Monday, 31 August 2020

Cosmose, a platform that analyzes foot traffic in physical stores, gets $15 million Series A

Cosmose, a platform that analyzes foot traffic in physical stores, gets $15 million Series A

Cosmose, a platform that tracks foot traffic in brick-and-mortar stores to help companies predict customer behavior, announced today it has raised a $15 million Series A. The round was by Tiga Investments, with participation from returning investors OTB Ventures and TDJ Pitango, who co-led Cosmose’s seed round last year. The company said its valuation is now more than $100 million.

The Series A will be used for product development and geographic expansion, starting with Southeast Asian markets this year, followed by the Middle East and India. Chief executive officer Miron Mironiuk, who founded Cosmose in 2014, said its goal is to break even and generate profit by 2021.

Cosmose has offices in Shanghai, Hong Kong, New York and Warsaw, where is software engineering team is based. Most of the stores its tech is currently use in are in China and Japan, and its clients include companies like Walmart, Marriott, Samsung, and LVMH.

As companies try to recover from the impact of COVID-19, Mironiuk said Cosmose’s platform has helped clients make decisions about when to reopen stores and what kind of inventory to stock, and how to increase revenue. For example, ‘some shops wanted to connect with customers who used to shop in their physical locations and encourage them to buy online,” he said. “Hotels in Japan were focused on promoting their in-house restaurants to local residents to make up for the lost revenue.” The company is also working with Boston Consulting Group on a report called “COVID-19 offline retail recovery traffic in China” for publication next week.

Mironiuk said that a PwC audit of the platform’s accuracy completed in December 2019 confirmed its ability to track customers within 1.6 meters of their location in a store, and that its data ecosystem now comprises of more than one billion smartphones and 360,000 stores. Cosmose’s plan is to grow that to two billion smartphones and 10 million stores by 2022.

The company offers three main products: Cosmose Analytics, which tracks customers’ movements inside brick-and-mortar stores; Cosmose AI, a data analytics and prediction platform to help retailers create marketing campaigns and increase sales; and Cosmose Media, for targeting online ads.

Cosmose does not require hardware installation, which means no regular maintenance is required after Cosmose maps a store, and helps it differentiate from rivals.

There are other companies that also analyze foot traffic in brick-and-mortar stores, including RetailNext and ShopperTrak, but being tracked might alarm customers who are concerned about their privacy. Mironiuk said all of the smartphone data Cosmose AI gathers is anonymized, so the company doesn’t know who shoppers are. The platform uses alphanumeric IDs called OMNIcookies, does not collect personal data like phone MAC addresses, mobile numbers, or email addresses, and follows data privacy laws in each of the countries it operates in. It also allows shoppers to opt-out of tracking.

In a press statement about the investment, Raymond Zage, the CEO and founder of Tiga Investments, said “I was attracted by the strong results Cosmose is already achieving for some of the world’s recognizable brands, while simultaneously ensuring user privacy is protected. Cosmose team is saving stores while enhancing consumer experience.”



Apple alum’s jobs app for India’s workers secures $8 million

Apple alum’s jobs app for India’s workers secures $8 million

Javed, a middle-aged man, worked as a driver before losing that job earlier this year as coronavirus spread across India, prompting New Delhi to enforce a nationwide lockdown and temporarily curb several business activities.

There are millions of people like Javed in India today who have lost their livelihood in recent months. They are low-skilled workers and are currently struggling to secure another job.

An Apple alum thinks he can help. Through his app startup Apna, Nirmit Parikh is helping India’s workers learn new skills, connect with one another, and find jobs.

Parikh’s app is already changing lives. Javed, who could barely speak a few words in English before, recently posted a video on Apna app where he talked about his new job — processing raisins — in English.

In less than one year of its existence, Apna app — available on Android — has amassed over 1.2 million users.

The startup announced on Tuesday it has raised $8 million in its Series A financing round led by Lightspeed India and Sequoia Capital India. Greenoaks Capital and Rocketship VC also participated in the round.

In an interview with TechCrunch last week, Parikh said that these workers lack an organized community. “They are daily-wage workers. They rely on their friends to find jobs. This makes the prospects of them finding a job very difficult,” he said.

Apna app comprises of vertical communities for skilled professionals like carpenters, painters, field sales agents and many others.

“The most powerful thing for me about Apna is its communities — I’ve seen people help each other start a business, learn a new language or find a gig! Communities harbinger trust and make the model infinitely scalable,” said Vaibhav Agrawal, a Partner at Lightspeed India, in a statement.

The other issue they struggle with is their skillset. “An electrician would end up working decades doing the same job. If only they had access to upskilling courses — and just knew how beneficial it could be to them — they would stand to broaden their scope of work and significantly increase their earnings,” said Parikh.

Apna is addressing this gap in multiple ways. In addition to establishing a community, and rolling out upskilling courses, the startup allows users — most of whom are first time internet users — easily generate a virtual business card. The startup then shares these profiles with prospective employers. (Some of the firms that have hired from Apna app in recent weeks include Amazon, Big Basket, and HDFC Bank.)

In the last one month, Parikh said Apna has facilitated more than 1 million job interviews — up more than 3X month-on-month. During the same period, more than 3 million professional conversations occurred on the platform.

Parikh said he plans to use the fresh capital to expand Apna’s offerings, and help users launch their own businesses. He also plans to expand Apna, currently available in five Indian cities, outside of India in the future.

There are over 250 million blue and grey collar workers in India and providing them meaningful employment opportunities is one of the biggest challenges in our country, said Harshjit Sethi, Principal at Sequoia Capital India, in a statement.

“With internet usage in this demographic growing rapidly, further catalysed by the Jio effect, apps such as Apna can play a meaningful role in democratizing access to employment and skilling. Apna has built a unique product where users quickly come together in professional communities, an unmet need so far,” he added.

A handful of other players are also looking for ways to help. Last month, Google rolled out a feature in its search engine in India that allows users to create their virtual business card. The Android-maker also launched its jobs app Kormo in the country.



Everybody is racing to an IPO — even Laird Hamilton’s young “superfood” company

Everybody is racing to an IPO — even Laird Hamilton’s young “superfood” company

This one is unusual: Laird Superfood, a five-year-old, 100-person, Sisters, Ore.-based startup that was cofounded by famed surfer Laird Hamilton and which makes plant-based packaged beverage products, filed today to raise up to $40 million in an IPO.

