Duolingo CEO explains language app’s surge in bookings

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Language learning apps, like many educational technology platforms, soared when millions of students went home in response to safety concerns from the coronavirus pandemic. It makes sense: Everyone became an online learner in some capacity, and for non-frontline workers, each day became an opportunity to squeeze in a new skill (beyond sourdough).

So why not learn a new language in a low-lift way?

Language learning platforms, including Babbel, Drops and Duolingo, all have benefitted from quarantine boredom as shown by surges in their usage. However, success also depends on whether these same companies can turn that primetime interest into dollars and profit.

To figure out if the language learning boom comes with paying customers, I caught up with Luis von Ahn, the CEO of Duolingo, a popular language learning company valued at $1.5 billion.

Von Ahn tells TechCrunch that Duolingo has hit 42 million monthly active users, up from 30 million in December 2019. The surge comes as new users are spending more time on the app in aggregate, for some of the reasons explained above. Duolingo has been steadily increasing in bookings over the past few years:

This year, Duolingo will hit $180 million in bookings, von Ahn estimates. The company discloses bookings as a proxy for revenue, because when someone purchases a subscription the app it is considered a “booking” until the completion of the subscription, when it becomes revenue.

“We’re more than breaking even,” von Ahn told TechCrunch.

While this growth is impressive, the most staggering metric that von Ahn revealed is that $180 million in bookings is only coming from 3% of its current users.

“Only 3% of our users pay us, yet we make more money than the apps where 100% of their users pay them,” he said.

9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future

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Spain’s startup ecosystem has two main hubs: Madrid and Barcelona.

Most observers place Barcelona first and Madrid second, but the gap appears to close every year. Barcelona has benefitted from attracting expats in search of sun, beach and lifestyle who tend to produce more internationally minded startups.

Madrid’s startups have predominantly been Spain or Latin America-focused, but have become increasingly international in nature. Although not part of this survey, we expect Valencia to join next year, as city authorities have been going all-out to attract entrepreneurs and investors.

The overall Spanish ecosystem is generally less mature than those in the U.K., France, Sweden and Germany, but it has been improving at a fast clip. More recently, entrepreneurs in Spain have moved away from emulating success in pursuit of innovative technologies.

Following the financial crisis, the Spanish government supported the creation of startups with the launch of FOND-ICO GLOBAL, a €1.5 billion fund-of-funds in 2017, which put €800 million into the market that year. Three years later, the fastest-moving sector is tech. In 2018, Spain counted 4,115 active startups, reported 150sec. Barcelona has seen a boom in startups and support systems, with companies based there raising €2.7 billion between 2015 and 2019, almost doubling Madrid’s figure (according to Dealroom).

In the first half of a two-part survey that asks 18 Spain-based startup investors about the trends they’re tracking, we reached out to the following VCs:

Marta-Gaia Zanchi, managing partner, Nina Capital

What trends are you most excited about investing in, generally?
Infrastructural needs of the healthcare industry.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
We see opportunities in data liquidity, in silico trials, biotech manufacturing … for which enabling technologies may already exist from the information technology and semiconductor industry.

What are you looking for in your next investment, in general?
What we always do: Great unmet need, deep understanding of healthcare stakeholder ecosystem, the right technology solution, a team we love to work with.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Telemedicine.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Local ecosystem: 10% Rest of the world: 90%.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
We only invest in healthtech. So, the answer is: healthtech 🙂

How should investors in other cities think about the overall investment climate and opportunities in your city?
They all think we have a wonderful climate. After all, it’s Barcelona. Regarding the investment climate in particular, I believe too few international investors appreciate the full spectrum and significance of the opportunities that this city affords for starting and scaling a company.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Not really. I think most companies will continue to have HQs in the major hubs, but their teams are going to be more distributed. And hubs that were traditionally at disadvantage over the usual suspects will find themselves less so.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
We are specialized healthtech investors. All our investments to date are B2B companies selling to healthcare organizations.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We decided to increase our reserves, to have more capital to support our portfolio companies in follow-on rounds. For more, see here.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
My team is amazing. With them by my side, I never lost hope.

Any other thoughts you want to share with TechCrunch readers?
I know 2020 is a tragedy but … Isn’t it something to see everyone finally engaged in the conversations that matter (healthcare, science, public health, politics, equality, diversity).

Healthcare entrepreneurs should prepare for an upcoming VC/PE bubble

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While many industries are taking a major hit due to the ongoing pandemic, the healthcare technology market continues to grow. In fact, total healthcare-related innovation funding for H1 2020 hit $9.1 billion, up nearly 19% compared to the same period in 2019, according to StartUp Health’s 2020 Midyear Funding Report.

As the virus continues to pose new challenges for the industry, investors are rushing to pump money into startups addressing healthcare sub-sectors ranging from telemedicine to patient financial engagement.

