TechCrunch+

Once a game on the periphery for the nerdiest of nerds, Dungeons & Dragons has exploded into the mainstream. Much of this success is owed to the podcasters, Twitch streamers and writers who have embraced the fantasy framework to tell collaborative stories at the whims of their dice rolls, inspiring massive renewed interest in the game.

“I think we’re in a really interesting moment in D&D,” Catie Osborn, a Dungeons & Dragons content creator with over 1.6 million TikTok followers, told TechCrunch. “You have [a new edition of the game] that’s about to come out, and you have also at the same time, all of these third party writers, and people writing modules, and all of the different stuff that they’re adding into the community.”

Though Dungeons & Dragons was first published in 1974, a new generation of fans has found an entry point through independent “actual play” shows like Dropout’s “Dimension 20” or the McElroy brothers’ “The Adventure Zone.” In 2021, a Twitch leak revealed that the platform’s highest paid channel was “Critical Role,” a highly-produced stream in which a crew of professional voice actors play Dungeons & Dragons live. The show made over $9.6 million that year.

These hugely popular shows are only the tip of the iceberg when it comes to the Dungeons & Dragons fan community. Thanks to the longstanding Open Gaming License (OGL), which has been in effect since 2000, a slew of internet creators are making a modest living off of the game, whether they’re performing on livestreams, writing original spell books, or coding online platforms for remote gameplay.

Now, proposed changes to the OGL threaten an entire cohort of Dungeons & Dragons content creators.

Wizards of the Coast (WoTC), the Hasbro-owned publisher of the game, plans to update the OGL for the first time in over twenty-two years, releasing a new licensing system that the company is calling OGL 1.1. Some creators who received copies of OGL 1.1 have leaked it across the internet, sparking an outcry of resistance from fans and content creators alike.

More than 54,000 people have signed an open letter against these changes as part of a movement called #OpenDND, organized by Mage Hand Press editor-in-chief Mike Holik.

“If this new license gains wide adoption, the tabletop landscape will fracture and lose its biggest onboarding mechanisms, shuttering the small businesses that populate your local cons and putting a stop to their creations,” the open letter says. “Innovation in the gaming industry will evaporate; your favorite games will be trapped in the past, instead of being allowed to migrate to your phone, virtual reality, and beyond. Diversity in the industry will shrink away, as projects from marginalized creators are effectively written out of the future.”

As a franchise, Dungeons & Dragons is not really one canonical story. Each time a new group plays the game, they create their own characters and plot lines that guide their improvisational roleplaying experience. Though WoTC will publish its own books of lore that players can choose to incorporate, the core of the game is pretty malleable and unspecific.

To play the game, players sculpt original fantasy characters from classes like sorcerers, druids and fighters, and the rules of Dungeons & Dragons provide skills, spells and ability stats that make up the game system. But as actual play shows and fan-made companion publications become more popular, Hasbro and WoTC executives have said that they want to turn the “undermonetized” Dungeons & Dragons property into a full-blown media franchise.

“The D&D strategy is a broad four-quadrant strategy, where we have this powerful brand that has similar awareness, say like ‘Lord of the Rings’ or ‘Harry Potter,’” said Hasbro CEO Chris Cocks on a December investor call. “And we’re going to imbue it with blockbuster entertainment.” The company is producing a Dungeons & Dragons TV show and movie, which is slated for release in March.

The problem, though, is that Dungeons & Dragons is merely a framework through which people create their own fantasy-inspired stories and games — there are no core characters or plot that unifies the interest of the whole community. The game’s play books feature some fan-favorite characters like Drizzt Do’Urden, a drow hero who resists his dark nature, or Count Strahd von Zarovich, an evil vampire villain. But it’s very possible for fans to dive deep into Dungeons & Dragons without ever even encountering these characters, since they are not essential to the game. It’s impossible to imagine a “Star Wars” fan who has never heard of Yoda, but you can play Dungeons & Dragons for years without ever knowing that Drizzt or Strahd exist.

“There is no main character of D&D, or I think another way of saying it is, you are the main character of D&D,” said Osborn, who is known online as Catieosaurus. “I think it could be fun to watch a movie about these adventures or whatever, but the appeal of D&D is that it’s about us — it’s about the stories that we tell together at a table.”

Hasbro did not respond to multiple requests for comment on its plans for OGL 1.1. A creator who received a copy of the updated license told TechCrunch that the new terms give WoTC ownership of any fanmade IP — so, if a creator writes an adventure for players to incorporate into their own Dungeons & Dragons campaign, WoTC has the right to reprint the creator’s work as their own without payment. It also endangers the existence of virtual tabletop software, which make remote play possible.

Under the new license, as proposed, any creator who makes over $50,000 will have to report their income to WoTC, and those who make over $750,000 will have to pay a 25% royalty to the company on every dollar above that threshold. Though these dollar values may seem high, this applies to gross revenue, not profit.

