Technology

The week is kicking off with a major piece of M-A in the world of financial technology startups. Today Intuit — the accounting, tax filing and financial planning software giant behind QuickBooks, TurboTax and Mint, confirmed that it plans to acquire Credit Karma — the fintech startup with more than 100 million registered users, 37 million of them active monthly users, which lets people check their credit scores, shop for credit cards and loans, file taxes and more. Intuit said it would pay $7.1 billion for Credit Karma, making this Intuitbiggest-ever acquisition to date, and one of the biggest in the category of privately-held fintech companies.

The news confirms a report from the WSJ that surfaced over the weekend noting that Intuit was finalising a deal to buy the startup for $7 billion in a cash and share offer, in the first big acquisition to be made by CEO Sasan Goodarzi since he took the role just over year ago. Intuit also announced itsquarterly earnings todayin which it reported revenue growth of 13% on revenues of $1.7 billion, beating analyst estimates of $1.68 billion. However, it missed analysts& average expectations for earnings per share: it reported non-GAAP EPS of $1, while they were forecasting $1.03.

&Our mission is to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform,& said Goodarzi, in statement. &We wake up every day trying to help consumers make ends meet. By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they&ve always dreamed about, pay for education and take the vacation they&ve always wanted.&

Intuit plans to keep Credit Karma — which makes more than $1 billion in revenues annually — as a standalone operation, run by CEOKenneth Lin, who cofounded the startup with Ryan Graciano and Nichole Mustard.

&We started Credit Karma with a goal to build a trusted destination for all consumers, to make financial progress regardless of where they are in life,& said Lin, in a statement. &We saw the opportunity to enrich peoplefinancial lives through transparency, simplicity and certainty.&

The acquisition is an obvious fit for Intuit, where it will serve two purposes. Intuit can tap Credit Karmacustomer base and range of services — it partners with some 100 financial service providers in its marketplace — to complement those it already offers, to help upsell those users to Intuitpremium, paid services. And Intuit can use it to grow its wider business by tapping a set of consumers — typically younger users — that Credit Karma has possibly been more successful in capturing than Intuit has.

Including this deal, Intuit has made some 31 acquisitions to date. It has a track record of acquiring startups with big potential and running with them. One of its major business units today, Mint (for personal financial planning and management), is based on a startup of the same name that it bought in 2009 (for the relatively modest sum of $170 million).

In reality, Credit Karma and Intuit have a lot in common in terms of what they do. While Intuit provides a set of services and software to professional accountants, perhaps its biggest claim to fame is that it helped build and popularise a movement in &DIY accounting& and related software: a set of easy-to-use online tools that ordinary people can use to manage their money, file their taxes and more.

Intuitcurrently has a market cap of over $77 billion, and while its share price was down about 3.75%in market trading today, it has over the last year (and more) seen a gradual rise in its share price — a reflection of its overall profitability, stability and dominance in its particular area of financial services. After market close, the share price was up 2.21% in the wake of the Credit Karma news.

And this is also where Credit Karma comes in. The company started out originally in 2007 providing free credit scores, later extending that to full credit reports. Eventually, it used the data and audience it had amassed as the basis for an expansion into a wider range of related services — which, like Intuit, Credit Karma built around the premise of ordinary consumers using the internet and cloud-based services to take charge of their financial lives.

Credit Karmalaunch of a financial planning tool in 2013 drew a direct comparison to IntuitMint. And since then, Credit Karma has launched other products that directly rival Intuit, for example a free tool to help people file their taxes. These not only represented direct competition, but a disruptive threat, since Credit Karmaproducts skewed younger and were built on a &free& premise (offering the products at no charge and instead making money off showing users and selling relevant, related products). The fact that Credit Karma partners with so many other financial services providers also means itsitting on a huge data trove that it leverages to build and personalise products, representing a data science angle for Intuit here, too.

The company reported crossing $500 million in revenues in 2017 (meaning itmore than doubled revenues in the last two years), and it used that momentum to move into international servicesand more. (I&d add that the diversification was significant for another reason: the Equifax breach of 2017 has cast a shadow on credit scores and credit histories; and how they are used and sometimes misused.)

Credit Karma over the weekend told us that it would not comment on rumours or speculation regarding the reports, but interestingly it had long eyed plans for an IPO, talking about the ideaas early as 2015, when it was valued at just $3.5 billion.

A$500 million secondary round in 2018, at a $4 billion valuation, helped put off those plans for a while. Credit Karma had raised just over $645 million to date, according to PitchBook, with investors including Silver Lake, Tiger Global, Capital G, Founders Fund, Felicis and others.

