executive
Auto Added by WPeMatico
Before an exit, founders must get their employment law ducks in a row
Successfully selling a business has much to do with timing. For many entrepreneurs, it’s the high-stakes end game where they cash out and reap the rewards of their efforts. At a certain point, when both buyers and sellers are working hard to close the deal, negotiations can move very quickly. If you’re the seller, this is not the time to discover unanticipated problems in your business.
Distressingly often, these problems are related to employment. Inattention to employment issues can have a significant impact on deals — from preventing closings and reducing the deal value to altering the deal terms or significantly limiting the pool of potential buyers.
Poor compliance, lack of policies or flawed practices mean potential liability exposure or expensive policy revisions and employee retraining — all of which can devalue your business.
Fortunately, such issues typically can be resolved well in advance with a little forethought and legal guidance. It’s important to get your employment ducks in a row long before you start planning your exit.
What follows is an overview of the three main categories of employment issues that can derail or delay a sale. For the most part, these assume an asset sale, but may vary in the case of a stock sale.
Compliance
By far the most significant problem is general employment law compliance. This means creating strong employment policies and practices that are documented, in place and operating long before you pursue a deal. The key area is wage and hour issues — timekeeping and payroll practices, worker classification issues (employee vs. independent contractor; exempt vs. non-exempt), meal and rest periods, PTO policies and payouts at termination.
Powered by WPeMatico
Tiger Global leads $30M investment into Briq, a fintech for the construction industry
Briq, which has developed a fintech platform used by the construction industry, has raised $30 million in a Series B funding round led by Tiger Global Management.
The financing is among the largest Series B fundraises by a construction software startup, according to the company, and brings Briq’s total raised to $43 million since its January 2018 inception. Existing backers Eniac Ventures and Blackhorn Ventures also participated in the round.
Briq CEO and co-founder Bassem Hamdy is a former executive at construction tech giant Procore (which recently went public and has a market cap of $10.4 billion) and Canadian software giant CMiC. Wall Street veteran Ron Goldshmidt is co-founder and COO.
Briq describes its offering as a financial planning and workflow automation platform that “drastically reduces” the time to run critical financial processes, while increasing the accuracy of forecasts and financial plans.
Briq has developed a toolbox of proprietary technology that it says allows it to extract and manipulate financial data without the use of APIs. It also has developed construction-specific data models that allows it to build out projections and create models of how much a project might cost, and how much could conceivably be made. Currently, Briq manages or forecasts about $30 billion in construction volume.
Specifically, Briq has two main offerings: Briq’s Corporate Performance Management (CPM) platform, which models financial outcomes at the project and corporate level, and BriqCash, a construction-specific banking platform for managing invoices and payments.
Put simply, Briq aims to allow contractors “to go from plan to pay” in one platform with the goal of solving the age-old problem of construction projects (very often) going over budget. Its longer-term, ambitious mission is to “manage 80% of the money workflows in construction within 10 years.”
The company’s strategy, so far, seems to be working.
From January 2020 to today, ARR has climbed by 200%, according to Hamdy. Briq currently has about 100 employees, compared to 35 a year ago.
Briq has 150 customers, and serves general and specialty contractors from $10 million to $1 billion in revenue. They include Cafco Construction Management, WestCor Companies and Choate Construction and Harper Construction. The company is currently focused on contractors in North America but does have long-term plans to address larger international markets, Hamdy told TechCrunch.
Some context
Hamdy came up with the idea for Santa Barbara, California-based Briq after realizing the vast amount of inefficiencies on the financial side of the construction industry. His goal was to do for construction financials what Procore did to document management, and PlanGrid to construction drawing. He started Briq with his own cash, amassed through secondary sales as Procore climbed the ranks of startups to become a construction industry unicorn.
Briq CEO and co-founder Bassem Hamdy. Image Credits: Briq
“I wanted to figure out how to bring the best of fintech into a construction industry that really guesses every month what the financial outcomes are for projects,” Hamdy told me at the time of the company’s last raise — a $10 million Series A led by Blackhorn Ventures announced in May of 2020. “Getting a handle on financial outcomes is really hard. The vast majority of the time, the forecasted cost to completion is plain wrong. By a lot.”
