Tech Brew Ride Home - Thu. 08/03 – Pandemic High Fliers Crash To Earth

Episode Date: August 3, 2023

Two stories today of startups who flew high during the pandemic, but have crashed down to earth in meaningful ways. NFT trading volumes might be sinking, but developers continue to flood into the space. And does Goldman Sachs want out of the whole Apple Card partnership? Links: Johnny Boufarhat steps down as CEO of Hopin (Sifted) ‘A Nice Bike, When It Works’: Riders Fret After E-Bike Maker Goes Bust (NYTimes) IRS expects faster refunds in 2024 for people who stop using paper (Washington Post) NFT Trading Volume Is Sinking, But It’s Not Stopping Developers From Entering Web3 (Coindesk) Kenya suspends Worldcoin's crypto project over safety concerns (Reuters) Why are people lining up for Worldcoin eyeball scans? “Easy $50” (Rest of World) How the Partnership Between Apple and Goldman Sachs Soured (The Information) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme right home for Thursday, August 3rd, 2023. I'm Brian McCullough today. Two stories of startups who flew high during the pandemic that have crashed down to Earth in meaningful ways.

NFT trading volumes might be sinking, but developers continue to flood into the space. And does Goldman Sachs went out of the whole Apple card partnership? Here's what you missed today in the world of tech. I take no pleasure in this, but we've got two stories today of pandemic-era high flyers who have come crashing back down to Earth. First, Hoppin, the struggling virtual events startup, once valued at $7.75 billion back in August of 2021, is selling its events and session units to Ring Central. CEO Johnny Balfarhat is stepping down as well. Quoting Sifted, Hopin was the fastest European company to ever hit unicorn status

when it raised a $400 million Series C round at a $5.65 billion valuation in 2021, less than two years after it launched. It went on to acquire several other businesses, including Stream Yard, a video streaming platform, which it bought in 2021 for $250 million. That product, sifted sources say, is now the company's biggest revenue driver. The Streamyard product is not part of the Ring Central deal.

Hoppins investors include Andrewsson Horowitz, General Catalyst, IVP, CO2, DFJ growth, North Zone, Salesforce Ventures, Tiger Global Seed Camp, and a sell. Since the pandemic, the company has struggled. In 2022, it did several rounds of layoffs and saw its headcount drop by half from 1,100 employees in January to 505 in December 2022, according to data gathered by Synaptic. Hoppins' UK company accounts are also way overdue. The last accounts it filed were for the year to January 2021. It was meant to file accounts for the year to January 2022 at the start of this year. They are now seven months late. Beaufort, who has already sold $195 million worth of his shares in the company, according to FD

analysis, will remain on Hoppins' board. Earlier this year, he made it onto the Sunday Times' annual rich list worth $1.7 billion, at least on paper. Hoppins' record as the fastest unicorn was broken just weeks later by German speedy grocery company Gorillas, another scale up that has struggled in recent months, end quote. Yeah, in a lot of ways, I would argue that Hoppen was the quintessential startup of the whole pandemic era, a product designed to thrive in the pandemic environment, but maybe not beyond it. A company, fog rod, with so much money that it sort of limited their range of options. This is another one of those, though not one that is exactly a pandemic era story, precisely, and only to a limited degree, a tech story at all. But if you lived in

certain places, suddenly a few years ago, van moof, e-bikes were everywhere. Not sure if you've heard, but Van Moof is going bankrupt, perhaps due to similar foie grasing of money, but this presents an interesting angle. Owners of its $2,000-plus bikes are now worried that replacing proprietary parts and losing important app-enabled bike functions could all be a result of the bankruptcy. Yes, tech has eaten the world to such a degree that if the company that makes your bicycle goes bankrupt, you might not be able to use your again, Bicycle. Quoting the New York Times. Van Moof, the Dutch e-bike maker that gained a zealous following,