More generally, while we have seen some successes in the world of fintech IPOs — for example, both Adyen in Europe and Square in the US have definitely gone up in the last five years — the availability of large amounts of private capital from VCs and private equity have helped fintech startups, even the outsized ones like Stripe, stay private for longer, holding on for more profitability, and/or possibly another kind of liquidity event to come along.

Even within the trend for wider consolidation in the world of financial technology — where a number of smaller venture-backed startups, as well as more scaled up and mature fintech businesses, are getting snapped up by bigger fish in a bid for more economies of scale — Credit Karmasale to Intuit stands out as one of the bigger deals in terms of price.

CrunchBase has recorded around 150 fintech M-A deals in the years ittracked them, with some of the largest including the acquisition of First Data by Fiserv for $22 billion; PayPal acquiring Honey for $4 billion; Fiserv also acquiring CheckFree for $4.4 billion; and PayPal acquiring IZettle for $2.2 billion (see a pattern here)?

Are the schmooze sessions, after-parties and secret dinners with investors that take place during tech conferences mere distractions, or are these events an opportunity for founders to close a deal?

Which parties should you attend? How do you get in? And above all, what outcome are you working toward?

Some events are small, while others are shows of pomp, power and pizzazz. &For me, this is a time to bring value to my portfolio,& says Sid Trivedi, partner at Foundation Capital. FoundationRSA 2020 event is a small gathering of 50 people who fall into one of three categories: buyers from Global 2000 companies, channel partners or portfolio CEOs.

&In particular, I am focused on helping seed-stage companies because they rarely get access to such a buyer universe,& Trivedi says. At the other end of the spectrum, some events will have several hundred attendees, which raises the odds of getting lost in a crowd.

&If the event has a well-curated attendee list, it makes it worthwhile for both sides. Often, I can scan the room in 15 minutes and know if I want to stay here,& said Ariel Tseitlin, a partner at Scale Venture Partners. Some conference events are hosted by top-tier investors and partnership-heavy corporate VCs, while others are driven by consulting groups that share market trends and research content. As one founder bemoaned, &why can&t we just have a Tinder for VC-CEO match-making?&

Bypassing the firewall

If you don&t have an invitation, I don&t advise just showing up at the door; these are well-guarded events. Gate-crashing is a good strategy for a 19-year-old (who has the maturity of a 12-year-old), but not for the rest of us. Some founders use a simple tactic: get an existing portfolio CEO to take you in as their guest. Most VCs love it when they get such an introduction; ita great start and much better than sending a cold email or a LinkedIn to the lead partner.

Inspired by the work of Instacart shoppers over the last few years, a handful of workers at Target-owned Shipt, a grocery delivery service, are beginning to organize. With the help of two key Instacart shopper-activists, Vanessa Bain and Sarah Clarke, who goes by a pseudonym, Shipt workers are now demanding better wages and the elimination of what some describe as a culture of fear.

&We want to be the first responders,& Clarke tells TechCrunch. &Whenever gig workers find out there is a pay cut or some type of issue, they&ll feel comfortable coming to us.&

In January, Shipt started testing a new pay structure where, instead of basing it on cart size, Shipt takes into account the time it takes to complete and deliver an order. Shipt implemented these changes in Kalamazoo, Mich., San Antonio and Philadelphia. As Gizmodo reported earlier this month, there was some shopper backlash.

Prior to the changes, shoppers had received a $5 flat rate and 7.5% of the total store receipt, one shopper, who asked to remain anonymous, told TechCrunch.

&We are losing money as shoppers at a ridiculous rate,& a shopper from Kalamazoo tells TechCrunch. &A very good, close friend of mine told me in the three weeks since the new structure was implemented, she has lost the equivalent of a car payment. It is a lot of money. Our best guestimation is, we&re all losing about 30% or more. I did four orders this past weekend and I lost money on every single one.&

But Shipt says its goal is to maximize the earning potential for its shoppers and to make sure they get the most value for their time spent. Thatwhy Shipt is testing this new pay structure in certain markets to better account for time spent shopping and delivering orders,Shipt Director of Corporate Communications and Outreach Julie Coop told TechCrunch.