In fact, according to McKinsey, an astounding 80% of projects run over budget, resulting in significant waste and profit loss.
So at the end of a project, contractors often find themselves having doled out more money and resources than originally planned. This can lead to negative cash flow and profit loss. Briq’s platform aims to help contractors identify outliers, and which projects are more at risk.
Throughout the COVID-19 pandemic, Briq has proven to be “extremely valuable” to contractors, Hamdy said.
“In an industry where margins are so thin, we have given contractors the ability to truly understand where they stand on cash, profit and labor,” he added.
Powered by WPeMatico
Dear Sophie: Does it make sense to sponsor immigrant talent to work remotely?
Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.
Dear Sophie,
My startup is in big-time hiring mode. All of our employees are currently working remotely and will likely continue to do so for the foreseeable future — even after the pandemic ends. We are considering individuals who are living outside of the U.S. for a few of the positions we are looking to fill.
Does it make sense to sponsor them for a visa to work remotely from somewhere in the United States?
— Selective in Silicon Valley
Dear Selective,
Thanks for reaching out — I’m always happy to hear about another fast-growing startup! If some of your leadership team is also abroad, check out the recent announcement about the new International Entrepreneur Parole program for founders.
It can make great business sense to sponsor international talent for a visa even if the position involves working remotely from a location inside the U.S. With the right legal setup, your team can work from home in Silicon Valley, nearby in California, or in another state where the cost of living is not quite as high. We’ve received this question from many employers, and many of our clients are proceeding with sponsoring international talent with visas and green cards for work-from-home positions.
I discussed this and other issues related to recruiting and work trends with Katie Lampert for my podcast. Lampert leads the talent acquisition and infrastructure group at General Catalyst, a VC firm that invests in seed to growth-stage startups in the U.S. and abroad. She advises companies in the General Catalyst portfolio on all things talent-related, including establishing company culture, creating a company’s infrastructure for recruiting and retaining talent, and planning for the future.
“Recruiting is going to be more global, which is exciting,” Lampert said during our discussion. “This will have a really positive effect on cultural diversity in the workforce. Studies show that a more diverse workforce leads to greater financial success.”
In fact, the latest McKinsey & Co. report on diversity, “Diversity wins: How inclusion matters,” found that companies with ethnically and culturally diverse executive teams are 36% more likely to achieve above-average profitability than companies with less diverse teams. McKinsey has issued three reports on diversity, and with each subsequent report, the business case for ethnic and cultural diversity and gender diversity in corporate leadership has grown stronger.
In addition to boosting profitability, bringing international talent to the United States to join your startup offers a host of other benefits as well.
Powered by WPeMatico
Facebook steps into cloud gaming — and another feud with Apple
Facebook will soon be the latest tech giant to enter the world of cloud gaming. Their approach is different than what Microsoft or Google has built, but Facebook highlights a shared central challenge: dealing with Apple.
Facebook is not building a console gaming competitor to compete with Stadia or xCloud; instead, the focus is wholly on mobile games. Why cloud stream mobile games that your device is already capable of running locally? Facebook is aiming to get users into games more quickly and put less friction between a user seeing an advertisement for a game and actually playing it themselves. Users can quickly tap into the title without downloading anything, and if they eventually opt to download the title from a mobile app store, they’ll be able to pick up where they left off.
Facebook’s service will launch on the desktop web and Android, but not iOS due to what Facebook frames as usability restrictions outlined in Apple’s App Store terms and conditions.
With the new platform, users will be able to start playing mobile games directly from Facebook ads. Image via Facebook.
While Apple has suffered an onslaught of criticism in 2020 from developers of major apps like Spotify, Tinder and Fortnite for how much money they take as a cut from revenues of apps downloaded from the App Store, the plights of companies aiming to build cloud gaming platforms have been more nuanced and are tied to how those platforms are fundamentally allowed to operate on Apple devices.