“When you are creating content, you’re working on small margins. You’re hiring your own ecosystem of creators, designers, artists, everything,” said Noah Downs, a partner at Premack Rogers and Dungeons & Dragons livestreamer who has seen the OGL 1.1 document. “And a 25% royalty, even if it’s above a certain threshold, can absolutely destroy your margin, and in many cases, it can make it untenable to continue to produce.”

At Mage Hand Press, one of Holik’s Kickstarter campaigns for a Dungeons & Dragons expansion earned $704,467 from 7,710 backers. But he sees the royalty clause as a way for WoTC to make it harder for independent publishers to compete.

“A Kickstarter involves many small products, so your profit margins actually go down, because really, you’re going to offer people some dice, and some adventures, and a box set, and all of those individual things end up cutting into your profit margins pretty significantly,” Holik said. “Kickstarters don’t walk away with 80% of their money and profit. None of that is legitimate. I don’t know where they’re getting that 25% number beyond… they’re trying to squish competition completely.”

Not only would OGL 1.1 make it more difficult for Holik to turn a profit, but Downs says it would also grant WoTC the ability to publish independent creators’ work as its own.

“If you accept OGL 1.1, you’re granting Wizards of the Coast a perpetual, irrevocable, royalty-free sublicense,” Downs told TechCrunch. “That means they have the forever right, that you cannot revoke, to use your work without additional royalty… That section of the license is more detrimental to creators than the monetary part of the license.”

For those making actual play videos or podcasts, the new OGL has less of a direct effect.

“The OGL affects third-party creators of game materials. Podcasters are covered by the fan content policy,” said Eric Silver, game master of the TTRPG podcast “Join the Party.” But he is still concerned about how changes at WoTC could trickle down. “The fan policy contain a clause that says Wizards can shut down individual projects or creators that they deem harmful to Wizards’ brand. That makes me wonder if criticism of the company counts in their eyes as harmful, and if they’re counting on that fear to stifle pushback to policy changes. And they have demonstrated that they can and will change policies whenever it serves them with little warning.”

Currently, the fan content policy allows creators to use WoTC’s IP so long as it’s free. Creators are allowed to earn income through sponsorships, ad revenue and donations, but they cannot paywall any content.

WoTC has remained eerily silent in light of the backlash against the leak of OGL 1.1. It’s not clear how, when, or if this change will go into effect, but the company said last year that it would make these changes in the beginning of 2023.

“The OGL literally changed my life,” said Osborn. “It’s why I’m able to do what I do. It’s how I make my income. And so it’s just kind of scary.”

Holik says that if OGL 1.1 goes into effect, he will have to restructure his entire business.

“I’d have to cancel two Kickstarters and take my Patreon down overnight,” said Holik. Through Patreon alone, Holik’s company makes almost $2,000 per month.

According to Osborn, the silver lining is that there are more games out there like Dungeons & Dragons. Though it’s inarguably the most popular TTRPG, fans have also gravitated to game systems like Monster of the Week, Fate, Blades in the Dark and Kids on Bikes. On websites like itch.io, an indie games marketplace, TTRPG players can find anything from a game about cheeky, party-crashing goats to a “Friday Night Lights”-inspired story about high school football.

“I don’t want to say it’s a good thing, but I think it has put the community in an incredible position. Like, if you look on Twitter, right now there’s so many conversations starting about what are other options? What are other games I can play?” Osborn said. “I think people are going to start seeing the wide variety of incredible games that have been made by small indie creators.”

Dungeons & Dragons content creators are fighting to protect their livelihoods by Amanda Silberling originally published on TechCrunch

FTX founder and former CEO Sam Bankman-Fried launched his own Substack newsletter today, in a very unusual move for someone who was recently arrested and is facing eight counts of U.S. criminal charges.

In a post titled “FTX Pre-Mortem Overview,” Bankman-Fried maintains his innocence surrounding the collapse and bankruptcy of FTX, a cryptocurrency exchange he founded in 2019 that went on to raise $2 billion in funding and achieve a valuation of a staggering $32 billion.

He wrote:

I didn’t steal funds, and I certainly didn’t stash billions away. Nearly all of my assets were and still are utilizable to backstop FTX customers. I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers–or 100%, if the Chapter 11 team would honor my D&O legal expense indemnification.

When Bankman-Fried stepped down from FTX in November, Enron turnaround veteran John J. Ray III was appointed as the new CEO.

The 30-year-old former billionaire continues to insist that if he were not “forced” to declare bankruptcy that the company would have been able to repay all its customers. He wrote: “There were numerous potential funding offers–including signed LOIs post chapter 11 filing totaling over $4b. I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole.”

On January 3, Bankman-Fried pled not guilty to all eight counts of criminal charges, which included wire fraud, conspiracy to commit money laundering and conspiracy to misuse customer funds, among others. Bankman-Fried could face up to 115 years in jail if convicted on all charges. His trial date has been set for October 2, 2023.

Last month, a U.S. judge released Bankman-Fried on a $250 million bail bond after he was extradited to America from the Bahamas. The bail package allowed Bankman-Fried to remain under house arrest at his parents’ home in Palo Alto, California.

