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Clubhouse closes an undisclosed $4B valuation Series C round, as tech giants’ clones circle

Buzzy “social audio” app Clubhouse has raised a Series C funding round, reportedly valuing the company at $4 billion. Clubhouse said the new round of financing was led by Andrew Chen of Andreessen Horowitz, with participation from DST Global, Tiger Global and Elad Gil. This round means Clubhouse has tripled the valuation it attained in January when Andreessen Horowitz led its Series B funding round.

The funding comes as Twitter, Spotify, Facebook, Telegram, Discord and LinkedIn are all prepping similar features to Clubhouse’s live audio streaming rooms, which has attracted attention for hosting live chats with the likes of Elon Musk and Mark Zuckerberg. Indeed, Vox reported that Facebook will announce a series of “social audio” products only today.

But, unusually for such a late stage of funding, the company has not revealed the amount raised. Industry sources say that this is probably because the Series C funding round is “multi-stage” and therefore not officially closed. Alternatively, the company is “hyping” itself ahead of a sale, as is often the case with “hot” startups. Twitter reportedly broke off talks to acquire the startup at a $4 billion valuation, according to Bloomberg.

And despite appearances that this funding round has been timed to coincide with the launch this week of Facebook’s Clubhouse clone, one well-placed source told me “this funding round has been in the works for the last 1.5 months” and that some offers have been “above 2x” the $4 billion valuation. In other words, there are some investors out there who think Clubhouse is worth more than $8 billion.

So far Clubhouse is demurring on all this, and declining to comment more directly to the media. The company disclosed the news about the funding during its weekly “town hall” chat last Sunday night and in a blog post, the company said the fundraising will support a fresh burst of growth for the app.

“While we’ve quadrupled the size of our team this year, stabilized our infrastructure, launched Payments in beta to help creators monetize, and readied Android for launch, there is so much more to do as we work to bring Clubhouse to more people around the world. It’s no secret that our servers have struggled a bit these past few months, and that our growth has outpaced the early discovery algorithms our small team originally built,” said the post.

Noting that “it’s important to us to be building all of this with people who are invested in the community and who represent a diverse set of backgrounds and voices,” Clubhouse has, however, been struck by a wave of problems in the last few days, when anti-Semitic audio rooms seemed to proliferate on the platform. Clubhouse has previously been criticized for its seeming inability to moderate extremism on the app.

The year-old platform, which has reported 10 million weekly active users, has thrived during the pandemic while people were locked down and therefore unable to chat easily in person.

Tech news site The Information first reported details on the Clubhouse funding on Friday.

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Andela begins global expansion in 37 countries months after going remote across Africa

More than a year after the pandemic began, remote work shows no signs of going away. While it has its cons, it remains top of mind for potential employees around the world before joining a new company.

But while most people in Africa still go to physical offices despite the pandemic, a few companies have nevertheless embraced this concept. Andela, a New York-based startup that helps tech companies build remote engineering teams from Africa, was one of the first to publicly announce it was going remote on the continent.

Today, it is doubling down on this effort by announcing the global expansion of its engineering talent. Over the past six months, the company has seen a 750% increase in applicants outside Africa. More than 30% of Andela’s inbound engineer applications also came from outside the continent in March alone. Half this number came from Latin America while Africa saw a 500% increase in applications as well.

When Andela launched in 2014, it built hubs in Nigeria, Kenya, Rwanda and Uganda to source, vet and train engineers to be part of remote teams for international companies. It also tested satellite models in Egypt and Ghana as substitutes to physical hubs.

The company would issue a call for applications, select a few (less than 1%), pay them a salary for the first six months and provide them with housing and food. It also helped developers improve their skills via training and mentorship. Over 100,000 engineers have taken part in the company’s learning network and community, and, as of 2019, Andela had more than 1,500 engineers on its payroll.

However, after noticing that this model wasn’t sustainable, it began to make changes.

In September 2019, it let go of 420 junior engineers across Kenya, Uganda and Nigeria. Nine months later, citing the pandemic, it laid off 135 employees while introducing salary cuts for senior staff. But despite the layoffs, the pandemic provided some form of clarity to how Andela wanted to operate — which was remote, judging by the success of the satellite models.

“In the very beginning, a developer had to be in Lagos to work with Andela. Then it became living in Nigeria. Then Kenya. Then Uganda, Rwanda,” CEO Jeremy Johnson told TechCrunch. “Before the pandemic, Andela was opening applications in country after country. The pandemic came and changed that as we opened up to the entire continent.”

Shutting down its existing physical campuses and going remote also helped the company focus on getting engineers with more experience to meet its clients’ requirements. That experiment, which the company conducted in less than a year, is also part of its mission to be a global company.

“That went so well and we thought ‘what if we accelerated it now that we’re remote and just enable applicants from anywhere?’ because it was always the plan to become a global company. That was clear, but the timing was the question. We did that and it’s been an amazing experiment,” Johnson added.

Now with its global expansion, its clients can tap into regional expertise to support international growth.

According to a statement released by the firm, it currently has engineers from 37 countries across Africa, Asia, Latin America, North America and Europe.

Johnson didn’t go into details about how many of these engineers are getting jobs from Andela or even its total developer count. He’s more interested in helping its clients solve the diversity issues that have plagued many Western corporations.

Andela is currently working with eight companies that have hired its engineers in Latin America and Africa. In addition to the diversity play, the CEO says that means Andela engineers get to prove themselves on a global playing field in a way the company has “always wanted to see.”

