Tech Crunch

Apple has sourced over 20 million protective masks, now building and shipping face shields

As it mobilizes its supply chain, employees, and partners to provide personal protective equipment to medical workers and others working to stop the spread of the COVID-19 epidemic, Apple has sourced over 20 million face masks and is now building and shipping face shields, according to a statement from chief executive Tim Cook.

Apple is dedicated to supporting the worldwide response to COVID-19. We’ve now sourced over 20M masks through our supply chain. Our design, engineering, operations and packaging teams are also working with suppliers to design, produce and ship face shields for medical workers. pic.twitter.com/3xRqNgMThX

Tim Cook (@tim_cook) April 5, 2020

The company is working with governments around the world to distribute its supply of face masks to where it’s needed most.

Meanwhile, the first delivery of the company’s Apple face shields went out to Kaiser hospital facilities in the Santa Clara valley earlier this week, according to Cook.

As Cook noted, the masks pack flat and ship 100 to a box. They can be assembled in less than two minutes and are fully adjustable. Cook said that the company would ship 1 million by the end of the week and will expect to ship an additional 1 million face shields weekly, with a goal to expand distribution beyond the U.S. 

“For Apple this is a labor of love and gratitude and we will share more of our efforts over time,” Cook said. 

Apple is joining an effort that several 3D printing startups and maker facilities have already spent time working on.

In Canada, INKSmith, a startup that was making design and tech tools accessible for kids, has now moved to making face shields and is hiring up to 100 new employees to meet demand.

“I think in the short term, we’re going to scale up to meet the needs of the province soon. After that, we’re going to meet the demands of Canada,” INKSmith CEO Jeremy Hedges told the Canadian news outlet Global News.

3D-printing companies like Massachusetts-based Markforged and Formlabs and Brooklyn’s Voodoo Manufacturing are all making personal protective equipment like face shields in the US.

Original Content podcast: ‘The Platform’ offers a gruesome metaphor for capitalism

“The Platform” is not a subtle movie.

That’s true of its approach to horror, with intense, bloody scenes that prompted plenty of screaming and pausing from your hosts at the Original Content podcast. It’s also true of its thematic material — right around the time one of the characters accuses another of being communist, you’ll slap yourself on the forehead and say, “Oh, it’s about capitalism.”

The new Netflix film takes place in a mysterious prison, with two prisoners on each level (they’re randomly rotated each month). Once each day, a platform laden with delicious food is lowered through the prison. If you’re on one of the top levels, you feast. If you’re further down, things are considerably more grim, and can become downright gruesome as the month wears on.

“The Platform” is a hard movie to sit through, and it has other faults, like an irritatingly mystical ending. But it’s certainly memorable, and even admirable in its dedication to fully exploring both the logistical and moral dimensions of its premise.

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

And if you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:27 “The Platform” review
17:29 “The Platform” spoilers

Zoom admits some calls were routed through China by mistake

Hours after security researchers at Citizen Lab reported that some Zoom calls were routed through China, the video conferencing platform has offered an apology and a partial explanation.

To recap, Zoom has faced a barrage of headlines this week over its security policies and privacy practices, as hundreds of millions forced to work from home during the coronavirus pandemic still need to communicate with each other.

The latest findings landed earlier today when Citizen Lab researchers said that some calls made in North America were routed through China — as were the encryption keys used to secure those calls. But as was noted this week, Zoom isn’t end-to-end encrypted at all, despite the company’s earlier claims, meaning that Zoom controls the encryption keys and can therefore access the contents of its customers’ calls. Zoom said in an earlier blog post that it has “implemented robust and validated internal controls to prevent unauthorized access to any content that users share during meetings.” The same can’t be said for Chinese authorities, however, which could demand Zoom turn over any encryption keys on its servers in China to facilitate decryption of the contents of encrypted calls.

Zoom now says that during its efforts to ramp up its server capacity to accommodate the massive influx of users over the past few weeks, it “mistakenly” allowed two of its Chinese data centers to accept calls as a backup in the event of network congestion.

From Zoom’s CEO Eric Yuan:

During normal operations, Zoom clients attempt to connect to a series of primary datacenters in or near a user’s region, and if those multiple connection attempts fail due to network congestion or other issues, clients will reach out to two secondary datacenters off of a list of several secondary datacenters as a potential backup bridge to the Zoom platform. In all instances, Zoom clients are provided with a list of datacenters appropriate to their region. This system is critical to Zoom’s trademark reliability, particularly during times of massive internet stress.”

In other words, North American calls are supposed to stay in North America, just as European calls are supposed to stay in Europe. This is what Zoom calls its data center “geofencing.” But when traffic spikes, the network shifts traffic to the nearest data center with the most available capacity.

China, however, is supposed to be an exception, largely due to privacy concerns among Western companies. But China’s own laws and regulations mandate that companies operating on the mainland must keep citizens’ data within its borders.

Zoom said in February that “rapidly added capacity” to its Chinese regions to handle demand was also put on an international whitelist of backup data centers, which meant non-Chinese users were in some cases connected to Chinese servers when data centers in other regions were unavailable.

Zoom said this happened in “extremely limited circumstances.” When reached, a Zoom spokesperson did not quantify the number of users affected.

Zoom said that it has now reversed that incorrect whitelisting. The company also said users on the company’s dedicated government plan were not affected by the accidental rerouting.

But some questions remain. The blog post only briefly addresses its encryption design. Citizen Lab criticized the company for “rolling its own” encryption — otherwise known as building its own encryption scheme. Experts have long rejected efforts by companies to build their own encryption, because it doesn’t undergo the same scrutiny and peer review as the decades-old encryption standards we all use today.

Zoom said in its defense that it can “do better” on its encryption scheme, which it says covers a “large range of use cases.” Zoom also said it was consulting with outside experts, but when asked, a spokesperson declined to name any.

Bill Marczak, one of the Citizen Lab researchers that authored today’s report, told TechCrunch he was “cautiously optimistic” about Zoom’s response.

“The bigger issue here is that Zoom has apparently written their own scheme for encrypting and securing calls,” he said, and that “there are Zoom servers in Beijing that have access to the meeting encryption keys.”

