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Roblox is adding two new ways for people who spend time in its virtual worlds to find old friends and make new ones.

The company announced Friday that it would introduce a contact importer and friend recommendations, two new features designed to connect existing users to each other and to bring new players into its experiences.

The features have long been the the norm elsewhere, but most things about Roblox work quite a bit differently from other social networks and more traditional online games. For one, Roblox serves a much younger demographic, including tens of millions of kids under the age of 13 who use the app on a daily basis. Young users age 13 to 18 comprise another massive chunk of the company’s user base and Roblox is making efforts to retain that age group and build around their needs as they age up.

The two new features work like you’d expect. New and existing phone-verified Roblox users over the age of 13 who play on mobile will be prompted to scan for contacts on their devices and add any friends that show up. Any nicknames saved in a phone will automatically stay tagged to that user across the platform. For privacy’s sake, anyone eligible for the contact importer can disable the ability to be discovered through their phone number. Existing users can also invite friends through the contact interface, making it easier for dedicated Roblox players to loop in their friends and bring more users to the platform.

Roblox’s new friend recommendations feature is also straightforward, providing a list of people “you may know and want to connect with.” The company is giving the new social tool some prominent real estate, featuring it on the home page for eligible users age 13 and older. For safety reasons, Roblox says that the feature will only make “high quality” connections, so it won’t be trying to connect people who don’t already have a high probability of knowing each other. Two users might share a number of mutual friends or have interacted recently in one of Roblox’s many game-like portals.

Roblox Senior Product Director Garima Sinha told TechCrunch that the pair of new social utilities will create fresh “entry points” that help new users plug in to their real-life social circles right away. “People care more and more about finding friendships,” Sinha said.

Ultimately while deeper social graph-building features are standard on other platforms, Roblox’s unusually young user base means the company moves deliberately when considering new features that connect users or give them new ways to interact.

“There’s very little we do just to get market fast or because others have it,” Sinha said.

Roblox will let 13+ users import contacts and add recommended friends by Taylor Hatmaker originally published on TechCrunch

Brodmann17, an Israeli computer vision technology startup that developed a novel approach to take on a marketplace dominated by Mobileye, shut down this week.

Brodmann17’s co-founder and CEO Adi Pinhas posted a message on LinkedIn announcing the move, stating that while the company would not be able to bring its products to the mass market as hoped, “we do get comfort that our innovation will hopefully influence the market thinking and others will proceed in the mission of creating safer mobility to everyone.”

In a subsequent interview, Pinhas told TechCrunch that “there is a strong feeling of sorrow as we proved the technology, there is outstanding demand and we have customers in production.”

Brodmann17, named after the primary visual cortex in the human brain, was launched six years ago by Pinhas, a deep learning and computer vision specialist, and AI scientists Amir Alush and Assaf Mushinsky. The trio focused their efforts on developing a new approach to computer vision technology designed to support advanced driver assistance systems.

Computer vision systems are considered a critical component to automated driving features. This multibillion-dollar market promises to only get bigger as automakers shift away from its autonomous vehicle goals and instead toward near-term revenue products like advanced driver assistance systems.

Brodmann17 knew it couldn’t compete with Mobileye on its front-facing camera unless it could bring a new angle to the tech, Pinhas said. “So we focused on the blue ocean,” he added.

That blue ocean was to develop deep learning-based computer vision technology that isn’t reliant on bulky hardware. This “lightweight” software-based product was able to run on low-end processors in the car itself and was designed to complement sensors like cameras, radar and even lidar already on the vehicle.

Brodmann17 applied its technology to blind-spot wing cameras, surround and rear cameras, video telematics and even two wheelers, Pinhas said.

“The demand in the market is far more diversified than people think,” he said. “We decided to take the road not taken by many other companies in the ecosystem. We just needed more time.”

The startup did attract investors during its lifetime. Brodmann17 raised $11 million in a Series A round back in 2019 that was led by OurCrowd. Maniv Mobility, AI Alliance, UL Ventures, Samsung NEXT and the Sony Innovation Fund also participated.

But the company struggled to get new funding. Even though the team was “very lean,” with fewer than 30 people, Pinhas said it was impossible to continue without support from private and corporate venture capital firms. He added that “everyone” is waiting for next year and for something to happen before making more investments.

