Stung by criticism of its widely reported role as a platform capable of spreading disinformation and being used by state actors to skew democratic elections, Facebook’s COO Sheryl Sandberg unveiled five new ways the company would be addressing these issues at the annual DLD conference in Munich, staged ahead of the World Economic Forum. She also announced that Facebook would fund a german university to investigate the eithics of AI, and a new partnership with Germany’s office for information and security.
Sandberg laid out Facebooks five-step plan to regain trust:
1. Investing in safety and security
2. Protections against election interference
3. Cracking down on fake accounts and misinformation
4. Making sure people can control the data they share about themselves
5. Increasing transparency
Public backlashes mounted last year after Facebook was accused of losing track of its users’ personal data, and allow the now defunct Cambridge Analytica agency to mount targetted advertising to millions of Facebook users without their explicit consent in the US elections.
On safety and security, she said Facebook now employed 30,000 people to check its platform for hate posts and misinformation, 5 times more than in 2017.
She admitted that in 2016 Facebook’s cybersecurity policies were centered around protecting users data from hacking and phishing. However, these were not adequate to deal with how state actors would try to a “sow disinformation and dissent into societies.”
Over the last year she said Facebook has removed thousand of individuals accounts and page designs to coordinate disinformation campaigns. She said they would be applying all these lessons learned to the EU parliamentary elections this year’s well as working more closely with governments.
Today, she said Facebook was announcing a new partnership with the German government’s office for information and security to help guide policymaking in Germany and across the EU ahead of its parliamentary elections this year.
Sandberg also revealed the sheer scale of the problem. She said Facebook was now cracking down on fake accounts and misinformation, blocking “more than one million Facebook accounts every day, often as they are created.” She did not elucidate further on which state actors were involved in this sustained assault on the social network.
She said Facebook was now working with fact checkers around the world and had tweaked its algorithm to show related articles allowing users to see both sides of a news story that is posted on the platform. It was also taking down posts which had the potential to create real-world violence, she said. However, she neglected to mention that Facebook also owns WhatsApp, which has been widely blamed for the spreading of false rumors leaking a spate of murders in India.
She cited independent studies from Stanford University and the Le Monde newspaper which have show that Facebook user engagement with unreliable sites has declined by half since 2015.
In a subtle attack on critics, she noted that in 2012 Facebook was often attacked because it was a “walled garden”, and that the platform had subsequently bent to demands to open up to allow third-party apps to build on the service, allowing greater sharing, such as for game-play. However, the company was “now in a “very different place”. “We did not a do a good job managing our platform,” she admitted, acknowledging that this data sharing had led to abuse by bad actors.
She said Facebook had now dramatically cut down on the information about users which apps can access, appointed independent data protection officers, bowed to GDPR rules in the EU and created similar users controls globally.
She said the company was also increasing transparency, allowing other organizations to hold them accountable. “We want you to be able to judge our progress,” she said.
Last year it published its first community standards enforcement report and Sandberg said this would now become an annual event, and given as much status as its annual financial results.
She repeated previous announcements that Facebook would be instituting new standards for advertising transparency, allowing people to see all the adverts a page is running and launching new tools ahead of EU elections in May.
She also announced a new partnership with the Technical University of Munich (TUM) to support the creation of an independent AI ethics research center.
The Institute for Ethics in Artificial Intelligence, which is supported by an initial funding grant from Facebook of $7.5 million over five years, will help advance the growing field of ethical research on new technology and will explore fundamental issues affecting the use and impact of AI.
We used to be such optimists. Technology would bring us a world of wealth in harmony with the environment, and even bring us new worlds. The Internet would erase national boundaries, replace gatekeepers with a universal opportunity for free expression, and bring us all closer together. Remember when we looked forward to every advance?
I just finished Liu Cixin’s magisterial science-fiction trilogy Remembrance of Earth’s Past. It is very much a bracingly pessimistic story for our era. Without spoiling it too much, I’ll just say that it’s a depiction of a transition from optimistically anticipating contact with other worlds … to a bleak realization that we haven’t done so yet because the universe is a “dark forest,” the title of the trilogy’s second book. “Dark forest theory” holds that civilizations fear one another so much that they don’t dare to reveal themselves lest they immediately be considered a potential threat and destroyed.
There are certain analogies here. We’ve grown to fear technology, to mistrust everything it offers us, to assume its every new offering has a dark side. Consider the recent mini-viral-storm around the “10 Year Challenge” meme, and the resulting Wired piece suggesting it’s a Trojan Horse designed to manipulate us into training Facebook’s AI to improve recognition of aging faces.
I strongly doubt that that is actually the case. Not because I have any faith in Facebook’s transparent benevolence; because they already have a way-past-enormous cornucopia of such data, more accurately (implicitly) tagged. Even if explicit tags were helpful rather than counterproductive — which I doubt, given the stripping of metadata, the jokes riffing on the meme, etc. — they wouldn’t move the needle. As Max Read puts it:
i get the attraction but i found this post wildly unconvincing. FB already has an enormous, rich facial-recognition dataset going back 15 years. the idea that it's "too noisy" to be of use is obviously untrue given that facebook *already uses it* https://t.co/31na0W9fPL
— Max Read (@max_read) January 16, 2019
But I find it a striking example of how so many of us have grown to treat technology as a dark forest. Everything tech does seems to now be considered a threat until proved a blessing, and maybe even then. It wasn’t long ago that the reverse was true. How and why did this happen?
Part of it is probably resentment. The fabulously wealthy and influential tech industry has become one of the world’s premier power centers, and people (correctly) suspect tech is now more likely to reify this new hierarchy than disrupt or undercut it. But it’s hard to shake the sense that it’s not really technology’s job to improve human hierarchies; it’s democracy’s. It’s true that democracy seems to have been doing a shockingly poor job over the last few years, but it’s hard to blame that entirely on technology.
Rather, I think a lot of this dark-forest attitude towards tech is because, to most people, technology is now essentially magic. In AI’s case, as we see from that Wired piece, even experts can’t agree on what the technology needs, much less exactly how it works, much less explain step-by-step how it arrives at its (not always be reproducible) results.
(Possibly implicitly biased results! you may shout. Yes, that’s true and important. But I find it bizarre how everyone outside of the business keeps hammering the table shouting about how the tech industry need to stop ignoring the fact that AI may reinforce implicit bias, while all the AI people I know are deeply aware of this risk, describe it as one of their primary concerns, talk about it constantly, and are doing all kinds of work to mitigate or eliminate it. Why the implicit assumption that all AI researchers and engineers are blithely ignoring this risk? Again: technology has become a dark forest.)
Tech-as-magic is not just limited to AI, though. How many people really understand what happens when you flick a switch and a light comes on? How many fewer really understand how text messaging works, or why a change of a mere few degrees in global temperatures is likely to be catastrophic for billions? Not many. What do we fear? We fear the unknown. Tech is a dark forest because to most people tech is dark magic.
The problem is, this dark magic happens to be our only hope to solve our immediate existential problems, such as global warming. We already live in a dark forest full of terrible but subtle and ill-defined threats, and they aren’t caused by new technologies, they’re caused by the consequences of exceeding the carrying capacity of our planet with our old technologies. Climate change is a grue coming through the trees for us with terrifying speed, and technology is the one torch which might lead us out.
Fine, granted, that fire might, theoretically, in the long run, and/or in the wrong, might eventually become some kind of a threat. It’s used by a lot of bad actors to manipulate people, reify oppression, and siphon wealth its users don’t deserve. In some parts of the planet it’s being horrifically misused in far worse ways yet. All true. But just because fire is dangerous doesn’t every new use of it is a malevolent threat. Let’s get past the knee-jerk backlash and try to restore a little optimism, a little hope, a little potential belief that new technological initiatives are not automatically a bad-faith misuse, even if they do come from Facebook.
