Roblox opens its books, Snap makes an acquisition and Pfizer and BioNTech seek regulatory approval for their vaccine. This your Daily Crunch for November 20, 2020.
The big story: Roblox is going public
The child-friendly gaming company filed confidentially to go public in October, but it only published its S-1 document with financial information late yesterday.
How do the numbers look? Well, Roblox is certainly growing quickly — total revenue increased 56% in 2019, and then another 68% in the first three quarters of 2020, when it saw $588.7 million in revenue. At the same time, losses are growing as well, nearly quadrupling to $203.2 million during those same three quarters.
The company also acknowledged that its success depends on its ability to “provide a safe online environment” for children. Otherwise, “business will suffer dramatically.”
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DoorDash, Affirm, Roblox, Airbnb, C3.ai and Wish all filed to go public in recent days, which means some venture capitalists are having the best week of their lives.
Tech companies that go public capture our imagination because they are literal happy endings. An Initial Public Offering is the promised land for startup pilgrims who may wander the desert for years seeking product-market fit. After all, the “I” in “ISO” stands for “incentive.”
A flurry of new S-1s in a single week forced me to rearrange our editorial calendar, but I didn’t mind; our 360-degree coverage let some of the air out of various hype balloons and uncovered several unique angles.
For example: I was familiar with Affirm, the service that lets consumers finance purchases, but I had no idea Peloton accounted for 30% of its total revenue in the last quarter.
“What happens if Peloton puts on the brakes?” I asked Alex Wilhelm as I edited his breakdown of Affirm’s S-1. We decided to use that as the subhead for his analysis.
The stories that follow are an overview of Extra Crunch from the last five days. Full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.
Thank you very much for reading Extra Crunch this week; I hope you have a relaxing weekend.
Gaming company Roblox filed to go public yesterday afternoon, so Alex Wilhelm brought out a scalpel and dissected its S-1. Using his patented mathmagic, he analyzed Roblox’s fundraising history and reported revenue to estimate where its valuation might land.
Noting that “the public markets appear to be even more risk-on than the private world in 2020,” Alex pegged the number at “just a hair under $10 billion.”
HANGZHOU, CHINA – JULY 31: An employee uses face recognition system on a self-service check-out machine to pay for her meals in a canteen at the headquarters of Alibaba Group on July 31, 2018 in Hangzhou, Zhejiang Province of China. The self-service check-out machine can calculate the price of meals quickly to save employees’ queuing time. (Photo by Visual China Group via Getty Images)
For all the hype about new forms of payment, the way I transact hasn’t been radically transformed in recent years — even in tech-centric San Francisco.
Sure, I use NFC card readers to tap and pay and tipped a street musician using Venmo last weekend. But my landlord still demands paper checks and there’s a tattered “CASH ONLY” taped to the register at my closest coffee shop.
In China, it’s a different story: Alibaba’s employee cafeteria uses facial recognition and AI to determine which foods a worker has selected and who to charge. Many consumers there use the same app to pay for utility bills, movie tickets and hamburgers.
“Today, nobody except Chinese people outside of China uses Alipay or WeChat Pay to pay for anything,” says finance researcher Martin Chorzempa. “So that’s a big unexplored side that I think is going to come into a lot of geopolitical risks.”
“The only thing more rare than a unicorn is an exited unicorn,” observes Managing Editor Danny Crichton, who looked back at Exitpalooza 2020 to answer “a simple question — who made the money?”
Covering each exit from the perspective of founders and investors, Danny makes it clear who’ll take home the largest slice of each pie. TL;DR? “Some really colossal winners among founders, and several venture firms walking home with billions of dollars in capital.
The S-1 Airbnb released at the start of the week provided insight into the home-rental platform’s core financials, but it also raised several questions about the company’s health and long-term viability, according to Alex Wilhelm:
How far did Airbnb’s bookings fall during Q1 and Q2?
Autodesk CEO Andrew Anagnost explains the strategy behind acquiring Spacemaker
Andrew Anagnost, president and CEO, Autodesk.
Earlier this week, Autodesk announced its purchase of Spacemaker, a Norwegian firm that develops AI-supported software for urban development.
TechCrunch reporter Steve O’Hear interviewed Autodesk CEO Andrew Anagnost to learn more about the acquisition and asked why Autodesk paid $240 million for Spacemaker’s 115-person team and IP — especially when there were other startups closer to its Bay Area HQ.
“They’ve built a real, practical, usable application that helps a segment of our population use machine learning to really create better outcomes in a critical area, which is urban redevelopment and development,” said Anagnost.
“So it’s totally aligned with what we’re trying to do.”
After poring over its ownership structure, service offerings and its last two years of revenue, he asks and answers the question: “is the business itself any damn good?”
Is the internet advertising economy about to implode?
Image Credits: jayk7 / Getty Images
In his new book, “Subprime Attention Crisis,” writer/researcher Tim Hwang attempts to answer a question I’ve wondered about for years: does advertising actually work?
Managing Editor Danny Crichton interviewed Hwang to learn more about his thesis that there are parallels between today’s ad industry and the subprime mortgage crisis that helped spur the Great Recession.
So, are online ads effective?
