TechCrunch+

Meta founder and CEO Mark Zuckerberg took the stand on Tuesday in a hearing about Meta’s acquisition of Within, the VR company that makes the fitness app Supernatural. In July, the Federal Trade Commission (FTC) sued Meta in an attempt to block the deal, which the government agency alleges is anti-competitive.

The hearing comes at a tenuous time in Meta’s corporate history. As Meta struggles to realize its dreams of bringing VR into the mainstream, its corporate stock is plummeting while the company recovers from a layoff of 11,000 people, or 13% of its workforce.

Meta is losing billions of dollars per quarter on its virtual reality projects, and investors have voiced concerns about Zuckerberg’s plans as the company’s revenue declines.

During the seven-day hearing, one of the FTC’s witnesses, economic expert Hal Singer said that “fitness is the linchpin to owning VR.” He went as far as to add that this is what “keeps Mr. Zuckerberg up at night,” Law360 reported from the courtroom (later, Zuckerberg testified that he does not, in fact, lose sleep over VR fitness competitors).

The FTC has argued that Within’s Supernatural app is a direct competitor to Beat Saber, a popular VR rhythm game that some people use to work out.

Meta bought Beat Games, the studio behind Beat Saber, in 2019. Even Oculus, the hardware company that powers Meta’s flagship Quest headsets, came aboard via a $2 billion acquisition in 2014. The terms of the Beat Games deal were not disclosed, nor were the terms of Meta’s potential purchase of Within.

But while Beat Saber is a fun game that just so happens to get you to work up a sweat, Supernatural was actually built from the ground up as a fitness app, featuring daily workouts that are led by professional trainers and accompanied by popular music.

Under the leadership of Lina Khan, the FTC alleged that it would violate antitrust laws if Meta’s deal with Within goes through.

“Instead of competing on the merits, Meta is trying to buy its way to the top,” said FTC Bureau of Competition Deputy Director John Newman in a statement about the lawsuit. “Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits.”

When the FTC called Zuckerberg to the stand, the government lawyers presented email exchanges from March 2021 — before Meta rebranded from Facebook — that proposed the idea of a partnership between Beat Saber and Peloton. Zuckerberg said that this idea was promising in 2021, when Meta had some money to invest in fitness, but ultimately the company decided to buy Within. A partnership between Beat Saber and Peloton would now be impossible, Zuckerberg testified, since Meta is now in a lesser financial situation (in part due to changing Apple policies, he said).

Zuckerberg also said that fitness is not his priority in the VR space — rather, he’s focused on social, gaming and productivity use cases. Meta even just released its Quest Pro, a powerful headset that’s specifically designed for remote work.

Initially, Meta wanted to wrap up its acquisition of Within by the new year. But in a court filing spotted by Reuters, Meta said it will delay the deal’s close until January 31, 2023, pending the court’s ruling on the legality of the deal.

FTC puts Zuckerberg on the stand over Meta’s plan to acquire Within by Amanda Silberling originally published on TechCrunch

Amid 2021’s record-breaking funding activity, it wasn’t uncommon to see startups raise rounds composed of numerous small checks from a large number of firms and angel investors. But now that said companies are looking to raise extension financing, they’re realizing that more investors doesn’t always mean more future money.

Last year, FOMO was running high, and investors were doing seemingly everything to get into rounds: taking a secondary stake instead of a primary, forgoing a board seat, writing a tiny check just to get into a hot deal.

Many founders leaned into this, and how can you blame them? Investors wanted to put more money into their companies, and each investor brings their own value-add and network to the table. In theory, that looks like a good thing. But, the pros of raising party rounds dry up quickly when the market turns — and a lot of companies are starting to realize that.

More investors, more problems by Rebecca Szkutak originally published on TechCrunch

Cruise has soft-launched its robotaxi service in Phoenix and Austin, making its own deadline to enter two new markets before the end of 2022. The GM-backed company has until now only operated its ridehail service in San Francisco, where it launched a fully driverless commercial service over the summer.

“In both Phoenix and Austin we completed our first paid rides for members of the public,” tweeted Cruise CEO Kyle Vogt. “Just like in SF, we’ve started with a small service area and will expand gradually. But since we’ve already done this in SF it will happen much faster in these new cities.”