“If you’re a well-resourced entity, obtaining a copy of the internet traffic containing some particularly high-value encrypted Zoom call is perhaps not that hard,” said Marcak.

“The huge shift to platforms like Zoom during the COVID-19 pandemic makes platforms like Zoom attractive targets for many different types of intelligence agencies, not just China,” he said. “Fortunately, the company has (so far) hit all the right notes in responding to this new wave of scrutiny from security researchers, and have committed themselves to make improvements in their app.”

Zoom’s blog post gets points for transparency. But the company is still facing pressure from New York’s attorney general and from two class-action lawsuits. Just today, several lawmakers demanded to know what it’s doing to protect users’ privacy.

Will Zoom’s mea culpas be enough?

Peloton launches an Android TV app

With gyms across the country closed for business, at-home exercise companies like Peloton have found an unexpected opportunity. As the connected fitness company looks to onboard new customers, they’re also expanding platform support, announcing today that they would be bringing their app to Android TV, the OS used by millions of smart TVs.

Peloton announced last month that it would be extending free trials of its $12.99 per month exercise app from 30 days to 90 days because of the pandemic. Peloton has not been unaffected by the virus. Last month, the company shut down its studios to visitors, holding classes with just instructors, while also moving away from in-home deliveries of its connected bike and treadmill.

While Peloton already boasted support for Fire TV, Chromecast and AirPlay, this latest addition should help round out support for users of most new smart TVs. The app is available today in Android TV’s Google Play Store.

If you’re an existing user looking to toss your workouts onto your Android TV screen, you should know that the app won’t support external bluetooth sensors like heart rate monitors or cadence sensors for your non-Peloton bike. The company also recommends running the app on Android OS 6 or later for best performance.

 

‘A perfect storm for first time managers,’ say VCs with their own shops

Until very recently, it had begun to seem like anyone with a thick enough checkbook and some key contacts in the startup world could not only fund companies as an angel investor but even put himself or herself in business as a fund manager.

It helped that the world of venture fundamentally changed and opened up as information about its inner workings flowed more freely. It didn’t hurt, either, that many billions of dollars poured into Silicon Valley from outfits and individuals around the globe who sought out stakes in fast-growing, privately held companies — and who needed help in securing those positions.

Of course, it’s never really been as easy or straightforward as it looks from the outside. While the last decade has seen many new fund managers pick up traction, much of the capital flooding into the industry has accrued to a small number of more established players that have grown exponentially in terms of assets under management. In fact, talk with anyone who has raised a first-time fund and you’re likely to hear that the fundraising process is neither glamorous nor lucrative and that it’s paved with very short phone conversations. And that’s in a bull market.

What happens in what’s suddenly among the worst economic environments the world has seen? First and foremost, managers who’ve struck out on their own suggest putting any plans on the back burner. “I would love to be positive, and I’m an optimist, but I would have to say that now is probably one of the toughest times” to get a fund off the ground, says Aydin Senkut, who founded the firm Felicis Ventures in 2006 and just closed its seventh fund.

“It’s a perfect storm for first-time managers,” adds Charles Hudson, who launched his own venture shop, Precursor Ventures, in 2015.

Hitting pause doesn’t mean giving up, suggests Eva Ho, cofounder of the three-year-old, seed-stage L.A.-based outfit Fika Ventures, which last year closed its second fund with $76 million. She says not to get “too dismayed” by the challenges.

Still, it’s good to understand what a first-time manager is up against right now, and what can be learned more broadly about how to proceed when the time is right.

Know it’s hard, even in the best times

As a starting point, it’s good to recognize that it’s far harder to assemble a first fund than anyone who hasn’t done it might imagine.

Hudson knew he wanted to leave his last job as a general partner with SoftTech VC when the firm — since renamed Uncork Capital — amassed enough capital that it no longer made sense for it to issue very small checks to nascent startups. “I remember feeling like, Gosh, I’ve reached a point where the business model for our fund is getting in the way of me investing in the kind of companies that naturally speak to me,” which is largely pre-product startups.

Hudson suggests he miscalculated when it came to approaching investors with his initial idea to create a single GP fund that largely backs ideas that are too early for other VCs. “We had a pretty big LP based [at SoftTech] but what I didn’t realize is the LP base that’s interested in someone who is on fund three or four is very different than the LP base that’s interested in backing a brand new manager.”

Hudson says he spent a “bunch of time talking to fund of funds, university endowments — people who were just not right for me until someone pulled me aside and just said, ‘Hey, you’re talking to the wrong people. You need to find some family offices. You need to find some friends of Charles. You need to find people who are going to back you because they think this is a good idea and who aren’t quite so orthodox in terms of what they want to see in terms partner composition and all that.’”

Collectively, it took “300 to 400 LP conversations” and two years to close his first fund with $15 million. (It’s now raising its third pre-seed fund).

Ho says it took less time for Fika to close its first fund but that she and her partners talked with 600 people in order to close their $41 million debut effort, adding that she felt like a “used car salesman” by the end of the process.

Part of the challenge was her network, she says. “I wasn’t connected to a lot of high-net-worth individuals or endowments or foundations. That was a whole network that was new to me, and they didn’t know who the heck I was, so there’s a lot of proving to do.” A proof-of-concept fund instilled confidence in some of these investors, though Ho notes you have to be able to live off its economics, which can be miserly.

She also says that as someone who’d worked at Google and helped found the location data company Factual, she underestimated the work involved in running a small fund. “I thought, ‘Well, I’ve started these companies and run these big teams. How how different could it be?” But “learning the motions and learning what it’s really like to run the funds and to administer a fund and all responsibilities and liabilities that come with it . . . it made me really stop and think, ‘Do I want to do this for 20 to 30 years, and if so, what’s the team I want to do it with?’”

Investors will offer you funky deals; avoid these if you can

First-time managers often look to close on a big anchor investor as a positive indicator to other backers, and some LPs will take advantage of their real or perceived desperation to lock something down. Yet seizing certain opportunities can actually send the wrong signal, depending on the scenario.

