Dispo Co-Founder Is Out After a Vlog Team Member is Accused of Sexual Assault
Investors behind David Dobrik's app Dispo are beginning to cut ties.
The venture-backed startup lost its top investor Sunday night following an investigation into a sexual assault allegation against a former member of his vlog crew.
And two early investors have since released statements and confirmed they would donate any profits from from investments to organizations working with survivors of sexual assault.
Spark Capital, who led the startup's $20 million Series A round in February, announced Sunday night that it has chosen to "sever all ties."
"We have stepped down from our position on the board and we are in the process of making arrangements to ensure we do not profit from our recent investment in Dispo," the venture capital firm posted on Twitter.
The firm did not directly address its investment and could not be immediately reached for comment.
Meanwhile, Dobrik, a co-founder of the Los Angeles company, said he has stepped down from Dispo, according to a report from The Information.
The departures come on the heels of a report from Business Insider last week that outlined the story of one woman who said she was sexually assaulted by a former member of the content creator group Vlog Squad. The woman said Dobrik had been present that night before the assault, filming.
Days after the story was published, a handful of Dobrik's sponsors, including HelloFresh and the Dollar Shave Club, ended their partnerships with the social media influencer. DoorDash, Honey, General Mills and Angel City Football Club also dropped sponsorships.
Early-stage investors are beginning to speak up about the allegations and reports.
Seven Seven Six, an early-stage venture capital firm created by Reddit's Alexis Ohanian, tweeted Monday that the allegations "are extremely troubling and are directly at odds" with the firm's values.
"We have made the decision to donate any profits from our investment in Dispo to an organization working with survivors of sexual assault," the firm posted. "We have believed in Dispo's mission since the beginning and will continue to support the hardworking team bringing it to life."
Ohanian could not be reached directly for comment.
Minutes later, Unshackled Ventures, an early-stage fund for immigrant founders, posted a brief statement calling the allegations "disturbing." The firm also participated in Dispo's October seed round and told TechCrunch it would also donate any profits to groups dedicated to survivors of sexual assault.
"As a female majority team, we do not take this lightly," reads the tweet. "We are in support of the companies decision to part ways with David and will continue to monitor the situation closely."
Editor's note: This story has been updated with new information about sponsorships and investors throughout.
Breanna de Vera also contributed to this report.
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Downtown Los Angeles-based Moving Analytics, which uses telehealth tools to lower the barriers to entry for the 6 million Americans suffering from heart disease, announced it has raised $6 million in seed funding Monday.
The eight-year-old company has nabbed customers like Highmark Health, Kaiser Permanente and the Department of Veterans Affairs.
Its rise is yet another example of how the health industry is embracing telehealth and virtual settings post-pandemic, making access easier to cardiac rehab services, which has been plagued by poor attendance for years.
"I think this is a permanent change," said Moving Analytics co-founder and CEO Harsh Vathsangam. "A lot more patients are getting access to care that would not have had access to care."
Cardiac rehabilitation is a comprehensive set of preventative services often provided to people who have suffered a stroke, heart surgery or heart attack in order to improve their heart health. Patients undergo supervised physical activities and mental health counseling to reduce stress and alleviate future heart problems.
Getting patients to attend can be difficult; only 16% of patients show up to their first class. Cardiac rehab requires people to take extra time out of their day to travel and complete activities, which restricts people who cannot travel because of work schedules or disabilities. Women and minorities, especially, participate in cardiac rehab less often than white men due to scheduling and language barriers.
Cardiac rehab centers are also space-constricted, and scheduling multiple people for physical therapy, especially after work hours, can be difficult. Cofounder and CEO of Moving Analytics Harsh Vathsangam said the company has seen waitlists for classes during the most popular hours span as long as three months.
Moving Analytics CEO and co-founder Harsh Vathsangam, PhD
When a patient is referred to Moving Analytics, the company sends over weight scales, a pressure cuff and an activity tracker, along with instructions on how to download a smartphone app. Patients are paired with a technical support agent to troubleshoot problems, and a coach who is often a registered nurse or an exercise physiologist. After compiling a profile on the patient's behavioral and social determinants of health, coaches take them through a series of activities.
"It's a very, very interactive process," Vathsangam said. "Our coaches work with you to really understand what your day-to-day life plans are. What are the challenges you're facing? And then they act more as mentors to help you pick the goals that you want to achieve success and then give you the clinical expertise."
The $6 million funding will go toward growing support and operational teams within the company, and creating new product features, including a data analytics platform for patient providers, and integrations with the Apple Watch and other wearables.
When the pandemic shuttered access to cardiac rehab centers around the country, health services were quick to pivot to virtual classes. Companies like Texas-based NextGen RPM, as well as institutions like Johns Hopkins, began to coordinate home-based care.
"Our idea was, 'how can we extend this life saving service beyond the four walls of a hospital facility or outpatient facility?'" Vathsangam said. "And that's basically what led us to create our program."
Moving Analytics began offering virtual services in 2015. Vathsangam said he soon found 80% of patients were completing rehab over the 90 day period, while study from the Journals of the American Heart Association found that completion rates for in-person rehab hovered at around 27%. Vathsangam said 40% of its virtual patients were women, while another study found that 80% of women who are prescribed cardiac rehab do not utilize the service.
It will also go to what Vathsangam calls an "AI-based coach" to guide patients through niche lifestyle changes around smoking and diet changes, and to modify patients' exercises based on their progress.
"This is an opportunity to capture and get access to life-saving services for thousands of people who would not otherwise get it," Vathsangam said.
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Hollywood is on notice: Gen Z would rather scroll through social media, play video games and stream music than watch TV or catch a film.