(I’m the first to admit that Facebook does a lot of bad things, and condemn them for it! But that does not mean that everything they do is bad. Companies are like people; it is possible, hard as this may to be to believe in this Death Of Nuance era, that they can do some good things and some bad things at the same time. Most shocking of all, this is even true of Elon Musk.)
I’m not just saying that this would be nice. I’m saying it’s something we probably need to do, because like it or not, it seems that we have, as a species, already collectively wandered into a very real dark forest, and a cascading series of better technologies is the only plausible route out. It’ll be awfully hard to build that route if we start assuming it’s been deliberately filled with pitfalls and quicksand. Let’s be skeptical, by all means; but let’s not assume guilt and bad faith as our default stance.
A funny thing happened in the second half of 2018. At some moment, all the people active in crypto looked around and realized there weren’t very many of us. The friends we’d convinced during the last holiday season were no longer speaking to us. They had stopped checking their Coinbase accounts. The tide had gone out from the beach. Tokens and blockchains were supposed to change the world; how come nobody was using them?
In most cases, still, nobody is using them. In this respect, many crypto projects have succeeded admirably. Cryptocurrency’s appeal is understood by many as freedom from human fallibility. There is no central banker, playing politics with the money supply. There is no lawyer, overseeing the contract. Sometimes it feels like crypto developers adopted the defense mechanism of the skunk. It’s working: they are succeeding at keeping people away.
Some now acknowledge the need for human users, the so-called “social layer,” of Bitcoin and other crypto networks. That human component is still regarded as its weakest link. I’m writing to propose that crypto’s human component is its strongest link. For the builders of crypto networks, how to attract the right users is a question that should come before how to defend against attackers (aka, the wrong users). Contrary to what you might hear on Twitter, when evaluating a crypto network, the demographics and ideologies of its users do matter. They are the ultimate line of defense, and the ultimate decision-maker on direction and narrative.
Since the collapse of The DAO, no one in crypto should be allowed to say “code is law” with a straight face. The DAO was a decentralized venture fund that boldly claimed pure governance through code, then imploded when someone found a loophole. Ethereum, a crypto protocol on which The DAO was built, erased this fiasco with a hard fork, walking back the ledger of transactions to the moment before disaster struck. Dissenters from this social-layer intervention kept going on Ethereum’s original, unforked protocol, calling it Ethereum Classic. To so-called “Bitcoin maximalists,” the DAO fork is emblematic of Ethereum’s trust-dependency, and therefore its weakness.
There’s irony, then, in maximalists’ current enthusiasm for narratives describing Bitcoin’s social-layer resiliency. The story goes: in the event of a security failure, Bitcoin’s community of developers, investors, miners and users are an ultimate layer of defense. We, Bitcoin’s community, have the option to fork the protocol—to port our investment of time, capital and computing power onto a new version of Bitcoin. It’s our collective commitment to a trust-minimized monetary system that makes Bitcoin strong. (Disclosure: I hold bitcoin and ether.)
Even this narrative implies trust—in the people who make up that crowd. Historically, Bitcoin Core developers, who maintain the Bitcoin network’s dominant client software, have also exerted influence, shaping Bitcoin’s road map and the story of its use cases. Ethereum’s flavor of minimal trust is different, having a public-facing leadership group whose word is widely imbibed. In either model, the social layer abides. When they forked away The DAO, Ethereum’s leaders had to convince a community to come along.
You can’t believe in the wisdom of the crowd and discount its ability to see through an illegitimate power grab, orchestrated from the outside. When people criticize Ethereum or Bitcoin, they are really criticizing this crowd, accusing it of a propensity to fall for false narratives.
In September, Bitcoin Core developers patched and disclosed a vulnerability that would have enabled an attacker to crash the Bitcoin network. That vulnerability originated in March, 2017, with Bitcoin Core 0.14. It sat there for 18 months until it was discovered.
There’s no doubt Bitcoin Core attracts some of the best and brightest developers in the world, but they are fallible and, importantly, some of them are pseudonymous. Could a state actor, working pseudonymously, produce code good enough to be accepted into Bitcoin’s protocol? Could he or she slip in another vulnerability, undetected, for later exploitation? The answer is undoubtedly yes, it is possible, and it would be naïve to believe otherwise. (I doubt Bitcoin Core developers themselves are so naïve.)
Why is it that no government has yet attempted to take down Bitcoin by exploiting such a weakness? Could it be that governments and other powerful potential attackers are, if not friendly, at least tolerant towards Bitcoin’s continued growth? There’s a strong narrative in Bitcoin culture of crypto persisting against hostility. Is that narrative even real?
Some argue that sexism and racism don’t matter to Bitcoin. They do. Bitcoin’s hodlers should think carefully about the books we recommend and the words we write and speak. If your social layer is full of assholes, your network is vulnerable. Not all hacks are technical. Societies can be hacked, too, with bad or unsecure ideas. (There are more and more numerous examples of this, outside of crypto.)
Not all white papers are as elegant as Satoshi Nakamoto’s Bitcoin white paper. Many run over 50 pages, dedicating lengthy sections to imagining various potential attacks and how the network’s internal “crypto-economic” system of incentives and penalties would render them bootless. They remind me of the vast digital fortresses my eight-year-old son constructs in Minecraft, bristling with trap doors and turrets.
I love my son (and his Minecraft creations), but the question both he and crypto developers may be forgetting to ask is, why would anyone want to enter this forbidding fortress—let alone attack it? Who will enter, bearing talents, ETH or gold? Focusing on the user isn’t yak shaving, when the user is the ultimate security defense. I’m not suggesting security should be an afterthought, but perhaps a network should be built to bring people in, rather than shut them out.
The author thanks Tadge Dryja and Emin Gün Sirer, who provided feedback that helped hone some of the ideas in this article.
Last April, Spotify surprised Wall Street bankers by choosing to go public through a direct listing process rather than through a traditional IPO. Instead of issuing new shares, the company simply sold existing shares held by insiders, employees and investors directly to the market – bypassing the roadshow process and avoiding at least some of Wall Street’s fees. That pattens is set to continue in 2019 as Silicon Valley darlings Slack and Airbnb take the direct listing approach.
Have we reached a new normal where tech companies choose to test their own fate and disrupt the traditional capital markets process? This week, we asked a panel of six experts on IPOs and direct listings: “What are the implications of direct listing tech IPOs for financial services, regulation, venture capital, and capital markets activity?”
This week’s participants include: IPO researcher Jay R. Ritter (University of Florida’s Warrington College of Business), Spotify’s CFO Barry McCarthy, fintech venture capitalist Josh Kuzon (Reciprocal Ventures), IPO attorney Eric Jensen (Cooley LLP), research analyst Barbara Gray, CFA (Brady Capital Research), and capital markets advisor Graham A. Powis (Brookline Capital Markets).
TechCrunch is experimenting with new content forms. Consider this a recurring venue for debate, where leading experts – with a diverse range of vantage points and opinions – provide us with thoughts on some of the biggest issues currently in tech, startups and venture. If you have any feedback, please reach out: Arman.Tabatabai@techcrunch.com.
Jay Ritter is the Cordell Eminent Scholar at the University of Florida’s Warrington College of Business. He is the world’s most-cited academic expert on IPOs. His analysis of the Google IPO is available here.
In April last year, Spotify stock started to trade without a formal IPO, in what is known as a direct listing. The direct listing provided liquidity for shareholders, but unlike most traditional IPOs, did not raise any money for the company. [According to recent reports], Slack [is considering] a direct listing, and it is rumored that some of the other prominent unicorns are considering doing the same.