In the Substack, Bankman-Fried went on to share what he described as “a record of FTX US’s balance sheet as of when I handed it off.”

He went on to say:

If FTX had been given a few weeks to raise the necessary liquidity, I believe it would have been able to make customers substantially whole. I didn’t realize at the time that Sullivan & Cromwell—via pressure to instate Mr. Ray and file Chapter 11, including for solvent companies like FTX US–would potentially quash those efforts. I still think that, if FTX International were to reboot today, there would be a real possibility of making customers substantially whole. And even without that, there are significant assets available for customers.

I’ve been, regrettably, slow to respond to public misperceptions and material misstatements. It took me some time to piece together what I could–I don’t have access to much of the relevant data, much of which is for a company (Alameda) I wasn’t running at the time.

This is not the first time the disgraced founder has taken to airing his thoughts publicly. In November, he said in a series of tweets that FTX International was looking to raise liquidity and was in talks with a “number of players.” Then in December, he talked from an undisclosed location in the Bahamas with reporter Andrew Ross Sorkin for a DealBook event, a discussion that his legal team “very much” did not approve of, he told Sorkin with a boyish grin. He also

Sam Bankman-Fried launches Substack: ‘I didn’t steal funds, and I certainly didn’t stash billions away’ by Mary Ann Azevedo originally published on TechCrunch

Emerging markets tend to go in and out of vogue. First, Austin was the next biggest thing, then Atlanta and, more recently, Miami. Pittsburgh has yet to have its moment, but all the signs are there that it could be next. Having local expertise in the category every VC wants to invest in right now doesn’t hurt, either.

The Steel City has all the ingredients to be a hub for startups: a good university system, a cheaper cost of living — definitely when compared to places like New York and the Bay Area — and a proliferation of seed firms and startup accelerators. Plus, it has seen a homegrown success story in language learning app Duolingo, which went public at a nearly $4 billion valuation in 2021.

Startups in the city raised more than $534 million through December 12, 2022, according to PitchBook, which, while not a lot of capital, is better than 2021, when they raised $336 million. And while the data is not consistently trending up and to the right — there was a huge outlier deal (Uber Advanced Technologies) in 2019 that spiked the yearly investment total to $1.3 billion — venture investors on the ground can feel the city’s potential. (I talked about Pittsburgh’s startup ecosystem on the City Cast Pittsburgh podcast recently in the context of two high-profile startup failures there, Ford- and VW-backed Argo AI and robotic vertical farming outfit Fifth Season. You can give it a listen here.)

Ven Raju, the president and CEO of Innovation Works, a local startup accelerator and seed fund, said he’s seen the market grow 10x in the last decade and 6x in the last three years.

“The ecosystem is on a tremendous upward trajectory,” he added.

Pittsburgh’s AI expertise may give rise to an already growing startup market by Rebecca Szkutak originally published on TechCrunch

When Alec Hartman first decided he wanted a house after his first child was born several years ago, he was surprised by the lack of options.

“I didn’t like anything I saw, and I wanted a new house and I couldn’t get one,” he recalls. “And like every crazy tech person, you have to ask questions like, ‘Why can’t I go online and get a house? Why is this so difficult?’ ”

The questions, he said, were “just rabbit holes.” Hartman ended up building his own house, and essentially serving as the general contractor.

That experience, and the questions leading up to it, got Hartman to start thinking about how to solve the problem for others like him. So In May 2020, he teamed up with fellow Digital Ocean co-founders Mitch Wainer and Ben Uretsky to startup Welcome Homes, a New York City-based company that offers people a way to design and build new homes online. (DigitalOcean’s other two co-founders Jesse Mauro and Marc Hartman are advisors to the company).

The trio had left Digital Ocean, a cloud infrastructure services provider, before the company went public in 2021 and concluded that homebuilding was not that dissimilar from their previous venture.

“Our main thing was educating and being that big value of simplicity for our customers, and while this is a completely different product and industry, we think the way in terms of owning the market position of simplicity,” Hartman told TechCrunch in an interview.

Interestingly, when Welcome Homes started out, it was focused on giving people the ability to build custom homes. But the team, according to Hartman, soon realized that many potential customers actually wanted the opposite – fewer choices.

“Thankfully, we were able to notice that quickly and revamped the product” to offer a variety of models, or move-in ready homes, going live in March of 2021, he said.

The startup “6xed” home sales in 2022, he added. Today, Welcome Homes is available in New York, New Jersey, Connecticut, Maryland, and Pennsylvania. The company says it appeals to home buyers by offering “guaranteed pricing,” and a pledge to streamline the process of building a home – from land selection to financing and construction. Excluding land, the cost of building a home through Welcome ranges from $596,000 to $1.75 million.

To build on its momentum, Welcome is announcing today that raised more than $29 million in a Series A funding round led by Era Ventures that closed in September of 2022. The company plans to use its new capital to boost its current headcount of 40, develop its “proprietary land technology,” design new home models and expand into new markets throughout the U.S.