Brodmann17 did attract some interest as a possible acquisition target. There were several offers, but all of those fell through, due mostly to timing reasons, he added.

Despite the gloomy news, Pinhas said he is ready for another project.

“I love deep tech and creating new products,” he said, without elaborating on what he might focus. “Life is too short for a break.”

Computer vision technology startup Brodmann17 has shut down by Kirsten Korosec originally published on TechCrunch

I have nothing against the investor class, but sitting in a room with several VCs while I try to sell them on my billion-dollar idea sounds very stressful.

When an investor inevitably asks founders about their valuation expectations, it is a trick question of the highest order. If the response is too high, it’s a red flag, whereas a lowball figure will undervalue the company.

“We’re letting the market price this round” is a confident reply, but it’s only appropriate if you’ve actually gathered substantial data points from other investors — and can fire back with a few questions of your own, says Evan Fisher, founder of Unicorn Capital.

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

“If that’s all you say, you’re in trouble because it can also be interpreted as ‘we don’t have a clue’ or ‘we’ll take what we’re given,’” said Fisher.

Instead of going in cold, he advises founders to pre-pitch investors for their next round and use takeaways from those conversations to shape current valuations.

In the article, Fisher includes sample questions “you will want to ask every VC you speak with,” along with other tips that will help “when they pop the valuation question.”

A pitch is a business meeting, but on some level, it’s also a game where investors hold all the cards and always win. To level the playing field, founders need to think one move ahead.

Thanks for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Twitter Space: Is tech media creating “charismatic” founders?

Larger-than-life entrepreneurs are nothing new, but tech has taken that to the next level, often with an assist from news media.

On Tuesday, December 13 at 1:00 p.m. PT, Builders VC investor Andrew Chen will join me on a Twitter Space to discuss the role tech reporting plays in shaping ecosystems, narratives and expectations.

This should be a lively conversation, so please bring your comments.

The climate founders’ guide to the Inflation Reduction Act

The Inflation Reduction Act goes well beyond bringing down costs for American consumers — Congress earmarked $369 billion to combat climate change, creating new opportunities and incentives for thousands of entrepreneurs.

In a detailed post that examines the IRA’s impact on green fintech, electrification, carbon capture and other areas, investor David Rusenko and Floodgate Fund principal Leeor Mushin share their “understanding of the regulatory ramifications of this monumental bill.”

To prepare for a downturn, build a three-case model

Startups that develop case models are better equipped to deal with potential setbacks. Visualizing exactly how potential market shifts can impact your business is a great way to prepare for the unexpected.

A three-case model attempts to predict best-case, down-case and base-case scenarios, writes Matt Barbieri, partner-in-charge at accounting firm Wiss & Co.

“Typically, the base-case scenario falls between the extremes. For example, in financial modeling, you might say that Peloton experienced both its ‘best case’ and ‘down case’ scenarios within a year.”

In uncertain times, B2B sales teams must put value front and center

In an era when companies are looking for places to shave SaaS spending, sales teams must focus on ROI and value, says Ketan Karkhanis, EVP and GM of Sales Cloud at Salesforce.

In a post for TC+, he shares tactics successful B2B sales teams use to coach prospects through the sales funnel while building relationships via personalized interactions.

“Many customers are feeling lost,” he writes. “They’re confused by economic volatility and overwhelmed by a deluge of information.”

“Serving as a coach who brings personalized, relevant information to the right stakeholders without pushing for a quick close is key to building trust.”

Pitch Deck Teardown: Rootine’s $10M Series A deck

In 2018, TechCrunch reported that health and wellness startup Rootine was preparing to enter the U.S. market after racking up “1,500 paying customers in Europe.”

Four months ago, the company, which sells a $70/month subscription for multivitamins, announced that it raised a $10 million Series A.

If you’d like to read all 29 unreacted slides, click through for our latest pitch deck teardown.

Dear Sophie: How do tech layoffs impact PERM and the green card process?

Dear Sophie,

I handle HR and immigration at our tech company. We filed a PERM for one of our team members about five months ago for her EB-2 green card, and we’re awaiting certification from the Labor Department. We’ve been gearing up to start PERM for another employee.