Although no equity capital is raised by the company in a direct listing, after trading is established the company could do a follow-on offering to raise money. The big advantage of a direct listing is that it reduces the two big costs of an IPO—the direct cost of the fees paid to investment bankers, which are typically 7% of the proceeds for IPOs raising less than $150 million, and the indirect cost of selling shares at an offer price less than what the stocks subsequently trades at, which adds on another 18%, on average. For a unicorn in which the company and existing shareholders sell $1 billion in a traditional IPO using bookbuilding, the strategy of a direct listing and subsequent follow-on offering could net the company and selling shareholders an extra $200 million.
Direct listings are not the only way to reduce the direct and indirect costs of going public. Starting twenty years ago, when Ravenswood Winery went public in 1999, some companies have gone public using an auction rather than bookbuilding. Prominent companies that have used an auction include Google, Morningstar, and Interactive Brokers Group. Auctions, however, have not taken off, in spite of lower fees and less underpricing. The last few years no U.S. IPO has used one.
Traditional investment banks view direct listings and auction IPOs as a threat. Not only are the fees that they receive lower, but the investment bankers can no longer promise underpriced shares to their hedge fund clients. Issuing firms and their shareholders are the beneficiaries when direct listings are used.
If auctions and direct listings are so great, why haven’t more issuers used them? One important reason is that investment banks typically bundle analyst coverage with other business. If a small company hires a top investment bank such as Credit Suisse to take them public with a traditional IPO, Credit Suisse is almost certainly going to have its analyst that covers the industry follow the stock, at least for a while. Many companies have discovered, however, that if the company doesn’t live up to expectations, the major investment banks are only too happy to drop coverage a few years later. In contrast, an analyst at a second-tier investment bank, such as William Blair, Raymond James, Jefferies, Stephens, or Stifel, is much more likely to continue to follow the company for many years if the investment bank had been hired for the IPO. In my opinion, the pursuit of coverage from analysts at the top investment banks has discouraged many companies from bucking the system. The prominent unicorns, however, will get analyst coverage no matter what method they use or which investment banks they hire.
Barry McCarthy is the Chief Financial Officer of Spotify. Prior to joining Spotify, Mr. McCarthy was a private investor and served as a board member for several major public and private companies, including Spotify, Pandora and Chegg. McCarthy also serves as an Executive Adviser to Technology Crossover Ventures and previously served as the Chief Financial Officer and Principal Accounting Officer of Netflix.
If we take a leap of faith and imagine that direct listings become an established alternative to the traditional IPO process, then we can expect:
The regulatory framework to remain unchanged – No change was / is required in federal securities laws, which already enable the direct listing process. With the SEC’s guidance and regulatory oversight, Spotify repurposed an existing process for direct listings – we didn’t invent a new one.
A level playing field for exits – Spotify listed without the traditional 180 day lock-up. In order to compete with direct listings, traditional IPOs may eliminate the lock-up (and the short selling hedge funds do into the lock-up expiry).
Financing frequency; right church, wrong pew – Regardless of what people tell you, an IPO is just another financing event. But you don’t need to complete a traditional IPO anymore if you want to sell equity. Conventional wisdom says you do, but I think conventional wisdom is evolving with the realities of the marketplace. Here’s how we’d do it at Spotify if we needed to raise additional equity capital. We’d execute a secondary or follow-on transaction, pay a 1% transaction fee and price our shares at about a 4% discount to the closing price on the day we priced our secondary offering. This is much less expensive “financing” than a traditional IPO with underwriter fees ranging from 3-7% (larger deals mean smaller fees) and the underwriter’s discount of ~36% to the full conviction price for the offering. You simply uncouple the going public event from the money raising event.
Josh Kuzon is a Partner at Reciprocal Ventures, an early stage venture capital firm based in NYC focused on FinTech and blockchain. An expert in payments and banking systems, Josh is focused on backing the next generation of FinTech companies across payments, credit, financial infrastructure, and financial management software.
I think the implications of direct listing tech IPOs are positive for venture capitalists, as it creates a channel for efficient exits. However, the threat of low liquidity from a direct listing is significant and may ultimately outweigh the benefits for the listing company.
Direct listing tech IPOs offers a compelling model for company employees and existing investors in pursuit of a liquidity event. The model features a non-dilutive, no lock-up period, and underwriting fee-less transaction, which is a short-term benefit of the strategy. Additionally, as a publicly traded company, there are longer-term benefits in being able to access public markets for financing, using company stock to pay for acquisitions, and potentially broaden global awareness of an organization. However, these benefits come with tradeoffs that should not be overlooked.
One concern is the circular problem of liquidity. Without a defined supply of stock, it can be difficult to generate meaningful buyside demand. A floating price and indeterminate quantity will dampen institutional interest, no matter how great the listing company may be. Institutions require size and certainty; not only do they desire to build large positions, but they need to know they can exit them if needed. Without consistent institutional bids, sellers are less motivated to unwind their stakes, for fear of volatility and soft prices.
I believe institutional investors and their brokers are crucial ingredients for a properly functioning public equities market structure. They help make markets more liquid and efficient and serve as a check on companies to drive better business outcomes for their shareholders. A lack of institutional investors could be a very expensive long-term tradeoff for a short-term gain.
For companies that have significant brand awareness, don’t need to raise additional capital, or already have a diverse institutional investor base, the direct listing model may work out well for them. Few companies, however, fit this profile. Many more will likely have to work a lot harder to persuade the capital markets to participate in a direct listing and even if successful, may ultimately come back to bite them as they evolve and require additional capital markets cooperation.
Eric Jensen is a partner at Cooley LLP. He advises leading technology entrepreneurs, venture funds and investment banks in formation, financing, capital market and M&A transactions, and in in the past seven years was involved in over 55 offerings, raising over $21 billion, for companies such as Appian, Atlassian, Alteryx, Avalara, DocuSign, FireEye, Forty Seven, LinkedIn, MongoDB, NVIDIA, Redfin, SendGrid, ServiceNow, Tenable, Zendesk, Zulilly and Zynga.
It is challenging to draw market lessons from a single completed “direct listing.” The degree of interest I am seeing, often without folks knowing what it means, shows that the IPO model has issues. So first I describe to a client what it means – an IPO without the “I” and the “O”, meaning you are not selling any stock and therefore you don’t have a set initial stock price. These factors mean that a direct listing is relevant only for a small subset of private companies – those that:
There is no evidence to indicate that it accelerates public market access, any company that can do a direct listing could do an IPO. The SEC doesn’t go away, and compared to the highly tuned IPO process, SEC scrutiny is actually higher. As least based on Spotify, it doesn’t put investment bankers out of a job, nor does it dramatically reduce total transactions costs. Spotify had no lock-up agreement, so the VCs I know love this feature, but it is not inherent in a direct listing, and IPOs don’t require lock-ups.
In my book, too soon to tell if it is the reverse Dutch Auction of its day.
Barbara Gray, CFA is a former top-ranked sell-side Equity Analyst and the Founder of Brady Capital Research Inc., a leading-edge investment research firm focused on structural disruption. She is also the author of the books Secrets of the Amazon 2.0, Secrets of the Amazon and Ubernomics.
Although Spotify successfully broke free of its reins last April and entered the public arena unescorted, I expect most unicorns will still choose to pay the fat underwriting fees to be paraded around by investment bankers.
