Some more comments from readers on the changing culture around startups filing their Form Ds with the SEC, and then a short update on SoftBank and a bunch more article reviews.
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Lawyers are pretty uniform that disclosure is no longer ideal
If you haven’t been following our obsession with Form Ds, be sure to read up on our original piece and follow up. The gist is that startups are increasingly foregoing filing a Form D with the SEC that provides details of their venture rounds like investment size and main investors in order to stay stealth longer. That has implications for journalists and the public, since we rely on these filings in many cases to know who is funding what in the Valley.
Morrison Foerster put together a good presentation two years ago that provides an overview of the different routes that startups can take in disclosing their rounds properly.
Traditionally, the vast majority of startups used Rule 506 for their securities, which mandates that a Form D be filed within 15 days of the first money of the round closing. These days though, more and more startups are opting to use Section 4(a)(2), which doesn’t require a Form D, but also doesn’t provide a “blue sky” exception to start securities laws, which means that startups have to file in relevant state jurisdictions and no longer have preemption from the SEC.
David Willbrand, who chairs the Early Stage & Emerging Company Practice at Thompson Hine LLP, read our original articles on Form Ds and explained by email that the practices around securities disclosures have indeed been changing at his firm and others:
We started pushing 4(a)(2) very hard when our clients kept getting “outed” thru the Form D and upset about it. In my experience, for 99% is the desire to remain in stealth mode, period.
When I started in 1996, Form Ds were paper, there was no internet, and no one looked. Now they are electronic and the media and blogs scrape daily and publish the information. It actually really is true disclosure! And it’s kind of ironic, right, which goes to your point – now that it’s working, these issuers don’t want it.
What I find is that the proverbial Series A is the brass ring, and issuers wants to call everything seed rounds (saving the title) until something chunky shows up, and stay below the radar too. So they pop out of the cake publicly for the first time with a big “Series A” that they build press around – and their first Form D.
Another piece of feedback we received was from Augie Rakow, the co-founder and managing partner of Atrium, which bills itself as a “better law firm for startups” that TechCrunch has covered a few times before. He wrote to us that in addition to the media concerns, startups also have to be aware of the broad cross-section of interested parties to Form Ds that hasn’t existed in the past:
Today, there is a bigger audience in terms of who cares about venture backed companies. Whether this spun off from the launch of the Facebook movie or the fact that over two billion people across the global have the internet at their fingertips via smartphones, people are connected and curious. The audience is not only larger but also encompasses more national and international interests. This means there are simply more eyes on trends, announcements, and intel on privately held companies whether they are media, investors, or your competitors. Companies that have a good reason to stay stealth may want to avoid attracting this attention by not making a public Form D filing.
For startups, the obvious advice is to just consult your attorney and consider the tradeoffs of having a very clean safe harbor versus more work around regulatory filings to stay stealthy.
But the real message here is for journalists. Form Ds are no longer common among seed-stage startups, and indeed, startup founders and venture investors have a lot of latitude in choosing how and when they file. You can no longer just watch the SEC’s EDGAR search platform and break stories anymore. Building up a human sourcing capability is the only way to get into those early investment rounds today.
Finally — and this is something that is hard to prove one way or the other — the lack of disclosure may also mean that the fears around seed financing dropping off a cliff may be at least a little bit unfounded. Eliot Brown at the Wall Street Journal reported just yesterday that the number of seed financings is down 40% according to PitchBook data. How much of that drop is because of changing macroeconomic conditions, versus changes in filing disclosures?
Quick follow up on SoftBank
Last week, I also got obsessed with SoftBank. The company confirmed today that it intends to move forward with the IPO of its Japanese mobile telecom unit, according to WSJ and many other sources. The company is targeting more than $20 billion in proceeds, and its overallotment could drive that above $25 billion, or roughly the level of Alibaba’s record IPO haul.
One interesting note from Taiga Uranaka at Reuters on the public issue is that everyday investors will likely play an outsized role in the IPO process:
Yet SoftBank’s brand name is still likely to draw retail investors long accustomed to using SoftBank’s phone and internet services. Many still see CEO Son as a tech visionary who challenged entrenched rivals NTT DoCoMo Inc ( 9437.T ) and KDDI, and brought Apple Inc’s ( AAPL.O ) iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits.
More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
Pavel Alpeyev at Bloomberg noted that “SoftBank is looking to tempt investors with a dividend payout ratio of about 85 percent of net income, according to the filing. Based on net income in the last fiscal year, that would work out to an almost 5 percent yield at the indicated IPO price.” A higher dividend ratio is particularly attractive to retired individual investors.