Andela serves more than 200 customers, including GitHub, ViacomCBS, Pluralsight, Seismic, Cloudflare, Coursera and InVision. GitHub is one company that seems to be benefitting from Andela’s new offerings. The company’s VP of Engineering, Dana Lawson, in a statement said, “As a business in the developer tool space, a lot of us are trying to enter those areas of the world (Southeast Asia, Latin America and Africa) where the emergent developers are coming so we can better understand their needs. Having a local presence there with amazing talent is super valuable to building a global product.”

Andela

Image Credits: Andela

In its quest to become a global company, going up against competition is unavoidable for the seven-year-old company. But since most of these companies are horizontal marketplaces (providing a wide range of expertise), whereas Andela is vertical, Johnson believes there’s enough market share to be acquired by the company.

“We are focused on building digital products, and because of that, we’re able to do more, essentially, for our customers… That’s where our focus is — [building long-term relationships] and around building great digital products,” the CEO said.

The company was founded by Jeremy Johnson, Christina Sass, Nadayar Enegesi, Ian Carnevale, Brice Nkengsa and Iyinoluwa Aboyeji. It has raised more than $180 million (up to Series D) from firms like Chan Zuckerberg Initiative, Generation Investment Management, Google Ventures and Spark Capital, at a valuation of about $700 million.

While announcing the layoffs last year, Andela said it was on an annual revenue run rate of $50 million. But when asked how this number has changed over the past year, Johnson said the company is “growing at a healthier pace as we’ve ever had.”

The future of remote work is global and Johnson believes Andela provides the vital link to talent wherever it is found. The company’s head of talent operations, Martin Chikilian, echoed similar sentiments regarding the expansion.

“We’ve seen exponential growth and interest from engineers from across Africa who want to work with some of the world’s most exciting technology-focused companies,” he said. “Growing our network of talent from Africa to include more markets is a unique proposition and we continue to match talent with opportunity beyond geographical boundaries.”

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Once VMware is free from Dell, who might fancy buying it?

TechCrunch has spilled much digital ink tracking the fate of VMware since it was brought to Dell’s orbit thanks to the latter company’s epic purchase of EMC in 2016 for $58 billion. That transaction saddled the well-known Texas tech company with heavy debts. Because the deal left VMware a public company, albeit one controlled by Dell, how it might be used to pay down some of its parent company’s arrears was a constant question.

Dell made its move earlier this week, agreeing to spin out VMware in exchange for a huge one-time dividend, a five-year commercial partnership agreement, lots of stock for existing Dell shareholders and Michael Dell retaining his role as chairman of its board.

So, where does the deal leave VMware in terms of independence, and in terms of Dell influence? Dell no longer will hold formal control over VMware as part of the deal, though its shareholders will retain a large stake in the virtualization giant. And with Michael Dell staying on VMware’s board, it will retain influence.

Here’s how VMware described it to shareholders in a presentation this week. The graphic shows that under the new agreement, VMware is no longer a subsidiary of Dell and will now be an independent company.

Chart showing before and after structure of Dell spinning out VMware. In the after scenario, VMware is an independent company.

Image Credits: VMware

But with VMware tipped to become independent once again, it could become something of a takeover target. When Dell controlled VMware thanks to majority ownership, a hostile takeover felt out of the question. Now, VMware is a more possible target to the right company with the right offer — provided that the Dell spinout works as planned.

Buying VMware would be an expensive effort, however. It’s worth around $67 billion today. Presuming a large premium would be needed to take this particular technology chess piece off the competitive board, it could cost $100 billion or more to snag VMware from the public markets.

So VMware will soon be more free to pursue a transaction that might be favorable to its shareholders — which will still include every Dell shareholder, because they are receiving stock in VMware as part of its spinout — without worrying about its parent company simply saying no.

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What does it take to create a startup ecosystem?

Say it louder for the people in the back: As tech grows bigger by the minute and venture capital adds dollar signs by the day, a startup hub’s success is not an either/or situation. The next Silicon Valley is a tired narrative, when in reality startups look, innovate and create differently all over the world.

On that note, my colleagues spent the past few months digging into the market in Detroit, Michigan:

While StockX is the startup darling that may have put the region in the generalist spotlight, I soon learned that the sneaker marketplace company wasn’t at all where the city’s story started and ended. Instead, it started a little more at ground level.

Detroit techies consistently point to billionaire Dan Gilbert, the co-founder of Quicken Loans and the owner of the Cleveland Cavaliers, as the reason behind the region’s startup growth. It made me immediately wonder if all it takes to create a startup ecosystem is deep pockets.

Turns out it’s a little more complicated than that.

Gilbert has poured at least $2.5 billion into rehabilitating buildings in the core of Detroit. Then he invested in the companies that took office space in those buildings, the restaurants that would feed those new families in the area and the retailers that would fill up the side blocks. It wasn’t one check by one billionaire, but instead a measured and consistent approach to try to reestablish Detroit as a city of innovation within the United States.

I think one founder put it best: “there are a lot of people who hate him, but the reality is that, while he wasn’t the only billionaire in town, he’s the only one who heavily invested in Detroit.”

Beyond Gilbert, the vitalization is spread throughout different sectors. There’s a 12-year-old early-stage venture firm that was one of the first to ever bet on mobility as an investment thesis; there’s a thriving garden startup; and there’s a hardware company that, despite remote work, is finding space to scale:

We’ll continue exploring emerging tech hubs, so throw us suggestions as we virtually (and one day physically) road trip across the country.