Parker89, Montage Ventures, Foundamental, Global Founders Capital, Activant Capital, Gaingels, Elefund and Arkin Holdings also participated in the financing, which brings Welcome’s total venture capital raised since inception to nearly $35 million.

Welcome is just one of many startups attempting to address the housing shortage that have raised venture capital in recent years. In November, Atmos, a startup which has built an online marketplace that teams up homebuyers with builders and land developers to design and build custom homes, emerged from stealth in November with $12.5 million raised in Series A funding round led by Khosla Ventures. And in February 2022, tech-enabled homebuilder Homebound raised $75 million in a Khosla-led Series C.

In conjunction with the funding, Clelia Warburg Peters, managing partner at Era Ventures, will join Welcome Homes’ board of directors. Peters previously was a venture partner at Bain Capital Ventures and president of Warburg Realty. Era is a new firm focused on investing in “ideas that leverage technology and innovation to reimagine the built environment.”

Via email, Peters described Welcome’s capital-light business model as that of a “neo-builder,” which she described as a three-sided, managed marketplace that links demand (buyers), supply (builders) and the required financing (banks).

She believes the startup can help alleviate the United States’ chronic undersupply of single-family housing.

“Today, the total US single-family homebuilding market value stands between $250 billion and $400 billion annually, and we believe that this number could grow with Welcome Homes’ unique ‘lot-by-lot’ approach focusing on urban infill – this sits between production homebuilding, which generally focuses on master build communities and custom homebuilding, which is inaccessible to most consumers because of price and timeline),” Peters wrote.

The investor went on to liken Welcome Homes to Tesla and Apple in that it has the potential to build “tap into an appetite for productized, branded homes that have not been sold ‘en masse’ since the Sears Catalog over half a century ago.”

“We believe these homes will resonate with a generation of millennial homebuyers who have grown accustomed to similar buying experiences from high-end brands such as Apple and Tesla.” Peters added.

Meanwhile, she told TechCrunch, Welcome can leverage technology to automate and alleviate most back-office functions that builders might find burdensome while giving banks a way to offer construction financing directly to the homebuyer in a less risky manner since they will “be working with a scaled partner across multiple projects.”

Finally, unlike traditional homebuilders, Welcome Homes doesn’t have land or unsold homes on its balance sheet, which Peters believes will allow it to scale more quickly.

“We’re really more of a tech company than a tech-enabled homebuilder,” said Hartman, who also previously started and sold another startup, TechDay. “Welcome is figuring out things like how we can use imaging to detect walk patterns, or how to create a rules-based system around municipal variances so we know exactly what type of home would fit on a given property.”

From cloud computing to proptech: Digital Ocean co-founders raise $29M for Welcome Homes by Mary Ann Azevedo originally published on TechCrunch

Fashion rentals marketplace Rent the Runway was hit hard by the pandemic, as its subscribers were largely renting outfits to wear to in-person events. The company survived, however, by slashing costs, renegotiating supplier contracts, and entering the clothing resale market. Today, the company is expanding that side of its business once again by bringing some of its pre-worn items and other exclusives to Amazon in a new partnership with Amazon Fashion.

On Thursday, Amazon announced the launch of a Rent the Runway Amazon Fashion storefront which will feature a selection of pre-worn fashion merchandise from over 35 brands across numerous styles. These pre-worn items have been inspected, cleaned, and restored but may have minor defects — though nothing that would impact the physical integrity of the garment. Customers will be able to shop items for “weekend wear, workwear, date night apparel and seasonal essentials like sweaters, tops, coats, and denim,” Amazon said.

This isn’t the first time Rent the Runway has partnered with another retailer to help unload its pre-worn items.

The fashion subscription service survived 2020 by partneringwith resale marketplace thredUP on a collection of previously rented designer clothing called “Revive by Rent the Runway” as well as with Nordstorm Rack. Last year, Rent the Runway also began working with Saks Off 5th, which agreed to sell pre-worn Rent the Runway clothes on its site, as well. Plus, Rent the Runway itself sells pre-worn clothes on its own website to customers who don’t have a subscription.

In addition to bringing pre-worn clothes to Amazon, Rent the Runway will also offer a selection of merchandise from its “Design Collective” through Amazon Fashion. These limited-edition fashion collections are created by design talent, including names like Thakoon and Peter Som, using Rent the Runway’s proprietary data and insights from its customer base. Other designers include Adam Lippes, Marina Moscone, and more, and will offer 1,000 styles in sizes 00-22 (though actual sizing may vary by availability.)

With this launch, Amazon Fashion will be the first retailer to carry the new, unworn Design Collective merchandise, aside from Rent the Runway itself.

Some of the Design Collective items will also become available through Amazon Prime’s “Try Before you Buy” offering, which allows for home try-on and returns.