“I think the companies are very reticent to give up the data that would allow you to find a really definitive answer to that question,” says Hwang.
Even after much of the population has been vaccinated against COVID-19, we will still be using Zoom’s video-conferencing platform in great numbers.
That’s because Zoom isn’t just an app: it’s also a platform play for startups that add functionality using APIs, an SDK or chatbots that behave like smart assistants.
Enterprise reporter Ron Miller spoke to entrepreneurs and investors who are leveraging Zoom’s platform to build new applications with an eye on the future.
“By offering a platform to build applications that take advantage of the meeting software, it’s possible it could be a valuable new ecosystem for startups,” says Ron.
Will edtech empower or erase the need for higher education?
Image Credits: Bryce Durbin
Without an on-campus experience, many students (and their parents) are wondering how much value there is in attending classes via a laptop in a dormitory.
Even worse: Declining enrollment is leading many institutions to eliminate majors and find other ways to cut costs, like furloughing staff and cutting athletic programs.
Edtech solutions could fill the gap, but there’s no real consensus in higher education over which tools work best. Many colleges and universities are using a number of “third-party solutions to keep operations afloat,” reports Natasha Mascarenhas.
“It’s a stress test that could lead to a reckoning among edtech startups.”
3 growth tactics that helped us surpass Noom and Weight Watchers
3D rendering of TNT dynamite sticks in carton box on blue background. Explosive supplies. Dangerous cargo. Plotting terrorist attack. Image Credits: Gearstd / Getty Images.
I look for guest-written Extra Crunch stories that will help other entrepreneurs be more successful, which is why I routinely turn down submissions that seem overly promotional.
However, Henrik Torstensson (CEO and co-founder of Lifesum) submitted a post about the techniques he’s used to scale his nutrition app over the last three years. “It’s a strategy any startup can use, regardless of size or budget,” he writes.
According to Sensor Tower, Lifesum is growing almost twice as fast as Noon and Weight Watchers, so putting his company at the center of the story made sense.
Send in reviews of your favorite books for TechCrunch!
Image via Getty Images / Alexander Spatari
Every year, we ask TechCrunch reporters, VCs and our Extra Crunch readers to recommend their favorite books.
Have you read a book this year that you want to recommend? Send an email with the title and a brief explanation of why you enjoyed it to bookclub@techcrunch.com.
We’ll compile the suggestions and publish the list as we get closer to the holidays. These books don’t have to be published this calendar year — any book you read this year qualifies.
Please share your submissions by November 30.
Dear Sophie: Can an H-1B co-founder own a Delaware C Corp?
Image Credits: Sophie Alcorn
Dear Sophie:
My VC partner and I are working with 50/50 co-founders on their startup — let’s call it “NewCo.” We’re exploring pre-seed terms.
One founder is on a green card and already works there. The other founder is from India and is working on an H-1B at a large tech company.
Can the H-1B co-founder lead this company? What’s the timing to get everything squared away? If we make the investment we want them to hit the ground running.
FoodBoss aims to be something like Kayak for online food ordering — the place where you can search across different service and apps to find the lowest prices and fastest delivery times.
One limitation, however, is the fact that the service was limited to third-party services like Uber Eats and Postmates, with no way to order from the restaurant itself — until recently, with the launch of a new feature called Restaurant Direct.
FoodBoss co-founder and CEO Michael DiBenedetto said that restaurants are placing an increasing emphasis on accepting delivery and pickup orders directly, both to save on the fees they pay to third-party services, and also to have a direct relationship with their customers.
“The main problem is they spent all this money to build out the [ordering] infrastructure, but they don’t necessarily know that they have to spend marketing dollars to drive consumers to their site or app,” DiBenedetto said. “That’s where we’re really helping.”
Image Credits: FoodBoss
Restaurant Direct may present some additional technical hurdles, because it will require FoodBoss to integrate with a variety of ordering systems. DiBenedetto said the company will be connecting through APIs in some cases and can also work directly with restaurant IT departments.
He emphasized that FoodBoss will remain agnostic about how you order — the goal is just to show you all the options, and to highlight the ordering method that best matches your priorities.
“At FoodBoss, we’re focused on making sure we’re helping third parties and [restaurants] have a lower overall marketing cost,” DiBenedetto continued. “Everybody wants to be profitable on delivery.”
The first restaurant available through Restaurant Direct is Lou Malnati’s in Chicago, with plans to add Sbarro in multiple markets next year. In a statement, Lou Malnati’s president, Heather Stege, said, “The challenge for restaurants is being able to serve customers through the users preferred channels, while still providing them with exceptional food. FoodBoss helps simplify that by offering multiple options, including our own, to attract customers.”
The last time we wrote about JoyRun, it was raising $10 million. Today, the Bay Area startup has some very different news to share, as it becomes part of Walmart as Walmart has purchased select assets in a bid to enhance its supply chain. The mega-retailer announced today that it has acquired “select assets – including the talent, technology platform and IP” from the company, in a bid to incorporate its peer-to-peer food and drink delivery service into its own last-mile logistics.
Walmart EVP Srini Venkatesan notes that the app has amassed a network of 540 third-party merchant partners and north of 30,000 people who have delivered goods with the service since its launch half-a-decade ago. JoyRun’s service is a bit of twist on more standard delivery apps like Seamless and Uber Eats.