 

In the rest of this newsletter, we’ll talk about Tiger Global, IPOs and a few exciting upcoming events. Make sure to follow me on Twitter @nmasc_ to hang during the week.

Tiger Global has a spending problem

This week on Equity, we talked about Tiger Global’s aggressive investment approach and what it could mean for early-stage firms and founders.

Here’s what to know: One of the reasons Tiger Global is feeling spendy is that it just closed one of the biggest venture funds ever. In 2020, the firm closed $3.75 billion in capital commitments. In 2021, it nearly doubled its own record, with $6.7 billion raised for its latest fund.

And if you don’t believe me, below is a list of just some of the New York-based firms’ recent activity:

Crypto’s Coinbase moment

Cryptocurrency trading giant Coinbase went public this week. The company opened at $381 per share, valuing the exchange at nearly $100 billion. It was a massive exit for the company, which underwent scrutiny last year when it banned politics at work.

Here’s what to know: It’s fairly obvious that Coinbase’s successful IPO was a big moment for fintech and crypto startups, as well as the decentralized finance movement. My colleagues Alex Wilhelm and Anna Heim dug into how the crypto ripple effect could look from the perspective of a few venture capitalists. There are too many good bits for me to choose an excerpt, so read it for yourself here, and a take sneak peek below:

So while there is an ocean of bullish sentiment that the Coinbase listing will lead to rising venture capital investment into crypto startups, there’s also some caution to be had; how much of the growing market that Coinbase can capture and control is not yet clear, though IVP’s Loverro was very bullish during our interview about the company’s expanding feature set — things like staking Tezos, or buying Uniswap. Its backers think that Coinbase is well-positioned to absorb future market upside in its niche.

Around TechCrunch

As always, we have a ton of exciting events coming up. Here’s just a taste:

Across the week

Seen on TechCrunch

Pakistan temporarily blocks social media

Republican antitrust bill would block all Big Tech acquisitions

Can the tech trade show return in 2021?

Garry Kasparov launches a community-first chess platform

Seen on Extra Crunch

What’s fueling hydrogen tech?

Billion-dollar B2B: cloud-first enterprise tech behemoths have massive potential

For startups choosing a platform, a decision looms: build or buy?

Building customer-first relationships in a privacy-first world is critical

The IPO market is sending us mixed messages

Best,

N

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Outdoor startups see supercharged growth during COVID-19 era

After years of sustained growth, the pandemic supercharged the outdoor recreation industry. Startups that provide services like camper vans, private campsites and trail-finding apps became relevant to millions of new users when COVID-19 shut down indoor recreation, building on an existing boom in outdoor recreation.

Startups like Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.

Outdoorsy, AllTrails, Cabana, Hipcamp, Kibbo and Lowergear Outdoors have seen significant growth, but to keep it going, consumers who discovered a fondness for the great outdoors during the pandemic must turn it into a lifelong interest.

Social media, increased environmentalism and high urbanization were already fueling a boom in popularity. There was a 72% increase in people who camp more than three times a year between 2014 and 2019, mostly spurred by young millennials, young families with kids and nonwhite participants.

But 2020 was a different animal: After months of shelter-in-place orders, widespread shutdowns and physical distancing, outdoors became the only location for safe socializing. In South Dakota, the Lewis and Clark Recreation Area saw a 59% increase in visitors from 2019 to 2020. In the pandemic year, consumers spent $887 billion on outdoor recreation according to the Outdoor Industry Association, more than pharmaceuticals and fuel combined.

And it’s going to continue to grow. Hiking equipment alone is supposed to reach a $7.4 billion market size by 2027, a 6.3% compound annual growth rate. Camping and caravanning is having an even more drastic moment. Without international travel, vacations shifted from flights to exotic resorts to domestic road trips, self-contained rentals and camping. In 2020, the market for camping and caravanning was almost $40 billion and is predicted to rise 13% to just over $45 billion this year.

After the initial and extreme drop-off in engagement early as national parks closed, private camping sites shut down and domestic travel ceased, many outdoor startups have had a breakout year. Outdoorsy, the peer-to-peer camper van rental marketplace, said it saw 44% of all bookings in the company’s history in 2020.

Campsite booking platform Hipcamp said it sent three times as much money to landowners in 2020 as compared to 2019. And it’s not just experienced outdoor veterans taking advantage of the work-from-home lifestyle: in 2020, Cabana, a camper van rental startup, said 70% of its customers had never rented a camper van or an RV before and another 26% had only done it once.

But a report commissioned by the Outdoor Industry Association showed that the most popular outdoor activities were ones that people could do close to home, not the traveling kind Hipcamp, Cabana and Outdoorsy traffic in. The three most popular outdoor activities for newbies: walking, running and bicycling.

But the pandemic did create a small boost for camping, climbing, backpacking and kayaking; fueled by an increase in women, younger, more ethnically diverse, urban and slightly less wealthy people pushing into the outdoors. This class of outdoor startups will need to engage the new demographic shift to capitalize on the pandemic’s outdoor boom because, according to the report, a quarter of those who started new outdoor activities during the pandemic don’t plan on continuing once it’s over.

Startups are increasing accessibility to the outdoors

But getting into the outdoors can be overwhelming: there’s gear to buy, skills to learn, exploring unfamiliar areas and the added stressor of safety. Outdoor startups are working to lower the barrier to entry to help grow their businesses.

“I think anytime you have like 2,000 articles with two dozen tips on how to use a product, that tells me that it is really, really too hard to use,” said Cabana founder Scott Kubly. “To me, that says there’s nothing but friction in this process. If you want to build something that’s mainstream, you need to make it super consistent and really easy to use.”

