Chamath launches SPAC, SPAC and SPAC as he SPACs the world with SPACs

SPACs are going to rule the world, or at least, Chamath’s future portfolio.

Chamath Palihapitiya, the founder of Social Capital, has already tripled down on SPACs, the so-called “blank check” vehicle that takes private companies and flips them onto the public markets. His first SPAC bought Virgin Galactic last year, and his second SPAC bought Opendoor this week in a blockbuster deal valuing the instant home sale platform at $4.8 billion, less cash. His third SPAC officially fundraised in April, and has yet to announce a deal.

Now, it looks like he’s going to double down on his triple down. After the bell rung on Wall Street this Friday, the venture capitalist filed three new SPAC vehicles with the SEC. Social Capital Hedosophia Holdings Corp. IV has a headline value of $350 million, Social Capital Hedosophia Holdings Corp. V has a headline value of $650 million and Social Capital Hedosophia Holdings Corp. VI has a headline value of $1 billion.

Those headline values are targets: each SPAC will need to go through an investor roadshow process and officially raise capital before they can begin trying to find an acquisition target. Each SPAC is independent, and may share investors or have entirely independent investors around the table.

The three new SPACs share similar managers: Palihapitiya himself; Ian Osborne, who manages Hedosophia; Steven Trieu, the CFO of Social Capital; and Simon Williams, the chief administration officer of Hedosophia.

However, each has a different fifth director, who perhaps sheds some light on how each SPAC differs in strategy. Nirav Tolia, a co-founder and CEO of popular social network Nextdoor, is joining the fourth SPAC. Jay Parikh, a former head of engineering at Facebook, who left earlier this year, is joining the fifth SPAC. And finally, Dick Costolo, the former CEO of Twitter and current venture capitalist, is joining the sixth SPAC.

We’ve been talking about the accelerating pace of SPACs this year, and that appears in microcosm here around these Social Capital vehicles. It seems as though Palihapitiya and Hedosophia not only have great ambitions for these vehicles, but are increasingly mechanizing the process of fundraising them and taking advantage of markets that seem excited for any avenue toward growth.

Daily Crunch: Partial US TikTok ban is imminent

The Trump administration moves forwards with plans to ban TikTok and WeChat (although TikTok gets a partial extension), Unity goes public and we announce the winner of this year’s Startup Battlefield. This is your Daily Crunch for September 18, 2020.

The big story: US TikTok ban is imminent

The U.S. Commerce Department has released details about how it will be implementing the Trump administration’s domestic ban of TikTok and WeChat. Both apps will no longer be available (and will not be able to distribute updates) in U.S. app stores starting this Sunday, September 20.

At the same time, TikTok will be able to continue operations in the country until November 12, leaving the door open for a deal with Oracle or another partner.

TikTok, WeChat and their users aren’t the only ones unhappy about this decision. Instagram CEO Adam Mosseri said a TikTok ban would be “bad for US tech companies which have benefited greatly from the ability to operate across borders,” while the ACLU said the order “violates the First Amendment rights of people in the United States.”

The tech giants

Salesforce announces 12,000 new jobs in the next year just weeks after laying off 1,000 — Salesforce CEO and co-founder Marc Benioff announced in a tweet that the company would be hiring 4,000 new employees in the next six months, and 12,000 in the next year.

It’s game on as Unity begins trading — Unity Software, which sells a game development toolkit primarily for mobile phone app developers, raised $1.3 billion in its initial public offering.

Apple will launch its online store in India on September 23 — Apple currently relies on third-party online and offline retailers to sell its products in India.

Startups, funding and venture capital

And the winner of Startup Battlefield at Disrupt 2020 is … Canix — After five days of fierce pitching in a wholly new virtual Startup Battlefield arena, we have a winner.

Amid layoffs and allegations of fraud, the FBI has arrested NS8’s CEO following its $100+ million summer financing — Adam Rogas, the co-founder and former executive at the Las Vegas-based fraud prevention company NS8 was arrested by the Federal Bureau of Investigation.