tripled its sales in the pandemic and raised more than $180 million in funding, declared bankruptcy last month, leaving riders in limbo. That's because the eye-catching e-bikes, which start around $2,000 are built from proprietary parts that only the company makes, available mostly at company-run service centers, and many of the bike's functions are limited to Van Moof's smartphone app. If I break it or something else happens, I don't know where to go, said Gideon Soutaman, 28, who lives in Amsterdam and has been riding his Van Moof e-bike since December. As the e-bike market boomed, the company sold about 200,000 bikes and open stores across Europe, the United States and Japan. In the e-bike world, Van Moof was often likened to Apple or Tesla,

given its elegant designs, heavy use of custom materials and premium prices. The speedy, technologically advanced bikes shift gears automatically and include a boost button that provides an extra kick. An app can lock and unlock the bike, fine-tuning its settings, and track a machine's location. For an extra fee, Van Moof-employed bike hunters to recover stolen bicycles. Those unique features are now at the heart of Van Moof owner's anxiety. Your bike will remain functional and rideable as we aim to keep our app and servers online and aim to secure the ongoing services for the future, Van Moof said in a statement. The administrators managing the company's bankruptcy in the Netherlands are, quote, currently setting up a sales

process for the assets and activities of Van Moof, the statement said. Van Moof, named as a Dutch spin on the word move, was founded in 2009 by the brothers Ties and Taco Carlier, and did not start off making battery-powered bikes, but in 2014, the founders came up with a design that put the battery inside the bike frame, helping protect it from rain and thieves, and giving Van Moof bikes their signature streamlined look. The brand took off in the bike-friendly Netherlands and word spread to early adopters elsewhere. Despite the buzz, Van Moof eventually ran into financial problems, including a production backlog that led to months-long waits for sales and repairs. They tried to do too much at once, said Horace Deju, a co-founder of micromobility industries. Overall, the industry is very

healthy, he added. Global sales of Van Moof e-bikes have been halted, and at company locations that remain open, like its shop in Brooklyn, repairs can be done only if the parts are in stock. In Amsterdam, where all Van Moof locations are shut, most bike repair shops cannot or will not repair the brand's bikes. And that's a problem because Van Moof bikes have developed a reputation for breaking down. Van Moof writers around Amsterdam said they had experienced problems with the bikes even as they praised the machines. When it's working, there's nothing better, said Michael Smith, 28, but he added the bike, quote, breaks often, end quote. The IRS says that by 2025, U.S. taxpayers will be able to file every major tax form

online and all paper returns will be digitized, quoting the Washington Post. The long-sought improvements enabled by an influx of funding in President Biden's landmark inflation reduction act mean taxpayers will be able to complete complex tax paperwork online or upload related documents directly to their IRS accounts instead of mailing hard copies to the agency. It takes the IRS a fraction of the time to process digital tax files, enabling revenue agents to swiftly and more accurately issue refunds. Tax officials for years have urged taxpayers to file. returns electronically, hoping to avoid assigning employees the tedious task of inputting lines of data by hand into the agency's decrepit computer system. By 2025 tax season, the IRS said it will

immediately digitize paperwork submitted by mail or fax, allowing optical scanners to harvest taxpayer data and upload it directly to IRS accounts. This paperless processing initiative is the key that unlocks other customer service improvements. Treasury Secretary Janet Yellen is expected to declare in a speech Wednesday, according to an early copy of her remarks obtained by the Washington Post. The tax agency estimates 94% of individual taxpayers will no longer need to send mail to the IRS once the program begins in January. The paperless project is part of a slew of customer service improvements that IRS Commissioner Daniel Werfel has prioritized since taking office in March. Agency leaders immediately tapped nearly $1 billion in new funding to hire legions of customer