Realistically, the direct listing route is most suitable for companies meeting the following three criteria: 1) consumer-facing with strong brand equity; 2) easy-to-understand business model; and 3) no need to raise capital. Even if a company meets this criteria, the “escorted” IPO route could provide a positive return on investment as the IPO roadshow is designed to provide a valuation uptick through building awareness and preference versus competitive offerings by enabling a company to: a) reach and engage a larger investment pool; b) optimally position its story; and c) showcase its skilled management team.
Although the concept of democratizing capital markets by providing equal access to all investors is appealing, if a large institution isn’t able to get an IPO allocation, they may be less willing to build up a meaningful position in the aftermarket. The direct listings option also introduces a higher level of pricing risk and volatility as the opening price and vulnerable early trading days of the stock are left to the whims of the market. Unlike with an IPO, with benefits of stabilizing bids and 90 to 180 days lock-up agreements prohibiting existing investors from selling their shares, a flood of sellers could hit the market.
Graham A. Powis is Senior Capital Markets Advisor at Brookline Capital Markets, a division of CIM Securities, LLC. Brookline is a boutique investment bank that provides a comprehensive suite of capital markets and advisory services to the healthcare industry. Mr. Powis previously held senior investment banking positions at BTIG, Lazard and Cowen.
While Spotify’s direct listing in 2018 and recent reports that Slack is considering a direct listing in 2019 have heightened curiosity around this approach to “going public,” we expect that most issuers in the near-to medium-term will continue to pursue a traditional IPO path. Potential benefits of a direct listing include the avoidance of further dilution to existing holders and underwriter fees. However, large, high-profile and well-financed corporations, most often in the technology and consumer sectors, are the companies typically best-suited to pursue these direct listings. By contrast, smaller companies seeking to raise capital alongside an exchange listing, and with an eye on overcoming challenges in attracting interest from the investing public, will continue to follow a well-established IPO process.
A case in point is the healthcare segment of the US IPO market, which has accounted for one-third of all US IPO activity over the last five years. The healthcare vertical tilts toward small unprofitable companies with significant capital needs and, as a result, direct listings aren’t likely to become a popular choice in that industry. Since 2014, unprofitable companies have accounted for more than 90% of all healthcare IPOs completed. Furthermore, the biotechnology subsector has been by far the most active corner of the healthcare IPO market, and biotechnology companies are voracious consumers of capital. Finally, healthcare IPOs tend to be relatively small: since 2014, healthcare IPO issuers have raised, on average, only 47% of the amount raised by non-healthcare issuers, and more than half have already returned to the market at least once for additional capital.
Illinois’s startup market in 2018 was very strong, and it’s not slowing down as we settle into 2019. There’s already almost $100 million in new VC funding announced, so let’s take a quick look at the state of venture in the Land of Lincoln (with a specific focus on Chicago).
In the chart below, we’ve plotted venture capital deal and dollar volume for Illinois as a whole. Reported funding data in Crunchbase shows a general upward trend in dollar volume, culminating in nearly $2 billion worth of VC deals in 2018; however, deal volume has declined since peaking in 2014.1
Chicago accounts for 97 percent of the dollar volume and 90.7 percent of total deal volume in the state. We included the rest of Illinois to avoid adjudicating which towns should be included in the greater Chicago area.
In addition to all the investment in 2018, a number of venture-backed companies from Chicago exited last year. Here’s a selection of the bigger deals from the year:
Crain’s Chicago Business reports that 2018 was the best year for venture-backed startup acquisitions in Chicago “in recent memory.” Crunchbase News has previously shown that the Midwest (which is anchored by Chicago) may have fewer startup exits, but the exits that do happen often result in better multiples on invested capital (calculated by dividing the amount of money a company was sold for by the amount of funding it raised from investors).
2018 was a strong year for Chicago startups, and 2019 is shaping up to bring more of the same. Just a couple weeks into the new year, a number of companies have already announced big funding rounds.
Here’s a quick roundup of some of the more notable deals struck so far this year:
Besides these, a number of seed deals have been announced. These include relatively large rounds raised by 3D modeling technology company ThreeKit, upstart futures exchange Small Exchange and 24/7 telemedicine service First Stop Health.
Globally, and in North America, venture deal and dollar volume hit new records in 2018. However, it’s unclear what 2019 will bring. What’s true at a macro level is also true at the metro level. Don’t discount the City of the Big Shoulders, though.
Behold, the LEGO Chevrolet Silverado. The full-size truck is basically a giant ad for Chevy and the new LEGO Movie, which is due out in February. Apparently they have to fight Duplo blocks from outer space. No, seriously, that’s the plot.
Anyway, the 2019 Silverado is six-feet tall, weighs 3,307 pounds and took 18 builders 2,000 hours to assemble the 334,544 pieces at a LEGO Master Builders shop in Connecticut. Chevy says it’s the first of its vehicles to be built full-scale in this manner.
The video is just over half-a-minute, but offers some interesting insight into how a team of people who get paid to build stuff with LEGO utilize computer models to complete the task.
We’re three weeks into January. We’ve recovered from our CES hangover and, hopefully, from the CES flu. We’ve started writing the correct year, 2019, not 2018.
Venture capitalists have gone full steam ahead with fundraising efforts, several startups have closed multi-hundred million dollar rounds, a virtual influencer raised equity funding and yet, all anyone wants to talk about is Slack’s new logo… As part of its public listing prep, Slack announced some changes to its branding this week, including a vaguely different looking logo. Considering the flack the $7 billion startup received instantaneously and accusations that the negative space in the logo resembled a swastika — Slack would’ve been better off leaving its original logo alone; alas…
On to more important matters.
The data management startup raised a $261 million Series E funding at a $3.3 billion valuation, an increase from the $1.3 billion valuation it garnered with a previous round. In true unicorn form, Rubrik’s CEO told TechCrunch’s Ingrid Lunden it’s intentionally unprofitable: “Our goal is to build a long-term, iconic company, and so we want to become profitable but not at the cost of growth,” he said. “We are leading this market transformation while it continues to grow.”
Will 2019 be a banner year for real estate tech investment? As $4.65 billion was funneled into the space in 2018 across more than 350 deals and with high-flying startups attracting investors (Compass, Opendoor, Knock), the excitement is poised to continue. This week, Knock brought in $400 million at an undisclosed valuation to accelerate its national expansion. “We are trying to make it as easy to trade in your house as it is to trade in your car,” Knock CEO Sean Black told me.
While we’re on the subject of VCs’ favorite industries, TechCrunch cybersecurity reporter Zack Whittaker highlights some new data on venture investment in the industry. Strategic Cyber Ventures says more than $5.3 billion was funneled into companies focused on protecting networks, systems and data across the world, despite fewer deals done during the year. We can thank Tanium, CrowdStrike and Anchorfree’s massive deals for a good chunk of that activity.
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I would be remiss not to highlight a slew of venture firms that made public their intent to raise new funds this week. Peter Thiel’s Valar Ventures filed to raise $350 million across two new funds and Redpoint Ventures set a $400 million target for two new China-focused funds. Meanwhile, Resolute Ventures closed on $75 million for its fourth early-stage fund, BlueRun Ventures nabbed $130 million for its sixth effort, Maverick Ventures announced a $382 million evergreen fund, First Round Capital introduced a new pre-seed fund that will target recent graduates, Techstars decided to double down on its corporate connections with the launch of a new venture studio and, last but not least, Lance Armstrong wrote his very first check as a VC out of his new fund, Next Ventures.
In case you were concerned there wasn’t enough VC investment in electric scooter startups, worry no more! Flash, a Berlin-based micro-mobility company, emerged from stealth this week with a whopping €55 million in Series A funding. Flash is already operating in Switzerland and Portugal, with plans to launch into France, Italy and Spain in 2019. Bird and Lime are in the process of raising $700 million between them, too, indicating the scooter funding extravaganza of 2018 will extend into 2019 — oh boy!