Outschool, newly profitable, raises a $45 million Series B for virtual small group classes — Outschool’s services, which range from engineering lessons through Lego challenges to Spanish teaching by Taylor Swift songs, are now high in demand.

Advice and analysis from Extra Crunch

Are high churn rates depressing earnings for app developers? — RevenueCat’s Jacob Eiting writes that for all the hype around Apple’s 85/15 split for subscription revenue, very few developers are going to see a meaningful increase.

The stages of traditional fundraising — What you think when you hear “seed funding” and “A rounds” might be different from what investors think.

3 VCs discuss the state of SaaS investing in 2020 — Commentary from Canaan’s Maha Ibrahim, Andreessen Horowitz’s David Ulevitch and Bessemer’s Mary D’Onofrio.

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

Everything else

How the NSA is disrupting foreign hackers targeting COVID-19 vaccine research — “The threat landscape has changed,” the NSA’s director of cybersecurity Anne Neuberger said at Disrupt 2020.

NASA to test precision automated landing system designed for the moon and Mars on upcoming Blue Origin mission — The “Safe and Precise Landing – Integrated Capabilities Evolution” (SPLICE) system is made up of a number of lasers, an optical camera and a computer.

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

SaaS Ventures takes the investment road less traveled

Most venture capital firms are based in hubs like Silicon Valley, New York City and Boston. These firms nurture those ecosystems and they’ve done well, but SaaS Ventures decided to go a different route: it went to cities like Chicago, Green Bay, Wisconsin and Lincoln, Nebraska.

The firm looks for enterprise-focused entrepreneurs who are trying to solve a different set of problems than you might find in these other centers of capital, issues that require digital solutions but might fall outside a typical computer science graduate’s experience.

Saas Ventures looks at four main investment areas: trucking and logistics, manufacturing, e-commerce enablement for industries that have not typically gone online and cybersecurity, the latter being the most mainstream of the areas SaaS Ventures covers.

The company’s first fund, which launched in 2017, was worth $20 million, but SaaS Ventures launched a second fund of equal amount earlier this month. It tends to stick to small-dollar-amount investments, while partnering with larger firms when it contributes funds to a deal.

We talked to Collin Gutman, founder and managing partner at SaaS Ventures, to learn about his investment philosophy, and why he decided to take the road less traveled for his investment thesis.

A different investment approach

Gutman’s journey to find enterprise startups in out of the way places began in 2012 when he worked at an early enterprise startup accelerator called Acceleprise. “We were really the first ones who said enterprise tech companies are wired differently, and need a different set of early-stage resources,” Gutman told TechCrunch.

Through that experience, he decided to launch SaaS Ventures in 2017, with several key ideas underpinning the firm’s investment thesis: after his experience at Acceleprise, he decided to concentrate on the enterprise from a slightly different angle than most early-stage VC establishments.

Collin Gutman from SaaS Ventures

Collin Gutman, founder and managing partner at SaaS Ventures (Image Credits: SaaS Ventures)

The second part of his thesis was to concentrate on secondary markets, which meant looking beyond the popular startup ecosystem centers and investing in areas that didn’t typically get much attention. To date, SaaS Ventures has made investments in 23 states and Toronto, seeking startups that others might have overlooked.

“We have really phenomenal coverage in terms of not just geography, but in terms of what’s happening with the underlying businesses, as well as their customers,” Gutman said. He believes that broad second-tier market data gives his firm an upper hand when selecting startups to invest in. More on that later.

Gaming companies are reportedly the next targets in the US government’s potentially broader Tencent purge

Some of the biggest names in online gaming in the United States have received letters from the U.S. government requesting information about their relationship with the multibillion-dollar Chinese technology company, Tencent, according to reports.

Even as the U.S. Department of Commerce moves to block new downloads of the Chinese company’s popular messaging and payment app, WeChat, it has sent out letters to U.S. gaming companies like Epic Games, Riot Games, and others about their data-security protocols and their relationship to Tencent, according to a report in Bloomberg.

Citing people familiar with the matter, Bloomberg reports that the Committee on Foreign Investment in the U.S., which is chaired by the Treasury Department, is looking for information about how these companies handle the personal data of their U.S. customers.