support staff for the 2023 tax season, the IRS's best year. year in recent memory. In 2024, the tax agency is set to debut a pilot program that allows taxpayers to file digital returns free. Most digital filing currently happens through software or websites operated by tax prep companies that charge certain users for the service or collect personal data for Google and social media platforms. The paper reduction expected from the upgrades announced Wednesday could save the IRS tens of millions of dollars each year, officials said. The agency spends $40 million annually to store billions of taxpayer documents, end quote. According to Alchemy, NFT trading volume is sinking, but it's not stopping developers from

entering the Web3 space, quoting CoinDesk. The past few months have been rough for non-fungible token trading, but it appears builders are still bullish on Web3. According to developer platform Alchemy's latest Web 3 development report, while NFT trading volume fell 41% in the second quarter of 2023, 5.9 million smart contracts were deployed across Ethereum virtual machine compatible networks, including Ethereum, Arbitrum, Optimism, and Polygon. This number represents a 302% increase since Q1 and a 1,107% increase since the second quarter of 2022. In addition, 26.8 million Ethereum software developer kits were installed in Q2, a 7% increase from the previous quarter. while not all of the new smart contracts deployed or Ethereum SDKs installed will be used to build

NFTs, continued development points to a positive direction for Web3's growth and it steps toward mass adoption. Despite the bear market, Ethereum's price has increased 12% since last year. Blake Tandowski, growth analyst at Alchemy, told CoinDesk that whale NFT trading volumes peaked in Q2 2022, and now less users are entering the market. Still, the emerging use cases for NFTs, such as gaming, have kept developers hungry to build on the blockchain. We saw a pretty strong new users in Q2, 2022, but as time went on, the number of new users entering the space for NFT volume basically wasn't able to sustain that level of growth, which is why today we're kind of seeing a lower number than usual, said Tandowski. One thing that kind of stands out is the need for

additional use cases for some NFTs. There could be a lot of future NFT use cases that look very different from their original JPEG iteration, end quote. bottom line. Although fewer collectors are trading NFTs, more developers are focusing on building new use cases to bring Web3 technologies mainstream, end quote. Kenya's interior ministry has suspended the local activities of WorldCoin, while government agencies assess public safety risks to the service. Local media is reporting that more than 350,000 Kenyans had already signed up for WorldCoin. Quoting Reuters, the project founded by OpenAI CEO Sam Altman launched last week. requires users to give their iris scans in exchange for a digital ID, and in some countries,

users also get free cryptocurrency as part of plans to create a new identity and financial network. Relevant security, financial services, and data protection agencies have commenced inquiries and investigations to establish the authenticity and legality of the aforesaid activities. Interior Minister Kithri Kandiki said in a statement, a preliminary review of World Coins Operations has raised concerns Communications Authority of Kenya and the Office of the Data Protection Commissioner said, among them being that obtaining consumer consent in return for a monetary award bordered on inducement. World Coin Foundation, a Cayman Islands-based entity said it would take the time of suspension to work with authorities to boost understanding

of privacy measures it has in place in Kenya and elsewhere it has a presence. WorldCoin remains committed to providing an inclusive privacy-preserving, decentralized on-ramp to the global digital economy and looks forward to resuming its services in Kenya, while working closely with local regulators and other stakeholders, it said in a statement. Kandigy said the government was concerned with WorldCoin's activities, and agencies would probe how it intends to use the data it gathers, end quote. Meanwhile, our friends at rest of world interviewed people at various Worldcoin sign-up booths in Nairobi, among other places around the world,

and found that many people signing up to get their irises scanned were doing so to receive the crypto bonuses, an easy $50. many said, quote. But the individuals in line weren't drawn by Altman's lofty ideals. Instead, they were there to collect the sign-up bonus of 25 Worldcoins, roughly $7,100 Kenyan shillings, or $50. It's been so busy the past two days, said one attendant at the World Coin booth in Amara, who asked not to be named because she isn't authorized to speak to reporters. I think it's because more people are hearing about it, seeing Worldcoin trending on Twitter, WhatsApp, end quote. Announced at the height of the NFT craze, Worldcoin is one of the most ambitious projects to