In Hudson’s case, an LP offered him two options: either a typical LP agreement wherein the outfit would write a small check, or an option wherein it would make a “significant investment that would have been 40% of our first fund,” says Hudson.

Unsurprisingly, the latter offer came with a lot of strings. Namely, the LP said it wanted to have a “deeper relationship” with Hudson, which he took to mean it wanted a share of Precursor’s profits beyond what it would receive as a typical investor in the fund.

“It was very hard to say no to that deal, because I didn’t get close to raising the amount of money that I would have gotten if I’d said yes for another year,” says Hudson. He still thinks it was the right move, however. “I was just like, how do I have a conversation with any other LP about this in the future if I’ve already made the decision to give this away?”

Fika similarly received an offer that would have made up 25 percent of the outfit’s debut fund, but the investor wanted a piece of the management company. It was “really hard to turn down because we had nothing else,” recalls Ho. But she says that other funds Fika was talking with made the decision simpler. “They were like, ‘If you sign on to those terms, we’re out.” The team decided that taking a shortcut that could damage them longer term wasn’t worth it.

Your LPs have questions, but you should question LPs, too

More so than most first-time managers, Senkut started off with certain financial advantages, having been the first product manager at Google and enjoying the fruits of its IPO before leaving the outfit in 2005 along with many other Googleaires, as they were dubbed at the time.

It allowed him to start putting money to work immediately. Still, as he tells it, it was “not a friendly time a decade ago” to raise outside capital, with most solo general partners spinning out of other venture funds —  not search engines. As an outsider, to crack into the venture industry, he largely tried to shadow angel investor Ron Conway, working checks into some of the same deals that Conway was backing.

“If you want to get into the movie industry, you need to be in hit movies,” says Senkut. “If you want to get into the investing industry, you need to be in hits. And the best way to get into hits is to say, ‘Okay. Who has an extraordinary number of hits, who’s likely getting the best deal flow,’ because the more successful you are, the better companies you’re going to see, the better the companies that find you.”

Senkut has developed an enviable track record over time, including stakes in Credit Karma, which was just gobbled up by Intuit, and Plaid, sold in January to Visa. Those kinds of exits may give him more confidence than managers earlier in their careers might muster. Still, Senkut also says it’s very important for anyone raising a fund to not just answer LPs’ questions but to also ask the right questions of them.

He says, for example, that with Felicis’s newest fund, the team asked many managers outright about how many assets they have under management, how much of those assets are dedicated to venture and private equity, and how much of their allotment to each was already taken.

Felicis did this so it doesn’t find itself in a position of making a capital call that an investor can’t meet, especially given that in recent years, many institutional investors have been writing out checks to VCs at a faster pace than ever been before and have, in many cases, too much of their capital in the venture industry at this point.

In fact, Felicis added new managers who “had room” while cutting back some existing LPs “that we respected . .. because if you ask the right questions, it becomes clear whether they’re already 20% over-allocated [to the asset class] and there’s no possible way [they are] even going to be able to invest if they want to.”

It’s smart thinking and, when the market eventually eases up again, and new funds can again capture the attention of investors, certainly something to keep in mind.

Investors tell Indian startups to ‘prepare for the worst’ as Covid-19 uncertainty continues

Just three months after capping what was the best year for Indian startups, having raised a record $14.5 billion in 2019, they are beginning to struggle to raise new capital as prominent investors urge them to “prepare for the worst”, cut spending and warn that it could be challenging to secure additional money for the next few months.

In an open letter to startup founders in India, ten global and local private equity and venture capitalist firms including Accel, Lightspeed, Sequoia Capital, and Matrix Partners cautioned that the current changes to the macro environment could make it difficult for a startup to close their next fundraising deal.

The firms, which included Kalaari Capital, SAIF Partners, and Nexus Venture Partners — some of the prominent names in India to back early-stage startups — asked founders to be prepared to not see their startups’ jump in the coming rounds and have a 12-18 month runway with what they raise.

“Assumptions from bull market financings or even from a few weeks ago do not apply. Many investors will move away from thinking about ‘growth at all costs’ to ‘reasonable growth with a path to profitability.’ Adjust your business plan and messaging accordingly,” they added.

Signs are beginning to emerge that investors are losing appetite to invest in the current scenario.

Indian startups participated in 79 deals to raise $496 million in March, down from $2.86 billion that they raised across 104 deals in February and $1.24 billion they raised from 93 deals in January this year, research firm Tracxn told TechCrunch. In March last year, Indian startups had raised $2.1 billion across 153 deals, the firm said.

New Delhi ordered a complete nation-wide lockdown for its 1.3 billion people for three weeks earlier this month in a bid to curtail the spread of COVID-19.

The lockdown, as you can imagine, has severely disrupted businesses of many startups, several founders told TechCrunch.

Vivekananda Hallekere, co-founder and chief executive of mobility firm Bounce, said he is prepared for a 90-day slowdown in the business.

Founder of a Bangalore-based startup, which was in advanced stages to raise more than $100 million, said investors have called off the deal for now. He requested anonymity.

Food delivery firm Zomato, which raised $150 million in January, said it would secure an additional $450 million by the end of the month. Two months later, that money is yet to arrive.

Many startups are already beginning to cut salaries of their employees and let go of some people to survive an environment that aforementioned VC firms have described as “uncharted territory.”

Travel and hotel booking service Ixigo said it had cut the pay of its top management team by 60% and rest of the employees by up to 30%. MakeMyTrip, the giant in this category, also cut salaries of its top management team.

Beauty products and cosmetics retailer Nykaa on Tuesday suspended operations and informed its partners that it would not be able to pay their dues on time.

Investors cautioned startup founders to not take a “wait and watch” approach and assume that there will be a delay in their “receivables,” customers would likely ask for price cuts for services, and contracts would not close at the last minute.

“Through the lockdown most businesses could see revenues going down to almost zero and even post that the recovery curve may be a ‘U’ shaped one vs a ‘V’ shaped one,” they said.

Los Angeles-based challenger bank HMBradley officially opens its virtual doors

The Los Angeles-based digital challenger bank, HMBradley, opened its virtual doors to the public today, allowing the thousands of waitlisted would-be users to set up direct deposits and collect their sign-up bonuses.