Tencent is the world’s largest gaming company, with stakes in multiple U.S. gaming companies, including the Los Angeles-based Riot Games and a 40 percent stake in Epic Games, the maker of Fortnite, which is one of the most popular multiplayer online games in the U.S.

The requests could presage a push by the United States to force Tencent to sell off its gaming interests in America and would follow similar steps taken to crack down on the Chinese-owned social media network, TikTok.

The tumultuous TikTok saga has centered on the ways in which the wildly popular social media company handles user data and how that data could be misused by TikTok’s Chinese parent company, Bytedance. And the announcement earlier today from Commerce Secretary Wilbur Ross uses language that could be applied to Tencent’s gaming holdings just as easily as TikTok’s social media service.

“Today’s actions prove once again that President Trump will do everything in his power to guarantee our national security and protect Americans from the threats of the Chinese Communist Party,” said Ross in a statement. “At the President’s direction, we have taken significant action to combat China’s malicious collection of American citizens’ personal data, while promoting our national values, democratic rules-based norms, and aggressive enforcement of U.S. laws and regulations.”

Technology companies account for an increasing share of global economic output, and social media companies like Facebook have been denied access to the Chinese market. Some have speculated that the forced sale of TikTok’s U.S. assets could be an attempt to impose the same restrictions on Chinese companies that U.S. companies experience in China’s domestic market.

Security concerns have been at the heart of U.S. trade restrictions against other Chinese technology companies — like the networking and communications technology developer Huawei.

Extending the same argument to gaming may open another front in the ongoing trade war that’s been waged between the U.S. and China for the duration of the Trump presidency. But it would be yet another unprecedented step to wall off what historically has been unfettered commercial access to U.S. markets by foreign competitors in most of the tech arena (excluding things like weapons systems).

Tencent has over 300 investments in its portfolio, including Riot Games which it acquired outright in 2015 after buying a 93% stake in the business back in 2011. The Chinese company also owns a huge stake in Epic Games, the $17 billion game technology developer that created the runaway multiplayer smash hit, Fortnite, and Activision/Blizzard, which produces the Call of Duty franchise (among others).

Any movement by the Trump Administration to further restrict the economic activity of foreign companies operating in the U.S. could have unintended consequences for the nation’s technology industry, as well.

Even the top executives at some of the companies that would ostensibly benefit from TikTok’s disappearance from the competitive social media landscape have decried the approach taken by the US government.

Earlier today, Instagram CEO Adam Mosseri took to Twitter to decry the announcement. The ACLU also wasted no time in criticizing the announcement. Hina Shamsi, the director of the agency’s National Security Project, said in a statement: “This order violates the First Amendment rights of people in the United States by restricting their ability to communicate and conduct important transactions on the two social media platforms.”

Check out this never-before-seen clip from HBO’s The Perfect Weapon

At Disrupt 2020, we got a chance to see some never-before-seen footage from HBO’s upcoming documentary The Perfect Weapon.

The documentary, which was executive produced by John Maggio, is based on the book by the same(ish) name written by David Sanger, Washington correspondent for the New York Times.

We got to sit down for an interview with Sanger where we discussed the cybersecurity threats the United States faces, the definition of an appropriate response, and in general, whether or not we should be worried.

You can check out the full interview below, as well as a never-before-seen clip from the upcoming documentary.

The conversation was an excellent lead-in to Zack Whittaker’s interview with the NSA’s Cybersecurity Chief Anne Neuberger, which you can check out here.

Salesforce announces 12,000 new jobs in the next year just weeks after laying off 1,000

In a case of bizarre timing, Salesforce announced it was laying off 1,000 employees at the end of last month just a day after announcing a monster quarter with over $5 billion in revenue, putting the company on a $20 billion revenue run rate for the first time. The juxtaposition was hard to miss.

Earlier today, Salesforce CEO and co-founder Marc Benioff announced in a tweet that the company would be hiring 4,000 new employees in the next six months, and 12,000 in the next year. While it seems like a mixed message, it’s probably more about reallocating resources to areas where they are needed more.