emerged from the blockchain boom, using a combination of cryptocurrency and biometric registration to create a new kind of global identity service. Worldcoin claims more than two million people have already registered for the service, but with the official launch on July 24th, they're trying to bring even more people on board, setting up booths in 20 new cities around the world where curious users can register. Rest of world reporters visited World Coin booths in Nairobi, Bengaluru, and Hong Kong to get a better sense of who was signing up for the service and why. In all three cities, the surge of interest was driven primarily by the sign-up bonuses. Relatively few people were familiar with the goals of the project and rarely did their enthusiasm

for the bonuses translate to an enthusiasm for the World Coin Project or cryptocurrency more broadly. Word of the sign-up bonuses has spread quickly with little context. WhatsApp was particularly effective in driving interest in Kenya as word of free money spread from group to group. Those who haven't gotten them should visit these malls. Read one mass text viewed by rest of world sent to a group of 238 participants. You'll get a quick start, AirDrop 25 WLD tokens, easy 50 bucks, end quote. The overwhelming focus on sign-up bonuses has raised longstanding concerns about whether WorldCoin's users really understand what they're signing up for. Last April, Twin reports from BuzzFeed News and MIT Technology Review found that the company was

using deceptive marketing to induce sign-ups. In simple terms, many users had been drawn in by the promise of free money with little awareness of the broader project, end quote. Finally today, Apple says Apple card savings accounts, which boast a 4.15% interest rate, has topped $10 billion in deposits, which is not bad. But the story that's been floating around is that while this has been a success for Apple generally, it's Apple Card and Apple Savings, for their partner, Goldman Sachs, not so much. Coding the information. Apple and Goldman had struck the powerful alliance as they set out to build a revolutionary digital first credit card with designs on expanding into other consumer finance products.

For Goldman, it was a key opportunity to grow the consumer business it had jumped into as it sought to diversify away from the old school Wall Street revenue model of trading and advising on deals. For Apple, it was a way to bolster its services business, broaden its finance offerings, which began with Apple Pay, and maybe most importantly, prompt people to buy more iPhones. In October 2019, a couple of months after customers began signing up, Goldman's CEO David Solomon described it as the most successful credit card launch ever. less than four years later, and only a handful of months after the two companies extended their

contract through the end of the decade, the Apple Goldman deal is teetering. Some of the partnership shortcomings have blemish both companies' world-class reputations, and a falling out could threaten future collaboration between Wall Street and Tech at large. Goldman has been trying to get out of the pact because it won't be profitable enough for the bank in the near term, according to people familiar with the matter, and it has shopped the relationship to credit card issuer American Express. But the options for a Goldman exit are, are slim. It can't offload the business without Apple's approval, which puts it in a bind because few, if any, other partners would agree to Apple's terms, according to people familiar

with the deal. American Express cards run on its own payment network, but the Apple card has a deal in place to run on the MasterCard network, at least until 2026. People familiar with that deal said. Apple could even wind up partnering with a less visible bank and handling the bulk of the work itself. The Apple relationship has become less and less of a strategic fit for Goldman in recent months as Goldman has changed course, shifting away from the consumer strategy it had embraced. Goldman has bailed on the vast majority of its consumer operations, apart from Marcus' deposits in recent months, and there is intense pressure on Solomon to focus on profitability and Goldman's core business, according to people familiar with the matter.

That is part of the reason Goldman is trying to exit the partnership before it has had enough time to mature to the point of making the firm money, some people said. In January, Bloomberg reported that the Apple Card was responsible for at least $1 billion and pre-tax losses at Goldman between 2021 and 2022. Earlier this month, the Wall Street Journal reported that Goldman was shopping the partnership to American Express, end quote. Huh, I got sucked into that show, hijack on Apple TV Plus last night, burned through four episodes all in a row.

It's quite good. Idris Elba, so does this mean I have to give Silo a try now. Talk to you tomorrow.