Apple was initially slow to provide a path forward for cloud gaming apps from Google and Microsoft, which had previously been outlawed on the App Store. The iPhone maker recently updated its policies to allow these apps to exist, but in a more convoluted capacity than the platform makers had hoped, forcing them to first send users to the App Store before being able to cloud stream a gaming title on their platform.
For a user downloading a lengthy single-player console epic, the short pitstop is an inconvenience, but long-time Facebook gaming exec Jason Rubin says that the stipulations are a non-starter for what Facebook’s platform envisions, a way to start playing mobile games immediately without downloading anything.
“It’s a sequence of hurdles that altogether make a bad consumer experience,” Rubin tells TechCrunch.
Apple tells TechCrunch that they have continued to engage with Facebook on bringing its gaming efforts under its guidelines and that platforms can reach iOS by either submitting each individual game to the App Store for review or operating their service on Safari.
In terms of building the new platform onto the mobile web, Rubin says that without being able to point users of their iOS app to browser-based experiences, as current rules forbid, Facebook doesn’t see pushing its billions of users to accessing the service primarily from a browser as a reasonable alternative. In a Zoom call, Rubin demonstrates how this could operate on iOS, with users tapping an advertisement inside the app and being redirected to a game experience in mobile Safari.
“But if I click on that, I can’t go to the web. Apple says, ‘No, no, no, no, no, you can’t do that,’ ” Rubin tells us. “Apple may say that it’s a free and open web, but what you can actually build on that web is dictated by what they decide to put in their core functionality.”
Facebook VP of Play Jason Rubin. Image via Facebook.
Rubin, who co-founded the game development studio Naughty Dog in 1994 before it was acquired by Sony in 2001, has been at Facebook since he joined Oculus months after its 2014 acquisition was announced. Rubin had previously been tasked with managing the games ecosystem for its virtual reality headsets; this year he was put in charge of the company’s gaming initiatives across their core family of apps as the company’s VP of Play.
Rubin, well familiar with game developer/platform skirmishes, was quick to distinguish the bone Facebook had to pick with Apple and complaints from those like Epic Games, which sued Apple this summer.
“I do want to put a pin in the fact that we’re giving Google 30% [on Android]. The Apple issue is not about money,” Rubin tells TechCrunch. “We can talk about whether or not it’s fair that Google takes that 30%. But we would be willing to give Apple the 30% right now, if they would just let consumers have the opportunity to do what we’re offering here.”
Facebook is notably also taking a 30% cut of transaction within these games, even as Facebook’s executive team has taken its own shots at Apple’s steep revenue fee in the past, most recently criticizing how Apple’s App Store model was hurting small businesses during the pandemic. This saga eventually led to Apple announcing that it would withhold its cut through the end of the year for ticket sales of small businesses hosting online events.
Apple’s reticence to allow major gaming platforms a path toward independently serving up games to consumers underscores the significant portion of App Store revenues that could be eliminated by a consumer shift toward these cloud platforms. Apple earned around $50 billion from the App Store last year, CNBC estimates, and gaming has long been their most profitable vertical.
Though Facebook is framing this as an uphill battle against a major platform for the good of the gamer, this is hardly a battle between two underdogs. Facebook pulled in nearly $70 billion in ad revenues last year, and improving their offerings for mobile game studios could be a meaningful step toward increasing that number, something Apple’s App Store rules threaten.
For the time being, Facebook is keeping this launch pretty conservative. There are just 5-10 titles that are going to be available at launch, Rubin says. Facebook is rolling out access to the new service, which is free, this week across a handful of states in America, including California, Texas, Massachusetts, New York, New Jersey, Connecticut, Rhode Island, Delaware, Pennsylvania, Maryland, Washington, D.C., Virginia and West Virginia. The hodge-podge nature of the geographic rollout is owed to the technical limitations of cloud-gaming — people have to be close to data centers where the service has rolled out in order to have a usable experience. Facebook is aiming to scale to the rest of the U.S. in the coming months, they say.
Powered by WPeMatico
How Roblox completely transformed its tech stack
Picture yourself in the role of CIO at Roblox in 2017.