The move is another way Rent the Runway is seeking growth in a post-pandemic market. Covid could have easily destroyed Rent the Runway’s business entirely — and, for a time, things looked dire. In 2020, the company’s active subscribers declined from 133,000 to 55,000, its losses grew and its stock tanked. It was only a year after Rent the Runway’s IPO.

To its credit, the business survived Covid and, in its most recent earnings, saw a return to growth. In Q3 2022, Rent the Runway beat Wall Street expectations on quarterly revenue of $77.4 million compared with the $72.9 million analysts expected. It grew its active subscribers 15% from the year-ago quarter to 134,240 and raised its financial outlook for the year to $293-295 million. (The company says the Amazon partnership was already baked into these projections).

​​”Collaborating with Amazon Fashion brings Rent the Runway incredible brand awareness,” said Jenn Hyman, Rent the Runway co-founder and CEO, in a statement. “We believe strategic relationships like this can ignite a new engine of growth for our business. They also showcase demand for our products beyond our community and allow more customers to experience exclusive data-driven fashion from our top design partners.”​

For Amazon, meanwhile, the partnership allows the retail giant to dabble in another area — fashion resale — without having to invest in spinning up a resale marketplace of its own. To date, Amazon has offered a way for consumers to browse select pre-owned merchandise through its Amazon Renewed site, but this doesn’t include women’s fashion. Instead, it’s a way to shop for pre-owned consumer electronics, like phones and smartwatches, plus tools, cameras, gaming equipment, and other home, kitchen, and entertainment items.

It only has smaller investments in fashion resale through partners, including Shopbop’s “pre-loved” edit and What Goes Around Comes Around’s brand store with Luxury Stores at Amazon, focused on pre-loved handbags, jewelry and accessories, and some designer apparel.

“At Amazon Fashion, we continually expand our assortment through strategic relationships with brands to inspire and delight our customers,” said Muge Erdirik Dogan, President of Amazon Fashion, in a release. “Rent the Runway’s collection continues to grow our offering in pre-loved and designer fashion.”

Starting today, customers will be able to browse and shop from Rent the Runway’s brand store​ via amazon.com/stores/renttherunway. Products are eligible for free shipping with Prime and will allow for returns through Amazon, not Rent the Runway’s stores.

Rent the Runway’s fashion comes to Amazon, including pre-worn items and design exclusives by Sarah Perez originally published on TechCrunch

Scalable production of alternative proteins continues to be a big challenge for companies in this sector, and No Meat Factory wants to help with that.

The Canada-based company, which produces alternative proteins for third-party customers, took in $42 million in new Series B capital to build a bigger manufacturing facility in the U.S. No Meat Factory has now raised $60 million to date.

New investor Tengelmann Growth Partners led the round and was joined by existing investor Emil Capital Partners, who initially invested in No Meat Factory when Dieter Thiem and Leon Bell initially co-founded the company in 2019.

Both Bell and Thiem have plant-based food production backgrounds, and Thiem was even a master butcher in Germany.

Their goal is to expand their production footprint in North America. No Meat Factory’s current 30,000-square-foot manufacturing facility in British Columbia produces meat alternative products, like nuggets, hamburgers and whole-muscle cuts, Bell told TechCrunch. The new capital would enable a second facility to be built in the Pacific Northwest that, at 200,000 square feet, would make similar products as well as add capability to make sausages, hot dogs and deli-sliced meat alternatives. The new facility is expected to go online toward the end of 2023, he added.

No Meat Factory began working with clients in September of 2020 and is bringing in revenue; however, Thiem and Bell declined to provide specifics on year-over-year traction other than to say there has been “consistent growth.”

The world remains in a food crisis, but the jury is still out if meat alternatives will fill that gap and gain mainstream popularity. Many companies are working on it, with Project Eaden being one of the more recent to attract venture capital for its plant-based steak alternative. And, with more consumers making healthier and more sustainable food choices, additional industrial-scale manufacturing capabilities are likely to help increase the output as demand for plant-based products grows. Other companies are also working to add capacity to the industry. For example, both Planetary and Prolific Machines raised capital in 2022 to build production facilities.

No Meat Factory’s investors agree that additional capacity is needed for this industry.

“As more brands understand the need to provide customers with delicious plant-based alternatives, companies like No Meat Factory are poised to experience rapid growth and increasing demand for its manufacturing capabilities,” added Daniel Bentrup, investment partner at Tengelmann Growth Partners, in a statement.

More manufacturing capabilities should also assist in narrowing the gap between the cost of producing plant-based meat and animal-based meat. Though traditional meat prices rose significantly during the global pandemic, a Good Food Institute report looked at average retail prices from 2019 and found that the cost for plant-based meat was double that of beef, with it being two or three times the cost of chicken and pork.

Meanwhile, with increased demand for meat alternatives on the horizon, Bell said the company will work on expanding its customer base and adding to its 40-person workforce.

“Working with brand owners on the additional capacity coming unlocks some opportunity for us that we can pursue,” he added. “We will also focus more on a private label strategy as well, for example, offer our products and our ideas to some of these private label manufacturers. With our phase one site, we were limited given the size of some of the private label opportunities in the market.”

