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Yubo might be the next big thing in social

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Good morning! This Tuesday, how one founder is using new SEC rules to ditch the VCs, why Yubo might be the next big thing in social, how the wearables market became the AirPods market and why, for Elon Musk, it's NFTs all the way down.

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The Big Story

All the money, none of the VCs

Sahil Lavingia, the CEO of commerce platform Gumroad, just raised $5 million in new funding. But he didn't do it by traversing Sand Hill Road looking for a few big checks. Instead, he wanted that $5 million to come in a few hundred dollars at a time from investors he's never met. Maybe even investors who no one would call "investors."

The backstory: Last fall, the SEC passed a new set of rules for "exempt offerings," which allow startups to raise funds by selling securities. The SEC acknowledged that its exempt offering rules had become "overly complex" and tried to make them simpler to understand.

  • The new rules increase the amount of money a startup can raise through regulation crowdfunding, which works like ordinary Kickstarter-style crowdfunding but involves selling equity instead of products and thus comes with many more rules attached (though not nearly as many as would apply to your average public company). Reg CF, as it's known, used to allow a company to sell a maximum of only $1.07 million in securities every year. Starting Monday, that number jumped to $5 million a year.
  • The rules also allow startups to "test the waters," which means they can talk much more publicly about raising money without actually raising money.

These rule changes are probably going to make VCs crazy, since now there are easy ways to loop them out of the super-early fundraising that often brings the biggest windfalls. Lavingia, who has a history of trying new things in this space, seems pretty OK with that: "I think if VCs were really upset about rolling funds, they're really upset about just trying to skip the VCs at all if possible."

  • He's also hoping that this model — start with a lead investor who negotiates and does due diligence, then offer the same terms to the general public – becomes a go-to move for startups everywhere.

It certainly worked for Gumroad. It hit $5 million in less than a day, with the money coming from 7,513 investors. That means the average check was about $665. And the waitlist for even more investors is already growing (though Lavingia can't crowdfund more investment until next year). The idea works, at least for one founder.

Will this change the way Gumroad is run? After all, it's one thing to take money from a bunch of rich investors, and quite another to have thousands of regular people bet their savings on you. Lavingia said … probably?

  • "I've been running Gumroad very, some would say, haphazardly over the years," he said. "I told the team I probably will be more aggressive. We may need a few deadlines."


New friends everywhere

Anna Kramer writes: If you don't know what Yubo is, that's OK! You will. The French social networking app is targeted at teenagers, and it's basically a rejection of "traditional" social media like Facebook and Twitter. Also, it's on fire; it has more than 40 million users, most of them in the U.S., Canada and Australia.

So what is Yubo, actually? At its core, it's an app where you make friends with other people your own age by hopping in and out of rooms based on your interests.

  • It's meant for making new friends, Yubo COO Marc-Antoine Durand said, not just chatting with existing ones. Users join livestreaming rooms where they can videochat, play games together, watch YouTube in a virtual shared space, etc.
  • It defies the algorithm- and engagement-driven strategies of Facebook, Twitter, etc. There's no "passive" engagement, as Durand likes to call it. Rather than reading and sharing news and videos, users have to engage with each other in these virtual spaces.
  • There are no ads. For obvious reasons: Selling kids' personal data to advertisers would freak people out. Instead, Yubo plans to make money the Fortnite way: by selling add-ons that improve the user experience for particularly active users. (The company made more than $20 million in revenue last year.)

Building an app so that kids can meet strangers online is an inherently risky proposition. It also, according to Durand, opened the door to much more creative and aggressive user-safety approaches and tools.

  • Yubo is designed to prevent people from actually violating its safety policies by educating users when they join the platform and as they use it. Just to name one example: The Yubo team has found that when they remind users it could be dangerous to share personally identifying information online, they are much less likely to do it.

Kids are just going to be permanently online in the future, and tech needs to be designed for that reality. The company raised $47.5 million in its series C late last year, so investors seem to think that Yubo might be good for that future.


Who's winning wearables

The wearables market is booming. And changing. What used to mean "Fitbits and Jawbones and other stuff you wear on your wrist" now mostly means … AirPods.

