Comics are the foundation for so many movies, TV shows, and video games however creators still struggle to be fairly compensated for their material. Chris Giliberti founded Zestworld, a creator-centered platform that offers solutions for the artist to publish their work, manage commissioned artwork, and own their IP and licensing. In this episode Chris and Darrell nerd out about upcoming projects, the best ways to monetize digital custom art, and building a community online that feels like walking through your local comic book store. Jordan is also there, just not nerding out because she has yet to find the comic book for her.
Comics are the foundation for so many movies, TV shows, and video games however creators still struggle to be fairly compensated for their material. Chris Giliberti founded Zestworld, a creator-centered platform that offers solutions for the artist to publish their work, manage commissioned artwork, and own their IP and licensing. In this episode Chris and Darrell nerd out about upcoming projects, the best ways to monetize digital custom art, and building a community online that feels like walking through your local comic book store. Jordan is also there, just not nerding out because she has yet to find the comic book for her.
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Darrell Etherington 0:01
Hi, I'm TechCrunch Managing Editor Darrell Etherington. Welcome back to the TechCrunch podcast where we cover everything you need to know about the week's top stories in tech from the people who wrote them. This week we're talking to Becca su tak about the front state of extension rounds for many early stage startups and Devin Coldewey, about upcoming changes to Instagram that a lot of users agree will make the app much worse. But before we get into all that, here's what else is going on in tech news this week. Plenty of the biggest tech companies reported their earnings results this week, including Apple, Amazon and metta. Apple's earnings showed some issues on the hardware side likely impacted by supply chain issues. The iPhone makers service revenue now accounts for a huge and growing chunk of its profits however, so watch for more new products and offerings there. Amazon's earnings revealed a $2 billion loss, but they still beat analysts estimates for the quarter. The loss was due entirely to their investment in rivian. But only time will tell whether that proves a wise move. Facebook owner Mehta also reported earnings and for the first time ever since they debuted as a public company they saw revenue decline quarter over quarter that has understandably got investors rattled, but it is worth noting that some analysts suggest the loss was actually because of an artificial spike in online ad spending due to the pandemic. There's plenty of earnings coverage check out on TC from Brian heater, Lauren Forrestal, Amanda silverlink, and more. Speaking of Amazon's investment in rivian, the truck maker is laying off around 6% of its workforce according to a company wide email sent out by CEO rj scaringe this week. The move is designed around increasing the company's cost efficiency through restructuring he said reviewing has increased the price of its vehicles in response to rising supply costs and the current macro economic environment. You can check out more on TC from Kiersten courser T Mobile has reached a settlement with a class action lawsuit filed against it for last year's massive data breach, the company will pay $350 million to be divided among participants in the class minus lawyer fees. Of course, the class could include as many as 76 point 6 million US residents. So depending on how many sign up the payout is likely to be fairly small, as little as $9 per person. First up, Becca ScrewAttack, is walking us through both the VC and the founder side of the extension rounds struggle. Hi, Becca. Hey, thanks for coming on. Really happy to talk to you about this. I guess it's not the sunniest of topics, but it's a really pertinent topic these days for startups. So you wrote an article on TechCrunch plus about how a lot of startups have strong interest in getting an extension round. But it doesn't seem like every one of those startups is going to get that extension round. So can you tell us a bit about what's going on here?
Unknown Speaker 2:42
Yeah, so the origin story actually came on the investor side. A few weeks ago, a couple precede investors started tweeting about the fact that they're getting all of these requests from companies that already raised substantial funding looking for bridge financing. And both of these particular investors wrote really small checks. So they were saying like, This must really be like a hair on fire situation, if they're reaching out to us. Not that they don't want to help, obviously, but their cheque size versus the Ask was just like it did not compare. So I thought that was pretty interesting. And after talking with them, it occurred to me that of course, I wanted to get the side from the actual startups themselves. And once I put out a feeler trying to get a few people to talk to me about their experience, so many people reached out to me in the first like, hour or two, but a lot of people were saying that they were just really struggling. And some of them were even in the situation where they had already gotten commitments that have been pulled and just a lot of people were feeling just a little abandoned by either previous investors or future investors that seemed originally very keen to help out. So I just thought that was pretty interesting to kind of dive in there. And what strikes me the most is that the general consensus is the people raising extension capital right now are the people who probably need it the least.