The company is offering banking customers an up to 3% return on their savings based on the percentage they save of their quarterly deposits.

HMBradley also set up a new feature which allows users to save towards specific goals.

Backed by PayPal founder Max Levchin’s HVF Labs, along with Walkabout Ventures, Mucker Capital, Index Ventures, and Accomplice, to the tune of $3.5 million, HMBradley was designed to benefit savers, the company said.

Account holders with balances up to $100,000 can receive up to 3% annual percentage yields on their accounts. These account holders qualify by receiving one direct deposit and saving at least 5% of the total amount deposited in an account monthly.

HMBradley accounts are held through Hatch Bank, which is FDIC insured.

To qualify for the 3 percent rate, customers need to save over 20 percent of their income, account holders who save between 15 percent and 20 percent receive 2 percent of their cash per year, and those saving less than 15 percent but more than ten percent receive a 1 percent APY.

“We want to empower and protect every consumer financially to show them that a bank can be on their side, regardless of how much money they make,” said Zach Bruhnke, co-founder and CEO of HMBradley, in a statement.

Account holders have access to 55,000 fee-free ATMs around the country, mobile check deposit and around-the-clock support, the company said.

The company’s MasterCard comes with all of the standard features including zero liability protection and an ability to set up travel, fraud alerts, and cancel cards all through an online portal, the company said.

The Station: Bird and Lime layoffs, pivots in a COVID-19 era and a $2.2 trillion deal

Hello folks, welcome back (or hi for the first time) to The Station, a weekly newsletter dedicated to the all the ways people and packages move around this world. I’m your host, Kirsten Korosec, senior transportation reporter at TechCrunch.

I also have started to publish a shorter version of the newsletter on TechCrunch . That’s what you’re reading now. For the whole enchilada — which comes out every Saturday — you can subscribe to the newsletter by heading over here, and clicking “The Station.” It’s free!

Before I get into the thick of things, how is everyone doing? This isn’t a rhetorical question; I’m being earnest. I want to hear from you (note my email below). Maybe you’re a startup founder, a safety driver at an autonomous vehicle developer, a venture capitalist, engineer or gig economy worker. I’m interested in how you are doing, what you’re doing to cope and how you’re getting around in your respective cities.

Please reach out and email me at kirsten.korosec@techcrunch.com to share thoughts, opinions or tips or send a direct message to @kirstenkorosec.

Micromobbin’

the station scooter1a

It was a rough week for micromobility amid the COVID-19 pandemic. Bird laid off about 30% of its employees due to the uncertainty caused by the coronavirus.

In a memo obtained by TechCrunch, Bird CEO Travis VanderZanden said:

The unprecedented COVID-19 crisis has forced our leadership team and the board of directors to make many extremely difficult and painful decisions relating to some of your teammates. As you know, we’ve had to pause many markets around the world and drastically cut spending. Due to the financial and operational impact of the ongoing COVID-19 crisis, we are saying goodbye to about 30% of our team.

The fallout from COVID-19 isn’t limited to Bird. Lime is also reportedly considering laying off up to 70 people in the San Francisco Bay Area.

Meanwhile, Wheels deployed e-bikes with self-cleaning handlebars and brake levers to help reduce the risk of spreading the virus. NanoSeptic’s technology, which is powered by light, uses mineral nano-crystals to create an oxidation reaction that is stronger than bleach, according to the company’s website. NanoSeptic then implements that technology into skins and mats to turn anything from a mousepad to door handles to handlebars into self-cleaning surfaces.

The upshot to all of this: COVID-19 is turning shared mobility on its head. That means lay offs will continue. It also means companies like Wheels will try to innovate or pivot in hopes of staying alive.

While some companies pulled scooters off city streets, others changed how they marketed services. Some turned efforts to gig economy workers delivering food. Others, like shared electric moped service Revel, are focusing on healthcare workers.

Revel is now letting healthcare workers in New York rent its mopeds for free. To qualify, they just need to upload their employee ID. For now, the free rides for healthcare workers is limited to Brooklyn, Queens and a new service area from upper Manhattan down to 65th street. Revel expanded the area to include hospitals in one of the epicenters of the disease.

Revel is still renting its mopeds to the rest of us out there, although they encourage people to only use them for essential trips. As you might guess, ridership is down significantly. The company says it has stepped up efforts of disinfecting and cleaning the mopeds and helmets. Revel also operates in Austin, New York City, Oakland, and Washington. It has suspended service in Miami per local regulations.

Megan Rose Dickey (with a cameo from Kirsten Korosec)

Deal of the week

money the station

Typically, I would highlight a large funding round for a startup in the “deal of the week” section. This week, I have broadened my definition.

On Friday, the House of Representatives passed a historic stimulus package known as the Coronavirus Aid, Relief, and Economic Security or “CARES” act. President Donald Trump signed it hours later. The CARES act contains an unprecedented $2.2 trillion in total financial relief for businesses, public institutions and individuals hit hard by the COVID-19 pandemic.

TechCrunch has just started what will be a multi-day dive into the 880-page document. And in the coming weeks, I will highlight anything related or relevant to the transportation industry or startups here.

I’ll focus today on three items: airlines, public transit and small business loans.

U.S. airlines are receiving $58 billion. It breaks down to about $25 billion in loans for commercial carriers, $25 billion in payroll grants to cover the 750,000 employees who work in the industry.  Cargo carriers will receive $4 billion in loans and $4 billion in grants. These loans come with some strings attached. Airlines will have to agree not to lay off workers through the end of September. The package forbids stock buybacks and issuing dividends to shareholders for a year after paying off one of the loans.

Public transit has been allocated $24.9 billion. The CARES Act provides almost three times the FY 2020 appropriations for this category, according to the American Public Transportation Association. The funds are distributed through a formula that puts $13.79 billion to urban, $2 billion to rural, $7.51 billion towards state of good repair and $1.71 billion for high-density state transit. APTA notes that these funds are for operating expenses to prevent, prepare for, and respond to COVID-19 beginning on January 20, 2020.

