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Daily Crunch: Apple removes Fortnite from the App Store

Epic Games takes on Apple, Instagram fixes a security issue and Impossible Foods raises $200 million. This is your Daily Crunch for August 13, 2020.

The big story: Apple removes Fortnite from the App Store

The controversy over Apple’s App Store policies has expanded to include Epic Games and its hit title Fortnite. The company introduced a direct payment option for its in-game currency on mobile, leading Apple to remove the app for violating App Store rules.

“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services,” Apple said.

Epic, meanwhile, said it’s taking legal action against Apple, and that the game’s removal is “yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market.”

The tech giants

Bracing for election day, Facebook rolls out voting resources to US users — The hub will centralize election resources for U.S. users and ideally inoculate at least some of them against the platform’s ongoing misinformation epidemic.

Instagram wasn’t removing photos and direct messages from its servers — A security researcher was awarded a $6,000 bug bounty payout after he found Instagram retained photos and private direct messages on its servers long after he deleted them.

Slack and Atlassian strengthen their partnership with deeper integrations — At the core of these integrations is the ability to get rich unfurls of deep links to Atlassian products in Slack.

Startups, funding and venture capital

Impossible Foods gobbles up another $200 million — Since its launch the plant-based meat company has raised $1.5 billion from investors.

Omaze raises $30 million after expanding beyond celebrity campaigns — The Omaze model has shifted away from celebrity-centric campaigns to include fundraisers offering prizes like an Airstream Caravel or a trip to the Four Seasons resort in Bora Bora.

We’re exploring the future of SaaS at Disrupt this year — We’re bringing Canaan Partners’ Maha Ibrahim, Andreessen Horowitz’s David Ulevitch and Bessemer Venture Partners’ Mary D’Onofrio together to help explain how the landscape has changed.

Advice and analysis from Extra Crunch

How to get what you want in a term sheet — Lior Zorea discusses the reality of term sheets.

Five success factors for behavioral health startups — Courtney Chow and Justin Da Rosa of Battery Ventures argue that behavioral health is particularly suited to benefit from the digitization trends COVID-19 has accelerated.

Minted.com CEO Mariam Naficy shares ‘the biggest surprise about entrepreneurship’ — Naficy got into the weeds with us on topics that founders don’t often discuss.

Everything else

Digital imaging pioneer Russell Kirsch dies at 91 — It’s hard to overstate the impact of his work, which led to the first digitally scanned photo and the creation of what we now think of as pixels.

AMC will offer 15-cent tickets when it reopens 100+ US theaters on August 20 — The theater juggernaut announced plans to reopen more than 100 theaters in the U.S. on August 20.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Lily AI raises a $12.5M Series A led by Canaan to accelerate its e-commerce recommendation tech

Lily AI, a startup focused on using deep learning to help brands better convert customers through emotionally tailored recommendations, announced this morning that it has raised a $12.5 million Series A led by Canaan Partners. Prior investors NEA, Unshackled and Fernbrook Capital also took part in the funding event.

Prior to its Series A, Lily had raised just a few million, according to Crunchbase data.

The round caught our eye for a few reasons. First, the investor leading the round — Maha Ibrahim — also led The RealReal’s Series C back in 2014. That company, which also sports a focus on the sartorial, went public in 2019. (Ibrahim has also dropped by TechCrunch from time to time, including here.) To see the investor lead an early round in a company operating in a related space was notable.

And the technology that co-founders Purva Gupta (formerly Eko India and UNICEF) Sowmiya Chocka Narayanan (formerly of Box) have built is neat.

TechCrunch first covered Lily back in 2017 when it raised $2 million from NEA. At the time it had an iOS application, along with a web app and API designed to help retailers “better understand a woman’s personal preferences around fashion” in their “own catalogs and digital storefronts.”

In a phone call with TechCrunch, Gupta said that she and Narayanan decided that “from a business model perspective” their technology was “better for an enterprise product.” The iOS app was eventually deprioritized (in “less than a year” after launch according to the CEO), with the company making a formal move to focus on enterprise offerings in early 2018.

So what does Lily AI do and what is it selling to large retailers? An e-commerce power-up.

How it works

Lily’s founding hypothesis came from Gupta’s time exploring fashion in New York, asking hundreds of women about what they had bought recently (more on the company’s founding story here). What came out of that exercise was the idea that every customer is “roaming around with [their own] emotional context,” how “they think about their body” and “how they react to different types of details and items.”

The CEO thought that if you could get that context into an online shop, it would probably help consumers find what they want, and help the store sell more at the same time. That’s the hypothesis behind Lily AI, according to Gupta, who wants to know the “individual emotional context” of “each customer” when they shop online.

It’s that idea that helped the company raise $12.5 million in its A, more capital by far than it had raised before in total.

The service works in three steps, starting with tech that can pull out myriad more attributes from items in a catalog; the more variables you have the more you can know about any particular product. Gupta told TechCrunch in an email that her company’s “approach captures significantly more detail on each product based on the traits customers look for when buying apparel,” including “style, fit, occasion” and the like.

Then, Lily uses “hashed customer data” that brands already collect, married to its item attribute data to “create a high-confidence prediction of each customer’s affinity to every attribute of every product in the catalog,” she continued. From there it’s a recommendation game.

The result of all this work is that “100 percent” of Lily’s customers have seen a “step gain in metrics,” not “just incremental” improvements, according to Gupta. (The company’s website claims a “10x ROI” on customer spend on its products.)

Lily charges for its service on a volume basis.

And there should be lots of that. According to Canaan’s Ibrahim, e-commerce “will continue to grow between 15-20% annually and will represent ~20% of all retail spending in 2020 […] off of an enormous absolute number base of ~$4T of e-commerce spend.” That means Lily has a pretty big market to grow into, which is just what venture investors love to see.

One final thing. During our call, I asked Gupta about privacy. After all, her company is pairing consumer preferences with other information for the benefit of a brand. In our discussion about how her startup protects customer privacy, she said something interesting that I asked her to expand on. Here’s how she described how her firm is built around understanding the feelings of others, or what’s better known as empathy:

We started Lily AI with the goal of helping customers look and feel their best. And I’m so proud that we use ‘Empathy’ as the guiding principle for everything: building products, hiring, retaining talent and establishing company culture.

Not a bad place to build from.

Source: TechCrunch