As we described it back in 2017, “The company’s app lets people find out who, nearby, is already heading out to a restaurant that they like, then tack on an order of their own.” It will be interesting to see how Walmart integrates this technology into its existing chain, though from the sound it, Walmart would essentially be relying on non-professionals to delivery goods like groceries.
The system would likely operate in a manner like Amazon Flex — a kind of Uber/Lyft gig economy-style approach to delivery.
“This acquisition allows us to further augment our team and ongoing efforts to explore even more ways to deliver for customers in the future,” Venkatesan adds. “For instance, Runners could complement our SPARK program and 3rd Party delivery providers. Our goal is to deliver as quickly and efficiently as possible.”
Walmart expects the deal to close “in the coming weeks,” which will incorporate JoyRun into its Supply Chain Technology team. Terms of the deal were not disclosed.
Kea is a new startup giving restaurants an opportunity to upgrade one of the more old-fashioned ways that they take orders — over the phone.
Today, Kea is announcing that it has raised a $10 million Series A led by Marbruck, with participation from Streamlined Ventures, Xfund, Heartland Ventures, DEEPCORE, Barrel Ventures and AVG Funds, as well as angel investors Raj Kapoor (chief strategy officer at Lyft), Craig Flom (who was on the founding team at Panera Bread), Wingstop franchisee Tony Lam and Five Guys franchisee Jonathan Kelly.
Founder and CEO Adam Ahmad said that with restaurants perpetually understaffed, they usually don’t have someone who can devote their attention to answering the phone. (Many of you, after all, are probably pretty familiar with the experience of calling a restaurant and being immediately placed on hold.)
At the same time, he suggested it remains an important ordering channel — especially during the pandemic, as takeout and delivery has become the biggest source of revenue for many restaurants. The New Yorker’s Helen Rosner put it succinctly when she suggested that anyone who wants to support restaurants should “pick up the damn phone.”
Similarly, Ahmad said that for restaurants, paying substantial third-party ordering fees on all of their orders is “not a sustainable long-term strategy.” So Kea is offering technology that should help restaurants handle more orders over the phone, creating what Ahmad called a “virtual cashier” who can do the initial intake with customers, process most routine orders and bring in a human employee when needed.
The idea of an automated voice assistant may bring back unpleasant memories of trying to call your bank or another Byzantine customer service department. But Ahmad said that while most existing phone systems are “not smart,” Kea’s AI is very different, because it’s just focused on restaurant ordering.
“We’re doing a very closed domain,” he said. “In the pizza world, there are only a couple thousand permutations. We’re not innovating for the whole dictionary — it’s a constrained model, it’s a menu.”
In fact, the Kea team gave me a number to dial where I could try out the system for myself. It was a pretty straightforward and easy process, where I provided my address and then the details of my pizza order. And again, you can transfer to a human employee at any time. (In fact, I was accidentally transferred during my demo, leading me to quickly hang up in embarrassment.)
Kea is already live in more than 250 restaurants, including Papa John’s, Donatos and Primanti Brothers, and it says it’s saving them an average of 10 hours of labor per week, with a 23% increase in average order size. With the new funding, Ahmad’s goal is to bring Kea to 1,000 restaurants across 37 states in 2021.
An AI that completes quests in a text-based adventure game by talking to the characters has learned not only how to do things, but how to get others to do things. The system is a step toward machines that can use language as a way to achieve their goals.
Pointless prose:Language models like GPT-3 are brilliant at mimicking human-written sentences, churning out stories, fake blogs, and Reddit posts. But there is little point to this prolific output beyond the production of the text itself. When people use language, it is wielded like a tool: our words convince, command, and manipulate; they make people laugh and make people cry.
Mixing things up: To build an AI that used words for a reason, researchers from the Georgia Institute of Technology in Atlanta and Facebook AI Research combined techniques from natural-language processing and reinforcement learning, where machine-learning models learn how to behave to achieve given objectives. Both these fields have seen enormous progress in the last few years, but there has been little cross-pollination between the two.
Word games: To test their approach, the researchers trained their system in a text-based multiplayer game called LIGHT, developed by Facebook last year to study communication between human and AI players. The game is set in a fantasy-themed world filled with thousands of crowdsourced objects, characters, and locations that are described and interacted with via on-screen text. Players (human or computer) act by typing commands such as “hug wizard,” “hit dragon,” or “remove hat.” They can also talk to the chatbot-controlled characters.
Dragon quest: To give their AI reasons for doing things, the researchers added around 7,500 crowdsourced quests, not included in the original version of LIGHT. Finally, they also created a knowledge graph (a database of subject-verb-object relationships) that gave the AI common-sense information about the game’s world and the connections between its characters, such as the principle that a merchant will only trust a guard if they are friends. The game now had actions (such as “Go to the mountains” and “Eat the knight”) to perform in order to complete quests (such as “Build the largest treasure hoard ever attained by a dragon”).
Sweet talker: Pulling all of this together, they trained the AI to complete quests just by using language. To perform actions, it could either type the command for that action or achieve the same end by talking to other characters. For example, if the AI needed a sword, it could choose to steal one or convince another character to hand one over.