Despite SoftBank’s horrifying levels of debt, Japanese consumers may well save the company from itself and allow it to effectively jump start its balance sheet yet again. Complemented with a potential Vision Fund II, Masayoshi Son’s vision for a completely transformed SoftBank seems waiting for him in the cards.
Notes on Articles
Tech C.E.O.s Are in Love With Their Principal Doomsayer – Nellie Bowles writes a feature on Yuval Noah Harari, the noted philosopher and popular author of Sapiens. Bowles investigates the paradoxical popularity of Harari, who sees technology as creating a permanent “useless class” and criticizes Silicon Valley with his now enduring popularity in the region. Interesting personal details on the somewhat reclusive Israeli, but ultimately the question of the paradox remains sadly mostly unanswered. (2,800 words)
Why Doctors Hate Their Computers – Atul Gawande discusses learning and using Epic, the dominant electronic medical records software platform, and discovers the challenges of building static software for the complex adaptive system that is health care. His observations of the challenges of software engineering will be well-known to anyone who has read Fred Brooks, but the piece does an excellent job of exploring the balancing act between the needs of technocratic systems and the human design needed to make messy and complicated professions work. Worth a read. (8,900 words)
Picking flowers, making honey: The Chinese military’s collaboration with foreign universities – An excellent study by Alex Joske at the Australia Strategic Policy Institute on the hundreds of military scientists from China who use foreign academic exchanges as a means of information acquisition for critical scientific and engineering knowledge, including in the United States. China’s government under Xi Jinping has made indigenous technology development a chief domestic priority, and the U.S. innovation economy is encouraged to increasingly guard its intellectual property. (6,500 words)
The Digital Deciders – New America report by Robert Morgus who investigates the fracturing of the internet, which I have written about at some length. Morgus finds that a small group of countries (the “digital deciders”) will determine whether the internet continues to be open or whether nationalist interests will close it off. Let’s all hope that Iraq believes in freedom of expression and not Chinese-style surveillance. Worth a skim. (45 page report, but with prodigious tables)
Google Pixel 6 Pro Review
The Google Pixel 6 Pro is the best Android phone in the world today – but is it right for you? This is really the first time Google has created a smartphone that’s meant to battle the top-tier handsets in the industry, and it shows. But do you need the features that make this device cost more than its non-Pro companion?
The Pixel 6 Pro works with a generous 6.7-inch LTPO AMOLED display with a centered punch hole for its front-facing camera. The display supports HDR10+, has a 120Hz variable image refresh rate, and boasts a healthy 1440 x 3120 pixels across its face, for a total of approximately 512 PPI density (pixels per inch).
This device has a curved-edge display panel with Corning Gorilla Glass Victus cascading off the left and right of the front. Because of the glass up front and around back, this device is quite slippery. That’s generally true of mostly-glass devices, and as usual, I’d recommend you get a protective case, if only to stop this Pixel from floating off the table every time you set it down.
The cases Google makes take account of the Pixel Camera Bar at the back, adding a bit of a bump above and below said bar for added protection. If you’ll take a peek at our Pixel 6 vs 6 Pro vs 5 hands-on guide, you’ll see how extremely similar the devices are – especially given their inclusion of the Pixel Camera Bar on both 6 and 6 Pro models.
The big differences come in the display and the power of both the front and back-facing camera arrays. The display on the Google Pixel 6 Pro is extravagant. If you’ve ever used a 120Hz display before, it’s difficult to go back to anything less. With the Pixel 6 Pro, you’re getting every bit the most powerful and good-looking Android 12 experience on the market today as a result of this panel.
The Pixel 6 Pro is 6.5 height x 3.0 width x 0.4 depth (inches) in size with a weight at 210g (7.41 oz). Exterior color options include Cloudy White (the one you see here), Sorta Sunny, and Stormy Black. The black model has a dark gray edge, Sunny has gold, and white has a reflective chrome edge. The front bezel is the same regardless of backside color.
The Google Pixel 6 Pro has an in-display fingerprint reader that works as well as I’ve ever seen an in-display fingerprint reader work. I’d still rather it be housed at the back or the side of the phone, as it feels most natural to me to scan my finger at either of those positions – but if it had to be in the display, I’m glad it works as well as this.