We’d reported on this company early last year in large part because it had attracted backing from WeWork, the co-working company that famously made a number of bets that were very afield from its business (including a maker of wave pools) before suffering a major meltdown last fall.

In fact, according to Crunchbase, WeWork Labs provided Laird Superfood with a whopping $32 million — the bulk of the $51 million it has raised altogether, per Crunchbase. (WeWork founder Adam Neumann has said that he surfed with Hamilton in Hawaii.)

At that time, WeWork’s investment was the strangest thing about the business, a largely direct-to-consumer business that makes “superfood” coffee creamers, beverage supplements like “performance mushrooms,” and Peruvian coffee beans, among an assortment of other things like teas and hot chocolate.

This IPO may be even more curious. Founded by Hamilton and another surfer, Paul Hodge, the company is very young to be going public by today’s standards (biotech startups notwithstanding). The company booked $19 million in sales for the 12 months ended June 30, but it lost $9 million over that same period and at the rate it is spending money, including on sales and marketing, it will see a net loss of $10 million this year.

Management says it has $13.1 million in cash on hand and investments. It would have more if it hadn’t spent $7.5 million buying back Series A-1 preferred shares in November 2019 that were purchased for twice that price. (The investor that sold its shares was also relieved of its commitment to fund another $10 million. It’s easy to imagine this was WeWork but we don’t know this.) Because of that outlay, the company actually probably did pretty well last year; it just can’t state it that way.

Still, we’re a little intrigued by this one. The company’s only outside shareholder that owns more than 5% of the company is Danone Manifesto Ventures, the corporate venture arm of the global food and beverage company. It owns 13.4% of the company. Why wouldn’t Danone, which looks to have invested $10 million in the business in April, just buy out Laird Superfood outright?

It could be that there’s much more than meets the eye here (or is reflected in its S-1). We’re certainly not opposed to companies trying to go public much sooner than has been in the case in recent years. The company is probably smart to take advantage of a hot market. We’re just wondering if this food company is completely baked.

Hamilton owns 13.2% of the startup. Hodge meanwhile owns 6.4%. Canaccord Genuity and Craig-Hallum Capital Group are the joint bookrunners on the deal. No pricing terms are included in the filing.



Walmart+ launches Sept 15, offering same-day delivery, gas discounts and cashierless checkout for $98/yr

Walmart+ launches Sept 15, offering same-day delivery, gas discounts and cashierless checkout for $98/yr

Walmart today officially unveiled its new membership service and Amazon Prime rival, which it’s calling “Walmart+.” The $98 per year service will combine free, unlimited same-day delivery on groceries and thousands of other items, with additional benefits, like fuel discounts and access to a new Scan & Go service, similar to Walmart-owned Sam’s Club, that will allow members to check out at Walmart stores without having to wait in line.

The service will be available starting on September 15, 2020 nationwide, reaching over 4,700 Walmart stores, including 2,700 stores that offer delivery. Members can choose to pay the $98 per year after a 15-day free-trial period, or they can pay $12.95 on a month-to-month basis.

At launch, the new program promises more than 160,000 items for same-day delivery with no per-delivery fee on orders totaling $35 or more. This is the same value proposition that Walmart’s existing “Delivery Unlimited” program offers today. With the launch of Walmart+, “Delivery Unlimited” members will be moved to the rebranded and expanded service.

In addition to delivery savings, the new Walmart+ membership will include fuel discounts of up to 5 cents per gallon on any fuel type at nearly 2,000 Walmart, Murphy USA and Murphy Express stations nationwide. Walmart+ members will enable the discounts by using the Walmart mobile app, either by scanning a QR code or entering a PIN at the pump. Further down the road, the program will expand to include Sam’s Club fuel stations as well.

Image Credits: Walmart

The Scan & Go membership perk, meanwhile, lets Walmart+ members pay without having to wait in checkout lines — a nice perk to have amid a pandemic, where time in store means time exposed to potential carriers of the novel coronavirus. Using the Walmart app, customers scan scan items as they shop, then pay for them using Walmart Pay for a touch-free checkout experience.

Walmart two years ago had tested cashierless Scan & Go technology in its stores, but killed the program due to shopper theft. Arguably, fewer people will use Scan & Go because it’s a paid service, which could help store staff better combat the earlier problems.

Image Credits: Walmart

As with “Delivery Unlimited,” the Walmart+ orders are picked by in-store staff then handed off to partners like Postmates, DoorDash, Roadie and Point Pickup for delivery. Not owning the end-to-end experience can cause issues for consumers, however — especially because a poor delivery experience can damage Walmart’s reputation, or because customer service issues can’t be always dealt with directly when a middleman is involved. Walmart has also seen partners come and go, as delivery services ended their relationship with Walmart over the costs involved.

Walmart claims its new program is not a Prime rival. But it could encourage some number of Prime members to make a switch.

“We’re not launching Walmart+ with the intent to compete with anything else. We’re launching it with the needs of customers in mind,” explained Walmart Chief Customer Officer Janey Whiteside.

“Of course, I hope that brings in more customers and makes them more loyal, but when you’re as big as Walmart is — and serving as many people as we are — this is about really doubling down with the customers that we have and getting more share of wallet and more share of mind,” Whiteside added.

Prime is a much more expansive program. For comparison, Prime offers tens of millions of products for two-day delivery, over 10 million for one-day delivery and over 3 million for same-day delivery on orders of $35 or more. Walmart+ is focused more specifically on same-day delivery, as Walmart.com already offers free one-day or two-day shipping on orders of $35 or more without requiring a membership fee.

Prime today also offers a huge array of other perks — like access to free music, video, audiobooks, Kindle books and more. Walmart+ does not.

Still, for many customers, the value in Prime is rooted in its promise of speedy delivery. But at the same time, Amazon has tested the limits of its customer loyalty by steadily raising Prime’s subscription price over the years to now $119 when paid annually, or $12.99 per month. Walmart+ undercuts Prime at $98 per year or $12.95 per month while largely catering to the online grocery shopper — a target market that has rapidly grown during the pandemic. Walmart recently reported the pandemic helped drive its own e-commerce sales, fueled  by online grocery, up 97% in the past quarter.

Image Credits: Walmart

Meanwhile, Amazon’s grocery strategy since its 2017 purchase of Whole Foods has yet to be streamlined. Amazon today continues to offer two different online grocery services, Amazon Fresh and Whole Foods, with a varying array of pickup and delivery options, potentially leading to consumer confusion.