For now, the system is a toy. And its manner can be blunt: at one point, needing a bucket, it simply says: “Give me that bucket or I’ll feed you to my cat!” But mixing up NLP with reinforcement learning is an exciting step that could lead not only to better chatbots that can argue and persuade, but ones that have a much richer understanding of how our language-filled world works.
Pfizer will apply for emergency permission to distribute its covid-19 vaccine in the US and is ready to start shipping the shots within “hours” of getting a government green light, the firm said today. It is the first such application from any of the makers of covid-19 vaccines that are currently in development.
If it is approved, the first people to get the shot are likely to be doctors, nurses, and other front-line workers, and that could happen before Christmas, according to the drug giant. Pfizer is also sharing information with regulators in Canada, the European Union, and Japan.
In a statement, Pfizer’s CEO, Albert Bourla, said the vaccine’s development took “248 long days and nights,” involving 43,661 volunteers at 150 locations in the US, Turkey, and South Africa. Pfizer claims its vaccine has proved to be 95% effective in its final trials.
Pfizer and its partner, German firm BioNtech, believe they can produce about 50 million doses by January, and as many as 1.3 billion doses by the end of 2021. Each recipient needs two doses, spaced weeks apart. “The companies will be ready to distribute the vaccine within hours after authorization,” Pfizer said.
While Pfizer’s vaccine may be the first to win authorization in the US, vaccine organizations say shots from several other companies will still be needed. That’s because no one company, or technology, can meet global demand for vaccination.
Other vaccines include one being developed by Moderna Pharmaceuticals, based in Massachusetts; another from AstraZeneca and Oxford University that’s in late-stage testing; and vaccines already authorized in China and in Russia.
The development of a vaccine for a new disease in less than a year has shattered all records, yet it won’t come soon enough to intercept the current winter wave of covid-19 cases in the US and Europe, where infections have reached an all-time high. The US alone is recording more than 170,000 coronavirus cases per day. If undetected infections are accounted for, that could mean half a million Americans are catching the coronavirus every 24 hours.
Because vaccines supplies will be limited at first, most people will have to wait until the middle of 2021, or beyond, to get vaccinated with the Pfizer shot or one from another company. That means for now, avoiding the virus still means avoiding other people. This week, the US Centers for Disease Control began discouraging Americans from traveling for the Thanksgiving holiday next Thursday.
Pfizer’s request to market its vaccines now means it is up to the Food and Drug Administration whether to issue a type of fast-track approval called an “emergency-use authorization.” A committee of advisors will meet in December to assess Pfizer’s data documenting how well the shots worked.
Some experts still question whether a vaccine should be rushed out, saying a formal, somewhat longer approval process would create more confidence in the product among the general public.
Since March, the FDA has used it emergency authorization power to allow the sale of four medical treatments for covid-19 (hydroxychloroquine, donor blood plasma, the antiviral remdesivir, and an antibody), each time on the basis of limited evidence. In every case, it remains disputed whether any of those drugs actually prevent patients from dying.
The Pfizer vaccine employs a novel technology in which part of the virus’s genome is packaged inside fatty nanoparticles. A person’s own cells then use that information to manufacture a single viral protein, called a “spike,” which trains the immune system to recognize the pathogen.
Pfizer said that it is able to manufacture and distribute its vaccine from several locations in the US and Europe and will use special ultra-cold shipping boxes tracked by GPS devices, since its product needs to be kept at a temperature of -70 °C.
New Zealand company Rocket Lab has hit a key milestone with the successful launch and recovery of its flagship Electron rocket. The mission, the firm’s 16th so far, included a soft parachute landing of the first-stage booster to the ocean for the first time.
The mission: Electron was launched around 1:46 a.m. local time this morning from the company’s launch site on the southern tip of New Zealand’s North Island. The mission successfully deployed 30 satellites into low Earth orbit.
After two minutes in flight (over 26,000 feet in the air), the first-stage booster separated from the second stage, flipped around 180 degrees, and deployed a parachute that slowed down its descent and allowed for a soft landing in the Pacific Ocean, after which crews successfully ventured out to recover it. It is the first time the company has ever attempted to recover a rocket booster.
Why it matters: Both SpaceX and Blue Origin have been recovering rocket boosters for years. Their method, however, involves bringing the boosters back down in a vertical landing.
Rocket Lab wants to pioneer a different approach. The goal is to recover the boosters as they fall by capturing them in midair with a helicopter. After the booster has deployed its parachute, a helicopter will snag the parachute line before the rocket hits the ocean.
The company demonstrated this in late March, with a helicopter catching a dummy rocket dropped about 5,000 feet above the ocean. Before this, Rocket Lab also successfully demonstrated a guided reentry of the Electron rocket during missions in December and January, proving that the first-stage booster could survive reentry through the atmosphere. Friday’s mission shows the company can get the booster back down to Earth in one piece.