Darrell Etherington 3:59
Okay, right. So there's a few things going on there. I know we saw now like a few weeks ago, basically, to kick off service spring summer, we saw a lot of the funds, go to the blogs, go to their blogs, and say like, Hey, like get runway, everybody should be essentially trying to extend the runway as much as possible. That means tightening the budgets if you already have money in the bank, or it might mean getting more money into the bank, right? So that is naturally going to create a glut on people looking for cash. But it's interesting, you say like the ones that are looking for are the ones that need at least so can you explain that a little bit more? Yeah,
Unknown Speaker 4:37
no. And that ties into what you were just saying, a lot of VCs are telling their portfolio companies even who maybe weren't planning to raise this year or really don't need the extra capital at the moment just to do it now if they can, so that if the market conditions get worse or like something were to happen, like unforeseen that they have all this capital in the bank already because I know some of the people I spoke to to a few of the startups said, the ones who had more ease raising were advised to raise the capital. And even though they didn't need it, and then found that those investors who advise them to we're happy to kind of throw in some capital themselves, versus some of the other startups who are also getting that advice from outside investors who are not backers of their company, and yet weren't having the same success, right,
Darrell Etherington 5:25
right. This ties in nicely with something that came up recently, we were talking to a founder of a real estate startup on our found podcast, but they're saying like, you know, the money is not actually going away, like the money is there, the investors have money, the LPS have money, right? Because we think about the recession or whatever. It's not a recession yet, officially. But we think about the downturn that we're currently undergoing. And we think like, oh, that means money is sort of drying up, right? But it's less than its money is drying up and more that it's less available. So what's going on? They're like people have the money to give, but they clearly don't want to hand it out. For whatever reason, at the moment.
Unknown Speaker 6:01
Yeah, they're actually this year is on pace for record VC fundraising, the first half of this year raised the most money for the first half of the year ever.
Darrell Etherington 6:10
Yeah, we got a lot of new funds all the time, right? Oh, yeah, of course,
Unknown Speaker 6:13
it seems like no one's having issues on that end of the front. But it seems like from what I've heard, just from talking to a few different investors, is that because a lot of people, you know, you have a fun period to sort of deploy the fund. And a lot of people if they especially if they raise capital last year, as opposed to this year, they deployed maybe too much of it or kind of went ahead of themselves. So now especially if the markets volatile, it's a great excuse to kind of just like sit out for a while I don't think people will really be on the sidelines for very long, especially with the amount of capital people have raised, because LPs are going to start asking what's going on, and people have to sort of show their work for the money that they raised. But definitely is something that the founders I talked to mentioned that it gets a little more frustrating, a little more painful to not be able to raise, especially when you're talking to say a firm that just closed a ginormous fund. And what you're asking for wouldn't even be like a comma on the spreadsheet, like startup founders definitely are clued in and kind of frustrated with this dynamic for sure.
Darrell Etherington 7:14
Yeah. So how much then? Because the other thing that came up with this was one of the reasons maybe that they're reserving their power kegs, I guess is that like, they feel the valuations have gotten far too high. So does that come into play when you're going out and looking for an extension round? Like, what is the valuation conversation going with these startups? Or did you get into that when you're talking to them,
Unknown Speaker 7:34
there are definitely some startups who are just at like the precede seed stage who probably don't have the lofty valuation from last year that are still struggling themselves. But that did come up repeatedly, especially on the investor side that there are a lot of companies who raised at absolutely crazy valuations last year, who are now kind of looking for this extension capital, because there's just no way that they can raise an alert proper round without some more capital to kind of help them hit some of the more milestones along the way. But it sounds like those companies are also struggling to raise the purchase and sale because a lot of investors are just like, I don't think not even if like opinions about the company and the growth and the progress aside. It's just like, the math just doesn't map on grand.