Kubly said only half a percent of the U.S. population takes a rental van or RV trip each year. Planning an outdoor adventure can be time-consuming — choosing a location, finding an open campsite, planning meals and water, and figuring out dump stations for trash or septic. That planning is multiplied tenfold if you are going for a road trip or backpacking and need to find new places every other night.

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Extra Crunch roundup: UiPath’s IPO filing, predicting revenue, how to pivot properly, much more

This is not a boast, but a warning: I could write a how-to article on almost any topic.

Give me enough time to do some research, and I can put together a reliable step-by-step for building a custom gaming PC, installing a hot water heater or interpreting public health data. But since I’ve never actually done those things, I would encourage you to ignore any advice I have to offer.

Trusted advice comes from experience. That’s why Ron Miller interviewed three entrepreneurs who have each built multiple companies to uncover some essential truths about achieving product-market fit:

  • Pouyan Salehi, CEO and co-founder, Scratchpad
  • Rami Essaid, CEO and founder,  Finmark
  • Melonee Wise, CEO and co-founder, Fetch Robotics

The basic tenets presented in Ron’s story will resonate with anyone who’s launched a startup.

Alex Wilhelm was particularly prolific this morning: For The Exchange, he studied UiPath’s 2020 quarterly results to get a clearer picture of its first S-1/A filing. Is the “somewhat slack news regarding UiPath’s potential IPO valuation” a harbinger of things to come?


Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.


In a follow-up, he recapped news from the public debuts of Coinbase, UiPath, Zenvia, AppLovin and Grab, all of which “adds up to a somewhat muddled picture of the current IPO market.” It feels like we’re in a turbulent window, but it’s also possible that we’re in the calm after the storm, he suggests.

Final note: I asked TechCrunch graphic designer/illustrator Bryce Durbin to create an image to accompany this primer on raising a Series A round. He didn’t just exceed my expectations — it’s my favorite TechCrunch illustration ever. Thanks, Bryce!

I hope you got something out of reading Extra Crunch this week. Have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Building the right team for a billion-dollar startup

Image Credits: Bryce Durbin/TechCrunch

From building out Facebook’s first office in Austin to putting together most of Quora’s team, Bain Capital Ventures managing director Sarah Smith has done a bit of everything when it comes to hiring.

At TechCrunch Early Stage, she spoke about how to ensure the critical early hires are the right ones to grow a business. As an investor, Smith has a broad view into the problems companies face as they search for the right candidates to spur organizational success.

She touched on a number of issues, such as who to hire and when, when to fire and how to ensure diversity from the earliest days.

So you want to raise a Series A

"So you want to raise a Series A" pamphlet in the style of "The Simpsons"

Image Credits: Bryce Durbin/TechCrunch

During a seed-funding round, a founder needs to convince a venture capital investor on a vision. But during a Series A fundraise, napkin-stage ideas don’t make the cut — a founder needs product progress, numbers and revenue (or at least a plan to eventually generate some).

In many ways, the stakes are higher for a Series A — and Bucky Moore, a partner at Kleiner Perkins, joined TechCrunch Early Stage last week to give founders tactical advice on the process of raising one.

Moore spoke about storytelling over semantics, pricing and where his firm sees itself “raising the bar” for startups.

With the right tools, predicting startup revenue is possible

For a long time, “revenue” seemed to be a taboo word in the startup world. Fortunately, things have changed with the rise of SaaS and alternative funding sources such as revenue-based investing VCs.

Still, revenue modeling remains a challenge for founders. How do you predict earnings when you’re still figuring it out?

How we dodged risks and raised millions for our open-source machine learning startup

Image Credits: erhui1979 / Getty Images

If you have a great idea within the open-core framework, expect your risks to be much lower than with a traditional business structure.

Clearly communicate this fact to venture capitalists for the best chance at securing the seed funding your organization needs.

But it takes more: Boasting a strong community around an emerging open-source product essentially serves as an “introduction letter” to venture capitalists. It highlights the founders’ ability to successfully execute their vision, as well as the mission to bring their product to a commercial reality.

Additionally, the iterative nature of open-source projects leads to fostering a sense of teamwork between the founders, their team and investors and stakeholders.

Founder and investor Melissa Bradley outlines how to nail your virtual pitch meeting

Image Credits: Ureeka

Melissa Bradley is the co-founder of a startup called Ureeka, an investor at 1863 Ventures and a professor at Georgetown’s business school. So it’s not an understatement to say that she understands the fundraising process from every angle.

She both invested and fundraised for her own startup during this last year, where the landscape has shifted drastically. At TechCrunch Early Stage, she led a session on how to nail your virtual pitch meeting.

Bradley covered how to allocate your time during the meeting, how to prepare, how to close out the meetings with a clear list of action items and what to avoid.

Scale CEO Alex Wang and Accel’s Dan Levine explain why sometimes unconventional VC deals are best

Image Credits: Eric Millette / Scale AI

Scale CEO and co-founder Alex Wang credits its success since founding — which includes raising over $277 million and achieving breakeven status in terms of revenue — to early support from investors, including Accel’s Dan Levine.

Accel haș participated in four of Scale’s financing rounds, and Levine wrote one of the company’s very first checks. So on this past week’s episode of Extra Crunch Live, we spoke with Levine and Wang about how that first deal came together, and what their working relationship has been like in the years since.

 

Ride-hailing’s profitability promise is in its final countdown

Let’s parse Uber’s latest, vet its profit promise, consider its rivals and their performance, then ask ourselves if the great ride-hailing and food-delivery booms will ever make back the money they cost to scale.