Will the layoffs in the tech industry affect the PERM process for EB-2 and EB-3 green cards? What will happen to my team members’ green cards if our company has to do layoffs?

— Pondering in People Ops

To win over investors, use growth as your differentiator

Despite the doom and gloom, investors are still meeting founders as they look for places to park their money. Suave storytelling skills are good, but they’re not enough: Once you’re in the room where it happens, it’s critical to make the best use of everyone’s time.

To make investor buy-in more likely, Jon Attwell, leader of the Seedstars Growth Track, advises teams to create metric-oriented customer journey maps that detail “all the mini-processes that customers are put through and the pathways they are led down.”

Growth projections are nice, but showing investors concrete plans for onboarding and retention, fighting churn and addressing other growth factors will help demonstrate how well you understand your market.

“For investors, it’s a rare treat to see an obsession with the granular metrics of a customer journey,” writes Attwell.

TechCrunch+ roundup: VC trick questions, building 3-case models, B2B sales coaching by Walter Thompson originally published on TechCrunch

Hello and welcome back toEquity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

We are nearly at the end of the year, so your friendly, local podcast crew is trying to make sense of just what happened in 2022.

We started the year on a venture capital high which quickly turned into a downturn. Startups kicked off the year hiring and wrapped the year shedding staff. The stock market kept going down. A crypto winter kicked off. We saw some PE deals but very few IPOs. And the world saw a bit more geopolitical upheaval than we might have anticipated.

There were elections and shutdowns and frauds and mistakes and big wins. It was, well, a lot.

Thankfully Mary Ann, Natasha, and Alex were able to collate the news into a few distinct categories, so that we can all look back at 2022 with a bit more clarity. And we even got to hear from a bunch of you, thanks to your dozens, and dozens of great taglines you sent in concerning the year and how it felt from your chair.

We have even more good stuff coming, including our yearly predictions episode. Get hype, and we’ll talk to you soon!

2022: The good, the bad, and the wake-up calls by Natasha Mascarenhas originally published on TechCrunch

This column would like to apologize for somehow missing the buildup to Getaround‘s SPAC combination, which was voted on yesterday and began trading this morning. I don’t know how we managed to get so far behind on this particular news item, but we will rectify our tardiness today.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Getaround allows consumers to rent cars from one another, taking a cut on the transactions. As you can imagine, it’s a marketplace-style company. And it was a venture capital darling, raising hundreds of millions of dollars while private, including a $200 million round in 2019and another $140 million in 2020.

It had a choppy early-COVID period but has since managed to announce and close a combination with a special purpose acquisition company.

Early direction of Getaround’s stock after the deal closed and it began to trade under the “GETR” ticker symbol has been sharply negative. Indeed, in the first moments of its trading under its own name, Getaround lost around 65% of its value. It now trades for around $3 per share.

Getaround braves chilly public markets with SPAC combination by Alex Wilhelm originally published on TechCrunch

Tom Zhu, Tesla’s China president who oversaw Gigafactory Shanghai’s transformation into the world’s largest EV plant, has been appointed to run the new Gigafactory in Austin, Texas, Bloomberg reported earlier this week. That would make the China chief, who joined Tesla China in April 2014, one of the top executives at the EV giant.

The decision didn’t come as a surprise to industry insiders, given how quickly Gigafactory Shanghai became a cornerstone manufacturing and export hub for Tesla.

It took the plant merely a year — from December 2018 to December 2019 — to go from construction to production. In August, Gigafactory Shanghai made its one-millionth car, accounting for a third of the total Teslas produced up until that point, Elon Musk tweeted. This November was a record month for the facility with 100,291 vehicles delivered.

Such achievements no doubt make Zhu a preferred aide of Musk who promotes a “hardcore” work environment. While Zhu might have a secret recipe for building a well-oiled manufacturing team in a short time, China’s unique conditions aren’t easily replicable in another country.

“Over the past three years, Gigafactory Shanghai has outperformed its counterparts in Fremont, Texas, and Berlin, although [not all of the success] is attributable to Tom or the China team,” suggested Chris Zheng, founder of Chinese automotive blog Channel-Q.