Having a Pixel with as large a display as this reminds me of using one of my favorite phones ever – the Nexus 6P. That device was announced back in 2015 with a 5.7-inch display, and it seemed overly-massive at the time. Now, with the Pixel 6 coming with a 6.4-inch display, and the Pixel 6 Pro coming with a 6.71-inch display, the smartphone experience at this size feels far more natural.
It’s important to note, here, that you’ll NEED to pay attention to the model you buy when you’re looking for 5G coverage. Make sure your chosen carrier has the Pixel 6 Pro you need to get sub-6 5G and/or mmWave 5G coverage, as the differences are significant.
It’s thanks in a big way to Android 12 that this large smartphone feels so natural to use. I’ve used the default settings for the most part, but Android 12 on this Pixel 6 Pro has the option to change sizes and arrangement of elements to a degree beyond what I’d ever consider needing.
In Android 12 on the Pixel 6 Pro you’ll find a new sort of Style system. This system delivers a color scheme to the UI based on your wallpaper. This can be a Google wallpaper or your own, it doesn’t matter: It works by selecting colors based on your wallpaper automatically.
Because of this Style system, Android 12 on the Pixel 6 Pro creates an experience that is new to Google. In the past, Google delivered a stripped-down, vanilla (or near-vanilla) Android with their own-branded smartphones. Now, with Android 12 on Pixel 6 and 6 Pro, Google dares to present an experience that’s custom fitted to the Pixel in ways that are truly significant.
At the back of the Pixel 6 Pro is a 50MP Octa PD camera with a 1/1.31-inch sensor, 1.2um pixel capture, f/1.85 aperture, and an 82-degree field of view. There’s also a 12MP ultrawide camera with f/2.2 aperture, 1.25um pixel capture, and a 114-degree field of view.
The camera that sets this device aside from the Pixel 6 Pro is the third unit at the back of the phone. That is a 48MP telephoto camera with a 1/2-inch image sensor, 0.8um pixel capture, f/3.5 aperture, and a 23.5-degree field of view. This camera allows the array to reach 4x optical zoom.
The back-facing array also works with an LDAC (laser detect auto focus) sensor and OIS (optical image stabilization) for both wide and telephoto lenses.
Up front, this phone has an 11.1MP camera with 1.22um pixel capture, f/2.2 aperture, and a 94-degree ultrawide field of view. This front-facing camera is fixed focus.
The Pixel 6 Pro has the most professional set of cameras I’ve ever used on a smartphone. Google’s computational photography powers are at last paired with a set of cameras whose hardware meets the challenge of Google’s biggest competitors.
Above and below you’ll find a variety of examples of photos captured with the cameras of the Pixel 6 Pro. Among them you’ll find a few examples captured with Google’s new BETA camera features: Action Pan and Long Exposure.
Google includes both Action Pan and Long Exposure in a tab called “Motion” in the standard Google Camera app. Google is careful to tag both features as “Beta” releases, which is good, because they might need a bit of work before they’re ready to considered ready for prime time.
Both features are right on the edge of greatness, with what appears to be just a TINY bit of work left to do detecting the edges of a given subject. I’m glad to see Long Exposure, in any case – keeping the shutter open as long as I like (within reason) is a feature I’ve always like to have the option to use on whatever camera I’m using.
Inside this device is a 5,000 mAh battery (minimum 4,905 mAh), with fast charging capabilities. The Pixel 6 Pro has the ability to charge speedily with a Google 30W USB-C charger with USB-PD 3.0 (PPS). That’s sold separately from the phone, mind, but you might well have one at home already.
This device can also charge wirelessly, and reverse charge other devices. That’s also known as Battery Share – and it turns the back of the device into a Qi-certified charging panel. It’s useful for topping up wireless earbuds or a smartwatch in a pinch.
Android 12 and the Google Pixel 6 Pro offer a variety of options that allow us to go from quick-draining the battery all the way to extreme battery preservation. If I keep the “Smooth Display” active (120Hz “for some content”) and activate Increase touch sensitivity, turn off all battery saver options, keep the display at max brightness, and use only 5G mobile data to stream movies non-stop, I could potentially drain the battery in a matter of hours.
When using the device for standard activities – even capturing photos and videos and running games and tests for this review – it’s difficult to drain the battery in less than double-digit numbers of hours.
Google Pixel 6 Pro Verdict
Google seems to have moved beyond using the Pixel as a baseline experience for Android. Back when Google made Nexus smartphones for the public as effective demonstrations of the capabilities of the software, Nexus devices were not expected to compete with top-tier smartphones. Instead they were generally viewed as industry nudges, with the hope that other phone-makers would take the hint and shift things in the way that Google intended.