  • Apple is crushing the wearables market, according to a new IDC report, with more than 55% of the market. And that market is increasingly ear-based; "hearables" (wow, do I hate that word) like the AirPods and the Echo Buds make up about two-thirds of the whole wearables market.
  • Everybody's gaining but Fitbit. Xiaomi, Huawei and Samsung round out the top four, and they all saw growth above 20% last year. Even "Others" grew almost 25% in 2020. But Fitbit dropped about 18% and has less than 3% of market share – a huge fall for a company that's still one of the biggest brands in the space.

Non-smartwatch wristbands look like a dying breed, at least for now. But, I mean, who needed a Fitbit to tell them they weren't going anywhere last year? And if Facebook is right that wristband controllers are a key part of the future of augmented reality, they could be in for a comeback.

But if there's one place you should be paying more attention, it's headphones. From spatial audio to Clubhouse to voice assistants to AR tools like MarsBot, there's a lot more to do with ears than blast music into them. The question is, can anyone outdo Apple?


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People Are Talking

Telegram needs money (badly), and Pavel Durov said he'd rather IPO than fundraise:

  • "Going public is an open and democratic way of raising capital, which is more in line with our values."

Regulation is needed to rein in China's tech platforms, the Communist Party said:

  • "Some platform companies are growing in an inappropriate manner and therefore bear risks. It is a considerable problem that the current regulatory regime has failed to adjust."
  • Case in point: Alibaba's UC Browser has just been pulled from Chinese app stores.

Making Moves

Sprinklr is going public, after confidentially filing an S-1 yesterday. The company has been planning this since last year, when it was valued at $2.7 billion.

EToro's going public via Betsy Cohen's SPAC. The deal values the combined company at $10.4 billion.

William Ingham is the new chief people officer at Poshmark, joining from Visa.

Peter Thiel donated $10 million to a PAC supporting JD Vance, the author and VC who may be planning a Senate run in Ohio. The Mercer family also gave to the PAC.

Cruise bought Voyage, adding to its portfolio as the AV world continues to consolidate.

Mike Anderson is Netskope's new CIO, joining from Schneider Electric.

Jerome Guillen is now Tesla's president of heavy trucking. He was most recently the company's president of automotive.

Maya Watson is Clubhouse's new head of global marketing, joining from Netflix.

ByteDance is hiring semiconductor engineers. It said it's exploring the field, which might result in custom server chips.

Nokia is laying off up to 10,000 people. That's 10% of its workforce. It announced the plans as part of a broader restructuring strategy.

In Other News

  • On Protocol: Mobilize app workers have unionized, adding momentum to CWA's tech organizing efforts. One hundred percent of eligible workers joined the new Mobilize union.
  • The FTC misread the future pretty badly a decade ago, during an investigation of Google, confidential internal memos show. For one thing, they didn't see the rise of mobile coming at all.
  • On Protocol: Google's new Nest Hub uses radar tech to track sleep, and might be the beginning of a new health-focused phase for the company now that the Fitbit acquisition is done.
  • Amazon is increasing warehouse gamification, The Information reported. It's reportedly expanding the FC Games program, which "lets" workers win digital rewards by doing their jobs quickly.
  • Mailchimp has seen a "mass exodus" of women and people of color, Business Insider reported. Current and former employees alleged that racist and sexist conduct at the company often went unpunished and that some people were promoted despite misconduct accusations.
  • On Protocol | China: Signal is no longer accessible in China. The secure-messaging app can now only be accessed via a VPN, user reports suggest.
  • Huawei wants 5G royalties from Apple and Samsung. It will start charging handset manufacturers for access to its 5G patents and said it plans to undercut rivals like Qualcomm.
  • Netflix dominated Oscar nominations, receiving 35 in total (including 10 for David Fincher's "Mank"). Apple TV+ got its first two nominations.
  • On Protocol: Students can't meet in person. Clubhouse might mean they never have to, with the app becoming a popular space for doctorate students to hang out.

One More Thing

Elon Musk NFT

NFT of the day

It's a song about NFTs, which sounds like it was created by the third opener at a David Guetta show. It also is an NFT, Elon Musk said yesterday. "I'm selling this song about NFTs as an NFT," he tweeted, in between missives about dogecoin and tweets about much better music. I couldn't find if or where it was on sale yet, but I can promise you the price tag is going to be insane. But it'll pale in comparison to when he mints the NFT of the tweet about the NFT of the NFT song. And all our heads explode.

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Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to, or our tips line, Enjoy your day, see you tomorrow.

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