Small is better: The company specializes in small payload launches. Its 55-foot-tall Electron rocket is 3D-printed—the only rocket of its kind to be flying at the moment. Electron can’t send very heavy satellites into space (it is too lightweight), but the rise of small satellites has opened up an enormous market that Rocket Lab wants to capitalize on, especially if the company can pull off frequent flights. Rocket Lab plans to start launching from the US at Wallops Island, Virginia, starting next year.
The company also has some deep space ambitions moving forward, including plans to launch a small satellite to Venus in 2023 to study the planet’s atmosphere for possible signs of life.
In the early days of the covid-19 pandemic, several competing projects launched around a deceptively simple concept: your phone could alert you if you’d crossed paths with someone who later tested positive. One system for these exposure notifications quickly caught on. It was designed, in an improbable act of cooperation, by Apple and Google, which released the first version in May.
How do the Apple-Google contact tracing apps work?
When you enable exposure notifications, your phone starts using Bluetooth to constantly scan for nearby phones doing the same thing. (This happens in the background, and it’s designed not to use much extra battery.)
When two phones connect, they swap anonymous ID codes. Your phone records how long you spend around the other device and guesses how far away you are, based on a mixture of factors such as how the phone is oriented and how strong the signal from the other handset is.
If you test positive for covid-19, your health department will ask if you’d like to notify people you may have exposed. If you agree, they’ll give you a code to enter into the app. This code authorizes your phone to send its ID codes—still anonymous—to a central server, which is managed by your state or national health authority.
Meanwhile, your phone periodically checks the server for new IDs that have been associated with positive tests and cross-references them against the ones it’s collected over the past two weeks.
If your phone thinks it’s been within six feet of flagged devices for at least 15 minutes in a day, you’ll get an alert that you may have been exposed, including information about what to do next.
What does effective contact tracing look like?
Effective contact tracing, whether it’s done by a human or by an app, is a three-pronged process: identify who has the virus, identify who those people have spent time with, and convince those contacts to stay home.
Access to testing has remained a fundamental problem—apps can’t work if users don’t get tested for covid-19. And if people do get tests, they need to trust their governments (or tech companies) enough to enter positive results into the app. Finally, everyone who gets an exposure notification needs to take advice about properly isolating.
How do contact tracing apps deal with privacy?
Health departments have struggled to build trust around contact tracing. A recent Pew survey found that 40% of Americans are unlikely to even talk with manual contact tracers. And despite many layers of anonymity, exposure notification apps have earned significant criticism over privacy concerns. They’ve been called out by Amnesty International, consumer protection groups, and even 39 US attorneys general.
Health departments can use privacy-preserving technology from Google and Apple and still ask users to send them a phone number if they get an exposure notification. While the feature is entirely voluntary—the apps still work if users don’t add their numbers—many governments don’t ask, in an effort to make people feel more secure about privacy.
This focus on privacy means certain trade-offs. If people were willing to talk to contact tracers after getting an exposure notification, they could help public health experts understand the spread of disease.
Are contact tracing apps working?
There’s evidence that apps can help by breaking transmission chains and preventing new cases, even without tons of users. They may be useful as part of a “Swiss cheese” model: even though every approach has holes, stacking lots of them together can make a solid barrier. But it’s unclear how much exposure notifications do to change people’s behavior, particularly since it’s difficult to track how many people get exposure notifications and later test positive.
Many experts are anxiously following the progress of Ireland’s app, which is actively used by more than a third of the adult population. Between mid-July and mid-October, users uploaded 3,000 positive results, representing around 11% of confirmed cases. In October, Ireland became the first country in Europe to reimpose a nationwide lockdown. (The country’s rate of new cases per capita dropped almost immediately, and is now a sixth of America’s rate.)
Unfortunately, the promise of a smartphone solution conflicts with one of the harshest realities of the pandemic: marginalized groups around the world are contracting and dying of covid-19 at rates far higher than people with greater socioeconomic power. People in these groups are also less likely to be tested in the first place. Smartphone apps may not be as helpful in such communities, particularly if members have good reasons to distrust the government.
What comes next?
While many countries now have national apps, there hasn’t been a federal effort in the US—which happens to be the world’s coronavirus hot spot. Instead, health departments in individual American states have been forced to create a patchwork of apps.
Statewide exposure notifications may finally be picking up steam. In September, Google and Apple started letting health agencies in the US offer exposure notifications without building their own apps. The tool, called Exposure Notifications Express, is baked into operating systems from iOS 13.7 on. That means iPhone users can just turn notifications on in the settings menu. Google, meanwhile, has a ready-made app that it customizes for each state.
One major roadblock has been a fragmented system for managing the IDs, or “keys,” associated with positive tests. Users weren’t getting notifications from people who were on other states’ apps. In August, the US Association of Public Health Laboratories built a communal server that makes it much easier for apps to talk to one another and send keys across state lines. So far Washington, DC, and 12 states—mostly on the East Coast—have launched apps using this system, and four more have pilot programs
If the book of nature is written in the language of mathematics, as Galileo once declared, the covid-19 pandemic has brought that truth home for the world’s mathematicians, who have been galvanized by the rapid spread of the coronavirus.
