Benchmark's Bill Gurley Explains The Reason For All Those Huge, High Valuation Funding Rounds

Uber. Pinterest. Snapchat. We're seeing a huge number of nine-figure funding rounds happening lately, driving valuations in tech companies up into the billions. Why's there so much interest among investors in making big bets over recent months? Backstage at TechCrunch Disrupt Europe, I got the chance to sit down with Benchmark's Bill Gurley to talk about his recent investments, Uber's amazing user growth, and why we are seeing so many huge, high-valuation funding rounds happening. It's that last part that's interesting, especially in light of all the big financing news we're seeing. Here's what he had to say: “I think there's two things are going on: One, there's quite a bit of capital availability out there, and if you look at how low-interest rates are, and what are the alternatives to invest capital and get return, that causes asset prices to rise. The stock market's up, as well. You know, this is a cyclical industry, and when times get good, they get really good. Last time we saw that was 1999 and many of the people at this conference might not have been paying attention, because they were in high school. But money is definitely freer flowing today than it was three or four years ago. The other thing that I think has become a global reality is that some of these companies have systems, they have networks in them, that cause early leads to always play out with really huge platforms. A lot of people laugh or write silly articles about the notion of a pre-revenue company having a very high valuation. If you talk to some of the smartest investors on Wall Street, or go talk to guys like Lee Fixel or Scott Shleifer at Tiger, they're looking for these types of things. They're looking for things that can become really, really big. I think over and over again you're seeing these companies that have these systematic effects go from being really little to massive. If you look at the size of the outcome… Look, every investment has two variables: the probability of success and the magnitude of success. What people are saying is, having watched history, companies that get this type of leadership or advantage early on - typically that second variable is really, really, really big. So they're willing to bet with higher prices.”

Munchery Rebuilds Mobile Apps, Hires 3-Star Chef And Gets Into Booze

Munchery today announced a grab-bag of updates to its platform, including a redesign of its menus, new iOS apps, support for kids' meals, booze delivery (including gluten-free options), and carbon offsetting of deliveries. The list is diverse, but the thrust of the updates is that Munchery is tightening its core dinner experience. Munchery brings together chefs to prepare meals then delivers the meals, almost ready-to-eat, to Bay Area residents. There is a bit of final cooking to do with your delivered food, so even if you are technically ordering in, it's up to you to finish prepping your dinner. Let's get into what's new. The Munchery iPhone and iPad apps have been improved, so they don't crash as much. The company is claiming a 5X speed boost, but really what users will find pleasant is that they won't fail on them when trying to order. Most important among the updates, in my humble view, is the inclusion of alcohol delivery. In the past, Munchery had what it calls “a small selection of wine now and then.” The service will now feature wine, beer, and cider. No whiskey, sadly. Also, tea from the Samovar Tea Company, coffee from Philz, and fresh juices will be available. Munchery also announced today that it has hired Bridget Batson, a three-star chef. While Munchery has long depended on its network of independent chefs, it is bulking up internally, to offer food that it sources in-house. This way it can expand its offerings to other dietary styles (Paleo, for example, could be one) that it doesn't yet support. You aren't a kid, but you might have one or two. Munchery now supports kids menus, so you don't have to attempt to get little Joey to eat Brussels sprouts. The company will also now carbon offset the impact of its delivery vehicles with tree planting, and expand its program to donate money to the SF and Marin food banks. Finally, Munchery has put together new packaging. This is cooler than it sounds. Remember that Munchery requires you to do the last step with your food, either in the oven or in your microwave. Its new delivery containers are both microwave- and oven-safe and look quite nice to boot: So, what do all the little updates sum to? Simply that Munchery has put together a service that allows any family in the Bay Area to eat well at home, on whatever diet, every night, and without the need to order Chinese yet again. This is appealing in a locale where people are busy, and wealthy, making the Bay Area a perfect spot to prove Munchery's model, if the company does have real product market fit. The Munchery premise is appealing in locations where the population is wealthy and busy. This makes the Bay Area a logical place for the company to try its model and prove product-market fit. I eat far too much delivered food, and I'm sure you do, too. I've used the service in the past, and found the experience pleasant, but not mind-blowing. I'll be re-testing it with the new updates this week, to get a handle on how it has grown up. If Munchery can keep us fed, and perhaps keep us slightly healthier, then that's something worth trying.