Amtrak received an additional $1 billion in grants, that directs $492 million of those funds towards the northeast corridor. The remaining goes to the national network.

Small business loans are a critical piece of the bill, and an area where many startups may be focused. There is a lot to unpack here, but in basic terms the act provides $350 billion in loans that will be administered by the Small Business Administration to businesses with 500 or fewer employees. These loans are meant to cover an eligible borrower’s payroll, rent, utilities expenses and mortgage interest for up to eight weeks. If the borrower maintains its workforce, some of the loan may be forgiven.

Venture-backed startups seeking relief may run into problems qualifying. It all comes down to how employees are counted. Normally, SBA looks at a company’s affiliates to determine if they qualify. So, a startup owned by a private equity firm is considered affiliated with the other companies in that firm’s portfolio, which could push employment numbers far beyond 500. That rule also seems to apply to venture-backed startups, in which more than 50% of voting stock is held by the VC.

The guidance on this is still spotty. But Fenwick & West, a Silicon Valley law firm, said in recent explainer that the rule has the “potential to be problematic for startups because the SBA affiliation rules are highly complex and could cause lenders to group together several otherwise unaffiliated portfolio companies of a single venture capital firm in determining whether a borrower has no more than 500 employees.”

One final note: The SBA has waived these affiliation rules for borrowers in the food services and food supply chain industry. It’s unclear what that might mean for those food automation startups or companies building autonomous vehicles for food delivery.

More deal$

COVID-19 has taken over, but deals are still happening. Here’s a rundown of some of partnerships, acquisitions and fundraising round that got our attention.

  • Lilium, the Munich-based startup that is designing and building vertical take-off and landing (VTOL) aircraft and aspires to run in its own taxi fleet, has raised $240 million in a funding round led by Tencent. This is being couched as an inside round with only existing investors, a list that included participation from previous backers such as Atomico, Freigeist and LGT. The valuation is not being disclosed. But sources tell us that it’s between $750 million and $1 billion.
  • Wunder Mobility acquired Australia-based car rental technology provider KEAZ. (Financial terms weren’t disclosed, but as part of the deal KEAZ founder and CTO Tim Bos is joining Wunder Mobility) KEAZ developed a mobile app and back-end management tool that lets rental agencies, car dealerships, and corporations provide shared access to vehicles.
  • Cazoo, a startup that buys used cars and then sells them online and delivers to them your door, raised $116 million funding. The round was led by DMG Ventures with General Catalyst, CNP (Groupe Frère), Mubadala Capital, Octopus Ventures, Eight Roads Ventures and Stride.VC also participating.
  • Helm.ai came out of stealth with an announcement that it has raised $13 million in a seed round that includes investment from A.Capital Ventures, Amplo, Binnacle Partners, Sound Ventures, Fontinalis Partners and SV Angel. Helm.ai says it developed software for autonomous vehicles that can skip traditional steps of simulation, on-road testing and annotated data set — all tools that are used to train and improve the so-called “brain” of the self-driving vehicle.
  • RoadSync, a digital payment platform for the transportation industry, raised a $5.7 million in a Series A led by Base10 Partners with participation from repeat investor Hyde Park Venture Partners and Companyon Ventures. The company developed cloud-based software that lets businesses invoice and accept payments from truck drivers, carriers and brokers. Their platform is in use at over 400 locations nationwide with over 50,000 unique transactions monthly, according to RoadSync.
  • Self-driving truck startup TuSimple is partnering with automotive supplier ZF to develop and produce autonomous vehicle technology, such as sensors, on a commercial scale. The partnership, slated to begin in April, will cover China, Europe and North America.

A final word

Remember, the weekly newsletter features even more mobility news and insights. I’ll leave ya’ll with this one chart from Inrix. The company has launched a U.S. traffic synopsis that it plans to publish every Monday. The chart shows traffic from the week of March 14 to March 20. The upshot: COVID-19 reduced traffic by 30% nationwide.

inrix traffic drop from covid

Detroit Auto Show canceled in preparation for FEMA to turn venue into field hospital

The North American International Auto Show, which was scheduled for June in Detroit, has been canceled as the COVID-19 pandemic continues to spread and the city prepares to repurpose the TCF Center into a temporary field hospital.

NAIAS is held each year in the TCF Center, formerly known as the Cobo Center. Organizers said they expected the Federal Emergency Management Agency to designate the TCF Center as a field hospital.

“Although we are disappointed, there is nothing more important to us than the health, safety and well-being of the citizens of Detroit and Michigan, and we will do what we can to support our community’s fight against the coronavirus outbreak,” NAIAS Executive Director Rod Alberts said in an emailed statement.

The NAIAS is the latest in a long line of events and conventions that have been canceled as COVID-19, the disease caused by the coronavirus, has spread from China to Europe, and now the U.S. and the rest of the world.

More than 100 convention centers and facilities around the country are being considered to potentially serve as temporary hospitals. Alberts said it became clear that TCF Center would be an inevitable option to serve as a care facility.

The NAIAS, also known as the Detroit Auto Show, will be held in June 2021. Organizers are discussing plans for a fundraising activity later this year to benefit the children’s charities that were designated as beneficiaries of the 2020 Charity Preview event.

This year’s show was highly anticipated because it had moved from January to summer, following years of encouragement to schedule it during the warmer months.

All tickets purchased for the 2020 NAIAS show, including tickets for the Public Show, Industry Preview and Charity Preview will be fully refunded, organizers said. Charity Preview ticket holders will be given the option of a refund, or the opportunity to donate the proceeds of their refund to one of the nine designated Charity Preview beneficiaries. The NAIAS ticket office will be in contact with all ticket holders, according to the organizers.

A new FDA-authorized COVID-19 test doesn’t need a lab and can produce results in just 5 minutes

There’s a new COVID-19 test from healthcare technology maker Abbott that looks to be the fastest yet in terms of producing results, and that can do so on the spot right at point-of-care, without requiring a round trip to a lab. This test for the novel coronavirus causing the current global pandemic has received emergency clearance for use by the U.S. Food and Drug Administration, and will begin production next week, with output of 50,000 per day possible starting next week.