 

UiPath’s first IPO pricing could be a warning to late-stage investors

Co-founder and CEO of UiPath Daniel Dines

Image Credits: Noam Galai/Getty Images

For UiPath, its initial IPO price interval is a disappointment, though the company could see an upward revision in its valuation before it does sell shares and begins to trade.

But more to the point, the company’s private-market valuation bump followed by a quick public-market correction stands out as a counter-example to something that we’ve seen so frequently in recent months.

Is UiPath’s first IPO price interval another indicator that the IPO market is cooling?

 

How to choose and deploy industry-specific AI models

Image of flow chart on a blackboard.

Image Credits: alexsl / Getty Images

As artificial intelligence becomes more advanced, previously cutting-edge — but generic — AI models are becoming commonplace, such as Google Cloud’s Vision AI or Amazon Rekognition.

While effective in some use cases, these solutions do not suit industry-specific needs right out of the box. Organizations that seek the most accurate results from their AI projects will simply have to turn to industry-specific models.

Any team looking to expand its AI capabilities should first apply its data and use cases to a generic model and assess the results.

Let’s dive into each of these approaches and how businesses can decide which one works for their distinct circumstances.

Atomico’s talent partners share 6 tips for early-stage people ops success

Photo of Talent Partners Caro Chayot and Dan Hynes

Image Credits: Atomico

In the earliest stages of building a startup, it can be hard to justify focusing on anything other than creating a great product or service and meeting the needs of customers or users.

However, there are still a number of surefire measures that any early-stage company can and should put in place to achieve “people ops” success as they begin scaling, according to venture capital firm Atomico‘s talent partners, Caro Chayot and Dan Hynes.

Long story short: You need to recruit for what you need, but you also need to think about what is coming down the line.

5 questions about Grab’s epic SPAC investor deck

grab 1

Image Credits: Roslan Rahman/Getty Images

Southeast Asian superapp Grab is going public via a SPAC.

Grab, which provides ride-hailing, payments and food delivery, will trade under the ticker symbol “GRAB” on the Nasdaq exchange when the combination is complete.

Let’s walk through several key points from Grab’s SPAC investor deck, including growth, segment profitability, aggregate costs and COVID-19, among other factors.

Expect an even hotter AI venture capital market in the wake of the Microsoft-Nuance deal

Microsoft’s huge purchase of health tech AI company Nuance led the technology news cycle this week. The $19.7 billion transaction is Microsoft’s second-largest to date, only beaten by its purchase of LinkedIn some years ago.

For the AI space, the sale is a coup. Nuance was already a public company, but to see Microsoft offer a firm premium over its public-market value demonstrates the value that AI technology can have to wealthy companies. For startups working in the AI space, the Nuance deal is good news; the value of AI revenue was repriced by the acquisition’s announcement — and for the better.

In light of the megadeal, The Exchange dug into the AI venture capital market. What’s happening on the startup side of the coin in the artificial intelligence and machine learning (AI/ML) space?

What’s fueling hydrogen tech?

market-maps-hydrogen-fuel-cell

Image Credits: Bryce Durbin

When the word “hydrogen” is uttered today, the average non-insider’s mind likely gravitates toward transportation — cars, buses, maybe trains or 18-wheelers, all powered by the gas.

But hydrogen is, and does, a lot of things, and a better understanding of its other roles — and challenges within those roles — is necessary to its success in transportation.

Hydrogen is now capturing the attention of governments and private sector players, fueled by new tech, global green energy legislation and post-pandemic “green recovery” schemes.

5 product lessons to learn before you write a line of code

Rearview shot of a young businesswoman having a brainstorming session in a modern office

Image Credits: LaylaBird / Getty Images

Before a startup can achieve product-market fit, founders must first listen to their customers, build what they require and fashion a business plan that makes the whole enterprise worthwhile.

The numbers will tell the true story, but when it happens, you’ll feel it in your bones because sales will be good, customers will be happy and revenue will be growing.

Reaching that tipping point can be a slog, especially for first-time founders. To uncover some basic truths about building products, we spoke to three entrepreneurs who have each built more than one company.

Inside the US’ epic first-quarter venture capital results

In broad strokes, the United States had a crushing venture capital start to the new year, pandemic be damned.

That is especially true when we consider 2020’s full-year figures. Last year, venture capitalists deployed some $166 billion into U.S.-based startups across 12,546 rounds. In contrast, if the first quarter’s pace was maintained during the rest of 2021, the United States would see around 16,000 rounds worth around $280 billion.

Of course, we cannot see the future, so those projections are merely shared to underscore how active the first quarter proved to be.

Dear Sophie: How can I get an H-1B without the lottery?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie:

For the past few years, our company has put very promising candidates into the annual H-1B lottery. None of them have been selected — and none of them meet the requirements for other work visas like an O-1A.

We lost out again in this year’s H-1B lottery. Are there any other ways we can obtain H-1Bs for our team members?

— Soldiering on in Sunnyvale

 

Alexa von Tobel outlines how founders should manage personal finances

Alexa von Tobel

Image Credits: Alexa von Tobel

Few people are more knowledgeable on the topic of how founders should manage their finances than Alexa von Tobel.

She is a certified financial planner, started her own company in the midst of the recession (which happened to be a wildly successful personal finance startup that sold for hundreds of millions of dollars) and is now a VC who invests and advises founders.

At Early Stage 2021, she gave a presentation on how founders should think about managing their own wealth. Startup founders can often put all their money into their venture and end up paying more attention to the finances of their company than their own bank account.