&In this structure, shoppers are guaranteed to make at least the minimum in the pay range shown at the time the order is offered to them,& Coop said. &That range is based on the estimated amount of time the order will take to complete. We&ve seen pay levels remain consistent overall, and in some markets slightly higher. As always, Shipt Shoppers receive 100% of their tips on top of order pay.&

Shipt connected me with Stacy Smith, who shops for Shipt in Kalamazoo, Mich. Smith tells TechCrunch she has no issue with the new policy, saying that sheactually seen a slight increase in her pay. While it was more attractive and economical for her to get bigger orders in the old pay model, the size of the order now doesn&t matter.

&I&m now getting a little less pay in larger-size orders and a little bit increase in the middle or smaller orders, which is the abundance of them,& Smith says. &If we&re not getting paid a little bit more for those smaller to mid-sized orders, that makes sense to me. The big picture is we used to get upset because we had these small or mid-sized orders. But now we get paid a little more for those orders.&

At this point, itnot clear how many of Shiptworkers are for or against this new pay structure. Still, a number of workers reached out to Clarke and Bain once the pay structure started rolling out.

&Shipt has been pretty under the radar,& Clarke said. &No one is really paying attention to them — mostly because the workers are scared to speak out.&

Willy Solis, who shops for Shipt in the Dallas area, is one of the shoppers who reached out to Clarke.

&I&ve followed Sarah and Vanessawork and their efforts over on Instacart, because I&m on that platform as well,& Solis tells TechCrunch. &I&ve been seeing what they&ve been able to accomplish, so when Sarah asked in our group lounge if anyone is interested in talking, I jumped at it.&

Solis says he had been thinking about organizing for some time, but there had been no catalyst for him and other workers to do something. Now, Solis is working with Clarke and Bain through their Gig Workers Collective to figure out their strategy moving forward.

&While I am afraid of being deactivated due to speaking out, I am hopeful Shipt will hear the Shipt shopper communityvoice as a collective whole, rather than censoring and ignoring dissenting concerns,& he says.

There are two main Facebook groups where Shipt shoppers interact. One is Shipt Shoppers United, which one shopper from Iowa, who asked to remain anonymous, describes as being &a little more real.& The group strictly prohibits people from Shiptcorporate team, but itmuch smaller in size. This group has just a little over 6,000 members.

The other group is the Shipt Shopper Lounge, which is administered by members from Shipt HQ. This group has more than 100,000 members. Itin this group where Solis says Shipt has created a &cult-like environment& where the company deletes any negative comments in Facebook groups for shoppers and only lets shoppers see &feel-good stories in an attempt to keep up shopper moral.&

Solis said his comments have been deleted from the Shipt Shopper Lounge Facebook group and his local Shipt group. This culture of fear, Solis says, leaves some shoppers feeling like they have to take every order, or else they&ll be punished in some way, like getting sent low-paying orders or getting deactivated. Or, if they speak out against the company in Facebook groups, some say they fear they&ll be deactivated.

&Shopper feedback has been incredibly important to improving the experience we create for our shopper community, members and retail partners,& Coop said. &We encourage ShiptShoppers to share their opinions and feedback about their journey withShipt, and we offer multiple feedback channels where shoppers are encouraged to speak freely toShipt about their shopper experience.&

But the Iowa-based shopper, for example, referred to the vibe of the group as brainwashing.

&Italmost like it tries to brainwash you into thinking the company can&t do anything wrong,& the shopper from Iowa says. &They won&t let you post negative things about it. If you do therea good chance you&ll be deactivated.&

This Iowa shopper says she saw someone question the pay model Shipt is testing, only for that comment to be deleted. Shipt, however, says it only deactivates people based on things like performance issues.

&Shipt does not make deactivation decisions based on shopper feedback that may be critical of Shipt, but is respectful and falls within our guidelines of appropriate actions,& Coop said in a statement to TechCrunch. &We do have written agreements with all shoppers that outline possible causes for deactivation including consistent performance issues resulting in a poor customer experience or unlawful behavior.&

While the culture and pay practices at Shipt are concerning to Solis, he says what really gets at him isthe amount of control he says Shipt tries to exert over him.

&I wake up in the middle of the night scared that I forgot an order and will get deactivated,& he said, &Thatthe type of fear they instill into you. I like being an independent contractor but I am not an independent contractor with Shipt in any sense of the word. The exercise of control and them telling me how to do my work and deliveries — it is control.&

Shipt, for example, requires shoppers to take certain training classes, such as Late Delivery refresher, which is sent to shoppers who have been late 10% of the time on their last 50 orders. If shoppers don&t get a perfect score, they risk being disabled from the platform. Herewhat the course, which Shipt has designed to take about 15 to 20 minutes, looks like.