If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm and I marveled at the dollars going into scooter startups, discussed Slack’s upcoming direct listing and debated how the government shutdown might impact the IPO market.
Something odd is in motion in Los Angeles. On a recent day at the office, colleagues debated the merits of the Boring Company’s proposal to alleviate Dodger traffic via levitating tunnel pods. I stepped out for coffee in the afternoon and was almost run over by an elderly man on a dozen scooters, balanced precariously as he rebalanced dockless inventory. And that night, I sat in traffic on the 10 Freeway listening to commentators discuss Uber’s ostensibly imminent eVTOL aircraft, while a venture capitalist friend rested his head in the sleeping compartment of a Cabin bus, carrying him back to Silicon Valley from Santa Monica.
Welcome to the abnormalization of transportation.
Even without hover-sleds and flying cars, the Los Angeles megalopolis is in the midst of a transformation in mobility. Neighborhoods from downtown to Silicon Beach have been carpeted in scooters and bikes. The Uber and Lyft revolution faces competition from the various dockless two wheelers and Via’s ridesharing as a service, launching in Los Angeles soon. Flixbus, looking to expand out of European dominance, targeted LA as its hub for inter-city private bus service. And Cabin’s luxury sleeper bus has been offering a premium alternative to Megabus to and from the Bay Area for months.
Los Angeles is far from the exception. Autonomous cars are driving people to and from school in Arizona, senior citizens around retirement homes in Florida, and a small army of journalists in an endless loop around Northern California. Starship’s delivery bots have rolled through more than 100 communities, and Kroger shoppers can let Nuro bring them the milk in Scottsdale today. And drone companies from around the world are vying for permission to replace vans and bikes with quadcopters for just-in-time deliveries, while nearly three dozen cities have signed onto the Urban Air Mobility Initiative to make flying cars a reality.
If even a fraction of the promise of this technology comes to pass, the movement of things and people in cities will be both bizarre and beautiful process in the near future.
Yet we fear that this future may not be realized if start-ups are given the red light by well-meaning regulators. As the cities of the world experience a shakeup they haven’t seen since the subway, we have three ideas to help policymakers bring about more equitable, efficient, and environmentally friendly transportation systems, and answer a fundamental question: how on earth do you plan for a future this wild?
It’s far from clear how these transformative, and multi-modal, technologies will fit together. Equally uncertain is the right framework to govern this puzzle. Proscriptive solutions risk killing innovation in its infancy. The solution is to encourage regulatory sandboxing. Regulatory sandboxes are mechanisms to allow emerging technologies to operate outside the constraints of normal regulations and to inform the development of future rules. These protected spaces, increasingly common in areas like fintech or crypto, allow the evolution of what Adam Thierer calls “soft law” before policymakers make hard decisions.
Perhaps the best example of regulatory sandboxes is a place, coincidentally, with a lot of sand. Arizona has aggressively moved to relieve regulatory burdens that would make testing in the real world effectively impossible. Cities across the state, including Tempe and Chandler, have competed for autonomous vehicle companies to launch their services. These deployments have surfaced a host of practical challenges like how frustrating autonomous cars can be for everyone else, how manned vehicles respond to unmanned grocery bots, and the safety challenges cities should consider when vehicles are operating at partial autonomy.
The federal Department of Transportation has recognized the value of such ecosystems and the lessons they bring. Last year, the DOT created the drone Integration Pilot Program which allows a number of state, local, and tribal governments to work with companies to test advanced drone operations, including the right balance of rules to govern such operations. Recognizing the early success of the IPP, DOT recently announced they would be creating a similar program for autonomous vehicles. These flexible environments promote critical collaboration between the companies building cutting-edge technologies and the regulator. New regulations are constructed on real-world experience, rather than hypotheses developed behind closed doors.
Regulators tend to be cautious folks, so more often than not, they favor incumbents. And even when they embrace innovation, too often, authorities takes sides and decide which companies, or even which technologies, are allowed to operate.
For example, some cities are writing off the scooter sector entirely, just as they did a few years ago with ridesharing. Beverly Hills has banned dockless scooters and impounded more a thousand, in an effort to send a message to Bird. Bird responded by suing the city, stating that the scooter ban violates several California laws.
Other cities haven’t gone so far as to ban scooters outright, but are nonetheless falling into the trap of replacing old cartels with new technocumbents. Santa Monica came very close to banning Lime and Bird, the two most popular scooter companies among locals, in favor of Uber and Lyft, who had never deployed scooters in the city before. Only after outcry from ordinary beach dwellers did the city council allow all four companies to operate. Still, no other scooter companies are allowed to operation within city limits.
We should let the market determine whether these technologies will succeed and which companies should deploy them. Cities should play an orchestration role, instead of adjudicator, facilitating connections between new technologies and the existing transit infrastructure. The alternative is to kill innovation in the crib.
Remember PickupPal? They were around well before Uber or Lyft, but you can’t call a PickupPal today. A Canadian pioneer in ridesharing in the early days of smartphones, the company was thwarted by incumbents raising a law banning pickups for profit. Rather than recognize the benefits of ridesharing, authorities crushed it (along with another popular ridesharing company Allo Stop). A technology-enabled last mile solution was regulated out of existence.
By contrast, Uber was able combat efforts to thwart its access to markets. They did so, in many cases, by taking an adversarial approach and changing the law to ensure ridesharing could continue. While this preserved ridesharing as an industry, it delayed the opportunity to connect ridesharing to existing transit networks. Regulators and ridesharing companies remain more at odds than not continuing to delay solutions to the systemic transportation challenges cities face.
Transportation is inherently local, and the future of of mobility innovation will be as well. Even aviation, an industry that long soared above concerns of the urban environment, is being forced to rethink its relationship with the metropolis. EVTOL aircraft are revisiting the lessons helicopters learned in the 1970s and drone companies face the hyperlocal concerns that arise when your neighbor decides 3am is the ideal time for his Eaze order to be facilitated by a flying lawnmower.
And therein lies one of the most exciting opportunities for the cities of the future. The negative externalities accompanying changes on, under, and over our roads, can be mediated by the same technologies that have sparked new headaches. Cities may use platforms like RideOS to smooth autonomous traffic, Remix to incorporate scooters into transit planning, Via to offer ridesharing as a public service, or our company, AirMap, to integrate drones drones today and flying cars tomorrow.
Ultimately, solutions, not sanctions, will allow cities to welcome this weird new transportation future and realize it’s transformative potential. The abnormalization of transportation presents a tremendous challenge for city officials, planners, and legislators. It’s a road worth traveling.
Days after Snap announced the departure of its CFO, reports have emerged that the company’s HR chief was asked to leave following an internal investigation late last year that had led to the firing of its global security head.
The Wall Street Journal is reporting that Snap fired global security head Francis Racioppi late last year after an investigation uncovered that he had engaged in an inappropriate relationship with an outside contractor he had hired. After the relationship ended, Racioppi terminated the woman’s contract, the report says.
Racioppi denied any wrongdoing in a comment to the Journal. A report from Cheddar also adds that one of Racioppi’s assistants was fired for aiding in an attempt to cover up the scandal.
The investigation’s findings reportedly contributed to CEO Evan Spiegel asking the company’s HR head Jason Halbert to step down. Halbert announced his plans to leave the company this week.
While today’s news pins two high-profile executive departures to a single incident, Snap’s executive team has seemed to be losing talent from its ranks at a quickening pace.
Snap did not comment on the reports.