No Meat Factory eats up new capital to build bigger protein production plant in U.S. by Christine Hall originally published on TechCrunch

In a recent episode of “Customer Wars” a woman put a chainsaw down her pants in an effort to steal it. And you might have caught the video of the thieves stealing from Ulta.

Videos like this are all over the internet, and the retail industry is reporting that theft continues to rise. Target attributed hundreds of thousands of dollars in profit losses in 2022 to organized retail theft, while Walmart recently said increased thefts may result in higher prices and store closures.

“Shrinkage” is the term retailers use to convey losses due to product theft, damage or misplacement. The National Retail Federation reported that in the past five years, shrinkage has increasingly become a $100 billion problem for retailers. Digging into shrinkage, the NRF says an estimated 65% of it is due to theft alone.

Enter Nvidia. Known for developing and manufacturing graphics processing units, the company announced three new Retail AI Workflows as part of its NVIDIA AI Enterprise software suite. These workflows are meant to help developers more quickly build and deploy applications designed to prevent theft.

The workflows are built on Nvidia’s Metropolis Microservices, a low- or no-code way of building artificial intelligence applications and then integrating them with a company’s legacy systems, like point-of-sale, said Azita Martin, Nvidia’s vice president for AI for retail, CPG and QSR, in a pre-brief with media this week.

The three tools include:

Retail Loss Prevention AI Workflow: This is what you might call the main tool and kind of a fun one. Martin said this workflow was pretrained with hundreds of images of the most-stolen products — we’re talking detergent, alcohol, over-the-counter medications and even steak — so that the AI could recognize the variety of shapes and sizes that the bottles and packaging come in. New products scanned during checkout become part of the training as well.

“We primarily focused on the brands that are manufactured by consumer packaged goods companies, but it can be customized for a specific retailer,” Martin added. “They can use synthetic data generation and some additional data to further train it for all of the different types of products that that particular retailer is selling in their stores.”

Multi-Camera Tracking AI Workflow: The multitarget, multicamera capabilities allow application developers to create systems that track objects across multiple cameras throughout the store. The objects are tracked through visual embeddings or appearance, instead of personal biometric information so shoppers can maintain privacy.

“As customers are moving throughout the store, if products are being moved, it tracks those products or even tracks shopping baskets or carts from camera to camera,” Martin explained. “It also gives retailers an overview of the customer journey throughout the store. So this is another area where we see tremendous amounts of interest from retailers.”

Retail Store Analytics Workflow: This tool uses computer vision to provide insights for store analytics, including store traffic trends, counts of customers with shopping baskets and aisle occupancy via custom dashboards.

“Using a heat map, you know where your customers are mostly going and what are the most popular paths for customers,” Martin said. “That allows you to optimize the assortment and merchandising in the store to increase revenue.”

Additional details on these new tools will be unveiled at the National Retail Federation Conference in New York beginning January 15.

Nvidia unveils new AI workflows to help the retail industry with loss prevention by Christine Hall originally published on TechCrunch

Without customers, there can be no business. So how can you drive new customers to your startup or keep existing ones engaged? The answer is simple: Growth marketing.

As a growth marketer who has honed this craft for the past decade, I’ve been exposed to countless courses, and I can confidently attest that working is the best way to learn.

I am not saying you need to immediately join a Series A startup or land a growth marketing role at a large corporation. Instead, I have broken down how you can teach yourself growth marketing in five easy steps:

Setting up a landing page.
Launching a paid acquisition channel.
Booting up an email marketing campaign.
A/B test growth experimentation.
Deciding which metrics matter most for your startup.

In this second part of my five-part series, I will teach you how to set up a paid acquisition channel to drive online traffic and, ultimately, conversions (purchases) to a landing page. For the entirety of this series, we will assume we are working on a direct-to-consumer (DTC) athletic supplement brand.

Picking a paid acquisition channel

Even with the most premium product on the market, most consumers aren’t going to magically discover its existence on your website. This is where paid acquisition is most effective — educating and driving consumer interest in your products.

When deciding which paid acquisition channel to launch, there is one key aspect you must consider: your target demographic. Where are your target consumers spending their time online? Are they scrolling through TikTok or reading an article on LinkedIn? Once you can answer this question, it will make selecting the first channel to launch quite easy.

In the event that your target demographic is already on numerous acquisition channels, you can choose Facebook or Google as your first channel. These two platforms are considered the duopoly in paid acquisition and will be the best primer for learning how to manage paid social media and paid search channels.

Teach yourself growth marketing: How to launch a paid acquisition channel by Annie Saunders originally published on TechCrunch

Elon Musk should take note of a recent major privacy fine for Metabefore forging ahead with any plan to force behavioral ads on Twitter users in the European Union.