Those members of the public will be “friends and family” of Cruise employees, who are the only ones to have access to the company’s ride-hail service to start. Members of the general public will get a turn, but Cruise didn’t provide a timeline for opening up the service. Cruise opened a waitlist for Austin and Phoenix in late October and should start offering rides once it has enough vehicles to meet demand, a spokesperson told The Verge.

Cruise has not disclosed its starting service areas in either city, nor what times of day it will operate. It’s also not clear if the rides Cruise offers initially will be fully driverless, or if they’ll put a human safety operator behind the wheel to start.

The AV company will have to contend with Waymo in Phoenix, which recently doubled its service area in the downtown area and opened up driverless rides to the airport to members of the public. Waymo has been operating a commercial robotaxi service in the Phoenix area, specifically Chandler, since 2018.

Vogt was eager to celebrate how it took years to launch in San Francisco, but only weeks to expand into new territory.

“In Austin, we went from zero infrastructure (no maps, charging facilities, test vehicles, etc.) to fully functional driverless ride hail service in about 90 days,” he tweeted. “We invest heavily in tools for engineering efficiency at Cruise, so it took just a few weeks to collect data to retrain our [machine learning] models and see performance meet our targets. This process is becoming increasingly automated, in some cases requiring no engineer intervention.”

Excitement for technological advancements aside, no autonomous system is yet perfect, and Cruise has been struggling with roadblocks — literally.

Videos and images have surfaced on social media showing Cruise robotaxis blocking traffic, stuck at intersections and having strange interactions with law enforcement. Last week, the National Highway Traffic and Safety Administration opened an investigation into the company after learning of incidents when Cruise’s robotaxis “may have engaged in inappropriately hard braking or became immobilized while operating on public roads.”

Cruise soft-launches robotaxi rides in Phoenix and Austin by Rebecca Bellan originally published on TechCrunch

The knotty issue of how Ukraine’s now-critical Starlink satellite internet should be paid for has been at least temporarily resolved, according to the country’s minister for digital transformation, Mykhailo Fedorov. It appears that a few European Union nations have decided it’s in everyone’s interest to keep the country online as the Russian invasion persists.

In October it was revealed that apart from an initial burst of funding to get Starlink terminals on the ground in Ukraine, there was no real arrangement in place to pay SpaceX for the service it was providing. At retail value the approximately 22,000 terminals sent to Ukraine would cost tens of millions of dollars — though this is only an estimate of both the actual cost and the number of active terminals.

SpaceX sought funding from the U.S. military but ultimately decided to press on without it — although this was framed as a charitable act at the time, it is possible that negotiations with other stakeholders were beginning to bear fruit.

Speaking to Bloomberg, Fedorov (who is also deputy prime minister) explained that “as of now all financial issues have been resolved.”

He declined to be more specific, saying only that several E.U. countries had pledged support at least through the spring. With winter coming and infrastructure already strained, having funding in place for decentralized internet access is one less thing the war-torn country will have to worry about.

In fact there is a new arrangement for more than 10,000 terminals to be sent down: “We have got a nod for another shipment that will be used to stabilize connection for critical situations,” Fedorov said. “There is no alternative to satellite connections.”

SpaceX recently expanded into the defense contractor world with Starshield, but that is more for U.S. government contracts. The Ukraine Starlink terminals seem to be from the professional and consumer side of the business.

Ukraine lines up 10,000 more Starlink terminals as funding issues are ‘resolved’ by Devin Coldewey originally published on TechCrunch

Ah, the end of the year. The perfect time to settle into the couch in a food coma and read.

In honor of our love of reading and the fact that giving books as gifts is a cliche for a reason — people love it! — TechCrunch has compiled several lists of great reads for you.

We started with a series of recommendations from TechCrunch staff. But we know that you want more perspectives, so your friends at TechCrunch+ collected myriad recommendations from both venture capitalists and founders alike. Here we have investor favorites, and we’ll follow up with notes from founders tomorrow.

You can check out the 2021, 2020and 2019 recommendations if you need even more. Enjoy, and may your holiday respite be filled with words.

This article contains links to affiliate partners where available. When you buy through these links, TechCrunch may earn an affiliate commission.