That said, the pandemic has led to massive sales increases for Amazon and Walmart, along with other essential retailers like Target, with all involved reporting stellar earnings in recent quarters.

Walmart’s plans for a new subscription program had previously been reported and a placeholder website has also been live for some time. In August, Walmart CEO Doug McMillon told investors on the company’s earnings call that it was readying the launch a membership program that would be centered around delivery. He noted also at the time how Walmart’s existing “Delivery Unlimited” subscription, launched last year, would serve a “great base of an offer” for the broader program, but didn’t offer a launch time frame.

Earlier reports said the service would include other perks, like access to more grocery time slots, promotional deals and eventually a Walmart+ credit card. The retailer declined to speak to its plans, only saying that Walmart+ benefits would expand over time.

“As is the case with any great membership offering, these benefits are not intended to be static. We will continue to leverage our assets and scale to bring solutions at unprecedented value, all while holding true to the everyday low prices that customers know they can always expect from Walmart,” Whiteside said. “In the future, we will be leveraging our wide-ranging strengths to add additional benefits for members in a range of both services and offerings,” she added.



Gillmor Gang: Platforming

 

Much was made during the Republican Convention of the lack of a party platform. The media characterized this as a capitulation to the Cult of Trump phenomenon, but the questioned begged was: so what? If you’re running as a candidate to disrupt the status quo…. But beneath the media framing, an important question emerges. What exactly is the platform we need to emerge from the toxic situation we find ourselves in?

For months, if not years, the technology industry has been working on a new platform to succeed the previous one. Mobile would seem to be that fundamental shift from the desktop world of Windows and PCs. The twin dominance of powerful phones by Google and Apple has created a new language of notifications and streaming video perfectly timed for the devastating pandemic. Our devices are now the front lines for managing the struggle to stay alive for our loved ones, the economy, and our future.

Zoom is of course the poster child for all that it enables, and certainly what it doesn’t. The notion of work from home is more likely a question of what is home and what’s the difference with work? The routines of life are congealing around the interactions with phone, watch, iPad, laptop, and TV. When I wake up, the first dive is for the notification stream built up overnight from overseas and then the East Coast. The rhythm varies from day to day: intense on Monday as the weekend cobwebs dissipate, more issue oriented through the middle of the week, and finally a thank-god-it’s Friday feel. Email, text messages, media updates, and work calendar reminders.

And then there’s the outline of the new platform — live streaming notifications from what some call citizen media, or the influencer network, or the loyal opposition. That last one refers to the decline in trust of the mainstream media. Maybe it’s just me, but the cable model of host-driven cyclical repetition of the headlines, talking heads, and medical ads adds up to a trip first to the mute button and eventually the off switch. Which plugs me right back into the notification stream and a new contract with us based on whether we click on the link or even allow the notification in the first place.

And these new voices are networks of one or a few, broadcasting on a global reach pastiche of cloud services that begin with the ubiquity of Zoom and its click and you’re there ease of on boarding. Then there are the key networks of record as it were: Facebook Live, Twitter/Periscope, YouTube, and maybe LinkedIn if you’re Brent Leary and got an early invite. There’s a whole bunch of streaming accelerators like Restream and StreamYard and Just Streams (I made that up) to use software and a dash of hardware to do what it took many thousands of dollars and cables just a few years ago. Right now it’s early days, but soon you’ll be seeing something that looks like the media it’s replacing as the OG buys in.

Don’t believe me? Just look at how streaming has disrupted the television industry. Or the music business. Or the reemergence of podcasting and newsletters. Or how messaging is growing rapidly as a preferred digital commerce and marketing channel. The pandemic has certainly had a devastating effect with the loss of theaters, events, and travel that drive so much of our economy and the emotional underpinning of our lives. But as we learn to respect the power of the virus to force this digital wave of transformation, we fuel the winners that emerge from a new hybrid blend of evolution and adaptation.

Technology has often been seen as impersonal and cold to the touch. But now we should be making friends with robots for touchless shopping, At the beginning of this Gillmor Gang session, Frank Radice seemed stunned by the administration’s takeover of the symbols of our Washington monuments for political purposes. By the end, he seemed more hopeful of a different result. We have more ways now of making our voices heard, broadcasting our own names in fireworks above and beyond the fake news and suppression. Our platform: suppress the virus, not the vote.

__________________

The Gillmor Gang — Frank Radice, Michael Markman, Keith Teare, Denis Pombriant, Brent Leary, and Steve Gillmor. Recorded live Friday, August 28, 2020.

Produced and directed by Tina Chase Gillmor @tinagillmor

@fradice, @mickeleh, @denispombriant, @kteare, @brentleary, @stevegillmor, @gillmorgang

For more, subscribe to the Gillmor Gang Newsletter and join the notification feed here on Telegram.

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There’s a growing movement where startup founders look to exit to community

There’s a growing movement where startup founders look to exit to community

Traditional roadmaps for startups center around this idea of the exit. Oftentimes, the ideal exit in the minds of startups and venture capitalists goes one of two ways: IPO or acquisition by another company.

But there are other ways for startups to exit that could potentially bring more value to a larger variety of stakeholders. Exit to Community (E2C), a collaborative working project led by the University of Colorado Boulder’s Media Enterprise Design Lab and Zebras Unite, explores ways to help startups transition investor-owned to community ownership, which could include users, customers, workers or some combination of all stakeholders. Today, the group released a digital and physical zine designed to serve as an introduction to Exit to Community.

“The purpose of the zine is to provide an initial roadmap to all of the aspects of the conversation that need to happen so we can save founders pain in recognizing and validating they’re in the wrong fit and we need to co-create what does fit,” Zebras Unite co-founder and zine co-author Mara Zepeda told TechCrunch. “It’s not a silver bullet. It’s not like there’s this other perfect thing that everyone needs to do. I describe it as running a Cambrian explosion of experiments in order to figure out what this future is. It’s not just one thing. That’s how what we’re doing is really different. Sometimes there are these niche products or movements that pop up and say, “this is the answer. There isn’t one answer for this moment.” 

These alternative exit models also have the potential to open the door for founders in other markets, E2C co-organizer Nathan Schneider told TechCrunch. He pointed to tiphub, a company focused on Africa and the African Diaspora, that had been looking for alternative ways to support founders, given there isn’t a huge mergers and acquisitions market in Africa.