The inefficiencies and frustrations of the U.S. healthcare system make it a tempting target for disruption-oriented VCs. But here’s the hard truth: Healthcare is unlike any other industry. It has a morass of regulations that a “move-fast-and-break-things” startup can’t handle over the long term.

Healthcare is also a sensitive, personal issue. As such, patients are inherently reluctant to adapt to new technologies, even when they’re dissatisfied with the status quo. Consequently, it’s crucial that startup technology leaders in this space understand how to wade through these unpredictable waters in order to thrive and deliver a strong ROI for investors.

But here’s the hard truth: Healthcare is unlike any other industry. It has a morass of regulations that a “move-fast-and-break-things” startup can’t handle over the long term.

Entering health technology

VCs are seeing all the latest headlines about COVID-19 and spying a potential money-making opportunity to invest capital into innovative startups. However, they must overcome barriers to entry when offering patient-focused, technology-centric solutions before they can compete with legacy players. As the saying goes, “Luck is what happens when preparation meets opportunity,” and, within the healthcare startup space, COVID-19 presents an opportunity for those who stood ready to offer a solution to the market before the situation became a crisis.

Therefore, VC and PE investors should focus on the problem the potential startup is trying to solve as recent times have rapidly refashioned the need for certain solutions. Are there other key players leading the market, or is the startup a duplicative offering that is currently available? If the value proposition is unique, it may be interesting. If it’s not, investors may want to think twice.

Greylock and MLT are trying to diversify tech’s wealth cycle

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Greylock Partners has teamed up with Management Leadership for Tomorrow to address issues of diversity and inclusion in the technology industry.

“Our view is this has to be a comprehensive approach,” MLT Founder and CEO John Rice told TechCrunch. “This is not just a coding program, mentor program, fellowship program. There are plenty of great ones. They’re important. But what we’re saying is you have to work on all these levers and take a long-term view. Our view is we can really move the needle exponentially to grow minority participation in the highest leverage areas of the tech ecosystem.”

For starters, the multi-faceted partnership will enable Greylock to tap into MLT’s network of around 8,000 Black, Latinx and Indigenous professionals and connect them with potential roles at the firm’s portfolio companies. Additionally, Greylock and MLT will work together to support retention at those companies, as well as help MLT professionals pursue careers in venture capital.

“Being at Greylock and seeing the tech ecosystem over the last 20 years — it’s become pretty clear that, at no surprise to us, modern technology is one of the greatest opportunities for wealth creation,” Greylock Partner David Sze told TechCrunch. “Has been one of the greatest creators for wealth and is likely to be so in the future — in the foreseeable future.”

But the greatest financial returns accrue to founders, early employees and investors. That creates this network where those early employees and alumni from top companies like Facebook or Google then go on to become founders of the next generation of startups in the wealth creation cycle, Sze said.

“And the cycle repeats itself,” Sze said.

Then, VCs are eager to back teams with people who used to work at those high-growth companies, he said.

“That’s just how the Valley works,” Sze said. “It’s a social network in and of itself. […] But the issue is that Black and Latinx and Native American people really largely have been left out of tech startups and venture capital and those networks. And as a result, it actually is a compounding factor.”

For those folks in the system, it compounds in their favor but that means for those left out, it becomes harder to figure out how to break into it, Sze said.

“And look, VCs and tech startups — we just have to be honest that we’ve been really bad at getting this right,” Sze said. “Historically, I mean, we’ve let the system sort of evolve without much top down oversight in regards of diversity and inclusion and we just really need to change that.”

That’s a key reason why Greylock and MLT are partnering to try to get more Black, Latinx and Indigenous people in these tech startups. And it’s not that there is a pipeline problem because there is plenty of available talent, Sze said. But he said that if there is a pipeline problem, “the problem is actually on our side.”

“It’s not on the talent side,” Sze said. “There is plenty of talent out there. It’s that the networks and systems that have existed and grown over time in the valley have not been conducive to allowing the inclusion of that group.”

Greylock’s partners also donated $5 million to anchor MLT’s first-ever impact fund, which allows MLT to be a limited partner in Greylock’s latest fund, a $1 billion fund.

“We have a long history with our LPs,” Sze said. “We do not let new LPs in very often and we’re super excited to have them involved because we think it’s a force multiplier.”

The hope with this partnership is that it’ll spur ideas for other collaborations with VC funds, Sze said. For Rice, he hopes that other leaders in tech will take note and get on board with moving the needle.

“Leaders need to be at this time, at this critical juncture, be much better informed about why we are where we are,” Rice said. “[…] Leaders not only need to be well-informed but also be willing to hold themselves accountable to be more informed. And that doesn’t require them to be experts on the history of racism. It requires them to understand like they understand, you know, AI and bitcoin and things like that. Understand this stuff.”