At that point, the gaming platform and publishing system that launched in 2005 was growing fast, but its underlying technology was aging, consisting of a single data center in Chicago and a bunch of third-party partners, including AWS, all running bare metal (nonvirtualized) servers. At a time when users have precious little patience for outages, your uptime was just two nines, or less than 99% (five nines is considered optimal).
Unbelievably, Roblox was popular in spite of this, but the company’s leadership knew it couldn’t continue with performance like that, especially as it was rapidly gaining in popularity. The company needed to call in the technology cavalry, which is essentially what it did when it hired Dan Williams in 2017.
Williams has a history of solving these kinds of intractable infrastructure issues, with a background that includes a gig at Facebook between 2007 and 2011, where he worked on the technology to help the young social network scale to millions of users. Later, he worked at Dropbox, where he helped build a new internal network, leading the company’s move away from AWS, a major undertaking involving moving more than 500 petabytes of data.
When Roblox approached him in mid-2017, he jumped at the chance to take on another major infrastructure challenge. While they are still in the midst of the transition to a new modern tech stack today, we sat down with Williams to learn how he put the company on the road to a cloud-native, microservices-focused system with its own network of worldwide edge data centers.
Scoping the problem
Powered by WPeMatico
A pandemic and recession won’t stop Atlassian’s SaaS push
No company is completely insulated from the macroeconomic fallout of COVID-19, but we are seeing some companies fare better than others, especially those providing ways to collaborate online. Count Atlassian in that camp, as it provides a suite of tools focused on working smarter in a digital context.
At a time when many employees are working from home, Atlassian’s product approach sounds like a recipe for a smash hit. But in its latest earnings report, the company detailed slowing growth, not the acceleration we might expect. Looking ahead, it’s predicting more of the same — at least for the short term.
Part of the reason for that — beyond some small-business customers, hit by hard times, moving to its new free tier introduced last March — is the pain associated with moving customers off of older license revenue to more predictable subscription revenue. The company has shown that it is willing to sacrifice short-term growth to accelerate that transition.
We sat down with Atlassian CRO Cameron Deatsch to talk about some of the challenges his company is facing as it navigates through these crazy times. Deatsch pointed out that in spite of the turbulence, and the push to subscriptions, Atlassian is well-positioned with plenty of cash on hand and the ability to make strategic acquisitions when needed, while continuing to expand the recurring-revenue slice of its revenue pie.
The COVID-19 effect
Deatsch told us that Atlassian could not fully escape the pandemic’s impact on business, especially in April and May when many companies felt it. His company saw the biggest impact from smaller businesses, which cut back, moved to a free tier, or in some cases closed their doors. There was no getting away from the market chop that SMBs took during the early stages of COVID, and he said it had an impact on Atlassian’s new customer numbers.
Image Credits: Atlassian
Still, the company believes it will recover from the slow down in new customers, especially as it begins to convert a percentage of its new, free-tier users to paid users down the road. For this quarter it only translated into around 3000 new customers, but Deatsch didn’t seem concerned. “The customer numbers were off, but the overall financials were pretty strong coming out of [fiscal] Q4 if you looked at it. But also the number of people who are trying our products now because of the free tier is way up. We saw a step change when we launched free,” he said.
Powered by WPeMatico
Sphero appoints new CEO, spins off robotics startup for first responders
Sphero just announced that it has spun off another company. Once again, the new startup has a decidedly different focus from its parent company’s core of education-focused products. While still a robotics company at its heart, the underwhelmingly named Company Six will create robotic systems designed for first responders and other humans whose work requires them to put themselves in harm’s way.
Also snuck into the press release, almost as an an afterthought, is the appointment of Paul Copioli as the new CEO of Sphero, effective immediately. The executive is an industry veteran who has worked at VEX Robotics, industrial robotics giant Fanuc and Lockheed Martin. Most recently, he was the president and COO of littleBits when the startup was acquired by Sphero.
Copioli takes over after the company’s exit from the consumer space. Sphero has pivoted almost entirely into the educational market, with the littleBits acquisition making up an important piece of the puzzle.