“Because of the infrastructure that exists in the financial market, we don’t have the same set of realities that a very active VC industry does in Europe or the U.S.,” tiphub partner Chika Umeadi told TechCrunch. “There’s just not as much private equity activity or M&A activity. We believe we have a strong hypothesis for how we can manufacture companies quickly, but we still need to build the other side of the market. There are companies that are valuable, but we now have to think about alternative methods of exiting.”

Already, there are a handful of examples out there of what exiting to community can look like. Buffer, a social media management platform, bought out its investors in 2018 because it became “clear that Buffer had become less of a fit for VC funding,” Buffer CEO and co-founder Joel Gascoigne wrote in a blog post at the time.

Then, in 2019, SEO and Conductor bought back its content marketing company from WeWork. Now, the company is majority employee-owned.

“It was a dream that we always had that we would own the company and we gave a huge amount of ownership to all the people and now the company is almost entirely employee-owned,” Conductor CEO Seth Besmertnik told me earlier this year. “And now we have everything we want to go and make our mission a reality.”

Outside of the tech industry, E2C points to Organically Grown Company, an organic produce distributor based in Oregon that transitioned from an employee- and grocer-owned operation into a community-owned one.

“These types of glimpses suggest that it’s possible,” Schneider said.

For investors, while IPOs and acquisitions can elicit high returns, not all of the startups in their portfolios will be candidates.

“Their current exit options limit what kind of returns and outcomes they can see for their portfolio companies,” Schneider said. “If a startup ends up not being a candidate for an IPO or acquisition, E2C can still help them get their money back, or get a decent return. There’s also a class of investors trying to thread the needle of financial return with social return, and are looking for models that can help facilitate that.”

Beyond the zine, the next step is to crate a peer learning cohort of founders who are exploring some of these options. Down the road, the hope is to create standard documents for startups that make it easy for founders to pursue these alternative paths.



RealPage acquires real estate IoT startup Stratis

RealPage acquires real estate IoT startup Stratis

RealPage, a publicly traded full-service property management technology firm with over 12,200 clients worldwide, today announced that it has acquired Stratis IoT,  a startup that provides IoT services to the real estate industry, with a focus on access and energy management tools.

“RealPage aims to become a leading provider in the burgeoning rental property automation market, and thereby create significant opportunity for operators to increase rents, improve sustainability, add operational efficiencies, reduce operating costs and enhance the customer experience for the company’s approximately 19 million units throughout the United States,” said RealPage CEO Steve Winn. “The smart building technology also provides a launching pad for expanded international operations, thanks to Stratis’ existing international presence.”

Stratis is currently installed in about 380,000 homes in the U.S., Japan, UK and several countries in Europe and Latin America. Both Stratis and RealPage target a wide range of the real estate industry, ranging from multifamily units to student housing, vacation homes and commercial real estate.

Image Credits: Stratis

Traditionally, the real estate market wasn’t always the first to adopt modern technologies. That’s quickly changing now, though, in part because of the promise of IoT, which isn’t just a boon to renters looking for modern solutions in their apartments but also represents the possibility of significant cost savings for the industry. RealPage argues that smart technology can generate a revenue lift of $55 per unit, for example, and that’s the kind of saving (and higher revenues) that will push even legacy B2B platforms to modernize.

One area where Stratis stands out is its ability to integrate with a wide variety of third-party solutions.

“Holistic building-wide access and utility management and control are integral to building optimization and the resident experience, which have become increasingly intertwined,” said Stratis IoT CEO Felicite Moorman. “RealPage and Stratis IoT combine two industry-leading, best-in-class platforms to create a powerhouse of control and single-app resident experience for multifamily, student housing, and beyond.”

The two companies did not disclose the price of the acquisition. It’s worth noting that RealPage isn’t a stranger to making acquisitions to bring its technology up to speed. A year ago, the company acquired Hipercept, for example, a firm that provided data services and data analytics to the institutional real estate market. Then, in December, it also acquired Buildium, a SaaS property management solution with over 2 million units under management. In 2019, the company said planned to spend just over $100 million on acquisitions.

 



OfferUp and letgo combine marketplaces, post-acquisition

OfferUp and letgo combine marketplaces, post-acquisition

Earlier this year, online marketplace OfferUp raised $120 million and acquired a top competitor, letgo as a part of the fundraise led by letgo’s majority investor, OLX Group. As a part of the deal, OfferUp said it planned to eventually combine the businesses’ respective marketplaces into one but didn’t get into specifics of how that merger would take place. Today, OfferUp says it has now combined the OfferUp and letgo marketplaces into a new app and explained how the transition will work for former letgo users.

The newly combined OfferUp and letgo application is available across both iOS and Android, and expands the number of deals, buyers and seller, by naturing of its combined communities. With the expansion and merger, users on the new marketplace will also gain access to features like nationwide shipping and OfferUp’s safety programs like TruYou and Community MeetUp Spots. In addition, the listings on the app will never expire, though letgo had expired them after 30 days.

Existing letgo users will be directed to download the new OfferUp & letgo app, then use their letgo sign-in information to create their new OfferUp account. When they sign in, their account’s reputation, including their ratings, sales and purchase history, and join date will transfer from letgo to OfferUp.

However, items users had listed on letgo will not move over to OfferUp. Instead, they’ll need to be reposted. For customers who were in the middle of transactions, the company is offering a website legacy.letgo.com where those transactions can be completed. This site will be shut down after September 21, so it’s being advised that all parties quickly complete their sales.

As a result of the merger, customers with an active subscription to Super Boost Mode on letgo will have that subscription automatically cancelled. They can choose to use OfferUp’s Promote Plus service instead, but won’t be automatically signed up or opted in.

There will be some other differences between the two marketplaces that letgo users should understand. While the merger does bring nationwide shipping to former letgo users, it also means that some of letgo’s categories are no longer supported. These include jobs, services, rental listings and gift cards.

In addition, letgo won’t be supported in Canada due to the merger and OfferUp hasn’t yet reached Canada either. That means the company will lose some number of Canadian users as a part of the deal.

At the time of the deal, letgo brought to the table an app that had over 100 million worldwide downloads, so there is potential for at least some portion of its lapsed users to reactive their accounts upon their next launch. The two apps had also been neck-and-neck in terms of their App Store category rankings before the acquisition, though the iPhone version of OfferUp had a slight lead.