Reports emerged today that the FTC is considering a fine against Facebook that would be the largest ever from the agency. Even if it were ten times the size of the largest, a $22.5 million bill sent to Google in 2012, the company would basically laugh it off. Facebook is made of money. But the FTC may make it provide something it has precious little of these days: accountability.
A Washington Post report cites sources inside the agency (currently on hiatus due to the shutdown) saying that regulators have “met to discuss imposing a record-setting fine.” We may as well say here that this must be taken with a grain of salt at the outset; that Facebook is non-compliant with terms set previously by the FTC is an established fact, so how much they should be made to pay is the natural next topic of discussion.
But how much would it be? The scale of the violation is hugely negotiable. Our summary of the FTC’s settlement requirements for Facebook indicate that it was:
How many of those did it break, and how many times? Is it per user? Per account? Per post? Per offense? What is “accessing” under such and such a circumstance? The FTC is no doubt deliberating these things.
Yet it is hard to imagine them coming up with a number that really scares Facebook. A hundred million dollars is a lot of money, for instance. But Facebook took in more than $13 billion in revenue last quarter. Double that fine, triple it, and Facebook bounces back.
If even a fine ten times the size of the largest it ever threw can’t faze the target, what can the FTC do to scare Facebook into playing by the book? Make it do what it’s already supposed to be doing, but publicly.
How many ad campaigns is a user’s data being used for? How many internal and external research projects? How many copies are there? What data specifically and exactly is it collecting on any given user, how is that data stored, who has access to it, to whom is it sold or for whom is it aggregated or summarized? What is the exact nature of the privacy program it has in place, who works for it, who do they report to, and what are their monthly findings?
These and dozens of other questions come immediately to mind as things Facebook should be disclosing publicly in some way or another, either directly to users in the case of how one’s data is being used, or in a more general report, such as what concrete measures are being taken to prevent exfiltration of profile data by bad actors, or how user behavior and psychology is being estimated and tracked.
Not easy or convenient questions to answer at all, let alone publicly and regularly. But if the FTC wants the company to behave, it has to impose this level of responsibility and disclosure. Because, as Facebook has already shown, it cannot be trusted to disclose it otherwise. Light touch regulation is all well and good… until it isn’t.
This may in fact be such a major threat to Facebook’s business — imagine having to publicly state metrics that are clearly at odds with what you tell advertisers and users — that it might attempt to negotiate a larger initial fine in order to avoid punitive measures such as those outlined here. Volkswagen spent billions not on fines, but in sort of punitive community service to mitigate the effects of its emissions cheating. Facebook too could be made to shell out in this indirect way.
What the FTC is capable of requiring from Facebook is an open question, since the scale and nature of these violations are unprecedented. But whatever they come up with, the part with a dollar sign in front of it — however many places it goes to — will be the least of Facebook’s worries.
If you’ve ever enthusiastically sent your spit off in the mail, you were probably anxious for whatever unexpected insights the current crop of DNA testing companies would send back. Did your ancestors hang out on the Iberian peninsula? What version of your particular family lore does the science support?
Most people who participate in mail-order DNA testing don’t think to question the science behind the results — it’s science after all. But because DNA testing companies lack aggressive oversight and play their algorithms close to the chest, the gems of genealogical insight users hope to glean can be more impressionistic than most of these companies let on.
To that point, Charlsie Agro, host of CBC’s Marketplace, and her twin sister sent for DNA test kits from five companies: 23andMe, AncestryDNA, MyHeritage, FamilyTreeDNA and Living DNA.
As CBC reports, “Despite having virtually identical DNA, the twins did not receive matching results from any of the companies.” That bit shouldn’t come as a surprise. Each company uses its own special sauce to analyze DNA so it’s natural that there would be differences. For example one company, FamilyTreeDNA, attributed 14% of the twins’ DNA to the Middle East, unlike the other four sets of results.
Beyond that, most results were pretty predictable — but things got a bit weird with the 23andMe data.
As CBC reports:
“According to 23andMe’s findings, Charlsie has nearly 10 per cent less “broadly European” ancestry than Carly. She also has French and German ancestry (2.6 per cent) that her sister doesn’t share.
The identical twins also apparently have different degrees of Eastern European heritage — 28 per cent for Charlsie compared to 24.7 per cent for Carly. And while Carly’s Eastern European ancestry was linked to Poland, the country was listed as “not detected” in Charlsie’s results.”
The twins shared their DNA with a computational biology group at Yale which verified that the DNA they sent off was statistically pretty much identical. When questioned for the story, 23andMe noted that its analyses are “statistical estimates” — a phrase that customers should bear in mind.
It’s worth remembering that the study isn’t proper science. With no control group and an n (sample size) of one set of twins, nothing definitive can be gleaned here. But it certainly raises some interesting questions.
Twin studies have played a vital role in scientific research for ages. Often, twin studies allow researchers to explore the effects of biology against those of the environment across any number of traits — addiction, mental illness, heart disease, and so on. In the case of companies like 23andMe, twin studies could shed a bit of light on the secret algorithms that drive user insights and revenue.
Beyond analyzing the cold hard facts of your DNA, companies like 23andMe attract users with promises of “reports” on everything from genetic health risks to obscure geographic corners of a family tree. Most users don’t care about the raw data — they’re after the fluffier, qualitative stuff. The qualitative reporting is where companies can riff a bit, providing a DNA-based “personal wellness coach” or advice about whether you’re meant to be a morning person or a night owl.
Given the way these DNA services work, their ancestry results are surprisingly malleable over time. As 23andMe notes, “because these results reflect the ancestries of individuals currently in our reference database, expect to see your results change over time as that database grows.” As many non-white DNA testing customers have found, many results aren’t nearly as dialed in for anyone with most of their roots beyond Europe. Over time, as more people of color participate, the pool of relevant DNA grows.
Again, the CBC’s casual experiment is by no means definitive science — but neither are DNA testing services. For anyone waiting with bated breath for their test results, remember that there’s still a lot we don’t know about how these companies come to their conclusions. Given the considerable privacy trade-off in handing your genetic material over to big pharma through a for-profit intermediary, it’s just some food for thought.
They may be free, but they sure pay. Games with no upfront cost but a plethora of other ways to make money generated a mind-blowing $88 billion in 2018 according to SuperData’s year-end report — leaving traditional games (and indeed movies and TV) in the dust.
While it may not come as a surprise that F2P (as free to play is often abbreviated) is big business at the end of 2018, the Year of Fortnite, the sheer size of it can hardly fail to impress.
The total gaming market, as this report measures it, amounts to a staggering $110 billion, of which more than half (about $61 billion) came from mobile, which is of course the natural home of the F2P platform.
The $88 billion in F2P revenue across all platforms is large enough to produce a dynamite top ten and an enormously long tail. Fortnite, with its huge following and multi-platform chops, was far and away the top earner with $2.4 billion in revenue; after that is a jumble of PC, mobile, Asian and Western games of a variety of styles. The top ten together brought in a total of $14.6 billion — leaving a king’s ransom for thousands of other titles to divide.
The vast majority of F2P revenue comes from Asia. Powerhouse companies like Tencent have been pushing their many microtransaction-based games
“Traditional” gaming, a term that is rapidly losing meaning and relevance, but which we can take to mean a game that you can pay perhaps $60 for and then play without significant further investment, amounted to about $16 billion across PCs and consoles worldwide.
An exception is the immensely popular PlayerUnknown’s Battlegrounds, one of the hits that touched off the “battle royale” craze, which took in a billion on its own — though how much of that is sales versus microtransactions isn’t clear. Amazingly, Grand Theft Auto V, a game that came out five years ago, generated some $628 million last year (mostly from its online portion, no doubt).