The new Abbott ID NOW COVID-19 test uses the Abbott ID NOW diagnostics platform, which is essentially a lab-in-a-box that is roughly the size of a small kitchen appliance. It’s size, and the fact that it can produce either a positive result in just five minutes, or a negative one in under 15, mean that it could be a very useful means to extend coronavirus testing beyond its current availability to more places including clinics and doctor’s offices, and cut down on wait times both in terms of getting tested and receiving a diagnosis.

Unlike the rapid tests that have been used in other countries, and that received a new type of authorization under an FDA guideline that doesn’t confirm the accuracy fo the results, this rapid testing solution uses the molecular testing method, which works with saliva and mucus samples swabbed from a patient. This means that it works by identifying a portion of the virus’ DNA in a patient, which means it’s much better at detecting the actual presence of the virus during infection, whereas other tests that search the blood for antibodies that are used in point-of-care settings can only detect antibodies, which might be present in recovered patients who don’t actively have the virus.

The good news for availability of this test is that ID NOW, the hardware from Abbott that it runs on, already “holds the largest molecular point-of-care footprint in the U.S.,” and is “widely available” across doctor’s offices, urgent care clinics, emergency rooms and other medical facilities.

In total, Abbott now says that it believes it will produce 5 million tests in April, split between these new rapid tests and the lab tests that it received emergency use authorization for by the FDA on March 18.

Testing has been one of the early problems faced by the U.S. in terms of getting a handle on the coronavirus pandemic: The country has lagged behind other nations globally in terms of per capita tests conducted, which experts say has hampered its ability to properly track and trace the spread of the virus and its resulting respiratory disease. Patients have reported having to go to extreme lengths to receive a test, and endure long waits for results, even in cases where exposure was likely and their symptoms match the COVID-19 profile.

Garry Tan and Alexis Ohanian on how to survive these crazy days (and what to learn from them)

Garry Tan and Alexis Ohanian founded Initialized Capital roughly nine years ago and they’ve closed four funds since, including most recently in late 2018.

That $225 million vehicle is roughly twice the size of their previous fund, but because of the coronavirus, the firm, and its portfolio companies — some of which include Opendoor, Instacart and Coinbase — could be facing a tougher road in 2020. Certainly, that’s true of nearly ever other venture firm and startup right now.

To get a sense of where the team is currently, what it’s telling its founders, whether it thinks the abrupt downturn might change founders’ behavior, as well as whether either thinks big tech should be broken up, we talked with the two last night about these issues and more. It was a fun conversation that you can check out here, beginning around the 23 minute mark. In the meantime, you can find highlights from our conversation right here. Among the many things we covered:

We first talked about how much runway startups need right now that the U.S. is largely closed for business.

Tan offered that because returning to normalcy could “well be six to nine months,” partly because the U.S. isn’t informally containing the virus and there’s not yet a vaccine for it. To “make sure you have the cash to last to the other side,” he said, founders need to think in terms of 18 months. “It’s a lot,” said Tan, “but that’s sort of what’s necessary, and that’s what we’ve been advising our portfolio companies.

The duo also talked about  how to actually squeeze 18 months of runway out of startup that hasn’t freshly raised a round.

Ohanian said to “renegotiate everything,” from office space to venture debt agreements. He also noted there are “obvious things that you get cut early, around like non-essential marketing,” saying, “I’m as bummed as the next person to not be able to go to Cannes Lions this year, but I think we all agree like these are very reasonable things to be cutting at times like this.”

Because Ohanian is fairly vocal on Twitter about U.S. efforts to contain the coronavirus and to help healthcare workers, we spent some time on this, too. 

Ohanian said that, “Like a lot of Americans, I’m pretty frustrated by the situation right now. I mean, I live in Florida, which I think is going to see some really staggering numbers [of sickened residents] here in the next couple of weeks [because of its] elderly population and . . .a governor that’s that’s taking too long to do the things we need to do to keep them safe.”

He added that he remains inspire by the “ingenuity and the resilience” of its citizens, including founders who’ve begun adapting to these new situations, including the Initialized portfolio companies Flexport, the logistics startup, and Ro, the tele-health startup that originally focused on men’s wellness.

Through a new initiative announced earlier this week, Flexport is “literally raising millions of dollars in donations to bring medical supplies to the Bay Area and to those healthcare workers,” noted Ohanian.

Ro is meanwhile offering a free Covid-19 assessment to anyone who wants to take it and if he or she is deemed at enough risk, Ro will connect that individual with a physician or RN. That medical professional can’t administer an FDA-approved test, Ohanian acknowledged, but it’s better than nothing, he suggested. “This is not a salve. This is not a magic wand at all. What hopefully this can do is give people more information quicker about the decisions they should be making about their own safety and the safety of people they might come in contact with.”

Naturally, we had to ask how a founder lands a check from Initialized, and whether the firm needs to see a product or momentum first.

On this front, Tan was clear that “no traction is fine,” explaining that the firm funded Around, a two-year-old, Redwood City, Ca.-based videoconferencing startup that this month announced $5.2 million in seed funding, with “a demo that kind of honestly barely worked” but whose approach to solving a particular problem really resonated with the team.

Tan also pointed to Instacart, the grocery delivery company that’s “doing insanely well right now,” as housebound Americans steer clear of grocery stores.

“When I met [founder and CEO Apoorva Mehta,” said Tan, “it was the early days of the iPhone app platform” and “everyone else was pitching that idea” at the same time. But where most ‘demoware’ is “jerky” or “not properly threaded,” Mehta’s “scrolled really smoothly and the images were properly threaded and I could see that he was a craftsman,” says Tan. As important to him, “Apoorva is not a person who accepts ‘no.’ He takes a no and turns it into a yes.” (Both Tan and Ohanian emphasized here that good salesmanship, meaning solid storytelling, can accomplish a lot.)

As for what’s happening day to day, we asked both if they’re spending time in board meetings, poring over financials and trying to figure out how keep the startups in their portfolio going during this downturn. They suggested they’d already done this before Covid-19 took hold in the U.S.