Von Tobel outlined the various steps you can take to stay out of debt, build credit and accumulate wealth through investments to ensure you have financial peace of mind as you take on the most stressful venture of your life: Starting a company.

How to pivot your startup, save cash and maintain trust with investors and customers

Olive CEO Sean Lane

Image Credits: Olive

A few years ago, founder Sean Lane thought he’d achieved product-market fit.

Speaking to attendees at TechCrunch’s Early Stage virtual event, Lane said Queue, a secure digital check-in tablet for hospital waiting rooms that reduced wait times by uniting and correcting electronic medical records, was “selling like hotcakes.” But once Lane realized it would only ever address one piece of a much bigger market opportunity, he sold off the product, laid off two-thirds of the people affiliated with it and redirected the employees who were left.

Lane explained that what he really wanted to build is what his company — since renamed Olive — has now become, a robotic process automation (RPA) company that takes on hospital workers’ most tedious tasks so nurses and physicians can spend more time with patients.

Building customer-first relationships in a privacy-first world is critical

Concept of knowledge, data and protection. Paper human head with pad lock.

Image Credits: jayk7 (opens in a new window) / Getty Images

In business today, many believe that consumer privacy and business results are mutually exclusive — to excel in one area is to lack in the other. Consumer privacy is seen by many in the technology industry as an area to be managed.

But the truth is that the companies that champion privacy will be better-positioned to win in all areas. This is especially true as the digital industry continues to undergo tectonic shifts in privacy — both in government regulation and browser updates.

For startups choosing a platform, a decision looms: Build or buy?

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Founders shouldn’t be worried about starting companies that rely on other platforms.

Platforms exist to help startups get to users and customers faster and should be used as a means to an end, but everyone must get their piece.

Coinbase’s direct listing alters the landscape for fintech and crypto startups

Coinbase’s direct listing was a massive finance, startup and cryptocurrency event, and the transaction’s effects will be felt for some time in the public market, but also among the startups and capital that comprise the private market.

In the buildup to Coinbase’s flotation — and we’d argue especially after it released its blockbuster Q1 2021 results — there was a general expectation that the unicorn’s direct listing would provide a halo effect for other startups in the space.

The widely held perspective raised two questions: Will the success of Coinbase’s direct listing bolster private investment in crypto-focused startups, and will that success help other areas of financially focused startup work garner more investor attention?

Billion-dollar B2B: Cloud-first enterprise tech behemoths have massive potential

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The “billion-dollar B2B” paradigm refers to the forces shaping a new class of cloud-first, enterprise-tech behemoths with the potential to reach $1 billion in ARR — and achieve market capitalizations in excess of $50 billion or even $100 billion.

One of the biggest factors driving billion-dollar B2Bs is a simple but important shift in how organizations buy enterprise technology today.

How startups can ensure CCPA and GDPR compliance in 2021

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Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.

Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.

Should Dell have pursued a more aggressive debt-reduction move with VMware?

Michael Dell, founder and chief executive officer of Dell Inc., speaks during the 2015 Dell World Conference in Austin, Texas, U.S., on Wednesday, Oct. 21, 2015. Dell said trimming debt for the massive deal to combine his namesake company with EMC Corp. should progress relatively quickly in the next couple of years. Photographer: Matthew Busch/Bloomberg via Getty Images

Image Credits: Bloomberg / Getty Images

When Dell announced it was spinning out VMware, the move itself wasn’t surprising; there had been public speculation for some time.

But Dell could have gone a number of ways in this deal, despite its choice to spin VMware out as a separate company with a constituent dividend instead of an outright sale.

It seems Dell hopes to have its cake and eat it too with this deal: It generates a large slug of cash to use for personal debt relief while securing a five-year commercial deal that should keep the two companies closely aligned.

What we all missed in UiPath’s latest IPO filing

Robotic process automation platform UiPath filed its first S-1/A this week, setting an initial price range for its shares. The numbers were impressive, if slightly disappointing because what UiPath indicated in terms of its potential IPO value was a lower valuation than it earned during its final private fundraising.

Here at The Exchange, we wondered if the somewhat slack news regarding UiPath’s potential IPO valuation was a warning to late-stage investors.

But in good news for UiPath shareholders, most everyone — ourselves included! — who discussed the company’s price range didn’t dig into the fact that the company first disclosed quarterly results to the same S-1/A filing that included its IPO valuation interval. And those numbers are very interesting, so much so that The Exchange is now generally expecting UiPath to target a higher price interval before it debuts.

But let’s dig into the company’s quarterly results to get a clearer picture of UiPath.

The IPO market is sending us mixed messages

If you only stayed up to date with the Coinbase direct listing this week, you’re forgiven. It was, after all, one heck of a flotation.

But underneath the cryptocurrency exchange’s public debut, other IPO news that matters did happen this week. And the news adds up to a somewhat muddled picture of the current IPO market.

To cap off the week, let’s run through IPO news from UiPath, Coinbase, Grab, AppLovin and Zenvia. The aggregate dataset should help you form your own perspective about where today’s IPO markets really are in terms of warmth for the often unprofitable unicorns of the world.

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AI-driven audio cloning startup gives voice to Einstein chatbot

You’ll need to prick up your ears for this slice of deepfakery emerging from the wacky world of synthesized media: A digital version of Albert Einstein — with a synthesized voice that’s been (re)created using AI voice cloning technology drawing on audio recordings of the famous scientist’s actual voice.

