Daily Tech Snippet: Friday, July 22

• Startup Deal Activity Keeps Falling Worldwide: According to a new report from KPMG International and CB Insights, global deal activity for venture capital-backed startups continued a decline in the second quarter after hitting record levels one year ago. In fact, at the current rate, deal activity will just barely top 2013’s numbers. "Many of the high-profile tech [initial public offerings] from 2015 continue to trade well below their initial offering price, putting pressure on private company valuations," said Brian Hughes of KPMG. "This, combined with economic concerns in China and Europe, has continued to put a damper on VC investment." "It's a challenging time for VC investors," he concluded.The reason funding moved higher while deal activity dropped is that some larger startups such as those of Snapchat Inc., Didi Chuxing, and Uber Technologies Inc. all saw huge rounds, accounting for much of the funding. In fact, in North America, Uber and Snapchat accounted for more than $4.5 billion of the $17.1 billion in total investment.And while there might have been more billion dollar companies minted in the second quarter than in the first, there were yet again more "down events"—companies raising new money or being acquired at a lower valuation—than there were unicorns created. According to the report, seven startups reached the unicorn club in the past four months, but CB Insights’ downround tracker shows that 17 failed to live up to expectations and experienced down events over that time. Unicorn creation saw its most recent peak in the third quarter of last year, when 25 were birthed.

• Roger Ailes created another big problem for Fox News — the average age of its audience is 68: Roger Ailes, the closest thing in modern U.S. politics to a kingmaker, today stepped down as head of Fox News, the network he founded 20 years ago and turned into a potent political force. James Murdoch and his brother Lachlan, both named by father Rupert to run parent company 21st Century Fox last year, pushed Ailes out on the heels of a sexual harassment suit that led to more allegations of sexual misconduct from female anchors. The brothers saw the situation as a way to remove a longstanding obstacle to their power within the company. A lot of the news reports — most of the key details were first broken by New York Magazine’s Gabriel Sherman — centered on how the 76-year-old, a lifelong Republican, clashed with the two brothers politically, personally and as an executive. Ailes is known as a venal operator, specializing in deals with questionable reciprocity. His style was completely at odds with James, a data-driven technocrat, and Lachlan, the earnest Murdoch member. Mostly true. A lesser-known but perhaps more important reason had to do with more practical issues — namely, the business of Fox News itself, according to sources. The average age of Fox News viewers in primetime, the hours that draw the highest ad rates and so are the ones that matter, is 68 — a group that advertisers don’t pay to reach. In the world of cable news, marketers really only pay for viewers in the 25-54 age range. That means a good chunk of Fox News’ audience is worth little to nothing. Fox News still mints money — it accounts for as much as 24 percent of the parent company’s yearly profit, or more than $1.5 billion — but a lot of that comes from licensing fees paid by distributors to carry the network, which are only negotiated every few years. Fox News still leads in total viewership and in primetime, but it can’t capitalize on a lot of that audience since advertisers don’t pay for a lot of these viewers. That weighed on the future value of the network, as James saw it, according to one person familiar with the matter, and as much as Ailes’s style and politics were issues for both brothers, the more pressing concern was managing for the future of the network, this source said.

• Reddit is still in turmoil: Its been one year since Reddit revolted When the company cracked down on revenge porn and subreddits containing offensive content last summer, the backlash was swift and ultimately led to the ouster of interim CEO Ellen Pao. Although Pao was seen as the driving force behind efforts to make Reddit respectable enough to appeal to advertisers, the company continued its clean-up after her departure, making diverse hires and keeping up with the anti-harassment policy instituted during Pao’s tenure. But Reddit, led by CEO Steve Huffman, seems to be struggling with its reform. Over the past six months, over a dozen senior Reddit employees — most of them women and people of color — have left the company. Reddit’s efforts to expand its media empire have also faltered. Reddit let go of at least two key members of its team earlier this week, several sources with knowledge of Reddit confirmed to TechCrunch. Among those who lost their jobs are Reddit’s vice president of marketing, Celestine Maddy and Reddit’s editorial director, Vickie Chang. Also this week, Reddit HR generalist Nicole-Jasmin Clark left the company, according to our sources and confirmed by her LinkedIn, as well as a handful of people from the marketing team. The layoffs follow departures from the network’s video team last month, and the slow trickle of employees exiting the company over the past several months. Back in May, Reddit lost its head of community, Kristine Fasnacht, after being in the role for just nine months. In short, female and POC employees have been quietly leaving the company — by way of layoffs and resignations — from many departments, including engineering, marketing, operations and product. Reddit’s associate creative director Stephen Greenwood also left the company in June. sources say Reddit’s internal turmoil can be traced back to the company’s ongoing struggle to leave its antagonistic culture behind. Several employees fended off uncomfortable comments from users and management alike, sources claimed. “Management is terrible, a complete reflection of what the site is like,” one source said. Another source, a former Reddit employee who asked to remain anonymous described a management team with good intentions but poor execution.One individual speculated that the reemergence of the company’s drinking culture was to blame for the uncomfortable environment. Under Pao’s reign, Reddit tried to eradicate the bro-like amount of alcohol consumption at the office, but that went right out the window following Pao’s departure in July 2015.

• Visa and PayPal have finally settled a long-standing feud: Two months ago, Visa’s CEO issued a thinly veiled threat to PayPal: Stop driving business away from us or risk increased competition like you’ve never seen. He got his wish. The two payment companies just announced a wide-ranging partnership that includes a promise from PayPal to stop steering Visa cardholders away from using their Visa cards for PayPal transactions. The new accord will also enable PayPal’s mobile app to work as a payment option in brick-and-mortar stores whose equipment accepts tap-and-pay Visa payments. The partnership appears to bring to a close tension between one of the world’s biggest credit companies and the biggest alternative online payment option in the U.S. PayPal has been viewed warily by the credit card companies that don’t appreciate PayPal pushing their customers to pay with a bank account hookup — known as ACH — rather than a payment card. PayPal historically makes more money on a transaction when a user funds his or her PayPal wallet with a direct bank account hookup, since that method carries lower transaction fees than payment cards do.“The agreement affords PayPal certain economic incentives, including Visa incentives for increased volume, and greater long-term Visa fee certainty,” according to the press release. Translation: Visa is paying PayPal for increasing the amount of PayPal transactions that flow through Visa pipes. It appears PayPal is also getting a promise that Visa will not raise the fees it charges PayPal when a PayPal customer uses a Visa card to make a PayPal purchase. But it still appears likely that the deal will eat into PayPal’s profits as more Visa customers choose to pay with cards through PayPal instead of bank accounts, according to Craig Maurer, an analyst with Autonomous Research. “Yes, PayPal will get some form of incentives from Visa, but we believe the off-set will be minimal while this drag will be material,” he wrote in research note to clients.