Darrell Etherington 8:20
Right? You mentioned that even like smaller startups are not having that, even if they don't have these balloon valuations. So like, how difficult is that? And is there a chicken and egg problem where you're like, I just need a little bit of money to build out kind of an MVP and get some traction numbers, so I can go back to the well, and yet, I can't get that. So how do I get the money to begin with? Because it seems like people VCs tend to turn into all of a sudden, more traditional business people when a downturn like this happens, they're like, Alright, show me the revenue numbers and show me the traction show me that whereas before they were like, You got Moxie kid like, here's $50 million.
Unknown Speaker 8:56
No, that definitely came up. Because it's a definitely a different conversation, this sort of topic, depending on what stage you're at. Because a series a company, I mean, if maybe you raised it a big valuation last year, and you're going out for extension financing, and you don't have the revenue numbers to back yourself up like you have a big uphill battle in front of you. But knowing from talking to some of the earlier stage precede seed type companies, one startup based in Germany, who told me that he was really frustrated because going out and trying to raise he found that a lot of the investors he spoke to were sort of evaluating like a hard line for revenue, like, oh, we want revenue in this range. We want X, Y, and Z. And he was just like, whoa, you didn't even look at our business. Like if you looked at our business, you would know why we don't have those revenue numbers yet. And the fact that that isn't a red flag, so there's definitely some sort of like it seems broad base revenue expectations from investors, which depending on the stage, if you're really early stage, it's not realistic to expect a precede company to have a certain amount of revenue to even get a conversation off the ground. That just is like Like I was saying it just some companies not having revenue as a red flag. But some of these companies not having revenue yet just wouldn't be a red flag in other circumstances.
Darrell Etherington 10:09
But it sounds like the on the investor side, they're kind of just like we needed some kind of criteria, because we're our mode right now is essentially winter mode, right? Like we're hibernating, we're waiting. And so they're just trying to come up with an excuse. And that's a handy one to handle inbound. Is that do you think something that's going on there? Or do you think it is actually about like, the math and they think that that is going to affect the long term viability of the business?
Unknown Speaker 10:32
No, I think absolutely. It's the first thing a few of the founders I spoke to were saying that it seems like investors were just looking for easier ways to say no, right?
Darrell Etherington 10:40
Yeah, with that much volume out there. Like there's gotta be something, right. I mean, we have similar kinds of things. I guess, don't Wow, this is a podcast. So I was gonna say, don't tell me but but like for inbound PR, right? It's like, oh, we're not doing whatever at the moment. It's like, right, maybe we're not actually doing that. We just get a lot of emails. Yeah. So what can people do that? Are you seeing founders take alternate paths, or do things differently in order to replace these bridge rounds or to extend their runway in more creative ways? I guess
Unknown Speaker 11:10
one of the big ones that I've heard both from a few startups I talked to, for this story, as well as for a story I wrote probably about a month ago at this point, is a lot of companies are turning to equity crowdfunding sites. So places like Republic, we funder and the like. And they're finding that especially some, like one of the companies I spoke to is a consumer app called rights. And it's essentially meant to be used for different civil rights scenarios, so that you can quickly look up what's happening and sort of what your legal rights are in that situation, which is really interesting. And he was saying that because they have users, they thought, equity crowdfunding, if they can't raise the drone at the moment might be a great place, because they already have users who back them socially. Sure. So they could check them financially. And I know from doing that story on equity crowdfunding a few weeks ago, they are already seeing an uptick this year in activity and as well as dollars sort of invested across those platforms. So it definitely seems like despite the market volatility, retail investors are still interested in funding startups in that way. And companies that they know. So that's definitely a great option. Another would be venture debt, venture debt, especially if you're one of those companies, maybe who is going to get missed out just for like not hitting some of those milestones, because they're really early budget, or could be a great option for those companies, a way to kind of if you know, you're on the right path, and like you have investors helping you out, but they just can't write that last check. Like, that's a great sort of financial product to take on in that stage.