The startup behind the “uncanny valley” audio deepfake of Einstein is Aflorithmic (whose seed round we covered back in February).

While the video engine powering the 3D character rending components of this “digital human” version of Einstein is the work of another synthesized media company — UneeQ — which is hosting the interactive chatbot version on its website.

Alforithmic says the “digital Einstein” is intended as a showcase for what will soon be possible with conversational social commerce. Which is a fancy way of saying deepfakes that make like historical figures will probably be trying to sell you pizza soon enough, as industry watchers have presciently warned.

The startup also says it sees educational potential in bringing famous, long-deceased figures to interactive “life”.

Or, well, an artificial approximation of it — the “life” being purely virtual and Digital Einstein’s voice not being a pure tech-powered clone either; Alforithmic says it also worked with an actor to do voice modelling for the chatbot (because how else was it going to get Digital Einstein to be able to say words the real-deal would never even have dreamt of saying — like, er, “blockchain”?). So there’s a bit more than AI artifice going on here too.

“This is the next milestone in showcasing the technology to make conversational social commerce possible,” Alforithmic’s COO Matt Lehmann told us. “There are still more than one flaws to iron out as well as tech challenges to overcome but overall we think this is a good way to show where this is moving to.”

In a blog post discussing how it recreated Einstein’s voice the startup writes about progress it made on one challenging element associated with the chatbot version — saying it was able to shrink the response time between turning around input text from the computational knowledge engine to its API being able to render a voiced response, down from an initial 12 seconds to less than three (which it dubs “near-real-time”). But it’s still enough of a lag to ensure the bot can’t escape from being a bit tedious.

Laws that protect people’s data and/or image, meanwhile, present a legal and/or ethical challenge to creating such “digital clones” of living humans — at least not without asking (and most likely paying) first.

Of course historical figures aren’t around to ask awkward questions about the ethics of their likeness being appropriated for selling stuff (if only the cloning technology itself, at this nascent stage). Though licensing rights may still apply — and do in fact in the case of Einstein.

“His rights lie with the Hebrew University of Jerusalem who is a partner in this project,” says Lehmann, before ‘fessing up to the artist licence element of the Einstein “voice cloning” performance. “In fact, we actually didn’t clone Einstein’s voice as such but found inspiration in original recordings as well as in movies. The voice actor who helped us modelling his voice is a huge admirer himself and his performance captivated the character Einstein very well, we thought.”

Turns out the truth about high-tech “lies” is itself a bit of a layer cake. But with deepfakes it’s not the sophistication of the technology that matters so much as the impact the content has — and that’s always going to depend upon context. And however well (or badly) the faking is done, how people respond to what they see and hear can shift the whole narrative — from a positive story (creative/educational synthesized media) to something deeply negative (alarming, misleading deepfakes).

Concern about the potential for deepfakes to become a tool for disinformation is rising, too, as the tech gets more sophisticated — helping to drive moves toward regulating AI in Europe, where the two main entities responsible for “Digital Einstein” are based.

Earlier this week a leaked draft of an incoming legislative proposal on pan-EU rules for “high risk” applications of artificial intelligence included some sections specifically targeted at deepfakes.

Under the plan, lawmakers look set to propose “harmonised transparency rules” for AI systems that are designed to interact with humans and those used to generate or manipulate image, audio or video content. So a future Digital Einstein chatbot (or sales pitch) is likely to need to unequivocally declare itself artificial before it starts faking it — to avoid the need for internet users to have to apply a virtual Voight-Kampff test.

For now, though, the erudite-sounding interactive Digital Einstein chatbot still has enough of a lag to give the game away. Its makers are also clearly labelling their creation in the hopes of selling their vision of AI-driven social commerce to other businesses.

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Data scientists: Bring the narrative to the forefront

By 2025, 463 exabytes of data will be created each day, according to some estimates. (For perspective, one exabyte of storage could hold 50,000 years of DVD-quality video.) It’s now easier than ever to translate physical and digital actions into data, and businesses of all types have raced to amass as much data as possible in order to gain a competitive edge.

However, in our collective infatuation with data (and obtaining more of it), what’s often overlooked is the role that storytelling plays in extracting real value from data.

The reality is that data by itself is insufficient to really influence human behavior. Whether the goal is to improve a business’ bottom line or convince people to stay home amid a pandemic, it’s the narrative that compels action, rather than the numbers alone. As more data is collected and analyzed, communication and storytelling will become even more integral in the data science discipline because of their role in separating the signal from the noise.

Data alone doesn’t spur innovation — rather, it’s data-driven storytelling that helps uncover hidden trends, powers personalization, and streamlines processes.

Yet this can be an area where data scientists struggle. In Anaconda’s 2020 State of Data Science survey of more than 2,300 data scientists, nearly a quarter of respondents said that their data science or machine learning (ML) teams lacked communication skills. This may be one reason why roughly 40% of respondents said they were able to effectively demonstrate business impact “only sometimes” or “almost never.”

The best data practitioners must be as skilled in storytelling as they are in coding and deploying models — and yes, this extends beyond creating visualizations to accompany reports. Here are some recommendations for how data scientists can situate their results within larger contextual narratives.

Make the abstract more tangible

Ever-growing datasets help machine learning models better understand the scope of a problem space, but more data does not necessarily help with human comprehension. Even for the most left-brain of thinkers, it’s not in our nature to understand large abstract numbers or things like marginal improvements in accuracy. This is why it’s important to include points of reference in your storytelling that make data tangible.