Said Tan, “Not to put other VCs on blast, but often they don’t actually keep track of the runway of their companies quite so closely. For us, we have quarterly reviews, [so] the day all this stuff happened, we immediately knew who we needed to spend time with. We’d started talking about this in February. I wore my first N95 mask to our retreat in Cabo San Lucas [early last month] and and people at the airport thought I was a little bit nuts, but it was already in our mind that [the virus] might come over here. So when we did our last portfolio review in February, we were already mindful of anyone who has short runway [because we wanted] to make sure we had that conversation.”

Added Tan, “There are some boards that I’m on where I was telling them this was going to happen, and they just didn’t believe me. But for a few teams, they were able to put the right things into place and start their fundraise a little bit earlier.”

Before we let them go, we asked if they had thoughts about the tech giants — on which we’re suddenly more reliant on ever  — being broken up, and whether they should be.

Ohanian, who famously cofounded the social media giant Reddit, declined to say much on this front, other than that Initialized has backed “companies that thrive in part because they’re giving everyone else a chance to compete with Amazon. So I don’t know if that doesn’t tell you something, I don’t know what else would.”

For his part, Tan said he “probably” doesn’t want the government to intervene with big tech, but he’s concerned about their rise (and rise).  Said Tan, “What I want is our startups to be successful, and when they become successful, that they arm thousands of small businesses, medium-size businesses, and the retailers that could not possibly to hire an engineer to actually survive. . . because otherwise, Amazon’s going to run the table. 

We also asked if they worry big tech companies are more hesitant to shop, given the regulatory scrutiny they have been under. 

Tan suggested that Initialized hasn’t counted on M&A activity for its exits for some time.  “What’s weird about startups [[is that back] in 2008 when we came up, M&A was a much bigger part of what people talked about. These days, everything we fund, we want to fund it for the IPO.”

The reality, he continued is that none of the tech giants are acquisitive because they “sort of don’t know what to do with the cash. [There’s] definitely a Peter Thiel-ism that I totally believe, which is that Google is sitting on a cash hoard, and when you sit on a cash hoard, it means, ‘I don’t know what else to do. There are not projects that have a positive net IRR that I can put that money into. I could not hire people to go work on a thing that could make more money.’

Said Tan, “If anything, these companies have sort of become giant babysitting places for very, very smart tech people.”

Not last, we talked about their hopes for what comes next.

Ohanian is choosing to remain optimistic on a lot of fronts right now, he suggested, and that’s unsurprisingly true of his work. As he told us, “One of the fortunate parts about doing early-stage investing is also that this [frightening moment] is a time when founders are going to come solving real problems. I actually expect the next two years to be opportunities for some really great and hopefully impactful companies to get formed. “In the wake of all this,  [founders] can not just solve really important business leads; they can also do some good in the process.”

Before we parted ways, we also talked about founders and whether some had blown it by not taking their companies public while the window was still open.

Both Tan and Ohanian seemed to defend founders who’ve chosen to stay private longer in recent years while ceding that staying private isn’t good for employees or investors or the founders themselves. Indeed, “a lot of it comes back to governance,” said Ohanian, with both he and Tan expressing equal parts dismay over activist investors and the perpetual shareholder rights that founders have been demanding to protect themselves from said activist investors. (Ohanian called such voting rights an “ugly hack.”)

Both sang the praises of Long Term Stock Exchange — the stock exchange created by entrepreneur Eric Ries — and what it hopes to accomplish, which is to make it safer to go public without worrying about activist investors by rewarding longer-term shareholders who believe in a company.

Worth noting: LTSE, as it’s known, is an Initialized portfolio company.

Photo: Tim Daw for Initialized Capital

Tesla CEO Elon Musk: New York gigafactory will reopen for ventilator production

Tesla CEO Elon Musk said Wednesday that the company’s factory in Buffalo, New York will open “as soon as humanly possible” to produce ventilators that are in short supply due to the spread of the COVID-19 pandemic.

His comments, which were made Wednesday via Twitter, follows previous statements by the CEO outlining plans to either donate ventilators or work to increase production of the critical piece of medical equipment needed for patients who are hospitalized with COVID-19, a respiratory disease caused by coronavirus. COVID-19 attacks the lungs and can cause acute respiratory distress syndrome and pneumonia. And since there is no clinically proven treatment yet, ventilators are relied upon to help people breathe and fight the disease. There are about 160,000 ventilators in the United States and another 12,700 in the National Strategic Supply, the NYT reported.

Giga New York will reopen for ventilator production as soon as humanly possible. We will do anything in our power to help the citizens of New York.

— Elon Musk (@elonmusk) March 25, 2020

Last week, Tesla said in a statement it would suspend production at its Fremont, Calif. factory, where it assembles its electric vehicles, and its Buffalo, N.Y gigafactory, except for “those parts and supplies necessary for service, infrastructure and critical supply chains.”

It isn’t clear based on Musk’s statements when the Buffalo plant would reopen or how long it would take to convert a portion of its factory, which is used to produce solar panels. Musk didn’t say if this was part of a possible collaboration with Medtronic .

Medtronic CEO Omar Ishrak told CNBC on Wednesday that it is increasing capacity of its critical care ventilators and partnering with others such as Tesla. He said Medtronic is open sourcing one its lower end ventilators in less acute situations for others to, to make as quickly as they can. These lower end ventilators, which are easier to produce because there are fewer components, can be used as an intermediary step in critical care.

Tesla is one of several automakers, including GM, Ford and FCA that has pledged support to either donate supplies or offer resources to make more ventilators. Earlier this week, Ford said it is working with GE Healthcare to expand production capacity of a ventilator.

GM is working with Ventec Life Systems to help increase production of respiratory care products such as ventilators. Ventec will use GM’s logistics, purchasing and manufacturing expertise to build more ventilators. The companies did not provide further details such as when production might be able to ramp up or how many ventilators would be produced.

Fox Sports to broadcast the full season of NASCAR’s virtual race series

Esports racing, helped by record-setting viewership, is hitting the big time.