Darrell Etherington 12:37
And I guess just generally, do you think that I know, it's hard to predict, but do you anticipate that we'll see a lot more of these? Because I've seen a lot of the plus rounds going around? So it's like, as much as there's a ton of volume of these maybe not going through? A lot of them are too, right. Like there's an overall uptick in volume of these bridge rounds going on? Do you think that continues? Do you think it has a kind of a window during which it can happen? Or do you think we get back to like kind of business as usual? Or is it too hard to say, I guess at this point,
Unknown Speaker 13:05
I think it'll continue, but I don't think it'll continue into next year. My guess is that I'll continue through most of q3 and then q4 people will kind of start getting back to how not necessarily how it was, I don't think it'll go back to 2021 levels by any means. But I think approaching the end of the year, some investors are going to be like, Oh, well, maybe we shouldn't have set x out. Or maybe if y is coming back to market, we really should consider investing more sort of taking that conversation. So my guess is that it'll last for a few more months. My other question with this is that Will something bad is not maybe the right word, but will accompany like go under because they could not raise this financing and be like a wake up call for investors who maybe were like, Oh, we just they were a good company. We weren't investing. So we assumed, you know, the gasps, somebody else will pick it up, right? And then it didn't, because I'm sure that's going to happen. And when that happens, I'm just curious how much of a catalyst that would be if maybe that ends up quicker than I'm predicting if nothing like that happens, but I mean, something like that's kind of inevitable. And I'm curious how the dominoes will fall after that, for sure. Yeah,
Darrell Etherington 14:11
if it hasn't already happened. But like, I wonder generally at the reaction of that, like, how many times is there a case where something like that happens to people like to him, we should have given them like two more months and made than they would have made it or as everyone just like, who could say when things died, because it's kind of you'd never know, right? It's not like you're like, Oh, I missed out on that Facebook investment. It's like, well, you know what happened with that? Right? But like, if you're like, Well, what if they had had like three more months, right, like, it's all speculative, I guess,
Unknown Speaker 14:39
ya know, I'm sure some investors have instances maybe were it wasn't in a company that went on to be successful, but I'm sure some of the successful startups of today, there were entrepreneurs who tried that exact same thing years ago and couldn't get the funding and maybe those investors who passed and then were like, oh, shoot, well, that company that I'd never even heard have wanted to be a winner and maybe that company I pass on would have been had, they had the right backing and guidance and the like. So I'm sure there are at least a few investors out there who already have like, been through something kind of similar to that and sort of realize that they missed out on something that could have grown into something great.
Darrell Etherington 15:15
Yeah. And some of those people might be invested with themselves at this point, right. Maybe they'll give you your britrail if you find the right person. Thanks so much, Becca. It was great talking to you. No, thank you so much. Next, Devin Coldewey joins us to talk about how Instagram is getting worse. Hey, Devin, how's it going? Oh, not too bad. Good. All right. So this week, lots of drama in the Instagram verse.
Devin Coldewey 15:41
You know, that's what they call it. I mean, that's what they're trying to get us to call it but I don't know. Yeah, stick now.
Darrell Etherington 15:47
But I don't know if anything's gonna stick. It seems like not you were a lucky participant in one of their, I think fairly large bucket redesign trials that they were doing this week. So do you want to talk a little bit about that?
Devin Coldewey 15:56
Yeah. I don't know why they picked me. They could not have picked a worse person to
Darrell Etherington 16:01
I think they said must must include Devon. Yeah, they left it mostly to chance. And they said, please include Devon. And that's one
Devin Coldewey 16:07
of those buckets like random plus, Devon. But I got it. Yeah, I got it. Like, I don't know, a week and a half ago or something like that. I just opened up Instagram. It was like, I don't know if it even gave me a little warning. Like, hey, we're testing out something new. Like this is temporary. I don't remember seeing anything like that. But it was like suddenly, it was this weird fullscreen thing. And I was like, Okay, let's not too bad. But then the way you scrolled was weird. Like you, you didn't scroll through a feed you were scrolling between posts, like tick tock, and it was really pushing the video thing. And I could no longer the worst thing for me is you could no longer just tap on it to mute stuff. Because I do that all the time. Because I don't know what my phone's you know, mute or volume status is like, and usually the background music or whatever, on these videos is horrible. So I just want to be able to just be like thing. All right, no volume. And now it's just a, you know, a video of achieving you, right? So you can't do that anymore. And a couple other little minor things that are just like, Wait, why are you doing this? This is objectively worse. And it's not the experience that it doesn't seem new or comfortable. It just seems like imitative of TiC tock.