And at the moment many are grappling with a particularly urgent—and thorny—area of research: modeling the optimal rollout of a vaccine. Because vaccine supply will be limited at first, the decisions about who gets those first doses could save tens of thousands of lives. This is critical now that promising early results are coming in about two vaccine candidates—one from Pfizer and BioNTech and one from Moderna—that may be highly effective and for which the companies may apply for emergency authorization from the Food and Drug Administration.
But figuring out how to allocate vaccines—there are close to 50 in clinical trials on humans—to the right groups at the right time is “a very complex problem,” says Eva Lee, director of the Center for Operations Research in Medicine and Health Care at the Georgia Institute of Technology. Lee has modeled dispensing strategies for vaccines and medical supplies for Zika, Ebola, and influenza, and is now working on covid-19. The coronavirus is “so infectious and so much more deadly than influenza,” she says. “We have never been challenged like that by a virus.”
Howard Forman, a public health professor at Yale University, says the last time we did “mass vaccination with completely new vaccines” was with smallpox and polio. “We are treading into an area we are not used to,” he says: all the other vaccines of the last decades have either been tested for years or were introduced very slowly.
Because covid-19 is especially lethal for those over 65 and those with other health problems such as obesity, diabetes, or asthma, and yet is spread rapidly and widely by healthy young adults who are more likely to recover, mathematicians are faced with two conflicting priorities when modeling for vaccines: Should they prevent deaths or slow transmission?
The consensus among most modelers is that if the main goal is to slash mortality rates, officials must prioritize vaccinating those who are older, and if they want to slow transmission, they must target younger adults.
“Almost no matter what, you get the same answer,” says Harvard epidemiologist Marc Lipsitch. Vaccinate the elderly first to prevent deaths, he says, and then move on to other, healthier groups or the general population. One recent study modeled how covid-19 is likely to spread in six countries—the US, India, Spain, Zimbabwe, Brazil, and Belgium—and concluded that if the primary goal is to reduce mortality rates, adults over 60 should be prioritized for direct vaccination. The study, whose authors include Lipsitch as well as Daniel Larremore and Kate Bubar of the University of Colorado Boulder, has been published as a preprint, meaning it has not yet been peer-reviewed. Of course, when considering covid-19’s outsizeimpact on minorities —especially Black and Latino communities—additional considerations for prioritization come into play.
Most modelers agree that “everything is changing with coronavirus at the speed of light,” as applied mathematician Laura Matrajt, a research associate at the Fred Hutchinson Cancer Research Center in Seattle, put it in an email. That includes our understanding of how the virus spreads, how it attacks the body, how having another disease at the same time might raise the risk, and what leads to superspreader events.
So far, the research has yielded some surprising results. While children are usually prioritized for flu vaccine, for example, experts say the very young should be a lower priority for covid-19 vaccines in the United States, because thus far young adults have been primary drivers of transmission. (This is not necessarily true across the globe; in India, for instance, where multiple generations often live together in smaller spaces, new research shows both children and young adults are spreading much of the virus in the two states studied.)
In addition, several models suggest that significant headway can be made against the pandemic even with lower deployment of a vaccine that is only partly effective. And several others emphasize the importance of local infection and transmission rates. According to Lee, whose early assessments of the pandemic’s origin, virulence, and probable global trajectory proved to be strikingly accurate, New York could potentially contain the virus if about 40% of the population were vaccinated, because local transmission of the virus is fairly low (a positivity rate of a little below 3% as of November 16), and around 20% have already been infected.
“The higher the fraction of people in the population who already have antibodies, the more bang for your buck,” says Larremore, because you can prioritize giving vaccines to those who don’t have antibodies.
All these findings are important because “at the end of the day, you will never have enough vaccines for the entire population,” says Lee—and not all Americans will take it. In fact, the World Health Organization recently predicted that healthy young adults may not even be able to get a vaccine until 2022, after the elderly, health-care workers, and other high-risk groups are vaccinated.
To model the rollout of vaccines, mathematicians must build formulas that reflect the starburst of human life and our complex interactions, using data like housing and socioeconomic status, daily habits, age, and health risks. But first they establish how contagious the virus is—its reproductive rate, or “R-naught.” This represents the number of people that one infected person can be expected to transmit the infection to.
When some fraction (depending on R-naught) of people are immune (either by recovering from natural infection, if that grants immunity, or through vaccination), herd immunity has been achieved. That means that while small outbreaks may still occur, the pandemic will not take off globally again. Given the R-naught of SARS-CoV-2, the virus that causes covid-19, the World Health Organization has estimated that 65 to 70% of the population needs to be immune before this can be achieved.
Vaccine rollout scenarios developed by Bubar et al. include five different ways of distributing the first doses of vaccines, presented in the left panel. The scenarios show the same pattern: to prevent deaths, vaccinate the elderly first, and then move on to other, healthier groups or the general population.
BUBAR ET AL. / MEDRXIV VIA CC 4.0
Modeling vaccine rollout requires a complex acrobatics, and while the models to flatten the curve that mesmerized the public last spring took weeks to craft, vaccine distribution models take many months. There are innumerable practical challenges facing modelers. For one thing, many of the vaccines currently in the pipeline—including the two candidates from Pfizer and BioNTech and Moderna—require two shots, several weeks apart, which involve registries and follow-up to ensure that people get the second, critical booster shot. And as the New York Times noted in late September, “Companies may have to transport tiny glass vials thousands of miles while keeping them as cold as the South Pole in the depths of winter.”