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Smith, on the other hand, says she feels like she can truly be independent on Shipt. Smith pointed to how she can make her own schedule determine which orders she wants to take.

&I know people look into things quite a bit and come up with theories,& Smith says. &But at the end of the day, thereno way to say Shipt is trying to control this, that and the other. I&ve never felt controlled by them at all.&

Shipt is the latest company in the gig economy to find itself at odds with its workers. Last year marked a turning point among gig workers who deliver for Instacart and DoorDash, as well as people who drive for Uber and Lyft. Between the passage of gig worker protections bill AB 5 and workers at Spin unionizing, gone are the days where workers for these big tech companies can be silenced.

&We do have some headwinds in organizing,& Solis says. &The company is active in our groups. We have a lot of resistance from that standpoint so we need different strategies to let people know they can be anonymous and speak out and be heard.&

Netflix is adding a new feature that will rank the 10 most popular programs on its service in your country, the company announced today. Its top 10 Overall list will display the most popular programs from across all Netflix content, including both movies and shows. In addition, separate top 10 lists for just movies and shows will be available when you switch over to either the Movies or TV show tab in the app.

These lists will be updated daily, says Netflix, and are intended to help users find out what titles everyone is watching. Before, Netflix had rows featuring both popular and trending content — but these didn&t rank content in order.

The shows and films making the list will also receive a special &top 10& badge wherever they appear on Netflix. That means if you&re searching for something to watch or browsing through your recommendations, it will be easier to see if a top 10 program is among your search results or personalized suggestions.

Netflix says this is the first time it has ever rolled out a top 10 ranking system. But the company has been experimenting with the top 10 feature before today in markets including the U.K. and Mexico. Users responded well to those additions, which is why the company decided to roll out its top 10 lists worldwide, the company says.

The Top 10 list will appear on your Netflix homescreen, but the listactual position will vary based on how relevant the shows and films are to you. For example, if you only watched documentaries and horror, a top 10 list filled with teen rom-comand comedies may not appear as high on the screen for you as it would for others.

The list itself is also designed in a way that makes it stand out from the other rows of recommendations. Instead of just displaying image thumbnails of the titles, it includes big numerals to show how those titles are ranking.

&When you watch a great movie or TV show, you share it with family and friends, or talk about it at work, so other people can enjoy it too. We hope these top 10 lists will help create more of these shared moments, while also helping all of us find something to watch more quickly and easily,& explained Netflix in a statement about the launch.

The feature arrives at a time when Netflix is feeling the pressure from increased streaming competition. User growth in the U.S. has been falling short, at the same time that rights holders pull back their content for their own rival streaming services, like NBCUPeacock and AT-T/WarnerMediaHBO Max, for example. Netflix is producing more originals than ever, but many of these are now of middling quality or are cheaper-to-produce reality programs. It hasn&t yet won a series race at the Emmyand its big bet on Scorsese&The Irishman& was one of the bigger snubs from this yearOscars.

The company has never been fully transparent about viewership metrics. It only releases numbers when a show or film breaks a milestone of some sort — like &The Witcher& and the 76 million households who &chose to watch& the series (meaning they watched for at least two minutes, indicating an intentional choice). The company also dismisses third-party estimates, like those from Nielsen, as undercounting its true viewer numbers.

The top 10 list doesn&t offer any hard metrics, but can at least help point to popular programming and other breakout successes Netflix may have in the future.

The top 10 lists are rolling out now to users worldwide, so you may not see your list just yet. The above photos are only samples, not the current top 10 in a specific market, Netflix notes.

The new season of Fortnitesecond chapter finally landed last week, shaking up a reimagined map that burst dramatically out of a black hole in the game last year. Over the weekend, we scoped out whatchanged in a game now sprinkled with secret agents, laser beams and all manner of things dipped in gold. Happily, we can report that Epic returns the game to its true colors in season 2, with some innovative ideas that deepen the game for casual players.

The black hole event and subsequent total map makeover were exciting at the time, but as the months ticked by, Epicdecision to pare down the gameexcesses left the game feeling bare. In season 2, Epic piles a lot of new ideas onto the gamefoundation, and the game feels weirder and more chaotic with a map thatmuch more alive as a result. And bananas in suits. Did we mention bananas in suits?

In season 2, Fortnite takes its most committed stab yet at a coherent theme, with spies, secret societies, dapper bananas, bulky henchmen and… a really swole cat for some reason. Ita fun vibe and well-executed so far. That theme plays out everywhere, from a revamped battle pass menu designed as a spy headquarters to some very dynamic new high-risk/high-reward map hotspots chock full of special new weapons, locked vaults and laser beams.