To wit: In remarks today, following the publication of two final decisions against Meta by EU privacy regulators applying the EU’s General Data Protection Regulation (GDPR) to Facebook and Instagram — decisions which include a total of around $410M in fines (still with a third decision against WhatsApp due shortly), along with orders to correct its unlawful data processing within three months — the European Data Protection Board (EPBD) has issued a clear warning to other businesses that seek to ignore EU data protection rules by not providing users with a choice over being subject to tracking for behavioural advertising.

“The EDPB binding decisions clarify that Meta unlawfully processed personal data for behavioural advertising. Such advertising is not necessary for the performance of an alleged contract with Facebook and Instagram users. These decisions may also have an important impact on other platforms that have behavioural ads at the centre of their business model,” said EDPB chair, Andrea Jelinek, in a statement.

The Board also dubbed the relationship between Meta and its users “imbalanced”, citing “grave breaches” of transparency obligations it said had “impacted the reasonable expectations of the users”, as well as criticizing the tech giant for presenting its services to users “in a misleading manner” — which led to the EDPB also finding a breach of the GDPR’s fairness principle as well as transparency failings.

The supervisory body oversees application of the EU’s GDPR with the aim of ensuring consistency in how the law is applied by regulators in Member States. And it was ultimately responsible for striking down Meta’s bogus claim of contractual necessity for behavioral ads — issuing a binding decision that forced the company’s lead data protection regulator for the GDPR, the Irish Data Protection Commission (DPC), to reverse a conclusion it had arrived at in its 2021 draft decision and find that Meta’s practice of forcing consent to tracking ads through a claim of contractual necessity is unlawful.

Behavioral advertising refers to a form of targeted advertising whereby the choice of ad served is determined as a result of tracking and profiling individual users via their online activity (and sometimes also by combining offline data-sets to further enrich these per-user profiles) — so, in EU data protection law terms, by processing personal data — an activity that requires a valid legal basis. Other types of targeted advertising which do not require processing personal data (such as contextually targeted advertising) are available. Hence Meta’s claim that intrusive tracking and profiling of individuals is a necessary core component of its services also failed to pass muster with the Board.

The EDPB’s remarks today — of the “important impact” the Meta ads decision could have on other platforms — also look relevant for TikTok which last year sought to remove users’ ability to refuse its tracking-ads — saying it planned to change the legal base for “personalized” advertising from consent to legitimate interest — before quickly freezing the move in the face of warnings from privacy regulators.

Any move by TikTok now to revive such a switch — with these two major GDPR decisions against Meta’s ‘forced consent’ standing — would only invite swift regulatory scrutiny so such a shift to its claimed legal basis is surely highly unlikely (not least as the video sharing platform is busy trying to burnish its image in front of EU lawmakers — as the Commission starts applying new oversight powers on digital platforms under the Digital Services Act (DSA) and Digital Markets Act (DMA)).

So just because Facebook has — for years — processed and profited off of Europeans’ data by running unlawful ads does not mean other ad-funded platforms are going to get the same free ride from the bloc’s regulators. Enforcement is here at last.

(For the record, Meta has said it will appeal the two GDPR decisions. It alsodenies they mean it has no option but to ask European users for their consent to its behavioral ads — pointing out that the regulation allows for “a range” of legal bases but without specifying which of these limited (and bounded) alternatives to consent might fly… So, er, public interest behavioral Facebook ads anyone?!)

Twitter, meanwhile, has also just announced its iOS app will default to a ‘For you’ algorithmic content feed — requiring users to actively swipe to view their usual chronological feed — which could raise questions over the legal basis the company is relying upon to push content personalization in front of users who may not want it. So there’s no shortage of interesting considerations flowing from Meta’s GDPR spanking.

This new GDPR enforcement dynamic (if we dare call it that) presents regional opportunities for other approaches (and innovation) in the area of lawful targeted advertising — whether that’s tracking based ads with valid user consent. Or forms of ad targeting that don’t involve any processing of personal data. (Or, well, which seek to claim they don’t.)

And we’re already seeing some high level moves to capitalize on the slow decline/demise of lawless behavioral ads, such as Google’s plan to switch away from individual-level ad targeting to alternative ‘privacy-sandboxing’ interest-targeting ads — or a new proposal by European telcos to band together on a joint venture to offer opt-in ad targeting of mobile users (which the carriers say would limit targeting to first party data and gather explicit user consent to the ads per advertiser/brand).

How Meta gets its ad-targeting operation in legal order, meanwhile, remains to be seen. But, well, fixing infrastructure that’s never cared to comply seems like it could be very expensive…

The EDPB’s press release today also addresses the reason why it instructed the DPC to investigate Meta’s processing of sensitive data — something that has led the Irish regulator to accuse the Board of jurisdictional overreach and announce that it’s taking legal action to try to annul that component of its instruction.

On this, the Board said it examined whether the complaints against the legality of Meta’s ads had been addressed with due diligence by the DPC.