“A friendly regulatory environment, a strong supply chain base, and an efficient front-line execution team — these are three factors that are currently only available in China, so the key isn’t Shanghai or Texas. Look at BYD. Granted, Tom and his executive team are excellent, but that’s not all,” he added.

Chinese tech news site PingWest reported Wednesday that Musk has anointed Zhu as the CEO of Tesla Global, a new executive role in charge of sales and Gigafactories, while Musk continues to lead “key technical works at the firm.”

Musk tweeted Thursday that he continues to “oversee both Tesla & SpaceX, but the teams there are so good that often little is needed from me.”

This is a developing story…

Tesla hopes China boss will bring secret sauce to Gigafactory Texas by Rita Liao originally published on TechCrunch

After weeks of rumors, Getir has announced that it is acquiring Gorillas. This is a major consolidation deal for the instant grocery delivery space. The Financial Times first reported that Getir has closed the acquisition of its competitor. TechCrunch has confirmed the news with Getir.

“Markets go up and down, but consumers love our service and convenience is here to stay. The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago,” Getir founder Nazim Salur said in a statement.

Getir originally launched its service in Turkey in 2015. Over the past couple of years, many people started ordering groceries online because of lockdown restrictions. Getir, Gorillas, Flink and a cohort of startups tried to popularize a new model for grocery deliveries.

Instead of reserving a delivery slot for the next day, orders are processed instantly on those apps. The user experience works more like food delivery services, such as Uber Eats, Deliveroo and Just Eat Takeaway. You open an app, pick a few items, hit the order button and track your order from your phone.

Those services raised a ton of money and grew at a rapid pace during the COVID-19 pandemic. Behind the scenes, all those instant delivery startups built networks of dark stores in dense cities so that orders can be delivered in less than an hour.

In addition to these expensive operation costs, startups in the space spent a small fortune in promo codes and reduced delivery fees. But restrictions were lifted, VC funding dried up and some cities put some restrictions on dark stores. That’s why 2022 has been a rough year for the industry, leading to a lot of layoffs, pullbacks and consolidation moves.

In May, Getir announced that it would cut 14% of its global staff — more than 4,000 were impacted by the downsizing. In addition to its home country, Getir operates in various European countries, such as the U.K., Germany, France, Italy, Spain, the Netherlands and Portugal. It operates in the U.S. as well.

Gorillas also had to conduct a round of layoffs earlier this year. It decided to focus on a handful of markets — Germany, the Netherlands, the U.K. and the U.S. The German startup acquired Frichti before it became harder to raise funding rounds.

According to the Financial Times’ Tim Bradshaw, the combined group is now valued at $10 billion. At the height of the instant grocery bubble, Getir and Gorillas reached valuations of $11.8 billion and $3 billion respectively. Gorillas investors are set to obtain 12% of Getir’s capitalization table.

As there is a lot of overlap between the two companies, there might some layoffs in some cities where both services are currently live. Reducing the number of dark stores could also help the company’s bottom line.

Instant grocery app Getir acquires its competitor Gorillas by Romain Dillet originally published on TechCrunch

When President Joe Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022, we started looking into its implications, particularly with regard to the impact on the future of the climate and the innovations that might shape that future.

As the most important piece of climate legislation in United States history, the IRA represents a fundamental regulatory inflection that may help create a different future. The purpose of this post is to share our understanding of the regulatory ramifications of this monumental bill, especially as they relate to the problems some of the most capable founders in the world are looking to tackle.

Building electrification

The IRA contains several major programs that aim to accelerate building electrification — the replacing of residential fossil fuel machines with electric equivalents. This has the benefit of eliminating combustion emissions, improving comfort, as well as improving indoor air quality, which can have dramatic positive health impacts.

There are three major programs that incentivize building electrification. The first (Sec. 50122) provides a total of $4.5 billion in funding for appliance replacements and is means tested: It provides up to 100% of project costs for those earning less than 80% of area median income (AMI) and 50% of project costs for those earning less than 150% AMI, with annual limits. Eligible appliances include heat pumps, heat pump water heaters, electric or induction stoves, electric or heat pump clothes dryers, upgraded breaker boxes, electrical wiring upgrades, home energy audits, and insulation and sealing.