Venture book favorites, 2022 edition

The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby

Recommended by Brian McCullough, GP at Ride Home Fund; Aziz Gilani, managing director at Mercury Fund, who added it as a textbook for his VC class at Rice; and Arvind Purushotham, head of Citi Ventures, who made this comment:

“‘The Power Law: Venture Capital and the Making of the New Future’ does an excellent job highlighting the importance of discovery and learning in the venture capital and startup world. Mallaby perfectly illustrates the laws of power that control which points of discovery succeed in venture capital and which ones don’t. His analysis of the highest highs and lowest lows adds color to the venture world and how it dictates how we see our future.”

The best books that venture capitalists read in 2022 by Anna Heim originally published on TechCrunch

Welcome back to Found, where we get the stories behind the startups.

This week Darrell and Becca caught up with Alice Albrecht about her early-stage AI startup re:collect. Alice talked about why she founded the company that uses machine learning algorithms to help creatives brainstorm and recall information without breaking focus. She also talked about why the algorithms re:collect is building will have guardrails from the start and also what it is like building an AI company in a time when interest in the category has recently exploded.

Subscribe to Found to hear more stories from founders each week.

Connect with us:

On Twitter
On Instagram
Via email: found@techcrunch.com

Augmenting creativity with Alice Albrecht from re:collect by Rebecca Szkutak originally published on TechCrunch

Few startups launch with a coherent content strategy.

In the early days, every project is a sprint, and there are times when putting on a show for investors can feel more important than actually serving your customers.

Blogs are a great example: Because they’re a cheap way to drive SEO, companies crank them out, then use KPIs like time on site, pages per session and social media likes to demonstrate how successful they’ve been.

“The truth is: vanity metrics don’t measure how engaged potential customers are,” writes Christopher P. Willis, chief marketing and pipeline officer at Acrolinx.

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

“They simply gauge the relative popularity of your business. This makes measuring ROI tricky.”

Creating a consistent brand strategy isn’t a major investment, and creating a shared style guide for marketing, design and sales generates positive ROI. With a content governance plan, any startup can track which offers are most likely to convert new customers.

“The biggest benefit of this is content that establishes trust,” writes Willis.

Thanks very much for reading TC+!

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Banish vanity metrics from your startup’s pitch deck

It’s legitimately nice to give your hard-working team targets they can work toward, but vanity metrics (e.g. X email signups in Y days, 20% more retweets) are like a Little League awards dinner: Everyone goes home a winner!

“The truth is, investors know what traction looks like,” writes Haje Jan Kamps, which means feel-good stats have no place in a pitch deck.

“Don’t confuse fluffy numbers and vanity metrics with your go-to-market strategy.”

3 Black founders predict little will change in VC in 2023

A rising tide lifts all boats, but when free-flowing venture capital starts to recede, underrepresented founders are the first to find themselves on dry ground.

Dominic-Madori Davis spoke to three Black founders to get their thoughts on the current funding landscape and the issues that are top-of-mind for them as we head into the new year:

Vernon Coleman, founder and CEO, Realtime
Sevetri Wilson, founder and CEO, Resilia
Abimbola Adebayo, founder and CEO, Pinnu Analytics

The fundraising stages are not about dollar values — they’re about risk

Before a founding team approaches any investor, they’ll need a clear idea of how their planned company will make money.

And also: how it will lose money.

Investors are open to ideas, but because they view everything through a lens of risk, entrepreneurs must develop a holistic understanding of where it exists in their company.

“‘For our company to be successful, these three things have to be true’ is a potent phrase in the earliest stages of starting a company,” writes Haje Jan Kamps.

With IT spending forecast to rise in 2023, what does it mean for startups?

The fact that so many CIOs and analysts believe IT spending will increase in 2023 is potentially good news for new SaaS companies hoping to weather this downturn, but “it’s not all rosy,” writes Ron Miller.

To bring these predictions down to earth, he interviewed several investors, industry watchers and CIOs to get their thoughts on “what’s coming for enterprise startups in 2023.”

TechCrunch+ roundup: Vanity metric dangers, planning for failure, Black founders survey by Walter Thompson originally published on TechCrunch

Amazon has announced that Fire TV users in the U.S. can now watch tens of thousands of music videos from major and independent labels for free. No downloads, fees or subscriptions are required to watch the music videos. The ad-supported music videos will be available from artists on the Billboard Hot 100, including Taylor Swift, Drake, Harry Styles and Lizzo, as well as a catalog of classics from different genres. The company says new content will be added daily.