“It’s an honor to lead the Sphero team as we continue to pave the way for accessible robots, STEAM and computer science education for kids around the world,” he says in a release. “With our focus on education and our mission to inspire the creators of tomorrow, Sphero has a long-standing place in our school systems and beyond.”
Spinning off Company Six as its own independent entity is seemingly part of the new focus. The seeds of the startups were formed by former CEO Paul Berberian’s Public Safety Division within Sphero. He has since shifted to become chairman of both companies, while former Sphero COO Jim Booth will head Company Six as COO. Got all that?
Company Six has already closed a $3 million seed round, lead by Spider Capital, with Sphero investors Foundry Group and Techstars also on-board. Like previous Sphero spin-off Misty, information about Company Six is minimal at the time of its announcement. The new company’s site is essentially bare. We only know it will be focused on creating robotic systems for first responders, defense workers and other dangerous jobs. The news echoes iRobot’s 2016 spin-off of its military wing, Endeavor.
Sphero explains:
By applying the experience used to bring more than 4 million robots to market at Sphero, the Company Six team believes it can create products that are not only robust and feature-rich enough for professional applications, but also affordable enough to be adopted by the majority, rather than the minority, of civilian and military personnel.
More news to follow soon, no doubt.
Powered by WPeMatico
Venafi acquires Jetstack, the startup behind the cert-manager Kubernetes certificate controller
It seems that we are in the middle of a mini acquisition spree for Kubernetes startups, specifically those that can help with Kubernetes security. In the latest development, Venafi, a vendor of certificate and key management for machine-to-machine connections, is acquiring Jetstack, a U.K. startup that helps enterprises migrate and work within Kubernetes and cloud-based ecosystems, which has also been behind the development of cert-manager, a popular, open-source native Kubernetes certificate management controller.
Financial terms of the deal, which is expected to close in June of this year, have not been disclosed, but Jetstack has been working with Venafi to integrate its services and had a strategic investment from Venafi’s Machine Identity Protection Development Fund.
Venafi is part of the so-called “Silicon Slopes” cluster of startups in Utah. It has raised about $190 million from investors that include TCV, Silver Lake and Intel Capital and was last valued at $600 million. That was in 2018, when it raised $100 million, so now it’s likely Venafi is worth more, especially considering its customers include the top five U.S. health insurers, the top five U.S. airlines, the top four credit card issuers, three out of the top four accounting and consulting firms, four of the top five U.S., U.K., Australian and South African banks and four of the top five U.S. retailers.
For the time being, the two organizations will continue to operate separately, and cert-manager — which has hundreds of contributors and millions of downloads — will continue on as before, with a public release of version 1 expected in the June-July time frame.
The deal underscores not just how Kubernetes -based containers have quickly gained momentum and critical mass in the enterprise IT landscape, in particular around digital transformation, but specifically the need to provide better security services around that at speed and at scale. The deal comes just one day after VMware announced that it was acquiring Octarine, another Kubernetes security startup, to fold into Carbon Black (an acquisition it made last year).
“Nowadays, business success depends on how quickly you can respond to the market,” said Matt Barker, CEO and co-founder of Jetstack . “This reality led us to re-think how software is built and Kubernetes has given us the ideal platform to work from. However, putting speed before security is risky. By joining Venafi, Jetstack will give our customers a chance to build fast while acting securely.”
To be clear, Venafi had been offering Kubernetes integrations prior to this — and Venafi and Jetstack have worked together for two years. But acquiring Jetstack will give it direct, in-house expertise to speed up development and deployment of better tools to meet the challenges of a rapidly expanding landscape of machines and applications, all of which require unique certificates to connect securely.
“In the race to virtualize everything, businesses need faster application innovation and better security; both are mandatory,” said Jeff Hudson, CEO of Venafi, in a statement. “Most people see these requirements as opposing forces, but we don’t. We see a massive opportunity for innovation. This acquisition brings together two leaders who are already working together to accelerate the development process while simultaneously securing applications against attack, and there’s a lot more to do. Our mutual customers are urgently asking for more help to solve this problem because they know that speed wins, as long as you don’t crash.”