Darrell Etherington 17:07
Right? Well, and I think the why question was an interesting one, because you basically provided some answers as to why like, it's not like they're doing these things just to make life difficult. They really do want an outcome out of this. And it seems like what the outcomes they want are essentially to like goose the numbers for advertisers. Is that fair?
Devin Coldewey 17:25
You know, that's that's my sort of like cynical assumption. I think that So Adam mosseri, head of Instagram, donned his medallion and got on Instagram to Twitter to say, oh, no, he did it. Did he do on Instagram? I can't remember now. Everything is the same. Everything looks the same. So I don't even know what platform we did this stuff on. I guess this is on Instagram. By the way. I wasn't the only one who didn't like this. Kim Kardashian and Kylie Jenner, right joined my fight to instead make Instagram Instagram again. But anyway, their support to trr? Yes, I know. And you know, they're such good good friends about this. This kind of thing. Thank you, Kylie. And Kim. Yeah. So anyway, my story was, he got up there and was like, Oh, so you guys are testing out the new Instagram? It's great, right? Oh, it's not Oh, well, it's fine. It's not meant to be good. Basically, he was like, oh, it's not good yet. And then we're like, why did you make hundreds of 1000s of people will probably use it. But anyway, but to your point, he said, and this is a true thing that a lot of people on Instagram are watching a lot more videos, because that's just something that people like and that's the reason Tik Tok took off in the first place is because people like short form videos, that's just the fact of the matter right now. And it's smart of Instagram to embrace short form video it did before, but it also did it in stories. And he said, that's where a lot of the growth was in video was in stories, because people aren't posting videos to their, you know, their actual account or whatever, that lasts forever. They're posting their stories that lasts for 24 hours. And I mean, I do this myself is that someone who doesn't really engage with Instagram that much, but I like doing this, because you know, a short clip of a bird on your windowsill or like, you know, you're on a boat or something. It's cool, but they embraced it too hard was the problem. They instead of being like, oh, people want to do this, let's find a good Instagrammy way to embrace short form video, which they really already had in stories and they said it was growing, so why not just keep it that way. Instead, they really mimicked Tik Tok, which is, you know, it tick tock has its own problems of addiction and recommendations and algorithms and stuff like that. So I think they had a reason for doing it that was not simply juicing numbers, although it seems like there were some dark patterns around like, Oh, now you absolutely have to like, look at a full app. You can never scroll past an ad by accident because you have to view every post full screen as you go past it. You have to look at ads. You have to look at everything, which seemed a little shady to me.
Darrell Etherington 19:52
Yeah, I think you're right that they are they're just overall kind of worried about the competition, right? So they're trying to do things to you stay relevant there with some of the audiences, especially audiences and demographics they compete directly with tick tock for but it seems like the complaints a lot of the complaints or and I think it was explicitly, it was one of the Kardashians who said like, stop trying to be so tick tock you like, I just want to see pictures of cute pictures of friends or dogs or whatever. But like, that is what I think their biggest struggle is is like they obviously see Tik Tok as competition and they obviously don't want to become they don't want to get MySpace to buy Tiktok. Right. It's probably the fear that keeps them up at night, I would guess, especially if Zuckerberg, you know, he did that to some videos here. Well, you know, he is aware of fear. He's aware of the ingredients and fear. And so he logically processes it that way. But yeah, I think they're very self conscious about that. But they're in a nearly impossible space. Like I feel for them in this way, where it's like, Okay, do we be what we are and not alienate our users, our massive user base and base and then kind of suffer a gradual decline and death? Or do we try to be this other thing that's growing and popular, but alienate our entire existing user base in the process? Right, it seems like they're trying to find a middle ground by testing and then rolling out different versions of the thing, but I don't know that they can square
Devin Coldewey 21:19