While Salesforce wouldn’t comment further on the hirings, the company has obviously been doing well in spite of the pandemic, which has had an impact on customers. In the prior quarter, the company forecasted that it would have slower revenue growth due to giving some customers facing hard times with economic downturn time to pay their bills.

That’s why it was surprising when the CRM giant announced its earnings in August and that it had done so well in spite of all that. While the company was laying off those 1,000 people, it did indicate it would give those employees 60 days to find other positions in the company. With these new jobs, assuming they are positions the laid-off employees are qualified for, they could have a variety of positions from which to choose.

The company had 54,000 employees when it announced the layoffs, which accounted for 1.9% of the workforce. If it ends up adding the 12,000 news jobs in the next year, that would put the company at approximately 65,000 employees by this time next year.

And the winner of Startup Battlefield at Disrupt 2020 is… Canix

We started this competition with 20 impressive startups. After five days of fierce pitching in a wholly new virtual Startup Battlefield arena, we have a winner.

The startups taking part in the Startup Battlefield have all been hand-picked to participate in our highly competitive startup competition. It was an unprecedented year as we moved all of the nail-biting excitement of our physical contest to a virtual stage. They all presented in front of multiple groups of VCs and tech leaders serving as judges for a chance to win $100,000 and the coveted Disrupt Cup.

After hours of deliberations, TechCrunch editors pored over the judges’ notes and narrowed the list down to five finalists: Canix, Firehawk AerospaceHacWare, Jefa and Matidor.

These startups made their way to the finale to demo in front of our final panel of judges, which included: Caryn Marooney (Coatue Management), Ilya Fushman (Kleiner Perkins), Michael Seibel (Y Combinator), Sonali De Rycker (Sequoia), Troy Carter (Q&A) and Matthew Panzarino (TechCrunch).

We’re now ready to announce that the winner of TechCrunch Battlefield 2020 is….

Are high churn rates depressing earnings for app developers?

Ever since Apple opened up subscription monetization to more apps in 2016 — and enticed developers with an 85/15 split on revenue from customers that remain subscribed for more than a year — subscription monetization and retention has felt like the Holy Grail for app developers. So much so that Google quickly followed suit in what appeared to be an example of healthy competition for developers in the mobile OS duopoly.

But how does that split actually work out for most apps? Turns out, the 85/15 split — which Apple is keen to mention anytime developers complain about the App Store rev share — doesn’t have a meaningful impact for most developers. Because churn.

No matter how great an app is, subscribers are going to churn. Sometimes it’s because of a credit card expiring or some other billing issue. And sometimes it’s more of a pause, and the user comes back after a few months. But the majority of churn comes from subscribers who, for whatever reason, decide that the app just isn’t worth paying for anymore. If a subscriber churns before the one-year mark, the developer never sees that 85% split. And even if the user resubscribes, Apple and Google reset the clock if a subscription has lapsed for more than 60 days. Rather convenient… for Apple and Google.

Top mobile apps like Netflix and Spotify report churn rates in the low single digits, but they are the outliers. According to our data, the median churn rate for subscription apps is around 13% for monthly subscriptions and around 50% for annual. Monthly subscription churn is generally a bit higher in the first few months, then it tapers off. But an average churn of 13% leaves just 20% of subscribers crossing that magical 85/15 threshold.

In practice, what this means is that, for all the hype around the 85/15 split, very few developers are going to see a meaningful increase in revenue:

MIT engineers develop a totally flat fisheye lens that could make wide-angle cameras easier to produce

Engineers at MIT, in partnership with the University of Massachusetts at Lowell, have devised a way to build a camera lens that avoids the typical spherical curve of ultra-wide-angle glass, while still providing true optical fisheye distortion. The fisheye lens is relatively specialist, producing images that can cover as wide an area as 180 degrees or more, but they can be very costly to produce, and are typically heavy, large lenses that aren’t ideal for use on small cameras like those found on smartphones.

This is the first time that a flat lens has been able to product clear, 180-degree images that cover a true panoramic spread. The engineers were able to make it work by patterning a thin wafer of glass on one side with microscopic, three-dimensional structures that are positioned very precisely in order to scatter any inbound light in precisely the same way that a curved piece of glass would.