The crux of the issue is the sheer volume of machines that are being used in computing environments, thanks to the growth of Kubernetes clusters, cloud instances, microservices and more, with each machine requiring a unique identity to connect, communicate and execute securely, Venafi notes, with disruptions or misfires in the system leaving holes for security breaches.
Jetstack’s approach to information security came by way of its expertise in Kubernetes, developing cert-mananger specifically so that its developer customers could easily create and maintain certificates for their networks.
“At Jetstack we help customers realize the benefits of Kubernetes and cloud native infrastructure, and we see transformative results to businesses firsthand,” said Matt Bates, CTO and co-founder of Jetstack, in a statement. “We developed cert-manager to make it easy for developers to scale Kubernetes with consistent, secure, and declared-as-code machine identity protection. The project has been a huge hit with the community and has been adopted far beyond our expectations. Our team is thrilled to join Venafi so we can accelerate our plans to bring machine identity protection to the cloud native stack, grow the community and contribute to a wider range of projects across the ecosystem.” Both Bates and Barker will report to Venafi’s Hudson and join the bigger company’s executive team.
Powered by WPeMatico
Decrypted: Chegg’s third time unlucky, Okta’s new CSO, Rapid7 beefs up cloud security
Ransomware is getting sneakier and smarter.
The latest example comes from ExecuPharm, a little-known but major outsourced pharmaceutical company that confirmed it was hit by a new type of ransomware last month. The incursion not only encrypted the company’s network and files, hackers also exfiltrated vast amounts of data from the network. The company was handed a two-for-one threat: pay the ransom and get your files back or don’t pay and the hackers will post the files to the internet.
This new tactic is shifting how organizations think of ransomware attacks: it’s no longer just a data-recovery mission; it’s also now a data breach. Now companies are torn between taking the FBI’s advice of not paying the ransom or the fear their intellectual property (or other sensitive internal files) are published online.
Because millions are now working from home, the surface area for attackers to get in is far greater than it was, making the threat of ransomware higher than ever before.
That’s just one of the stories from the week. Here’s what else you need to know.
THE BIG PICTURE
Chegg hacked for the third time in three years
Education giant Chegg confirmed its third data breach in as many years. The latest break-in affected past and present staff after a hacker made off with 700 names and Social Security numbers. It’s a drop in the ocean when compared to the 40 million records stolen in 2018 and an undisclosed number of passwords taken in a breach at Thinkful, which Chegg had just acquired in 2019.
Those 700 names account for about half of its 1,400 full-time employees, per a filing with the Securities and Exchange Commission. But Chegg’s refusal to disclose further details about the breach — beyond a state-mandated notice to the California attorney general’s office — makes it tough to know exactly went wrong this time.
Powered by WPeMatico
My experience with the CARES Act was frustrating, confusing and unfair
Suzanne is the CEO and co-founder of BadVR. She thrives at the intersection of data, art, technology and poetry.
As a small business owner, I was excited to learn about the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act that offers low-interest loans to firms impacted by the COVID-19 pandemic. However, as I read through the details and began to apply, it became clear that this legislation — while well-intentioned — may not be enough to help many SMBs and startups.
Here’s a quick recap of my experience.
Emergency Economic Injury Grants and Economic Injury Disaster Loans
First and foremost: You need to act swiftly. Emergency Economic Injury Grant and Economic Injury Disaster Loan programs included in the CARES Act function on a first-come, first-served basis, and are funded from a limited pool of resources.
I began my company’s application process by submitting our EIDL and EEIG applications through the SBA website. This was easy, if tedious. It took about two hours to complete the necessary online forms and about two seconds to click the EEIG checkbox. Submission was seamless, but I haven’t received any further communication from the SBA since completing my application, which is a bit confusing — EEIG funds are supposed to be dispersed within 3-5 days of the submission date.
However, I know there’s been a huge volume of submissions recently and this must be exceptionally difficult to handle. I look forward to any email correspondence or updates from the SBA that might give me — and other applicants — an updated estimate of the expected dispersal timeline.
Powered by WPeMatico