As of yesterday, OfferUp was still ahead with a ranking of No. 4 in iPhone’s Shopping category, compared with letgo at No. 12, per data from Sensor Tower.

 

 



Capchase raises $4.6M to deliver fast cash to SaaS companies

Capchase raises $4.6M to deliver fast cash to SaaS companies

As a business model, SaaS has expanded to epic size. A number of major SaaS companies filed to go public last week, and there are now thousands of SaaS startups growing all around the world. That scale makes it easier for banks and financial institutions to offer tailored solutions to this market around everything from equity to debt.

We’ve talked a bit about SaaS securitization the last few weeks, a crop of new financial products that use the metrics of a SaaS company to underwrite its debt (e.g. better churn = more debt available and at better terms) as opposed to traditional benchmarks like total revenue and company age. We also did a deep dive with Kentik CEO Avi Freedman on how he approached his recent venture debt fundraise and the terms he got across his five term sheets.

Every SaaS company these days is considering its financial options and the tradeoffs between equity and debt. But sometimes, they just need cash, and cash as quickly as possible. Startups sign contracts with customers that might be paid over a year or more, but they want to access that cash now, and at the best terms possible. The product that solves this problem is known as an accounts receivable line, and you can go to many banks to get them, with all the drudgery of that process.

Or, four founders hope, you’ll head to Capchase.

Capchase is an online platform for rapidly getting cash from your accounts receivable. Startups upload key details of their customer contracts and financial history to Capchase, and the company uses its underwriting algorithms to quickly assess the quality of those contracts and extend a debt line. The startup calls itself part of the “non-dilutive revolution,” and it’s headquartered in Boston.

“We’re targeting B2B SaaS or ‘X-as-a-service’ companies with recurring revenue, and we’re targeting companies around the seed to Series B/C stage having more than $1 million of ARR and at least eight months of revenue generating history,” Miguel Fernández, CEO and co-founder, said.

He linked up with three other founders earlier this year to launch Capchase: Luis Basagoiti, Ignacio Moreno, and Przemek Gotfryd. Fernández and Gotfryd met while at Harvard Business School where Fernández was thinking about “working capital and cash conversion cycle optimization” after his previous experiences at SaaS companies. Gotfryd had previously worked at growth investor TCV in London, where he acutely saw the challenges of raising non-dilutive cash.

Capchase’s team. Photo via Capchase.

Despite its early operational history, the company has already raised its own cash quickly. It closed on $4.6 million in VC seed funding led by Caffeinated Capital, Bling Capital, and SciFi VC, along with a number of angels.

To get cash early today, startups often resort to negotiating terms with their customers, offering discounts — sometimes massive discounts — for them to pay an entire contract’s value upfront. Fernández saw an opportunity to arbitrage the difference between interest rates and those discounts with Capchase.

From a user’s perspective, after syncing their startup’s financial data to Capchase, they will see a projection of what their runway extension will look like after selecting a debt line, and then Capchase will extend its terms after going through an underwriting process (“which takes a couple hours now, and is very rapidly decreasing to take minutes” Fernández said). In terms of traction, he said that “we’re working with around 3-4 customers right now.”

Startups are charged a discount on their total contract value, which is where Capchase makes its money. For instance, if $100,000 is going to be paid by a customer over the next twelve months, Capchase may offer $95,000 to the startup upfront, and keep the remaining $5,000 as those payments roll in. That discount fluctuates based on the startup in question and the payment risk of the underlying customer contracts.

Fernández said that venture debt is often cheaper on a pure interest rate basis, but that once additional elements of those products are added in such as warrants, the simplicity of Capchase’s product will prove competitive for founders.

Simpler, easier, and fully digital financial products are always welcome, and Capchase hopes that it will nestle itself in a suite of new financial products for SaaS founders looking to avoid dilution and extend their cash longer.



5 days left to save on early bird passes to TC Sessions: Mobility 2020

5 days left to save on early bird passes to TC Sessions: Mobility 2020

TC Sessions: Mobility 2020 kicks off in 37 days, but the countdown clock on early-bird pricing runs out in just five. Engage with the mobility community’s brightest minds, makers, visionaries and investors from around the globe on October 6-7. Buy your early-bird pass before the bird expires September 4 at 11:59 p.m. (PDT), and you’ll save $100 over full price.

Why attend TC Sessions: Mobility 2020? It offers beaucoup benefits, but let’s start here. Whether you’re launching a mobility startup or you’re an established player, you’ll gain valuable insight to help position and grow your business.

“I learned a lot from the breakout sessions. An official from the Los Angeles DOT spoke about the city’s plan to build pathways for micro mobility vehicles. Access to experts sharing that kind of information is essential for anyone launching a micro mobility startup. — Parug Demircioglu, CEO at Invemo and partner at Nito Bikes.”

“As a mobility company, we need to stay on the cutting edge of what’s happening in the space and know what others are doing. TC Sessions: Mobility helps us tap into the latest trends, like which cities are open to new services, which ones are having a harder time and what’s going on with MDS — probably the hottest topic at this point.” — Melika Jahangiri, vice president at Wunder Mobility.

Now that you’ve heard directly from your peers, let’s talk about what’s on the mobility menu. A kickass agenda for starters. Let’s take a peek.

  • Setting the Record Straight — Argo AI has gone from unknown startup to a company providing autonomous vehicle technology to Ford and VW — not to mention billions in investment from the two global automakers. Co-founder and CEO Bryan Salesky will talk about the company’s journey, what’s next and what it really takes to commercialize autonomous vehicle technology.
  • The Future of Trucking — TuSimple co-founder and CTO Xiaodi Hou and Boris Sofman, former Anki Robotics founder and CEO who now leads Waymo’s trucking unit, will discuss the business and the technical challenges of autonomous trucking.

You’ll hear interviews with top founders, technologists and investors. You’ll also hear from big players, like Lyft and Uber, and household giants like Porsche and Audi who can see the mobile writing on the wall. But we also have plenty of room for newbies and upstarts. In fact, we’ve added a pitch-off to this year’s lineup. We’ll announce more details on how early-stage mobility startup founders can apply to compete, so stay tuned.

Don’t miss out on the mobility event of the year — or miss out on serious savings. You have just five days left to beat the clock and save $100. Buy your pass to TC Sessions: Mobility 2020 before September 4 at 11:59 p.m. (PDT). Don’t let the early bird flip you the worm.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.