That's a remarkable shift from earlier generations – who still prefer to kick back and watch a screen – and poses serious challenges to traditional media, according to an annual survey of digital trends by Deloitte.
Asked to choose their favorite entertainment activity, the top response among Generation Z, was video gaming (26%), followed by listening to music (14%), browsing the internet (12%), engaging on social platforms (11%) and then watching TV or movies at home (10%).
Administered in February as the pandemic was raging, the survey of more than 2,000 U.S. consumers reflects the rising popularity of gaming across ages but most starkly highlights the digital divide among generations.
"Media companies and advertisers may still be video-first, but younger generations may not be," the report said.
Of the Generation Z respondents, defined as those born between 1997 and 2007, 87% play video games daily or weekly, on smartphones, consoles or computers. And while a majority of the respondents, including millennials and Generation X, said video games have helped them stay connected to others during the pandemic, they see entertainment differently.
For all other generations (Millennials: born 1983-1996; Gen X: 1966-1982; Boomers: 1947-1965 and Matures: 1946 and prior), kicking back and watching the tube came in as the number one entertainment option.
Here are some additional takeaways:
- 82% of U.S. consumers have at least one video streaming subscription
- The average subscriber pays for four services
- Cost is the most important factor for deciding whether to subscribe to a new streaming service, followed by content selection
- 52% find it difficult to access content across so many services
- 53% are frustrated by the need to have multiple service subscriptions
- 40% would prefer to pay $12 a month for an ad-free video service, while 60% said they'd accept some ads for a lower fee.
- Streaming music subscribers pay for an average of two paid music services
- 45% would rather pay than have ads for their music streaming; 67% of millennials would prefer to pay
- 67% don't trust the news they see on social media
- 55% pf Generation Z and 66% of millennials say social media ads influence their purchasing choices versus 49% of Generation X and 13% of boomers
- 40% would be willing to provide more personal information to receive more targeted ads
- 62% of Gen Z and 72% of millennials would rather see personalized ads than generic
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With more than 200 million subscribers and intense competition from the likes of Disney and HBO Max, can Netflix keep its big lead in the streaming wars?
Financially, Netflix has never been better off. It has forecast its cash flow to break even in 2021. If it does, that would eliminate, for the first time, the company's need to raise external financing for its day-to-day operations.
That's in part because the company raised its subscription price last year, by $1 for the standard option and $2 for premium, and still added a record 37 million new subscribers. But as the pandemic winds down and competition heats up, it's unclear whether it will be able to sustain the pace.
According to analytics firm JustWatch, Netflix's market share in the U.S. is already on the decline.
And the debt that has financed much of their enormous content library looms. In its most recent earnings report, the company's balance sheet showed nearly $8 billion due within one year, and an additional $20 billion further down the road. Flush with cash, however, it recently pledged to cut its debt load to a sustained level of $10 billion to $15 billion.
The question now is how Netflix can wind down that debt while simultaneously growing its revenues. Having already expanded to over 190 countries, there are few new markets to tap. Can Netflix squeeze more subscribers out of its current markets? Or might it continue looking to squeeze more out of existing subscribers' wallets?
At its earnings call on Tuesday, Netflix may offer some answers on how it plans to keep ahead of the pack. Analysts see the streamer, whose shares are trading near record-high levels, at a pivotal moment. Here is what some of them are expecting ahead of the first-quarter earnings call:
Shrinking Profitability in the Short-Term…
One reason why Netflix's financials were so strong last year is that the pandemic forced it to reduce spending on content production. Subscribers piled in anyway, and the company was able to make up for some of the shortfall by leaning into animation. But in the near-term, that slowdown may have consequences.
"We believe that the leaner content pipeline going into 2021 could very well influence subscriber growth," wrote Moody's analyst Neil Begley in his most recent note.
...But Long-Term Growth
Although Netflix is likely to increase the billions of dollars it already spends on making and buying shows and films, analysts still believe it's poised for profitability by next year.
"We know that the company has launched in every market, and that original content investment reached a tipping point in 2020," wrote Justin Patterson and Sergio Segura, analysts at KeyBanc Capital Markets, in their most recent Netflix note. "Even with healthy reinvestment in content, we believe this positions the company toward sustainable [free cash flow] generation beginning in 2022."
Moody's analysts also expect Netflix to continue adding subscribers over a longer period, projecting the streamer to hit 250 million subscribers globally by late 2022.
Higher Quality Programming
Most analysts think Netflix is likely to increase the quality of its programming.
Michael Pachter and Alicia Reese, analysts at Wedbush Securities, pointed to Netflix's recent licensing deal with Sony, which will give the streamer exclusive rights to Sony's films after their theatrical and home entertainment runs for five years, starting in 2022. Netflix will also get first-look rights on Sony's direct-to-streaming content, some of which it has pledged to produce.
"While the financial terms were not disclosed, it has been widely reported that Netflix will pay over $1 billion for the deal," they wrote in their most recent Netflix note. "This is meaningful for Netflix as many of its earlier exclusive licensing deals have expired, the content pulled back by studios such as Disney to shore up their competing streaming services."
Improving the quality of its content should allow Netflix to increase prices, KeyBanc analysts wrote. This past year's hikes didn't seem to repel customers, suggesting they may yet be willing to pay more, despite the many alternatives consumers now have.
But Maybe a Future Market Sell-Off?
Despite Netflix's strong 2020, Wedbush analysts called it overvalued and issued a price target of $340, nearly 40% below its current level.
"We have been consistently wrong about Netflix, but optimism about the company's potential to generate free cash flow growth of more than $1 billion per year [which, they note, is what the company's current valuation implies] seems to us to be misplaced," the note said.
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