There is also the question of vaccine efficacy. Will a given vaccine provide robust immunity, and in all groups? Or will it primarily shorten duration of infection and lessen symptoms, which would still be of great value in reducing mortality as well as transmission? And what if a vaccine is less effective among the elderly, as is often the case? At the moment, vaccines using messenger RNA (including those produced by Moderna and Pfizer and BioNTech) are “looking pretty good in older adults,” according to Kathleen Neuzil, director of the Center for Vaccine Development and Global Health at the University of Maryland School of Medicine. Preliminary analyses of both vaccine candidates show that they may be more than 90% effective.
Finally, there is also the vexing question of how long immunity might last after infection. For some viruses, such as the varicella-zoster virus that causes chicken pox, immunity can last for decades. For others, such as the family of coronaviruses that includes SARS-CoV-2 and the common cold, the virus has a relatively high mutation rate that may protect novel strains from our antibodies. That uncertainty is difficult to model precisely, so many modelers assume that, for the time being at least, those who have been infected are immune.
Matrajt, of the Fred Hutchinson Cancer Center in Seattle, remembers vividly how hard it was to begin to construct a model out of thin air when she began working with colleagues on a vaccination model this past April. There were “so many uncertainties,” she recalls. Together, the researchers developed algorithms based on an astonishing 440 or so combinations of parameters, from transmission to immunity to age groups and mortality. Their computers spent nearly 9,000 hours running equations, and their model, published in August as a preprint, shows that if there is only a low supply of vaccine at first, older adults should be prioritized if the goal is to reduce deaths.
But for vaccines that are at least 60% effective, once there is enough to cover at least half the population, switching to target healthy individuals ages 20 to 50 as well as children would minimize deaths. The model also predicts how many deaths can be averted with different amounts of vaccine coverage. For instance, if 20% of the population has already been infected and is immune, deaths could be halved by vaccinating just 35% of the remainder, if the vaccine is at least 50% effective.
In the model by Matrajt and her colleagues, herd immunity is achieved once 60% of the population is immune. “It is completely normal that different models will give different numbers,” she says, explaining why her estimate varies slightly from the WHO figure of 65%.
The model does “a really nice job looking at a large number of plausible cases,” says Michael Springborn, an environmental and resource economist at the University of California, Davis, who just finished his own model with Jack Buckner, a colleague at UC Davis, and Gerardo Chowell, a mathematical epidemiologist at Georgia State University. Their study, released in preprint, also suggests the power of careful initial targeting in reducing deaths.
The models suggest that even a partially effective vaccine given to just part of the population, says Springborn, “can go a really long way to reducing infections and reducing deaths.”
A vaccine rollout model by Matrajt and her colleagues shows how availability and efficacy of the vaccine affects infections and deaths due to Covid-19.
MATRAJT ET AL. / MEDRXIV VIA CC 4.0
Lee’s modeling, created with software she first developed in 2003, in conjunction with the CDC, for dispensing of supplies in natural disasters and pandemics, analyzes how the disease might be contained in areas with different infection rates and initially scarce vaccine supplies. In New York City, which was hit so hard in the spring, her model predicts that roughly 60% of the population may need immunity to contain the pandemic. Assuming 20% are already infected, about 40% would need to be vaccinated. In San Diego, however, where infection rates have been lower, Lee’s model suggests that 65% will need to achieve immunity through infection or vaccination. In Houston, the figure may be as high as 73% because the infection has persisted at a “slow burn” and because of the city’s large, vulnerable Latino and African-American populations, who have borne disproportionate risk.
Lee cautions that these results do not mean you can suddenly go to a football game in Houston or a Broadway show in New York, but it does mean that with ongoing precautions, the virus might well be contained with the percentages given in her models, until more vaccine arrives.
Though their results vary, most models agree that certain factors are critical, notably age group, which changes the risk of contracting, spreading, and dying from a virus. It’s not always predictable: the swine flu, for instance, spared older adults to some degree, while SARS-CoV-2 has severely affected those over 65. Adults 65 and older compose 16% of the U.S. population but account for about 80% of covid-19 deaths.
In addition, age indirectly influences transmission patterns. In 2009, Yale epidemiologists Alison Galvani and Jan Medlock published a mathematical model in Science, showing that targeting flu vaccines to children and young adults (in addition to the elderly) could have slashed swine flu infections from 59 million to 44 million; and for seasonal influenza, 83 million infections could plunge to 44 million. Children, it turns out, drive a disproportionate amount of flu transmission, and protecting them protects society at large.
The study, and others like it, inspired a change in CDC policy to prioritize vaccinating children. “It was a revolution in how we think about vaccines,” says Larremore. Vaccination models now routinely consider the power of indirect protection of the most vulnerable by vaccinating those most responsible for spread.
Age also intersects, in complex ways, with social connectivity in different regions. For instance, African-American and Latino communities in the United States have been disproportionately hit by covid-19, in part because of the prevalence of multiple generations living together: Older individuals are much more exposed to the young adults who might be the likeliest carriers of infection.