Leadership, Rice said, also looks like committing to a comprehensive approach with the same level of rigor that venture capitalists apply to how they invest in companies, and that tech companies apply to their growth.

“If we don’t have that same level of rigor in our approach and we just think that we can move the needle with random acts of diversity, then we’re done. We’re not going to move the needle. It’s going to require, you know, a comprehensive approach.”

Polaris and Zero Motorcycles reach deal to bring electric off roaders to market

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Polaris is a name synonymous with powersports — just head to any of the hundreds of snowmobile trails in Wisconsin, Minnesota or other sufficiently wintry place for evidence. Now, it’s teaming up with Zero Motorcycles, Santa Cruz-based maker of electric motorcycles and powertrains, to electrify its lineup.

The two companies announced Tuesday a 10-year agreement to work together to produce electrified off-road vehicles and snowmobiles using Zero’s powertrain technology, hardware and software. Polaris will develop, manufacture and sell the vehicles.

The companies will co-develop the technologies and vehicle platforms for this next generation of electrified powersports, according to Zero Motorcycles CEO Sam Paschel, adding that the aim is to dramatically expand the electric options currently in the market.

“Our EV expertise and millions of miles of real-world, rubber-meets-the-road EV experience, coupled with Polaris’ broad product portfolio, scale, supply chain and market leadership, makes this a game-changer for every powersports enthusiast,” Paschel said in a statement. 

Polaris already has several electric options in its portfolio, thanks to a series of acquisitions its made over the past decade. In 2011, the company acquired Goupil, a French manufacturer of on-road, commercial light duty electric vehicles for the European market as well as GEM, the street-legal passenger and utility electric vehicles. Polaris more recently acquired Brammo Electric Motorcycles, a purchase that gave the company access to technology that would later be used in its Ranger EV off-road vehicles.

This latest deal aims to create a broader portfolio of products, not just one offs. Polaris said the partnership will be the cornerstone of “rEV’D up,” the name of its long-term strategy to offer customers an electrified option within each of its core product segments by 2025. The first vehicle from this Zero-Polaris partnership will debut by the end of 2021.

“Thanks to advancements in power, pricing and performance over the last several years, and with customer interest surging, now is the right time for Polaris, with Zero Motorcycles as a key strategic partner, to implement our rEV’d up initiative and aggressively accelerate our position in powersports electrification,” Polaris CEO and Chairman Scott Wine said in a statement. Wine boasted the partnership will enable Polaris to “leapfrog technological hurdles around range and cost while providing a tremendous speed-to-market advantage.”

Facebook introduces Accounts Center, a tool for managing a growing number of cross-app settings

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Despite being under antitrust investigations in U.S. and E.U., Facebook today is rolling out a new feature that highlights the extent to which its suite of apps now interoperate. The company this morning introduced a consumer-facing tool called “Accounts Center,” which is found in the Settings section of Facebook, Instagram and Messenger. The feature aims to give users the ability to manage their connected experiences across Facebook-owned apps, like Single Sign On and Facebook Pay, for example.

In Accounts Center, users will be able to optionally turn on or off Single Sign On, an authentication option that  allows you to do things like use your Facebook account information to log into Instagram or to recover your accounts.

Image Credits: Facebook

In the new settings area, you’ll also be able to make adjustments to how your Stories post — for instance, whether you want your Stories to publish to both Facebook and Instagram at the same time.

Though not available at launch, Facebook says it will add Facebook Pay to the Accounts Center later this year. In the U.S., you’ll then be able to enter your payment information in one place then use it across both Facebook and Instagram when you make purchases, like in the new Facebook and Instagram Shops, or when you make donations.

Facebook says users who choose to use Accounts Center won’t have to publicly use the same identity across all of Facebook. You could, for instance, continue to use a personal profile on Facebook while using Instagram to promote your business or hobbies. But the feature will likely be more useful for those who do maintain the same identify across platforms, as you can do things like sync your profile photo across apps.

The new feature, however, brings to light the extensive data collection operation Facebook has built by way of its various apps. In a blog post, Facebook clearly states that it uses information from across its suite of apps to personalize your experience, including which ads are shown. In other words, even if you maintain different identities publicly, Facebook is aggregating your data behind the scenes. This allows it to maintain its market dominance in social and potentially stifle new competition. This matter has been at the forefront of the U.S. government’s antitrust investigations, and elsewhere, which are still ongoing.

Without intervention from regulators, Facebook isn’t slowing on plans to make its suite of apps ever more interoperable. This summer, for example, it began testing the merger of Instagram and Messenger chats. Those efforts continue today.

Facebook says the test of the new Accounts Center will begin this week across Facebook, Instagram and Messenger.

A closer look at the Apple Watch Series 6 and how to review it

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Vergecast co-host Dieter Bohn has been hosting a series of discussions diving deep into tech review season each Tuesday, with every episode focusing on a specific product announced this fall.