“The complainant had raised the fact that sensitive data is processed by Meta IE [Ireland]. However, the IE DPA [aka the DPC] did not assess processing of sensitive data and therefore, the EDPB did not have sufficient factual evidence to enable it to make findings on any possible infringement of the controller’s obligations under Art. 9 GDPR [which deals with the processing of special category data],” it writes. “As a result, the EDPB disagreed with the IE DPA’s proposed conclusion that Meta IE is not legally obliged to rely on consent to carry out the processing activities involved in the delivery of its Facebook and Instagram services, as this could not be categorically concluded without further investigations. Therefore, the EDPB decided that the IE DPA must carry out a new investigation.”

The DPC has frequently been accused of ‘fiddling round the edges’ of GDPR complaints — such as by opening narrower enquiries than complainants had called for (or not opening a probe at all). It is also being sued for inaction (and has even faced allegations of criminal corruption) in a couple of cases. So it’s certainly notable (and awkward for Ireland) that the EDPB’s binding decision concludes the Irish regulator failed to investigate elements of Meta’s data processing it says were required for it to reach its proposed conclusion that Meta was not legally obliged to rely on consent.

As black marks against the DPC’s approach to GDPR enforcement go, this schooling from the Board is a major addition to Dublin’s tally.

Still, the EDPB’s instruction that the DPC open a whole new investigation of Meta’s data processing has invited some quizzical attention — given EU law provides for the independence of data protection authorities.

On this, noyb’s honorary chairman, Max Schrems — a long time critic of (especially) the DPC’s approach to GDPR enforcement but also, more generally, how poorly resources EU DPAs are and how difficult it is for Europeans to exercise their rights — suggests it still shows the system does not work.

Few would say GDPR enforcement is smooth sailing — but heading towards the fifth birthday of the regulation coming into application (this May) there is now a regular flow of decisions, including some major ones with implications for rights hostile business models. So the needle appears to be moving — even though the story rarely ends at a final decision (since years of legal appeals can follow).

A lot of attention to regulatory-working in the EU this year will also swivel onto the European Commission — to see how it enforces two newer regulations on larger digital platforms (the aforementioned DSA and DMA); a new centralized enforcement structure devised by the bloc’s lawmakers that was undoubtedly informed by years of criticism of slow and weak GDPR enforcement.

So the legacy of Meta’s lawless ads, and Ireland’s dilly-dallying to enforce against its consentless tracking-and-profiling, is already a lasting one.

Meta’s ads being found unlawful in the EU is a warning to other ad-funded platforms by Natasha Lomas originally published on TechCrunch

Teams dedicated to boosting customer acquisition, retention and sales don’t necessarily have the time or tools to use data insights effectively. In a 2019 survey, NewVantage partners found that the percentage of firms identifying themselves as being data-driven declined in each of the past three years, with over half admitting that they’re not competing on data and analytics.

That’s why Ariel Maislos, who sold semiconductor startup Anobit to Apple for $400 million in 2012, partnered with Itamar Falcon and Michael Ehrlich to launch Coho AI, a product-led revenue optimization platform designed to help businesses — specifically software-as-a-service (SaaS) businesses — access insights for upselling and growth.

Coho AI today announced that it raised $8.5 million in a seed funding round led by Eight Roads, TechAviv and angel investors. CEO Falcon says that the capital will be put toward product R&D and expanding the size of Coho AI’s team, which currently stands at 17 people.

“Coho AI has developed a unique data consolidation platform that models the business value of a software-as-a-service company and maps it to the behavior of the customers in real time using machine learning and advanced analytics,” Falcon told TechCrunch in an email interview. “Coho AI’s behavioral modeling allows the crafting of personalized customer journeys that improve conversion metrics and help revenue teams, from sales and customer success, together with product teams, achieve higher growth and sales efficiencies.”

Coho AI’s target audience is sales, customer success and product teams within business-to-business (B2B) SaaS companies. The platform provides AI models to discover what makes a product “sticky” and what drives users to upgrade to a paid B2B SaaS subscription plan, as well as real-time usage models to spotlight upsell opportunities and churn risks and segmentation models to identify different users based on their behavior.

Falcon says that all the models are trained using anonymized data from Coho Ai’s customer base. “By doing so, we are creating a network effect that each of our customers gets the benefits of a larger data set, which results in a more accurate model,” he added.

Beyond the AI-driven features, Coho AI delivers a single source of truth that sales, product and customer success teams can pull data from on both users and accounts. An observability dashboard enables growth teams to identify where users are in the customer journey and tailor a specific experience to reduce drop-offs, while real-time triggers highlight growth opportunities including “free-to-play? and upsells.

“There is skepticism among SaaS leaders about whether an external tool can model their unique product value and turn it into actionable insights for go-to-market teams,” Falcon said. “[But] Coho AI truly helps companies improve metrics such as net revenue retention rate and sales efficiency, which have become more crucial in the current economic climate.”

Coho AI competes with startups including Correlated and Endgame, but Falcon says that the company already has “dozens” of customers and partners. He declined to provide revenue figures, however.

Coho AI, which uses AI to help B2B SaaS companies boost revenue, raises $8.5M by Kyle Wiggers originally published on TechCrunch