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An argument against cloud-based applications

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In the last decade we’ve seen massive changes in how we consume and interact with our world. The Yellow Pages is a concept that has to be meticulously explained with an impertinent scoff at our own age. We live within our smartphones, within our apps.

While we thrive with the information of the world at our fingertips, we casually throw away any semblance of privacy in exchange for the convenience of this world.

This line we straddle has been drawn with recklessness and calculation by big tech companies over the years as we’ve come to terms with what app manufacturers, large technology companies, and app stores demand of us.

Our private data into the cloud

According to Symantec, 89% of our Android apps and 39% of our iOS apps require access to private information. This risky use sends our data to cloud servers, to both amplify the performance of the application (think about the data needed for fitness apps) and store data for advertising demographics.

While large data companies would argue that data is not held for long, or not used in a nefarious manner, when we use the apps on our phones, we create an undeniable data trail. Companies generally keep data on the move, and servers around the world are constantly keeping data flowing, further away from its source.

Once we accept the terms and conditions we rarely read, our private data is no longer such. It is in the cloud, a term which has eluded concrete understanding throughout the years.

A distinction between cloud-based apps and cloud computing must be addressed. Cloud computing at an enterprise level, while argued against ad nauseam over the years, is generally considered to be a secure and cost-effective option for many businesses.

Even back in 2010, Microsoft said 70% of its team was working on things that were cloud-based or cloud-inspired, and the company projected that number would rise to 90% within a year. That was before we started relying on the cloud to store our most personal, private data.

Cloudy with a chance of confusion

To add complexity to this issue, there are literally apps to protect your privacy from other apps on your smart phone. Tearing more meat off the privacy bone, these apps themselves require a level of access that would generally raise eyebrows if it were any other category of app.

Consider the scenario where you use a key to encrypt data, but then you need to encrypt that key to make it safe. Ultimately, you end up with the most important keys not being encrypted. There is no win-win here. There is only finding a middle ground of contentment in which your apps find as much purchase in your private data as your doctor finds in your medical history.

The cloud is not tangible, nor is it something we as givers of the data can access. Each company has its own cloud servers, each one collecting similar data. But we have to consider why we give up this data. What are we getting in return? We are given access to applications that perhaps make our lives easier or better, but essentially are a service. It’s this service end of the transaction that must be altered.

App developers have to find a method of service delivery that does not require storage of personal data. There are two sides to this. The first is creating algorithms that can function on a local basis, rather than centralized and mixed with other data sets. The second is a shift in the general attitude of the industry, one in which free services are provided for the cost of your personal data (which ultimately is used to foster marketing opportunities).

Of course, asking this of any big data company that thrives on its data collection and marketing process is untenable. So the change has to come from new companies, willing to risk offering cloud privacy while still providing a service worth paying for. Because it wouldn’t be free. It cannot be free, as free is what got us into this situation in the first place.

Clearing the clouds of future privacy

What we can do right now is at least take a stance of personal vigilance. While there is some personal data that we cannot stem the flow of onto cloud servers around the world, we can at least limit the use of frivolous apps that collect too much data. For instance, games should never need access to our contacts, to our camera and so on. Everything within our phone is connected, it’s why Facebook seems to know everything about us, down to what’s in our bank account.

This sharing takes place on our phone and at the cloud level, and is something we need to consider when accepting the terms on a new app. When we sign into apps with our social accounts, we are just assisting the further collection of our data.

The cloud isn’t some omnipotent enemy here, but it is the excuse and tool that allows the mass collection of our personal data.

The future is likely one in which devices and apps finally become self-sufficient and localized, enabling users to maintain control of their data. The way we access apps and data in the cloud will change as well, as we’ll demand a functional process that forces a methodology change in service provisions. The cloud will be relegated to public data storage, leaving our private data on our devices where it belongs. We have to collectively push for this change, lest we lose whatever semblance of privacy in our data we have left.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more

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Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Digital generated image of abstract multi colored curve chart on white background.

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

financial stock market graph on technology abstract background represent risk of investment

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

OLYMPUS DIGITAL CAMERA

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Spotlit Multi Colored Coil Toy in the Dark.

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window) / Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

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GitLab oversaw a $195 million secondary sale that values the company at $6 billion

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GitLab has confirmed with TechCrunch that it oversaw a $195 million secondary sale that values the company at $6 billion. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”

GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’

 

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Facebook blocks new events around DC and state capitols

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As a precaution against coordinated violence as the U.S. approaches President-elect Joe Biden’s inauguration, Facebook announced a few new measures it’s putting in place.

In a blog post and tweets from Facebook Policy Communications Director Andy Stone, the company explained that it would block any events slated to happen near the White House, the U.S. Capitol or any state capitol building through Wednesday.

The company says it will also do “secondary” sweeps through any inauguration-related events to look for violations of its policies. At this point, that includes any content connected to the “Stop the Steal” movement perpetuating the rampant lie that Biden’s victory is illegitimate. Those groups continued to thrive on Facebook until measures the company took at the beginning of this week.

Facebook will apparently also be putting new restrictions in place for U.S. users who repeatedly break the company’s rules, including barring those accounts from livestreaming videos, events and group pages.

Those precautions fall short of what some of Facebook’s critics have called for, but they’re still notable measures for a company that only began taking dangerous conspiracies and armed groups seriously in the last year.

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