The second program (Sec. 50121) is a performance-based home energy retrofit program that provides up to $4,000 per home, or $8,000 per home for low-to-moderate income households. Projects cannot claim both this program and Sec. 50122.

Both programs can be combined with the third program (Sec. 13302), which expands the Investment Tax Credit (ITC) to a 30% tax credit for eligible projects including residential solar, solar water heating, fuel cell, small wind energy, battery storage and geothermal heat pumps.

The IRA also includes significant and open-ended financing for projects that broadly reduce greenhouse gasses and accelerate deployment of renewable energy, many of which will likely apply to building electrification projects, such as the Greenhouse Gas Reduction Fund (Sec. 60103), and $40 billion in loan guarantee authority for the Department of Energy (Sec. 50141).

Interesting problems

The funding in the IRA for buildings is likely to catalyze the replacement of fossil fuel machines in buildings and accelerate the adoption of fully electric alternatives. Today, market share of these alternatives is relatively low and contractor adoption and expertise is lacking. Early examples of an increase in consumer demand for these products include Maine and New York.

While we won’t see an overnight shift across the country, these incentives will create a burgeoning market for home electrification, similar to how past laws created a market for residential solar. Problems we have identified include:

Fragmented contractor market.
There are not enough trained professionals (electricians, HVAC technicians, etc.).
Projects tend to be highly custom and time intensive to design and quote.
Difficult for businesses and consumers to navigate the changing financing/incentives landscape.
The ROI of these projects will be highly variable and vary from home to home.
Most home appliances are replaced on failure in an emergency, and most homes are not wired for 220v, so there is a pre-wiring problem to be solved.
Navigating the retrofit process is time consuming and confusing for consumers, requiring work across multiple contractors that don’t individually plan for holistic project needs (e.g., panel upgrade).

Carbon capture/methane reduction

The latest science tells us that in order to keep warming to 1.5°–2° C, we need to reduce emissions to about 45% lower than 2010 levels by 2030 and achieve net-zero by 2050. It is not realistic to expect that we can replace all of our fossil fuel machines and processes in that time frame.

The climate founders’ guide to the Inflation Reduction Act by Ram Iyer originally published on TechCrunch

There is one trick question that investors almost always ask, and it’s guaranteed to make founders uneasy: “What are your expectations surrounding valuation?”

For most founders, it’s the perennial Goldilocks scenario. Throwing out a number that’s too high might push investors away, while an amount that’s too low might trigger the question, “Why so low? What’s wrong with this business?” and leave shareholder value on the table.

And if it’s just right, most investor’s knee-jerk response goes something like this: “Let’s see how much I can work this founder down to a better price.”

Founders are at a distinct disadvantage in the valuation game. By design, investors play this game far better than most founders ever will — a VC might do multiple deals in a quarter, but a founder might approach markets only once every couple of years.

So, instead of having to throw out specific numbers that will inevitably be challenged, here’s a solution:

Don’t throw out a number

The most confident (and valuable) founder response to the infamous valuation question starts with: “We’re letting the market price this round.”

When delivered correctly, it implies you’re taking offers, you aren’t desperate and you’re confident you’ll close a deal at acceptable terms.

But if that’s all you say, you’re in trouble because it can also be interpreted as “We don’t have a clue” or “We’ll take what we’re given.” After all, you need to give a baseline indication of your expectations if you actually want to close a deal.

Jay Levy, co-founder and managing partner of Zelkova Ventures, explains, “When speaking with VCs, founders should give some indication of their valuation expectations coming into the conversation. It’s important to know that everyone is on the same page, because it would be painful and unfortunate for everyone to advance toward a term sheet only to realize that expectations are misaligned.”

Gather your valuation data points

To substantiate your market-based valuation approach, you have to begin early. Start by pre-pitching the investors for your next round to gather valuation data points and have low-stakes conversations to build in the presumption that “we’re probably too early for you, but in 12-15 months, we’ll most likely be a great fit.” In these chats, always ask how they might approach valuing your company when the time would be right (i.e., in your next round, 12-15 months from now).