Frugal startups should pay attention to how JFrog’s IPO prices

Frugal startups should pay attention to how JFrog’s IPO prices

In last week’s IPO wave, one company fell a bit by the wayside amongst filings from better-known companies like Asana and Palantir. JFrog, a company that TechCrunch reported helps allows developers and companies deliver application updates “in the background without disturbing the user experience” when it raised $165 million in 2018, is positioned for an exciting debut.

Why? The unicorn — the same 2018 round valued JFrog at around $1.2 billion according to PitchBook data — has a unique blend of growth, margins and profitability that should make its pricing cycle incredibly interesting.


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JFrog will give us an insight into how Wall Street will value a fast-growing, managed software company that also doesn’t lose money. It’s not something we see often, and other market hopefuls like the aforementioned Asana and Palantir are far from similar levels of profitability.

Let’s take a quick look at what JFrog would be worth if it were a more normal — read: less profitable — SaaS company, and then ask what it might be worth as a cash-generating, recently profitable concern. The numbers are pretty surprising.

JFrog

If you want more on the basics of JFrog’s business and why developers and companies care about the company, head here. We’re only doing numbers today.

Back to the basics as a refresher from early last week, here’s what you need to know about JFrog’s business:

  • Revenue grew from $63.5 million in 2018 to $104.7 million in 2019 and from $46.1 million to $69.2 million from the first half of 2019 to the first half of 2020. Those gains of 65% and 60.1%, respectively, put JFrog on a comfortable growth pace for a company doing nine-figure revenues.
  • JFrog has lost less money as it has grown. From $1.00 per share in 2018 to $0.20 per share in 2019, and from $0.08 per-share in the first half of 2019 to just $0.02 per share in the first half of 2020.
  • JFrog’s gross margins have been 81% or better in every mutliquarter period we have record of.
  • JFrog’s operating cash flow has improved over time as well, rising from +$8.6 million in 2018 to $10 million in 2019, and from +$0.415 million in the first half of 2019 to +$5.9 million in the first half of 2020.
  • And, after some quarters of extremely limited losses, JFrog posted its first known (since Q1 2018) GAAP profitable quarter in Q2 2020, generating $1.7 million in net income off of revenues of $36.4 million in the same period.

Now ask yourself, what is that company worth?



Amazon’s Prime Air drone delivery fleet gains FAA approval for trial commercial flights

Amazon’s Prime Air drone delivery fleet gains FAA approval for trial commercial flights

Amazon has been granted an approval by the U.S. Federal Aviation Administration (FAA) that will allow it to start trialling commercial deliveries via drone, Bloomberg reports. This certification is the same one granted to UPS and a handful of other companies, and while it doesn’t mean that Amazon can immediately start operating a consumer drone delivery service for everyone, it does allow them to make progress towards that goal.

Amazon has said it’ll kick off its own delivery tests, though it hasn’t shared any details on when and where exactly those will begin. The FAA clearance for these trials is adapted from the safety rules and regulations it imposes for companies operating a commercial airline service, with special exceptions allowing for companies to bypass the requirements that specifically deal with onboard crew and staff working the aircraft, since the drones don’t have any.

These guidelines are at best a patchwork solution designed by the agency and its commercial partners to help provide a way for them to get underway with crucial systems development and safety testing and design, but the FAA is working towards a more fit-for-purpose set of regulations to govern drone airline operation for later this year. That will mostly be related to authorizing flights over crowds – but any drone flights will still require constant human observation.

Ultimately, any actual viable and practical system of drone delivery will require fully autonomous operation, without direct line-of-sight observation. Amazon has plans for its MK27 drones, which have a maximum 5 lb carrying capacity, to do just that, but it’ll still likely be many years before the regulatory and air traffic control infrastructure is updated to the point where that can happen regularly.



The New Paper offers a ‘fact-first’ news digest in text message form

The New Paper offers a ‘fact-first’ news digest in text message form

Tired of signing up for email newsletters? Then maybe it’s time to try out The New Paper‘s news digest, which arrives in the form of a daily text message rounding up the biggest headlines.

The Indianapolis-based startup is announcing that it’s leaving private beta testing. It raised $300,000 in pre-seed funding last year, including $80,000 from a pitch competition held by Elevate Ventures (the VC fund based by Indiana State).

Founders Michael Aft and John Necef told me that they started The New Paper with the intention of creating  email newsletters at first (something Necef has experience with, having served as head of growth at The Hustle), but they decided that text messages offered the best way to, in Aft’s words, “do daily news right.”

“Think about the volume of email you get everyday,” he continued. “It’s this stressful, noisy, environment where you get spam and e-commerce messages. Text is easy, it’s clean, it’s extremely convenient, it’s intimate.”

In fact, Necef said that “a common anecdote” they’ve heard from early subscribers is the fact that they sign up for email newsletters “with the best of intentions” but then those newsletters end up sitting unread in their inboxes. (Think of it as the digital equivalent of those piles of unread New Yorkers.)

Of course, the fact that text messaging is such a personal channel also means that readers aren’t likely to stick around unless they’re actually getting what they want. But Aft said he embraces the challenge of meeting that higher bar: “You’re never going to forget that you subscribed.”

The New Paper

Image Credits: The New Paper

In fact, The New Paper needs to provide value not just because it’s delivered via text message, but because it’s a paid product — after a weeklong free trial, it costs $5 per month. And more than 7,000 paying subscribers have already signed up.

Currently, the digest consists of six headlines, all linking to reporting from other publications, plus a link to The Daily Dash, which provides a high-level snapshot of stock market performance, the current state of the coronavirus pandemic and more.

Both Aft and Necef emphasized that The New Paper’s approach is “fact first.” Of course, there are plenty of news organizations that tout their objectivity and devotion to accuracy, but the pair seemed particularly determined to present their readers with a “common set of facts” about a story that everyone can agree on, regardless of their political leanings.

To illustrate the company’s approach, Aft pointed to the recent report on Russian election interference by the Senate Intelligence Committee. Rather than trying to make any “second order conclusions” about the report — conclusions that could be influenced by a writer or editor’s political beliefs — he said The New Paper focused on what was factually indisputable, namely that the committee had released its report.

As soon as he said that, I imagined my editors past and present tearing their hair out — not because they’re liberals determined to make the Trump Administration look bad, but because the report’s findings (that Russian intelligence worked to interfere with the election, and that members of the Trump campaign were happy to accept the help) is the real news, rather than the simple fact of the report’s release.