that circle. No, and I don't know either. And like you said, you know, they're kind of choosing between death with dignity and a dishonorable life of worth worthless, you know, trash life, but I don't I don't know. I don't know that they could, even if they tried that life, because like if you try to go up against Tik Tok, as you know, if you try to compete with Tik Tok with a worse version of Tik Tok, you're gonna get steamrolled. Tik Tok is already popular. It's already eating their lunch. And I understand like, and I sympathize in a way, because as much as you can sympathize with like a bunch of rich Oh, yeah. But But to a certain extent, I'm just like, Yeah, well, it is a tough position to be in, how can you square that circle, they may not be able to. And so they're kind of lashing out trying everything, but the way they're doing it is so dumb, like this weird, fullscreen tic tock clone thing was a bad move. And everybody hated it. It's not like a lot of people were like, actually, the new Instagram was good. No one said that. Everybody said it was bad. And then this is combined with the assurance from Zuckerberg that we're gonna go from 15%, you know, algorithm suggested posts to 30% algorithms posts next year. And everybody's like, who asked for that? Literally no one that you are seeing the success of TiC TOCs algorithmic recommendations, which are in a way very, very good, because that's kind of the meat of the thing is like discovery. But Instagram is not about discovery. Instagram is about community and friends and like curating your own feed. And I mean, to some extent, of course, tick tock Is that Is that too, but they do a better job of the discovery thing? So yeah, they're caught between a rock and a hard place. But you know, they kind of put themselves there too. Absolutely. I I'm sorry that they are having to do sucky things to stay alive. Because I would like to use the app and not, you know, have 30% of the stuff that comes up be something I don't care about and don't want, but I don't know, I would rather it didn't disappear either. And just go into the dustbin of history will often move over to visco or I don't know if God forbid Tik Tok or something.
Darrell Etherington 23:15
Yeah, I know. I mean, it's weird, because there's like, not really a ready alternative that I can think of to what they do. But you're right, that it's this could be a generational thing. Like, I don't even know if if younger users want what they do. Right? That might be the big problem for them. But the other problem for them is they have chased the same final success metric as Tiktok in like a pure, pure, but like devoid of any other contexts. They are both looking for engagement, which is what allows them to sell to advertisers. And there's no question that Tiktok is eating their lunches, you put it on the engagement side, like yeah, that is just the right way to do it. But they're not starting from zero. They're not operating in an a contextual void. So Instagram, and Facebook can't just say, okay, all right, we're tick tock, which they have done. Like a lot of other times, they have essentially pulled that trick many other times previously, where they said, Oh, well, you know, Snapchat has stories, we'll do stories or whatever, right? Like, they've used that to great effect to date. And it seems like with tick tock, it's like, oh, no, these things are too dissimilar. You'd think this the same? Because when you go down to it, and look at what your key success metrics are, they are the same on paper, but actually, they're very, very, very different beasts, and therefore you can't translate success from one end to the other.
Devin Coldewey 24:31
Yeah, yeah, I agree. And it feels like Instagram is like the Kratt like one of those crabs that goes around on the bottom of the sea, like picking up little things to like stick to its shell. And it's finally it's found like another crab and it's trying to stick that crab to its shell. It was like, oh, no, this it's not the same, like the crabs like no, I my own crap. I'm gonna put you on my show. So it's becoming a real fight.
Darrell Etherington 24:55
Well, I mean, I don't want to belabor this anymore, because I think that's the perfect place to end because I want people to think of though the battle between Instagram and Tiktok as a an eternal crab but thanks so much Devon and I'm glad that your stuff is all reverted. macera has felt guilt and apologize to you personally and reverted your feeds. It has
Unknown Speaker 25:17
filled the crappy one. So it's because he's not careful. Yeah,
Darrell Etherington 25:23
get on it. Adam. He needs his stuff back. That's it for this week. Thanks for joining us and remember to check out all the stories we talked about in this episode on techcrunch.com. Be sure to use our TC plus promo code TC podcast all one word to get 20% off on both annual and two year terms. And be sure to check out all our other TC podcasts found equity chain reaction and the TechCrunch live podcast. See you next week. The TechCrunch podcast is hosted by myself Managing Editor Darrell Etherington are produced by Maggie Stamets with editing by Cal Taylor. Bryce Durbin is our Illustrator Alisa stringer leads audience development and Henry pic of IT managers TechCrunch his audio products. Thanks for listening and we'll be back next week.
Transcribed by https://otter.ai