How to respond when a VC asks about your startup’s valuation by Ram Iyer originally published on TechCrunch

Primer, a U.K. startup founded by alums of Braintree and PayPal that provides a drag-and-drop framework for merchants to build online payment stacks, last year raised $50 million at a $425 million valuation from investors like ICONIQ, Accel, Balderton Capital and Seedcamp– a round the came amid a bullish period for e-commerce, with record-levels of buying activity in the midst of the Covid-19 pandemic. This year, that activity has cooled down, and so have things at this e-commerce startup. TechCrunch has learned and confirmed that Primer has cut a big swathe of its staff as part of a restructuring, as it looks to adjust to current market conditions and extend its runway amid what many believe will be a tough year ahead.

Sources tell us that some 85 staff have been let go — around one-third of the company, we understand.

“We can confirm that we did have a reduction in staff,” a spokesperson said. “Like many other firms right now, we have course-corrected heading into the new year given the economic environment and we have taken what we think are appropriate steps to account for the uncertain times ahead.”

The story of what is going on here bears spelling out because the same thing is likely hitting a number of startups (and bigger companies) in the industry.

The long and short of it is that the wider e-commerce market has seen a major drop in activity this year as the peak of the Covid-19 pandemic — or at least the acute response that involved masking, social distancing and staying away from crowded physical spaces — has subsided. That activity was not what many had predicted: many had presumed that after large numbers of people had shifted to buying online, they would “never go back” to the old way of doing things.

That hasn’t played out: people are going back to shopping in stores, but more importantly, the global economy has cooled down, inflation has gone up, and people are spending less. So companies that expanded to meet demand are now retrenching.

That has led to layoffs and restructuring even at some of the very biggest companies in the space that you might have thought would be best equipped to handle economic ups and downs. Amazon, for example, warned in its last quarterly earnings that sales would be lower than originally expected in the critical holiday period. It has been cutting thousands of employees and rationalizing some of its most costly product areas.

You may have recently seen that some of the gloomiest predictions were not borne out during the bellwether Black Friday and subsequent first weekend of holiday sales. But a good part of that activity has been attributed to retailers offering large discounts to spur buying, so margins will be hit longer term.

This is not just playing out at larger end of the retail market: smaller sellers and the many providers of tech to the industry will also be feeling the drop.

Primer’s unique selling point is that it has built a very simple, no-code interface that reduces what is usually a very complicated, fragmented process — building a payments stack and flow around online purchasing, which includes not just the basic transaction but potentially different payment options, adding in loyalty or discount codes, upselling to other products, managing customer information, verifying against fraud and much more — into a set of drag and drop boxes for its customers both to call in more features and visualize how they would work together. It offers integrations for dozens of different services, underscoring just how fragmented the space is.

“We are building out a whole suite in the next year to aid merchants with operations and the observability of the payment stack,” said Paul Anthony, Prime’s co-founder and CEO, in an interview with TechCrunch last year.

However, a source tells us that while the process was seamless to order up, implementing it was not quite as automatic and quick.

“They are signing merchants but getting them live is a long process,” they said. “They do not generate revenue until they are live. Hence, they reduced teams until they solve this bottleneck.”

Given the pressures many startups are seeing with fundraising right now, the first thing to do is not to raise more money to extend runway, but to cut costs to extend what you already have in the bank, and that’s what Primer has done here. Sources tell us that Primer’s aim with this restructuring is to extend its runway to more than two years (which it believes it has done). Its plan now is to continue investing in product with expansions on that front planned for next year.

As in any downturn, there is an argument to be made for more automation in any process to cut down costs and — especially in the case of e-commerce — put more efficient tech in place to speed up and close more sales. But that only stands if the tech is up to the challenge, and if target customers are in a position to invest in improvements themselves. That’s the opportunity but also curse of working in any ecosystem.

Primer’s aim is to come out as one of the helpers (and winners) in that process.

“Given the challenging economic environment, we believe Primer is more valuable to merchants and partners than ever before as they look to increase efficiency within their organisations, lower costs, build greater customer loyalty, and launch in new markets – and do this in a no-code/automated fashion,” the spokesperson said. “While these are always difficult decisions to make, we feel confident this recalibration will not affect the level of service we offer to our current and prospective merchants and partners.”

Primer, the UK e-commerce tech startup, has laid off one-third of its staff by Ingrid Lunden originally published on TechCrunch