The New Paper Daily Dash

Image Credits: The New Paper

In other words, emphasizing objectivity and facts sounds good, but it also risks leaving out crucial context or analysis. Plus, it’s become increasingly clear that facts rarely change people’s minds.

Still, despite my quibbles with the approach, I’m happy to report that I’ve been receiving the digest for the past week, and I’ve found it to be a convenient, comprehensive catch-up on the day’s news, with links that make it easy to learn more.

For now, Aft and Necef are writing the digest themselves, though they said much of the ranking and sorting is done by algorithms. Over time, they’re hoping to hire on both the technology side and the editorial side. They also plan to expand into other channels like email and voice.

Asked whether the subscription business model means that they don’t have to pursue a mass audience, Aft replied, “We think it’s so critically important to give people a common set of information. To make this a viable business model, do we need to be 100 million strong? Of course not. Is that the goal we’re targeting? Absolutely, because we are so passionate about the problem.”



Facebook partially documents its content recommendation system

Facebook partially documents its content recommendation system

Algorithmic recommendation systems on social media sites like YouTube, Facebook and Twitter, have shouldered much of the blame for the spread of misinformation, propaganda, hate speech, conspiracy theories and other harmful content. Facebook, in particular, has come under fire in recent days for allowing QAnon conspiracy groups to thrive on its platform and for helping militia groups to scale membership. Today, Facebook is attempting to combat claims that its recommendation systems are at any way at fault for how people are exposed to troubling, objectionable, dangerous, misleading, and untruthful content.

The company has, for the first time, made public how its content recommendation guidelines work.

In new documentation available in Facebook’s Help Center and Instagram’s Help Center, the company details how Facebook and Instagram’s algorithms work to filter out content, accounts, Pages, Groups and Events from its recommendations.

Currently, Facebook’s Suggestions may appear as Pages You May Like, “Suggested For You” posts in News Feed, People You May Know, or Groups You Should Join. Instagram’s suggestions are found within Instagram Explore, Accounts You May Like, and IGTV Discover.

The company says Facebook’s existing guidelines have been in place since 2016 under a strategy it references as “remove, reduce, and inform.” This strategy focuses on removing content that violates Facebook’s Community Standards, reducing the spread of problematic content that does not violate its standards, and informing people with additional information so they can choose what to click, read or share, Facebook explains.

The Recommendation Guidelines typically fall under Facebook’s efforts in the “reduce” area, and are designed to maintain a higher standard than Facebook’s Community Standards, because they push users to follow new accounts, groups, Pages and the like.

Facebook, in the new documentation, details five key categories that are not eligible for recommendations. Instagram’s guidelines are similar. However, the documentation offers no deep insight into how Facebook actually chooses how it chooses what to recommend to a given user. That’s a key piece to understanding recommendation technology, and one Facebook intentionally left out.

One obvious category of content that many not be eligible for recommendation includes those that would impede Facebook’s “ability to foster a safe community,” such as content focused on self-harm, suicide, eating disorders, violence, sexually explicit, regulated content like tobacco or drugs, content shared by non-recommendable accounts or entities.

Facebook also claims to not recommend sensitive or low-quality content, content users frequently say they dislike, and content associated with low-quality publishings. These further categories include things like clickbait, deceptive business models, payday loans, products making exaggerated health claims or offering “miracle cures,” content promoting cosmetic procedures, contest, giveaways, engagement bait, unoriginal content stolen from another source, content from websites that get a disproportionate number of clicks from Facebook versus other places on the web, news that doesn’t include transparent information about the authorship or staff.

In addition, Facebook claims it won’t recommend fake or misleading content, like those making claims found false by independent fact checkers, vaccine-related misinformation, and content promoting the use of fraudulent documents.

It says it will also “try” not to recommend accounts or entities that recently violated Community Standards, shared content Facebook tries to not recommend, posts vaccine-related misinformation, has engaged in purchasing “Likes,” has been banned from running ads, posted false information, or are associated with movements tied to violence.

The latter claim, of course, follows recent news that a Kenosha militia Facebook Event remained on the platform after being flagged 455 times after its creation, and had been cleared by 4 moderators as non-violating content. The associated Page had issued a “calls to arms” and hosted comments about people asking what types of weapons to bring. Ultimately, two people were killed and a third was injured at protests in Kenosha, Wisconsin when a 17-year old armed with an AR-15-style rifle broke curfew, crossed state lines, and shot at protestors.

Given Facebook’s track record, it’s worth considering how well Facebook is capable of abiding by its own stated guidelines. Plenty of people have found their way to what should be ineligible content, like conspiracy theories, dangerous health content, COVID-19 misinformation and more by clicking through on suggestions at times when the guidelines failed. QAnon grew through Facebook recommendations, it’s been reported.

It’s also worth noting, there are many gray areas that guidelines like these fail to cover.

Militia groups and conspiracy theories are only a couple examples. Amid the pandemic, U.S. users who disagreed with government guidelines on business closures can easily find themselves pointed towards various “reopen” groups where members don’t just discuss politics, but openly brag about not wearing masks in public or even when required to do so at their workplace. They offer tips on how to get away with not wearing masks, and celebrate their successes with selfies. These groups may not technically break rules by their description alone, but encourage behavior that constitutes a threat to public health.

Meanwhile, even if Facebook doesn’t directly recommend a group, a quick search for a topic will direct you to what would otherwise be ineligible content within Facebook’s recommendation system.

For instance, a quick search for the word “vaccines,” currently suggests a number of groups focused on vaccine injuries, alternative cures, and general anti-vax content. These even outnumber the pro-vax content. At a time when the world’s scientists are trying to develop protection against the novel coronavirus in the form of a vaccine, allowing anti-vaxxers a massive public forum to spread their ideas is just one example of how Facebook is enabling the spread of ideas that may ultimately become a global public health threat.

The more complicated question, however, is where does Facebook draw the line in terms of policing users having these discussions versus favoring an environment that supports free speech? With few government regulations in place, Facebook ultimately gets to make this decision for itself.

Recommendations are only a part of Facebook’s overall engagement system, and one that’s often blamed for directing users to harmful content. But much of the harmful content that users find could be those groups and Pages that show up at top of Facebook search results when users turn to Facebook for general information on a topic. Facebook’s search engine favors engagement and activity — like how many members a group has or how often users post — not how close its content aligns with accepted truths or medical guidelines.