The version created by the researchers in this case is actually designed to work specifically with the infrared portion of the light spectrum, but they could also adapt the design to work with visible light, they say. Whether IR or visible light, there are a range of potential uses of this technology, since capturing a 180-degree panorama is useful not only in some types of photography, but also for practical applications like medical imaging, and in computer vision applications where range is important to interpreting imaging data.

This design is just one example of what’s called a ‘Metalens’ – lenses that make use of microscopic features to change their optical characteristics in ways that would traditionally have been accomplished through macro design changes – like building a lens with an outward curve, for instance, or stacking multiple pieces of glass with different curvatures to achieve a desired field of view.

What’s unusual here is that the ability to accomplish a clear, detailed and accurate 180-degree panoramic image with a perfectly flat metalens design came as a surprise even to the engineers who worked on the project. It’s definitely an advancement of the science that goes beyond what may assumed was the state of the art.

Battery tech superstars JB Straubel of Redwood Materials, Celina Mikolajczak of Panasonic coming to TC Mobility 2020

It was a trickle at first that has evolved into a slow and steady stream. Now, a wave of new electric vehicles is building, promising to deliver an unprecedented number of models to North America, Europe and China over the next two to three years.

There might not be a better time to dig into EVs and we have two superstars coming to TC Sessions: Mobility 2020. JB Straubel, co-founder and CEO of Redwood Materials who pioneered the battery powertrain design for Tesla as its longtime CTO, and Celina Mikolajczak, the vice president of battery technology for Panasonic Energy of North America, will join us on our virtual stage to talk about all things electric vehicles.

This virtual event takes place October 6-7, and we’re excited to hear from these two technology leaders working at the forefront of the industry.

Straubel’s role at Tesla cannot be understated. The co-founder and executive was responsible for some of the company’s most important technology during his 15 years there, including leading the cell design, supply chain and the first Gigafactory concept through the production ramp of the Model 3.

But Straubel’s story isn’t just tied to Tesla. The former Tesla executive went on to found another startup in 2017 called Redwood Materials . The battery recycling startup is focused on circular supply chains, essentially turning waste into profit and solving the environmental impacts of new products before they happen. Its first named customer is Panasonic; and just this week announced Amazon has joined that list.

Mikolajczak has a long history researching and developing better lithium-ion batteries. Her technical consulting practice at Exponent focused on lithium-ion cell and battery safety and quality. She then took a senior management position at Tesla that was focused on cell quality and materials engineering. During her time at Tesla, Mikolajczak developed the battery cells and packs for Tesla’s Model S, Model X, Model 3 and Roadster Refresh.

After leaving Tesla, Mikolajczak went on to serve as director of engineering focused on battery development for rideshare vehicles at Uber Technologies. Last year, she joined Panasonic Energy of North America, where she is vice president of battery technology. Mikolajczak leads a team of more than 200 engineers and other technical staff to improve lithium-ion cell manufacturing and to bring the latest cell technologies to mass production for Tesla at the Gigafactory facility in Sparks, Nevada.

In short: these two know a lot about battery technology from how it has developed in the past decade to where it’s headed and the implications it will have on automakers, consumers and the economy.

Mikolajczak and Straubel are just two in a long list of all-star speakers, including Bryan Salesky, co-founder and CEO of Argo AI, Tekedra Mawakana, chief operating officer at Waymo, Ike co-founder and chief engineer Nancy Sun as well as folks from Nuro, Aurora, Cruise, Lyft and Uber. There are startups as well including Refraction AI, which came out of stealth on our stage at last year’s mobility event.

We hope you can join in October 6-7, 2020 at the event. As you might have heard, TC Sessions: Mobility is a virtual event. Don’t worry, we know many of you want to network. We’ve built out features into our platform to give attendees unparalleled access to speakers, investors and fellow founders. Get your tickets before prices increase in a few short weeks! There are discounts for groups and students and exclusive opportunities for exhibiting for early-stage founders.