The top titles there are nearly all parts of a series, and all lean heavily towards the Western and console-based, with only pennies (comparatively) going to Asian markets. China is a whole different world when it comes to gaming and distribution, so this isn’t too surprising.
Lastly, it would be neglectful not to mention the explosion of viewship on YouTube and Twitch, which together formed half of all gaming video revenue, with Twitch ahead by a considerable margin. But the real winner is Ninja, by far the most-watched streamer on Twitch with an astonishing 218 million hours watched by fans. Congratulations to him and the others making a living in this strange and fabulous new market.
Tom Griffiths has founded four companies, two of which “weren’t much to write home about,” he jokes. The third captured the world’s attention: FanDuel, the fantasy sports company that was routinely in the press — not always for desirable reasons — from nearly the day it launched, to its near merger with rival DraftKings, to its ultimate sale last May to the European betting giant Paddy Power Betfair in a deal that reportedly saw FanDuel’s founders, along with its employees, walk away with almost nothing at the end of their roller coaster ride.
Little wonder that Griffith’s new, fourth company, Hone, is targeting the comparatively undramatic world of workforce training. Specifically, Hone and his small team have built a platform for modern and distributed teams, inspired largely by FanDuel’s experience of becoming a unicorn at one point in just six years’ time, and growing its team from 5 to 500 people in the process. Looking back, says Griffiths, “We really didn’t have the manager training we wanted or needed.”
In fact, Griffiths had already left the company by the time it was acquired, around his 10th anniversary last year, to “go back to the start.” It was time, he says. FanDuel had grown like a weed. He was exhausted by the many regulators wrestling with whether FanDuel provided a legally acceptable form of gambling. He knew he wanted to work in education, too. “My mom was a teacher,” he offers simply.
Enter Griffith’s newest act, which is just 10 months old at this point. The goal of the San Francisco-based company is to improve people’s skills around leadership management and people management, specifically at companies that already have hundreds of employees and that are wrestling with increasingly distributed and diverse teams.
Hone is obviously not the first company tackling the remote management training or team building. The market already attracts tens of billions of dollars each year. But he insists it will be one of the best, including because it’s unlike a lot of what’s available currently. For one thing, Hone is very anti-traditional workshop. Hone also eschews pre-recorded video, working instead with qualified professional coaches who have to audition for Hone and who are already teaching a growing number of customers 12 different modules, typically in online class sizes of eight to a dozen people.
A company simply signs up, chooses from the programs (these include an intensive manager bootcamp, for example, as well as a manager 101 program), then embarks on what are seven 60- to 90-minute sessions one week for seven weeks.
The idea, in part, is for the learnings to stick. According to Griffiths, trainees forget 70 percent of what they are taught within 24 hours of a training experience. Instilling new lessons and reiterating old ones produces a greater return on investment for Hone’s customers, he suggests.
Hone’s underlying platform is also a differentiator, he says. It contains a reporting interface, so companies can not only see who is in attendance, but they can measure learner feedback (including by gauging how many questions were asked) through students who are asked afterward to provide the company with details about what they’ve learned.
The self-learning platform also gives Hone an easier way to assess how successful, or not, a particular module proves to be, and it allows Hone to continue sharpening its products. In fact, Griffiths says that by working with early, paying customers that include WeWork, Clear, App Annie, Dashlane, Omada Health, SoulCycle and others, Hone has already learned much that it intends to bake into future products,.
“We were in pilot mode last year to get product-market fit.” Now, the company is ready for its close-up, he suggests.
Some new funding should help. In addition to taking the wraps off Hone and opening more widely for business, the company just raised $3.6 million in seed funding led by Cowboy Ventures and Harrison Metal. Other participants in the round include Slack Fund, Reach Capital, Rethink Education, Day One Ventures, Entangled Ventures and numerous relevant angel investors, like Masterclass CEO David Rogier and Guild Education CEO Rachel Carlson.
What the 10-month-old company isn’t sharing publicly just yet is its pricing, which may remain flexible in any case. Says Griffiths, “We work with customers to diagnose their needs, then we create a package, one that’s far more reasonable than classroom training. There’s no travel. No instructor having to come to you.”
Griffiths is more forthcoming when it comes to lessons learned at FanDuel. Among these is aligning one’s self with investors who share a company’s values. He points to Cowboy Ventures founder Aileen Lee, calling her a “towering pillar of progressive values, equality, inclusion and diversity.” What he saw at FanDuel, he says, is that “investors can influence culture. So from the board down, you want people who share your same values.”
Griffiths also stresses the “importance of establishing a strong culture and a vision from the start, and to live that every day as you grow.
“It’s something we did well at FanDuel at some times,” he says, “and not so well at other times.”
Hone founders, left to right: Savina Perez, who was formerly a VP of marketing at CultureIQ, a platform that aims to helps companies strengthen their culture; Tom Griffiths; and Jeremy Hamel, who was formerly the head of product at CultureIQ.
One SF startup wants you to get home from a day at work and polish off a bottle of wine by yourself.
Vinebox isn’t really trying to get you wasted though, these bottles are cute and tiny. The small startup is hoping that they can get consumers into the idea of buying premium quality wine-by-the-glass and they’ve convinced investors there’s something behind this concept as well.
The team has just closed a $5.9 million round of funding led by Harbinger Ventures.
Co-founders Rachel Vodofsky and Matt Dukes were both corporate lawyers several years ago with a taste for good wine, but when Dukes decided to move to France and dig deeper into his burgeoning interest in wineries, the founders set off to see how they could start a consumer business with wine discovery at its heart.
The Y Combinator-backed company began their mission with a quarterly and annual subscription service that set people up with new types of single-serve wine on a rolling basis (as well as a wonderful-sounding wine advent calendar) with the ultimate goal of exposing wine lovers to small-lot wineries they wouldn’t have otherwise come across. The 100ml bottles look more like something you would find in a laboratory than a liquor store.
A quarterly subscription is $78 per quarter and includes 9 wine samples with $15 off purchases of full-sized bottle.
A big drive of the subscription is helping members to discover new favorites. Subscription members can get discounts on full bottles if they stumble upon something that piques their interest. Vinebox says they’ve shipped one million glasses of wine so far.
The company is also now working on multi-packs of their single-serve bottles as they aim to shift consumer habits. With the Usual brand, Vinebox sells what are essentially half-bottles in 6, 12, and 24-packs. Right now The pricing is similarly premium ( a 12-pack is $96), but Dukes says that they’re trying to reshape the attitudes toward single-serve wine.
“The biggest mold that we wanted to break when we were coming into this was the little bottles of wine you get on the airplane,” Dukes says. “It comes in the little plastic bottles and you just immediately associate with lesser quality, cheaper wine.”
Vinebox is selling a red blend from Sonoma County and a rosé from Santa Barbara under the Usual brand first, but says that they’ve gotten a lot of great customer feedback and can let that drive the direction for what types of wine they move to add next.
With this new bout of funding, the group is looking to grow its team and further scale their online distribution as they hope to get their single-serve bottles into more people’s hands.
Salesforce first opened an office in Dublin back in 2001, and has since expanded to 1,400 employees. Today’s announcement represents a significant commitment to expand even further, adding 1,500 new jobs over the next five years.
The new tower in Dublin is actually going to be a campus made up of four interconnecting buildings on the River Liffey. It will eventually encompass 430,000 square feet with the first employees expected to move into the new facility sometime in the middle of 2021.
Artist’s rendering of Salesforce Tower Dublin rooftop garden. Picture: Salesforce
Martin Shanahan, who is CEO at IDA Ireland, the state agency responsible for attracting foreign investment in Ireland, called this one of the largest single jobs announcements in the 70-year history of his organization.