Facebook’s search algorithms aren’t being similarly documented in as much detail.

 

 



Lenovo’s Smart Clock Essential is less smart by design

Lenovo’s Smart Clock Essential is less smart by design

The Smart Clock Essential really blurs smart display lines. Aesthetics aside, Lenovo’s news device probably has more in common with the Echo Dot with Clock than it does the company’s first generation Smart Clock. In fact, at $50, it’s actually $10 less expensive than Amazon’s offering.

Essentially the Essential is a Google Assistant smart speaker with a digital display. Which really makes you wonder what qualifies as “essential” these days. It shows the time and the weather on its LED, but offers none of the kind of touch interaction you’ve come to expect from the form factor. There are still buttons that can be used to set the alarm and “a built-in light that helps you walk around without bumping into things,” which fair enough.

But at the end of the day, it’s more akin to the Google Home Mini than the Nest Hub. And like the former, it’s priced so you can buy a bunch of them to and stick them at various spots throughout your house. There’s a 3W speaker, which is built more for alarm sounds than casual listening, though like other Google Assistant speakers, it can be paired as part of a group. Oh, and like the original Smart Clock, there’s a USB port on board for charging devices while you sleep.

Honestly, that $50 price point is really the biggest seller here, but it’s nice to see hardware makers like Lenovo playing around with the form factor a bit, as voice enabled device take up an increasing amount of real estate on our kitchen counters and bedside tables. Honestly, after testing the original Smart Clock, I’m not sure I want or need more functionality than Lenovo’s offering up here next to my bed.

It’s set to hit retail next month. Just don’t call it a smart display.



Welcome to the most important panel on product development in the history of Disrupt

Welcome to the most important panel on product development in the history of Disrupt

In a few short weeks, some of the best product developers from some of the world’s most important tech companies will take to the virtual stage of our virtual Disrupt this September 14-18 to share all the tips and tricks they’ve learned over decades spent working at Zoom, Slack, Facebook, Amazon, Hulu, and Oculus.

This isn’t a tribute to the  most important panel on tech development you’ll ever attend… it is the most important panel on tech product development you’ll attend.

Not only do we have Oded Gal, the man responsible for leading Zoom’s product management; not only do we have Eugene Wei, who’s forgotten more about product development in a career spanning Amazon, Hulu, Oculus, and Flipboard than most developers ever knew; not only do we have Julie Zhuo, the co-founder of Inspirit and the former VP of Product Design for the Facebook app; and not only do we have Tamar Yehoshua, who oversees product strategy and development, design and research at Slack, but we have you, our interactive audience to help me question these doyennes of design, these prestigious progenitors of product on their path to product nirvana.

In this session, we’ll discuss how to get not from zero to one, but from one to one billion in industries as diverse as communication, social networking, virtual reality, direct-to-consumer sales, and more.

It’s worth getting those questions ready to share now for this exclusive, incredibly special ExtraCrunch panel. Some things to remember about each of our illustrious and esteemed panelists:

Oded Gal worked at Blue Jeans Network and Cisco Webex before joining Zoom and also served as director of business development at Radvision.

Julie Zhuo was the VP of Product Design for the Facebook app, where she scaled it from 10 million users to over 2 billion. She’s also a bestselling author of the book “The Making of a Manager”, voted one of Amazon’s best business and leadership books of 2019.

Eugene Wei ran product teams at Amazon, Hulu, Flipboard, and Oculus.

Tamar Yehoshua previously worked as a Vice President at Google holding product and engineering leadership roles on Google’s most important products, including Search, Identity and Privacy. And before that, Tamar was the Vice President of Advertising Technologies at Amazon’s A9.

This panel is so good TechCrunch should definitely be getting someone else to lead it. But luckily, y’all will be there to help out.

So don’t delay, get those tickets now!

Disrupt 2020 runs from September 14 through September 18 and will be 100% virtual this year. Get your front row seat to see this panel live with a Disrupt Digital Pro Pass or a Digital Startup Alley Exhibitor Package. We’re excited to see you there.



Apple mistakenly approved a widely-used malware to run on Macs

Apple mistakenly approved a widely-used malware to run on Macs

Apple has some of the strictest rules to prevent malicious software from landing in its app store, even if on occasion a bad app slips through the net. But last year Apple took its toughest approach yet by requiring developers to submit their apps for security checks in order to run on millions of Macs unhindered.

The process, which Apple calls “notarization,” scans an app for security issues and malicious content. If approved, the Mac’s in-built security screening software, Gatekeeper, allows the app to run. Apps that don’t pass the security sniff test are denied, and are blocked from running.

But security researchers say they have found the first Mac malware inadvertently notarized by Apple.

Peter Dantini working with Patrick Wardle, a well-known Mac security researcher, found a malware campaign disguised as an Adobe Flash installer. These campaigns are common and have been around for years — even if Flash is rarely used these days — and most run unnotarized code, which Macs block immediately when opened.

But Dantini and Wardle found that one malicious Flash installer had code notarized by Apple and would run on Macs.

The malicious installer was notarized by Apple, and could be run on the latest versions of macOS. (Image: Patrick Wardle/supplied)

Wardle confirmed that Apple had approved code used by the popular Shlayer malware, which security firm Kaspersky said is the “most common threat” that Macs faced in 2019. Shlayer is a kind of adware that intercepts encrypted web traffic — even from HTTPS-enabled sites — and replaces websites and search results with its own ads, making fraudulent ad money for the operators.

“As far as I know, this is a first,” Wardle wrote in a blog post, shared with TechCrunch.

Wardle said that means Apple did not detect the malicious code when it was submitted and approved it to run on Macs — even on the unreleased beta version of macOS Big Sur, expected out later this year.

Apple revoked the notarized payloads after Wardle reached out, preventing the malware from running on Macs in the future.

In a statement, a spokesperson for Apple told TechCrunch: “Malicious software constantly changes, and Apple’s notarization system helps us keep malware off the Mac and allow us to respond quickly when it’s discovered. Upon learning of this adware, we revoked the identified variant, disabled the developer account, and revoked the associated certificates. We thank the researchers for their assistance in keeping our users safe.”

But Wardle said that the attackers were back soon after with a new, notarized payload, able to circumvent the Mac’s security all over again.