‘We're Really Screwed Now,' Says NSA Official After Surveillance Hawks Switch Sides

The National Security Agency is having a very bad day: two of the most ardent surveillance hawks have officially turned against the spying agency. California Senator Dianne Feinstein broke ranks and came out against the NSA spying on foreign leaders. Even worse, the author of the Patriot Act, Jim Sensenbrenner, dropped a co-authored bill to end bulk collection of Internet and telephone data. “We're really screwed now,” one NSA official told Foreign Policy's The Cable. “You know things are bad when the few friends you've got disappear without a trace in the dead of night and leave no forwarding address.” Feinstein had been the most public defender of the NSA's massive surveillance practices, until German Chancellor Angela Merkel freaked out over the fact that the U.S. had maintained a secret spy hub in the embassy. “With respect to NSA collection of intelligence on leaders of US allies – including France, Spain, Mexico and Germany – let me state unequivocally: I am totally opposed,” she declared. President Obama, who was reportedly unaware of the practice, is considering a ban on surveillance of allies, according to The New York Times. This comes on the heels of a House of Representatives version of a Senate reform package to stop bulk collection of records and provide more transparency to members of Congress. Most notably, the co-author also wrote the Patriot Act, the legal foundation for most of the NSA controversial spy practices. It dropped with strong support - 70 members in the House. Combined, these are very good signs that some sort of reform is coming.

Google Adds SMS Support To Its Android Messaging App As Facebook Axes It

A few days ago, a set of leaked images pointed to some pretty drastic changes to the Google Hangouts Android app, the biggest of which was that users would be able to send SMS messages without having to switch into another messaging application. Well, Vic Gundotra trotted onstage at a Google+ event in San Francisco (after a power outage caused a half hour stream delay, no less) today to confirm exactly that. The Hangouts Android app will be indeed able to fire off bog-standard text messages, as well as share a user's location and send/display animated GIFs like this one when the update rolls out in a few days. If you'll recall, the iOS version of the Hangouts app got at least one of these tweaks ahead of the Android version (which was a surprising and refreshing change of pace) - as of about two weeks ago, iOS Hangouts users could send and receive animated GIFs, and got the ability to make Google Voice calls over a data network as an added bonus. (I should note that last bit is a bummer, but it's a story for another time). But really, it's that SMS support bit that seems the most intriguing if only because we're starting to see some peculiar movement in the messaging space by players that have sought to own it. Take Facebook for instance. Earlier today it pulled back the curtain on a revamped Messenger app for Android, and the once-present support for sending SMS messages from certain Android devices is officially gone. To hear Facebook tell it, the feature was the victim of poor traction so it got axed. Fair enough - there are more than enough mobile messaging apps out there to fill the chat void for certain users, and Facebook Messenger is poised to reach plenty of them. So two companies, two drastically different approaches to SMS. Though both aim to connect as many of their users as possible, Google's approach is one that needs to be as fundamentally inclusive to Android users as possible. I don't see Google axing SMS support even if it's as much of a drag as Facebook's attempt was. Now that's not to say that Google is necessarily dead set on owning the messaging experience on Android; that would run counter to the openness of Android itself, and it's already been confirmed that users can set other SMS apps as the default in Android 4.4 KitKat. But there's little question that Hangouts is much more attractive now than it was just a few hours ago. This curious little addition has also revived questions about the future of some of Google's other apps. Hangouts on Android is itself a fairly robust messaging application, and more than a few people have wondered whether or not it's ultimately going to replace the occasionally iffy Google Voice app as a sort of centralized communications hub. At least, I'm hoping that's ultimately where Google is taking things. Either way, SMS support in Hangouts could also serve as a shot across Apple's bow - the folks at Cupertino often tout iMessage's cross-device capabilities, but in practice the service doesn't always work as well as it should.

Retargeting Giant AdRoll Poaches Google Ads Veteran To Head New EMEA Office

As retargeting startup Criteo is poised to IPO, one company flying under the radar but, by the looks of it, that is also doing well in the retargeting space is AdRoll. It's now launched in Europe, or perhaps more accurately EMEA. At the same time it's poached Marius Smyth, eight-year Google veteran, and former head of UK & Ireland SMB Sales and part of Google's UK and Ireland executive team. AdRoll says it has had some 600 percent+ growth in the region – an indication of why it might be doing so well. It's been pulling in 1,300+ advertisers here (but 10,000+ advertisers in 100 countries). They say they recently passed a $100 million run-rate milestone (up from $50 million last year). Backed by Peter Thiel and Accel Partners with $25 million in funding, AdRoll's success shows retargeting is pretty hot right now. Google launched a "Dynamic Remarketing" product in June 2013 and in June Twitter said it would be offering a retargeting product. Facebook launched retargeting on FBX in late fall 2012. Then of course, there's Criteo's NASDAQ IPO. Criteo has already hiked its IPO price range to $27-$29. The company is expected to officially price its IPO this week, after which it'll begin trading. This comes after Rocket Fuel delivered a very hot IPO. Obviously, this is a European tech success story, even if there are plenty of annoyed people that they decamped to NASDAQ.