As with all things Salesforce, they will do this up big with an “immersive video lobby” and a hospitality space for Salesforce employees, customers and partners. This space, which will be known as the “Ohana Floor,” will also be available for use by nonprofits.They also plan to build paths along the river that will connect the campus to the city center.
Artist’s rendering of Salesforce Tower Dublin lobby. Picture: Salesforce
The company intends to make the project “one of the most sustainable building projects to-date” in Dublin, according to a statement announcing the project. What does that mean? It will, among other things, be a nearly Net Zero Energy building and it will use 100 percent renewable energy, including onsite solar panels.
Finally, as part of the company’s commitment to the local communities in which it operates, it announced a $1 million grant to Educate Together, an education nonprofit. The grant should help the organization expand its mission running equality-based schools. Salesforce has been supporting the group since 2009 with software grants, as well as a program where Salesforce employees volunteer at some of the organization’s schools.
Sony’s venture capital arm has invested in what3words, the startup that has divided the entire world into 57 trillion 3-by-3 meter squares and assigned a three-word address to each one.
Financial details were not disclosed.
The startup’s novel addressing system isn’t the whole story. The ability to integrate what3words into voice assistants is what has piqued the interest and investment from Sony and others.
“what3words have solved the considerable problem of entering a precise location into a machine by voice. The dramatic rise in voice-activated systems calls for a simple voice geocoder that works across all digital platforms and channels, can be written down and spoken easily,” Sony Corporation’s senior vice president Toshimoto Mitomo said in a statement.
Last year, Daimler took a 10% stake in what3words, following an announcement in 2017 to integrate the addressing system into Mercedes new infotainment and navigation system—called the Mercedes-Benz User Experience or MBUX. MBUX is now in the latest Mercedes A-Class, B-Class cars and Sprinter commercial vehicles. Owners of these new Mercedes-Benz vehicles are now be able to navigate to an exact destination in the world by just saying or typing three words into the infotainment system.
Other companies are keen to follow Daimler’s lead. TomTom and ride-hailing services like Cabify recently announced plans to enable what3words navigation to precise locations.
And more could follow. The startup says it plans to use the investment from Sony to focus on more initiatives in the automotive space.
Big week for Google wearable news — which, honestly, I not a phrase I expected to write in 2019. But a day after the company announced an agreement to purchase Fossil’s wearable technology for $40 million, Alphabet-owned research group Verily just scored FDA clearance for its electrocardiogram (ECG) technology.
The clearance pertains specifically to the company’s Study Watch. The device, which was announced back in 2017, shouldn’t be confused with the company’s more consumer-facing Wear OS efforts. Instead, the product is designed expressly for the purpose of gathering vitals for serious medical studies of conditions like MS and Parkinson’s.
“The ability to take an on-demand, single-lead ECG, can support both population-based research and an individual’s clinical care,” Verily writes on its blog. “Receiving this clearance showcases our commitment to the high standards of the FDA for safety and effectiveness and will help us advance the application of Study Watch in various disease areas and future indications.”
The Study Watch is a prescription-only device, but the clearance leaves one wondering how this might open the door for an upcoming Pixel Watch. After all, Fossil’s most recent Wear OS devices had a decided health focus, in keeping with most recent smartwatches. After Apple’s recent addition of ECG on the Series 4 Watch, it tracks that Google would want to go to market with a similar health-focused feature set.
Meantime, this news should open the door for the E Ink device’s ability to help collect some meaningful information for medical researchers.
DJI, the world’s leading maker of consumer drones, said today that extensive corruption discovered within the company could lead to losses as great as $150 million in the 2018 financial year. The exact nature of the corruption is not stated, but it seems to involve dozens of people at the least.
The China Securities Journal, a state-operated finance-focused newspaper, got hold of an internal company report on a corruption investigation that said some 40 people had been investigated so far.
Reuters confirmed with the company that “set up a high-level anti-corruption task force to investigate further and strengthen anti-corruption measures,” and that “a number of corruption cases have been handed over to the authorities, and some employees have been dismissed.”
I’ve contacted DJI for more details.
“Corruption” is a versatile term, especially in China, and depending on who’s accusing whom it can carry political connotations as well. Given the large amount being blamed on the phenomenon here, one imagines it’s on the financial side — misrepresenting costs and earnings to advance careers, that sort of thing. However that is only speculation and we will almost certainly know more as DJI informs its shareholders further on the topic.
Google is removing apps from Google Play that request permission to access call logs and SMS text message data but haven’t been manually vetted by Google staff.
The search and mobile giant said it is part of a move to cut down on apps that have access to sensitive calling and texting data.
Google said in October that Android apps will no longer be allowed to use the legacy permissions as part of a wider push for developers to use newer, more secure and privacy minded APIs. Many apps request access to call logs and texting data to verify two-factor authentication codes, for social sharing, or to replace the phone dialer. But Google acknowledged that this level of access can and has been abused by developers who misuse the permissions to gather sensitive data — or mishandle it altogether.
“Our new policy is designed to ensure that apps asking for these permissions need full and ongoing access to the sensitive data in order to accomplish the app’s primary use case, and that users will understand why this data would be required for the app to function,” wrote Paul Bankhead, Google’s director of product management for Google Play.
Any developer wanting to retain the ability to ask a user’s permission for calling and texting data has to fill out a permissions declaration.
Google will review the app and why it needs to retain access, and will weigh in several considerations, including why the developer is requesting access, the user benefit of the feature that’s requesting access, and the risks associated with having access to call and texting data.
Bankhead conceded that under the new policy, some use cases will “no longer be allowed,” rendering some apps obsolete.
So far, tens of thousands of developers have already submitted new versions of their apps either removing the need to access call and texting permissions, Google said, or have submitted a permissions declaration.
Developers with a submitted declaration have until March 9 to receive approval or remove the permissions. In the meantime, Google has a full list of permitted use cases for the call log and text message permissions, as well as alternatives.
The last two years alone has seen several high profile cases of Android apps or other services leaking or exposing call and text data. In late 2017, popular Android keyboard ai.type exposed a massive database of 31 million users, including 374 million phone numbers.
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In an email to employees, CEO Elon Musk says the focus must be on delivering “at least the mid-range Model 3 variant in all markets.” He also warns the employees who are not set to be axed that there are “many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive.”
“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors,” he writes.
Matthew Panzarino makes the case for the new Adapt BB, a Nike shoe with powered laces that tighten to a wearer’s foot automatically.
Microsoft’s smart assistant has its strong suits, but thus far statement of purpose hasn’t been among them. CEO Satya Nadella appears to acknowledge as much this week during a media event at the company’s Redmond campus.
LAS VEGAS, NV – JANUARY 06: Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. CES, the world’s largest annual consumer technology trade show, runs through January 9 and is expected to feature 3,600 exhibitors showing off their latest products and services to more than 150,000 attendees. (Photo by Ethan Miller/Getty Images)
In its most recent quarter, the company added 8.8 million subscribers, well above the 7.6 million that it had predicted at the beginning of the quarter. However, revenue was a bit lower than expected — $4.19 billion, compared to predictions of $4.21 billion.
We looked at domains of federal agencies and the executive branch, then poked every certificate to see if it had expired — and, if not, when it would stop working.
Twitter accidentally revealed some users’ “protected” (aka, private) tweets, the company disclosed yesterday. For some Android users over a period of several years, tweets were actually made public as a result of this bug.
New York Times columnist Kevin Roose noticed something fishy in the Amazon reviews for Facebook’s new device, noting on Twitter that many of the verified reviewers bore the same names as Facebook employees.