Modeling connectivity requires drawing grids that represent how we live and move among each other. In 2008, a landmark paper built a grid that epidemiologists everywhere still use today. It stratified people into groups based on age, from birth to 70 years old and up. In the study, more than 7,000 individuals kept a diary of their contacts—nearly 98,000 of them—over the course of one day. Contacts were sorted by place (home, school, work, leisure) and by nature (physical or nonphysical, brief or longer lasting). The model found that 5- to 19-year-olds tend to experience the highest incidence of infection when a new pathogen begins to spread in a completely susceptible population, possibly because of their more frequent and physical contact with others. It also showed how profoundly a society’s grids of connection influence transmission.
The model was expanded globally in 2017, with contact rates for 152 countries. “It’s what we all use,” says Matrajt, “because it’s the best thing we have to identify how people contact each other.” She incorporated the contact grid into her model.
For example, “if kids are really the hubs around which society is built,” Larremore says, “so that if you vaccinate the kids, you fragment that transmission network, then that’s going to give us a totally different way of rolling out this vaccine.”
The original grid relied on diaries. Today, our ability to gather data through real-time cell-phone and online activity may be even greater.
When social distancing became widespread this past spring, it dramatically altered the input into the typical transmission model, says Springborn. Data from the Institute for Health Metrics and Evaluation at the University of Washington shows the power of social distancing in reducing transmission. The contact grids in previous studies are “from pre-pandemic times,” Springborn wrote in an email. “We know that contact rates are very different under social distancing and we want to account for that. And we expect social distancing to soften as the number of infections falls. Human nature: As risk falls, so does risk-mitigating behavior.”
That needs to be modeled as well. And it will influence the expectations for a vaccine’s rollout and success. In fact, Lee maintains, if we had 90% compliance with face masks and social distancing right now, we could contain the virus without a vaccine.
In the study by Springborn, Buckner, and Chowell, social distancing is modeled by creating age-stratified categories for both essential and nonessential workers. Essential workers—health-care workers, grocery workers, and many schoolteachers, among others—are at high risk for infection because they cannot socially distance. This model finds that deaths, as well as total years of life lost, are dramatically decreased when essential workers are prioritized to receive the vaccine. Older essential workers between 40 and 59 should be prioritized first if the goal is to minimize deaths, the authors maintain.
With no vaccine, about 179,000 people may die in the first six months of 2021, Springborn says. His team’s model suggests that deaths could decline to about 88,000 if a vaccine were introduced gradually, given to 10% of the population each month, and distributed uniformly without prioritizing any groups. But distributing vaccines in a targeted way, based on people’s ages and whether they are essential workers, could save another 7,000 to 37,000 lives, depending on the situation.
There are other methods of teasing out social connectivity beyond diaries and cell-phone data. Census and other data reflect age, profession, and socioeconomic status, and Lee includes this information in her models. “The zip code gives you a huge amount of information,” she says. Public health data on disease prevalence and hospitalizations can tease out the other unrelated diseases that covid-19 patients have, as well as vulnerabilities in a given area. Even information on a city’s housing, whether skyscrapers or single-family homes, can give a clue to how closely people are packed together and how likely they are to interact. Inputting this kind of data allows for a vaccine rollout that is sensitive to local conditions. Lee would need to model about 500 representative cities around the US, she says, to cover the country accurately.
As powerful as the models can be, they are an imperfect guide. Inevitably they intersect with deep and broad social concerns. The pandemic has disproportionately harmed and killed minorities and those with lower incomes. For that reason, various groups are looking into the ethical principles that should frame vaccine allocation, according to Hanna Nohynek, deputy head of the Infectious Diseases Control and Vaccinations Unit at the Finnish Institute for Health and Welfare, and a member of the WHO’s SAGE Working Group on covid-19 vaccines.
In the US, the National Academies of Sciences, Engineering, and Medicine has begun to model an equitable allocation of a vaccine. In addition, two other important models have emerged, one associated with University of Pennsylvania School of Medicine and the other with Johns Hopkins University. Both are guided by concerns about ethics, fairness, maximizing benefits, building trust, and the greater public good.
But building trust can be challenging in practice. For instance, it’s widely acknowledged that Black people have experienced hospitalization and death at disproportionately high rates than white people. Yet when ethicists begin to talk about prioritizing Black people for vaccines, it can be perceived as an intent to experiment on them by pushing them to the head of the line. If there is concern among African-Americans, it’s a logical reaction to “a vast history of centuries of abuse of African-Americans in the medical sphere,” says medical ethicist Harriet Washington, author of Medical Apartheid.
Ultimately, both ethical and mathematical models have to face real-world practicalities. “It’s hard because math essentially boils down to a utilitarian calculus,” says Lipsitch, the Harvard epidemiologist.
Nonetheless, says Larremore, the models will help guide us in the uncertain early days. “Vaccines take a while to roll out,” he says. “We can’t let our foot off the gas the moment a vaccine is announced.”
Jill Neimark is a writer based in Atlanta, Georgia, whose work has been featured in Discover, Scientific American, Science, Nautilus, Aeon, NPR, Quartz, Psychology Today, and the New York Times. Her latest book is The Hugging Tree (Magination Press).