Twitter Apps For iOS, Android And Web Get In-Stream Video And Image Previews

Twitter today shipped an update that adds in-stream video and image previews to the main feed in its iOS, Android and web apps. Previously you would have to tap on links for images via Twitter or video service Vine. Now you can see them right in the feed. Update below. At this point, the previews will just be for Twitter photos and Vine videos, though we can imagine that expanding to other formats. Not to sound too toot-my-own-horn-ey but this is the way that Twitter has been headed for some time, as I noted late last year. Twitter has also tweaked the tweet actions like faving, retweeting or replying to allow you to do that right from within your timeline. If that feature sounds familiar to you, you might have been in one of Twitter's test groups, where it has been trialing this change for a few weeks. As for why Twitter is doing this, well there are a few things that jump to mind immediately. First off, it's aesthetically pleasing - images and videos make the stream look friendlier than a stream of text to new users. Also, it provides an opportunity for advertisers to ensure that you see their media. If they use Twitter's image hosting and Vine, you're going to see the visual part of their ads, period. Previously you'd have to tap a link in an ad tweet to see that. The side-effect of these changes, of course, is to lower the information density of the feed overall when it comes to text. If you ascribe to the “picture is a thousand” words adage, though, perhaps it's increased a bit. In advance of its IPO, Twitter is in the process of trying to prove its usefulness to users to ensure that its somewhat slow user growth numbers reverse the cycle. One of those efforts is a new breaking-news notification experiment called @eventparrot. This update isn't the big one we've been waiting for, with major updates to its TV offerings and more, but rather more of a maintenance release designed to slip in a bunch of features across the app. Note that you can toggle these in-line previews off in the apps (but not Twitter for web) if you wish, at least for now. The new look for photos and videos is available for Twitter's Android, iOS and Twitter.com apps.

Proposed USA FREEDOM Act Would Dramatically Curtail The NSA's Surveillance

Senator Patrick Leahy and Representative Jim Sensenbrenner have introduced a new bill, called the Uniting and Strengthening America by Fulfilling Rights and Ending Eavesdropping, Dragnet-collection, and Online Monitoring Act (USA FREEDOM Act), designed to dramatically curtail the ability of the NSA to collect information on the average United States citizen. The bill is broad. Its key elements are the reformation of how Section 215 of the Patriot Act, and Section 702 of the Foreign Intelligence Surveillance Act (FISA) can be used by the NSA to support their operations. Limiting those authorities could dramatically undercut the NSA's reach. The bill's official summary claims that it will end bulk collection of certain records that is currently based on Section 215′s authority, limiting collection to things that deal directly with terrorism or “clandestine intelligence” that are linked to foreign agents, foreign “power,” or suspected foreign agents, or individuals in contact with a foreign “power.” In short, no more collecting mass data on Americans. It appears that this would end the collection of American citizens' phone records, something that the NSA currently collect and stores. The USA FREEDOM Act also has new rules in place to constrain other legal methods – FISA pen registers, National Security Letters, and “trap and trace” statutes – so that they cannot in turn be used to “justify bulk collection.” This closes what could have been an open door for the NSA to continue its current operations, but under a separate authority structure. Moving on, Senator Leahy's office's summation of the bill claims that it “closes [the] NSA's ‘back door' access to Americans' communications by requiring a court order” for a search of their communications, in data that is collected under Section 702 sans an individual warrant. This provides increased protection of Americans' communications information that is already collected, which is disappointing. Still, it's an improvement. Also regarding Section 702, the bill boosts the “prohibition on ‘reverse targeting' of Americans.” This means that the NSA can't target a foreigner's communications, simply to get at the communication of an American. It's good that they can't do that, and even better that this bill builds that wall higher. Briefly, the Act would also sunset the FISA Amendments Act two years earlier, in 2015, than it is currently scheduled. This would put its end date in the same timeframe as the expiring elements of the Patriot Act. Therefore, Section 215 and Section 702 would come up for re-passage at the same time. The goal of this, again according to Leahy, is to ensure “proper congressional review.” The Act would put in place a new “Special Advocate” to speak up for privacy during operation of the FISA Court's secret operations. It would also put in place a “process for public release of FISA Court opinions” when they include legal interpretation that could be important for the public to know and understand. The bill would also allow companies to disclose “an estimate” of the number of FISA orders and National Security Letters that they have received, as well as allow them to comment on how many they complied with, and when relevant, the number of users and accounts impacted. This is something that Google, Microsoft, Facebook and others have requested. When the news of PRISM was first disclosed, tech giants were pilloried for their participation, even though they were unable to comment on much, due to legal gags on their speech. The USA FREEDOM Act would directly lift some of those restrictions. Continuing, the Act would force the government to release an estimate of the number of individuals and United States citizens who were “subject to various types of FISA orders and whose information was reviewed by federal agents.” This forces the government to disclose its work, and therefore perhaps limit abuse by requiring transparency. – That's quite a lot. However, I am unsure how the above would impact programs such as XKeyscore, the tapping of the core fiber cables of the Internet, and the cracking of encryption software. The NSA does more than operate under the authority of Sections 215 and 702. The bill is a solid first effort, but does not go far enough. We will likely see other bills of similar ilk. This specific bill is interesting given that one of its authors, Representative Sensenbrenner, played a key role in the creation of the Patriot Act, something that he is now trying to rein in. This is the Snowden Effect in legislative form.