For example, throughout the pandemic, we’ve been bombarded with countless statistics around case counts, death rates, positivity rates, and more. While all of this data is important, tools like interactive maps and conversations around reproduction numbers are more effective than massive data dumps in terms of providing context, conveying risk, and, consequently, helping change behaviors as needed. In working with numbers, data practitioners have a responsibility to provide the necessary structure so that the data can be understood by the intended audience.

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Tesla owners can now see how much solar or coal is powering their EVs

Tesla owners can now see exactly what kind of energy is powering their electric vehicles. TezLab, a free app that’s like a Fitbit for a Tesla vehicle, pushed out a new feature this week that shows the energy mix — breaking down the exact types and percentages of fossil fuels and renewable energy — coming from charging locations, including Superchargers and third-party networks throughout the United States.

“We’re tracking the origin of data as it relates to energy, so we know if you’re in Tucson or Brooklyn (or any location) where the energy is coming from and what the mix of that energy looks like,” Ben Schippers, the CEO and co-founder of TezLab explained in a recent interview. “As a result, we can see how much carbon is being pushed out into the atmosphere based on your charge, whether you’re charging at home, or whether you’re charging at a Supercharger.”

ElectricityMap, a project from Tomorrow, provided the energy data, which TezLab then folded into its consumer-facing app. Once downloaded, the app knows when and where a Tesla owner is plugging in. The energy mix feature builds off of an existing program on the app that gave owners more general information on how dirty or clean their charge is.

Image Credits: TezLab

Take Tesla’s Linq High Roller Supercharger in Las Vegas, a V3 Supercharger that is supposed to support a peak rate of up to 250 kilowatts and has been heralded for its use of Tesla solar panels and its Powerpack batteries to generate and store the power needed to operate the chargers.

According to TezLab’s data, 1.7% of the energy is from solar. The primary source of renewable energy is actually hydro at 65.6% — courtesy of the Hoover Dam. The remaining energy mix from the Supercharger is about 33% natural gas.

Tesla’s Supercharger in Hawthorne, California, which was one of the first to have solar panels, has an energy mix of 0.2% solar, 5.5% nuclear,13.3% natural gas, 27% coal and 49.9% wind.

The top 10 “cleanest” Superchargers — a list that includes Centralia, Leavenworth, Moses Lake and Seattle, Washington — achieved that goal thanks to hydroelectric power. Superchargers with the most solar energy are all located in the same power grid in California. Superchargers in Barstow, Oxnard, Cabazon, San Diego, Mojave, Inyokern, San Mateo, Seaside and Santa Ana, California all have 22.7% solar and 15% wind energy. The remaining mix at these locations is 0.2% battery storage, 2.9% biomass, 5.6% geothermal, 6.3% hydro, 6.6% nuclear and 40% natural gas.

TezLab was born out of HappyFunCorp, a software engineering shop that builds apps for mobile, web, wearables and Internet of Things devices for clients that include Amazon, Facebook and Twitter, as well as an array of startups. HFC’s engineers, including co-founders Schippers (who is now chairman of the company’s board) and William Schenk, were attracted to Tesla largely because of its software-driven approach. The group was particularly intrigued at the opportunity created by the openness of the Tesla API. The Tesla API is technically private. But the endpoints are accessible to outsiders. When reverse-engineered, it’s possible for a third-party app to communicate directly with the API.

TezLab launched in 2018 with some initial features that let owners track their efficiency, total trip miles and use it to control certain functions of the vehicle, such as locking and unlocking the doors and heating and air conditioning. More features have been added, mostly focused on building community, including one that allows Tesla owners to rate Supercharger stations.

All of that data is aggregated and anonymous. TezLab has said it won’t sell that data. It does post on its website insights gleaned from that data, such as a breakdown of model ownership, the average trip length and average time between plugging in.

As other electric vehicles come to market, TezLab is adding those to the app, including the Ford Mustang Mach-E.

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Enterprise security attackers are one password away from your worst day

If the definition of insanity is doing the same thing over and over and expecting a different outcome, then one might say the cybersecurity industry is insane.

Criminals continue to innovate with highly sophisticated attack methods, but many security organizations still use the same technological approaches they did 10 years ago. The world has changed, but cybersecurity hasn’t kept pace.

Distributed systems, with people and data everywhere, mean the perimeter has disappeared. And the hackers couldn’t be more excited. The same technology approaches, like correlation rules, manual processes and reviewing alerts in isolation, do little more than remedy symptoms while hardly addressing the underlying problem.

The current risks aren’t just technology problems; they’re also problems of people and processes.

Credentials are supposed to be the front gates of the castle, but as the SOC is failing to change, it is failing to detect. The cybersecurity industry must rethink its strategy to analyze how credentials are used and stop breaches before they become bigger problems.

It’s all about the credentials

Compromised credentials have long been a primary attack vector, but the problem has only grown worse in the midpandemic world. The acceleration of remote work has increased the attack footprint as organizations struggle to secure their network while employees work from unsecured connections. In April 2020, the FBI said that cybersecurity attacks reported to the organization grew by 400% compared to before the pandemic. Just imagine where that number is now in early 2021.

It only takes one compromised account for an attacker to enter the active directory and create their own credentials. In such an environment, all user accounts should be considered as potentially compromised.

Nearly all of the hundreds of breach reports I’ve read have involved compromised credentials. More than 80% of hacking breaches are now enabled by brute force or the use of lost or stolen credentials, according to the 2020 Data Breach Investigations Report. The most effective and commonly-used strategy is credential stuffing attacks, where digital adversaries break in, exploit the environment, then move laterally to gain higher-level access.

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