This week, Dieter talks with Joanna Stern, a senior personal technology columnist at The Wall Street Journal and Verge alum, about her review of the Apple Watch Series 6.

The big feature of the Series 6 is the addition of a blood oxygen sensor. Though Apple calls this feature a “wellness device” rather than a medical one and cannot guarantee the accuracy of the meter, Dieter and Joanna discuss whether this newly added sensor is worth the upgrade and how the many variants of the Apple Watch complicate the review process.

Dieter and Joanna also…

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5 tech trends that will redefine finance in the next 5 years

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As one of the most ancient tenets of human societies, money and finance have been constantly evolving with advances in technology and science. As technology continues to take leaps and bounds and permeates every aspect of life, we can expect banking and finance to change. So, how will technology transform financial services in the next few years? We asked experts to share their perspectives, and here are six trends we think are worth watching.  Natural language processing The past decade has seen tremendous advances in natural language processing, the field of artificial intelligence that extracts meaning and context from spoken…

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Duracell’s new coin batteries have a bitter coating that makes them taste terrible

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Duracell is trying to make its coin cell batteries a little less enticing to eat: the company is adding a new bitter coating to its 2032, 2025, and 2016 size lithium coin batteries, with the aim of discouraging young children from accidentally eating the otherwise (apparently) irresistible-looking batteries.

The new batteries — which began rolling out in stores earlier this month — feature a coating on the bottom that reacts with saliva to release a bitter taste that will in turn discourage children from actually swallowing the battery. Duracell notes that swallowing a lithium battery can cause a “harmful chemical reaction in as little as two hours.” By making the batteries too bitter to swallow, the company is hoping to prevent those…

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Datasaur snags $3.9M investment to build intelligent machine learning labeling platform

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As machine learning has grown, one of the major bottlenecks remains labeling things so the machine learning application understands the data it’s working with. Datasaur, a member of the Y Combinator Winter 2020 batch, announced a $3.9 million investment today to help solve that problem with a platform designed for machine learning labeling teams.

The funding announcement, which includes a pre-seed amount of $1.1 million from last year and $2.8 million seed right after it graduated from Y Combinator in March, included investments from Initialized Capital, Y Combinator and OpenAI CTO Greg Brockman.

Company founder Ivan Lee says that he has been working in various capacities involving AI for seven years. First when his mobile gaming startup, Loki Studios was acquired by Yahoo! in 2013, and Lee was eventually moved to the AI team, and most recently at Apple. Regardless of the company, he consistently saw a problem around organizing machine learning labeling teams, one that he felt he was uniquely situated to solve because of his experience.

“I have spent millions of dollars [in budget over the years] and spent countless hours gathering labeled data for my engineers. I came to recognize that this was something that was a problem across all the companies that I’ve been at. And they were just consistently reinventing the wheel and the process. So instead of reinventing that for the third time at Apple, my most recent company, I decided to solve it once and for all for the industry. And that’s why we started Datasaur last year,” Lee told TechCrunch.

He built a platform to speed up human data labeling with a dose of AI, while keeping humans involved. The platform consists of three parts: a labeling interface, the intelligence component, which can recognize basic things, so the labeler isn’t identifying the same thing over and over, and finally a team organizing component.

He says the area is hot, but to this point has mostly involved labeling consulting solutions, which farm out labeling to contractors. He points to the sale of Figure Eight in March 2019 and to Scale, which snagged $100 million last year as examples of other startups trying to solve this problem in this way, but he believes his company is doing something different by building a fully software-based solution

The company currently offers a cloud and on-prem solution, depending on the customer’s requirements. It has 10 employees with plans to hire in the next year, although he didn’t share an exact number. As he does that, he says he has been working with a partner at investor Initialized on creating a positive and inclusive culture inside the organization, and that includes conversations about hiring a diverse workforce as he builds the company.

“I feel like this is just standard CEO speak but that is something that we absolutely value in our top of funnel for the hiring process,” he said.

As Lee builds out his platform, he has also worried about built-in bias in AI systems and the detrimental impact that could have on society. He says that he has spoken to clients about the role of labeling in bias and ways of combatting that.

“When I speak with our clients, I talk to them about the potential for bias from their labelers and built into our product itself is the ability to assign multiple people to the same project. And I explain to my clients that this can be more costly, but from personal experience I know that it can improve results dramatically to get multiple perspectives on the exact same data,” he said.

Lee believes humans will continue to be involved in the labeling process in some way, even as parts of the process become more automated. “The very nature of our existence [as a company] will always require humans in the loop, […] and moving forward I do think it’s really important that as we get into more and more of the long tail use cases of AI, we will need humans to continue to educate and inform AI, and that’s going to be a critical part of how this technology develops.”