Even better, the new locations are stocked with NPC versions of the boss-like characters the season introduces us to right off the bat, making for a fun and reasonably challenging way to mix up gameplay when you need a break from the sometimes lonely intensity of battle royale play.

The new season keeps the old map mostly intact while adding five main new locations, all heavily guarded, loot-rich fortresses. That means a new point of interest near each corner of the map, and one right on the central island (a spot inevitably destined for something more interesting than a suburban home). The rest of the map doesn&t have many visual changes, but a handful of smaller, old locations scattered around the map have been co-opted by spy organizations and staffed with henchmen, which makes for a chaotic surprise when you come across them in the heat of gameplay. Even Pleasant Park has its own underground spy hub now.

Down the line, the new season will also introduce two competing factions for players to join, Ghost and Shadow. Depending on which faction you choose, players can unlock some pretty cool variants on battle pass skins, including Meowscles, a shirtless, muscle-bound catman with a pec-flexing animation that might be the best thing to ever happen to Fortnite. Well, except for the new teleporting port-a-potties. You&ll find those soon enough.

As far as changes that will affect gameplay, there are many, many unvaulted weapons mixing things up relative to last seasonstripped-down arsenal. Traps are gone, chests no longer shower you with fishing rods (thankfully) and heavy assault rifles and all manner of silenced guns have made a comeback. And if you really want to be treated to the best weapons in the game, you can raid one of the five new spy headquarters to take down bosses, including an explosive-happy rocker named TNTina, a sharply dressed guy calling himself Midas and Meowscles (oh Meowscles!), who hangs out on his own gigantic, laser-guarded yacht.

As you work through the battle pass, you&ll also unlock these boss characters as skins. Ita fun way to drape some light narrative over a game loved mostly for its incoherent total cartoon chaos rather than a character-centric light and fluffy multiplayer shooter like Overwatch. And because Epic is tasked with the impossible — maintaining momentum on a game with such historic success it basically became a mainstream social network at its peak — carving out a deeper game under Fortnitecandy-colored shell can&t hurt.

David Renteln, the Los Angeles-based co-founder of Soylent and the co-founder and chief executive of new nicotine gum manufacturer Lucy Goods, thinks there should be a better-tasting, less-medicinal offering for people looking to quit smoking.

Thatwhy he founded Lucy Goods, and thatwhy investors, including RRE Ventures, Vice Ventures and FundRX joined previous investors YCombinator and Greycroft in backing the company with $10 million in new funding.

&We reformulated nicotine gum and the improvements that we made were to the taste, the texture and the nicotine release speed,& said Renteln.

These days, any startup thatworking on smoking cessation or working with tobacco products can&t avoid comparisons to Juul — the multi-billion-dollar startup thatat the center of the surge in teen nicotine consumption.

&The Juul comparison is something thatobviously top of peopleminds,& Renteln said. &Itimportant to note that therea huge difference in nicotine products.&

Renteln points to statements from former Food and Drug Administration chief, Scott Gottlieb (whonow a partner at the venture firm New Enterprise Associates), which drew a distinction between combustible tobacco products on one end and nicotine gums and patches on the other.

&Nicotine isn&t the principle agent of harm associated with these tobacco products,& said Rentlen. &Itaddictive but not inherently bad for you.&

Lucy Goods also doesn&t release its nicotine dosage in a concentrated burst like vapes, which are designed to replicate the head rush associated with smoking a cigarette, said Renteln.

&It is a stimulant and they will get a sensation, but itnot as intense as taking a very deep drag of a cigarette,& Renteln said.

The companywebsite also doesn&t skew to young, lifestyle marketing images. Instead, there are testimonials from older, ex-smokers hawking the Lucy gum.

&I don&t want anyone underage using any nicotine product or any drug in general… [and] the flavors have been around for a long time.&

Joining Renteln in the quest to create a better nicotine gum is Samy Hamdouche, a former business development executive at several Southern California biotech startups and the previous vice president of research at Soylent.

For both men, the idea is to get a new product to market that can help people quit smoking — without a social stigma — Renteln said.

&Smoking is the leading cause of preventable death in the United States claiming over 480,000 lives every year and costing the U.S. an estimated $300 billion in direct health costs and lost productivity. Lucy is committed to bringing innovative nicotine products to the market to eliminate tobacco related harm and we&re proud to be part of their journey,& said RRE investor, Jason Black in a statement.