The Google Pixel 6 Pro, in contrast, is a masterpiece that stands on its own merits, coming correct with a hardware and software experience that delivers the best Google has to offer in a smartphone. This phone takes everything that works great in the Pixel 6 and adds features that elevate it to a true AAA hero phone that goes toe-to-toe with the best rivals on the market today.
The Google Pixel 6 Pro has a starting price of around $900 USD, and it is well worth the cash. Make SURE you get a case for this device right out the gate – the Google Pixel 6 Pro case we had here for this review is sold by Google for approximately $30 USD.
If you are looking for the newest in new Google Pixel smartphone action, but don’t need a device quite as large, with a display with 120Hz refresh rate, or that extra camera at the back, or the slightly better camera up front… there’s a Pixel 6 waiting for you at Google. That device has the same processor power, the same software, and every essential element of this Pixel 6 experience for several hundred dollars cheaper than this Pro model.
NOTE: If you’re reading this review on the 25th of October, 2021, you’ll need to wait just a short bit before our Pixel 6 Review (the non-Pro version) is posted. It’ll arrive on the 26th!
Google Play Store cuts developer tax for subscriptions by half
The industry practice of “70/30” revenue cuts between developers and app store owners have been put under a microscope in the past few years, especially after Epic Games made some big noise about it. It did force a few platforms to make changes to their policies, usually reducing the so-called “developer tax” under certain circumstances only. In general, however, storefront owners still take 30% of the profits by default, but Google is making a significant change in that policy to push subscriptions to the forefront.
Like many things in businesses, the 70/30 revenue split became a de facto standard without any explicit consensus among industry players. Giving store and platform owners 30% of profits might have worked well for the likes of Steam, where each product often sells in double digits, but it didn’t translate well to the mobile app market. Unfortunately, that has been the status quo for many years, which really hurt developers that sold their apps for an average price of $4.99 or even less.
It may be even worse for apps and services whose profits may come on a monthly or annual basis. At the same time, however, the likes of Google and Apple are trying to push the subscription model as a more viable and sustainable strategy compared to one-off payments for apps. In order to incentivize this model, Google is making it more attractive for developers to switch to subscription fees by lowering the tax they have to pay.
Starting January next year, the service fee or anything sold via Google Play Store will be reduced from 30% to 15%, meaning developers and publishers take away 85% of any of the revenue they make. Previously, Google allowed that same cut but only after 12 months of a recurring subscription. This change follows another big move last April when it cut the revenue cut to 15% for the first $1 million of a developer’s revenue.
Google is also adjusting some of the figures for ebook publishers and on-demand music streaming services. They can get their service fee reduced to as low as 10%, but only if they take part in Google’s Play Media Experience program. This program, the Android maker says, encourages publishers to target most or all of the devices where Android is available, making sure that the same experience and content is present in cars, TVs, and even smartwatches.
Skype now works also on Firefox after two years
When the video conferencing trend kicked up last year thanks to the COVID-19 pandemic, it was no surprise that Microsoft would jump on the bandwagon as well. What was a bit surprising, however, was that it prioritized bringing its younger Teams platform up to snuff instead of promoting the video conferencing service it has had for years. In fact, some might have almost forgotten about Skype at this point, including Microsoft. Two years after launching its new Web app, Microsoft has finally made Skype work on Firefox, though not without what might be an unnecessary warning.
Granted, there is a Skype desktop app anyway, so a Web browser experience might sound redundant. Not everyone, however, might want to install a separate app just for the occasional call, and not everyone might be keen on using Microsoft’s blessed browser. Depending on which browser you do prefer, however, you might have felt snubbed by Microsoft.
Switching Microsoft Edge from its homegrown edgeHTML engine to Chromium did mean that similar browsers like Chrome and Opera were able to support the new Skye for Web experience. Safari users on Macs, however, waited until May this year to be able to use Skype in their browser of choice.
Now it’s the turn of Firefox users to get equal treatment. According to Dr. Windows, going to the Skype landing page for browsers will finally let you use the communication platform’s functionality. There is still a warning that not all features might be available, but that might not actually be the case.
This compatibility with Firefox will be available on Skype 8.78, which is currently still in preview for Insiders. There’s no word yet on when it will roll out to the public, but until then, expect Skype’s official documentation to still believe that Firefox is the only browser that isn’t supported by Skype for Web.
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