Fire TV customers can find personalized recommendations based on their likes and viewing history, create their own mixes or choose from pre-made playlists, such as Top Holiday Hits, Best of 2022 Recap and Country Today. Users have unlimited music video skips and also have the option to play a continuous stream of similar music videos.

You can access the music videos by pressing the voice control on the Fire TV remote and saying “Alexa, find Music Videos.” Or, you can search “Music Videos” in the Appstore then click the “Music Videos on Fire TV.” From there, you need to click “get” app to download. When the download is complete, you can select “open” to access the free music videos.

In addition to music videos, Fire TV customers will now have access to additional ad-supported content, such as business and finance news from Bloomberg, The Street, CNBC and others. Users will also get access to entertainment news from brands like E! News and Mixible. In addition, customers can watch game previews and trailers, gaming news, developer interviews, how to’s, esports and more from providers including IGN, ESTV and Crown Channel. Last, users can watch viral videos from Always Funny Videos, FailArmy, People Are Awesome and The Pet Collective.

You can access the new additional free content by navigating to the “Home” icon on the Fire TV navigation bar, or by pressing the “Home” button on the Alexa Voice remote. Then, you need to scroll down to “Business & Finance News”, “Entertainment News” or “Gaming News & Esports.”

The announcement comes a few months after Amazon added free movie trailers, lifestyle content, sports highlights and more to Fire TV. Given that more viewers are gravitating to free and ad-supported content as streaming subscription prices continue to increase, it makes sense for Amazon to add more free content to Fire TV.

Amazon adds free music videos, viral videos and more ad-supported content to Fire TV by Aisha Malik originally published on TechCrunch

Scooter company Bird is certainly down, but it’s not yet out.

The five-year-old firm says that it and Bird Canada — a separate, private company that licenses Bird’s software and name — will merge “as soon as possible,” with an “estimated total of $32 million in new financing” from Bird Canada’s investors, “$4 million of which has already been funded.”

Bird’s stock price dropped more than 7% today amid the announcement. The stock was trading around $0.16 per share when this story was published.

The merger news follows a rough year for Bird, which recently exited dozens of markets, and alerted investors that it had inflated its revenue for two years and might have to shutter some of its operations.

In May 2021, Bird was reportedly valued at $2.3 billion, before it closed a SPAC deal that brought it to the New York Stock Exchange. Bird’s market cap has cratered since then, and now sits around $48 million.

Bird Canada was launched by Toronto Raptors founder John Bitove back in 2019. Bitove also founded Obelysk, one of Bird Canada’s investors.

According to Bird’s statement, the deal “would add additional profitable operations to Bird’s global platform, while consolidating North American operations.” Should the merger close, Bird intends for Bird Canada CEO Stewart Lyons to become the combined company’s president, and FreshBooks chief financial officer Michael Washinushi will take over for current Bird CFO Ben Lu.

Bird tanks on word that a Canadian company is saving its bacon by Harri Weber originally published on TechCrunch

Blockchain games have grown exponentially over the past year as a new and innovative alternative to the traditional gaming world. While the two areas have been widely separated, some market players see an integrated future.

“I was around in the very early days of mobile gaming, right after the iPhone came out, the App Store came out,” Chris Akhavan, chief gaming officer at NFT marketplace Magic Eden, said to TechCrunch. “I remember the attitude back then amongst traditional gaming companies was that mobile games were stupid.”

These gaming conglomerates viewed mobile games as “really small, unimpressive games” that people wouldn’t want to play, Akhavan said. “Largely, a lot of the big traditional gaming companies ignored mobile [games] for the first couple of years and that created opportunities for new mobile gaming companies like King, which is now owned by Activision, to create that margin and grow substantially.”

As that happened, big gaming companies became hyper-focused on the mobile gaming space and began acquiring smaller games to compete, Akhavan noted.

“We think that the same journey is going to happen in web3,” Akhavan said. “Over the last year, there’s been multiple billions of dollars invested in new web3 gaming studios and they’ll lead the charge here in creating the ecosystem and showing the true sides of the opportunities, which is going to be massive.”

Magic Eden exec sees NFT gaming like the ‘early days of mobile gaming’ by Jacquelyn Melinek originally published on TechCrunch