Fox Sports said Tuesday it will broadcast the rest of the eNASCAR Pro Invitational iRacing Series, following Sunday’s virtual race that was watched by 903,000 viewers, according to Nielsen Media Research.

While those numbers are far below the millions of viewers who watch NASCAR’s official races — the last one at Phoenix Raceway reached 4.6 million — it still hit a number of firsts that Fox Sports found notable enough to commit to broadcasting the virtual racing series for the remainder of the season, beginning March 29.

The races will be simulcast on the FOX broadcast network, Fox Sports iRacing and the FOX Sports app. Races will be available in Canada through FOX Sports Racing.

Virtual racing, which lets competitors race using a system that includes a computer, steering wheel and pedals, has been around for years. But it’s garnered more attention as the spread of COVID-19, the disease caused by coronavirus, has prompted sports organizers to cancel or postpone live events, including the NCAA March Madness basketball tournament, NBA, NHL and MLB seasons as well as Formula 1 and NASCAR racing series.

Classic. @JimmieJohnson checks in live with @JeffGordonWeb during the #ProInvitationalSeries and says he needs to “learn different cars” for his 2021 schedule. 👀

(And Jeff helps him notice a bit of damage 😂) pic.twitter.com/5gFgl1f0e3

— FOX: NASCAR (@NASCARONFOX) March 22, 2020

NASCAR ran its first virtual race in the series on Sunday in lieu of its planned race at the Homestead-Miami Speedway, which was canceled due to COVID-19. Not only was it the most watched esports event in U.S. television history, it was Sunday’s most-watched sports telecast on cable television that day.

50 seconds of #ProInvitationalSeries virtual engines. CRANK IT UP! pic.twitter.com/wyG1JhFkPQ

— FOX: NASCAR (@NASCARONFOX) March 22, 2020

“This rapid-fire collaboration between FOX Sports, NASCAR and iRacing obviously has resonated with race fans, gamers and television viewers across the country in a very positive way,” Brad Zager, FOX Sports executive producer said in a statement. “We have learned so much in a relatively short period of time, and we are excited to expand coverage of this brand-new NASCAR esports series to an even wider audience.”

Granted, there aren’t any live sports to watch in this COVID-19 era. Still, it bodes well for the future of esports, perhaps even after the COVID-19 pandemic ends.

“The response on social media to last Sunday’s race has been incredible,” said four-time NASCAR Cup Series champion Jeff Gordon, who is announcer for Fox NASCAR. “We were able to broadcast a virtual race that was exciting and entertaining. It brought a little bit of ‘normalcy’ back to the weekend, and I can’t wait to call the action Sunday at Texas.”

You can see what the virtual racing looks like here in this clip from Fox Sports.

NASCAR isn’t the only racing series to turn to esports. Formula 1 announced last week that it would host an esports series, the F1 Esports Virtual Grand Prix series, with a number of current F1 drivers alongside a number of other stars.

The virtual Formula 1 races will use Codemaster’s official Formula 1 2019 PC game and fans can follow along on YouTube, Twitch and Facebook, as well as on F1.com. The races will be about half as long as regular races, with 28 laps. The first race took place March 22. The first-ever virtual round of the Nürburgring Endurance Series kicked off on March 21.

Former Slack exec April Underwood has joined Obvious Ventures as a venture partner

April Underwood, who until early last year was Slack’s chief product officer, has joined Obvious Ventures as a venture partner, she announced on Twitter today.

Underwood said that as part of the firm’s team, she will “invest in great companies seeking to solve the big problems facing humanity: our climate, human health and wellness, and how we work.” Of Obvious’s focus on “backing company with world positive impact,” she said its mission “couldn’t possibly feel more needed than it does in this particular moment.”

For Underwood, the role is one of several that she is currently juggling. She founded a startup advisory outfit called Wise Owl last year. She is also a cofounder of #Angels, an organization that focuses on investing in female founders and to which Underwood remains very committed, she said today, tweeting that her focus on “getting more women on the cap tables of successful startups will continue unabated.”

Underwood is now among a growing number of  #Angels cofounders — powerful women at Twitter who introduced the initiative in 2015 — to be investing on pretty much a full-time basis.

In addition to Underwood, who spent nearly five years as a director of product at Twitter before joining Slack, #Angels was founded by Jana Messerschmidt, who is now a partner with Lightspeed Venture Partners; Jessica Verrilli, who is now a general partner with GV; and Katie Stanton Jacobs, who recently closed her own first venture fund with $25 million in capital commitments under the brand Moxie Ventures.

Another #Angels founder Vijaya Gadde, was and remains the General Counsel at Twitter. Meanwhile, Chloe Sladden, a former VP of Media at Twitter, last year cofounded a seed-stage startup making collaborative parenting tools called Honeycomb Labs.

Underwood, who also sits on the board of Zillow, was in charge of much of Slack’s strategy and product decisions during her nearly four years with the company.

Underwood is now one of three venture partners who are working with Obvious Ventures .

The others include serial entrepreneur, investor and advisor Julie Hanna, and Di-Ann Eisnor, who was previously the Director of Urban Systems at Google’s Area 120.

Obvious Ventures — cofounded very notably by Twitter cofounder Ev Williams —  closed its third fund with roughly $270 million in capital commitments earlier this year.

Jumia adapts Pan-African e-commerce network in response to COVID-19

Pan-African e-commerce company Jumia is adapting its digital retail network to curb the spread of COVID-19.

The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — announced a series of measures on Friday. Jumia will donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.

The company has offered African governments use of of its last mile delivery network for distribution of supplies to healthcare facilities and workers. Jumia will also reduce fees on its JumiaPay finance product to encourage digital payments over cash, which can be a conduit for the spread of coronavirus.

Governments in Jumia’s operating countries have started to engage the private sector on a possible COVID-19 outbreak on the continent, according to Jumia CEO Sacha Poignonnec .

“I don’t have a crystal ball and no one knows what’s gonna happen,” he told TechCrunch on a call. But in the event the virus spreads rapidly on the continent, Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” Poignonnec said.

Africa’s COVID-19 cases by country were in the single digits until recently, but those numbers spiked last week leading the World Health Organization to sound an alarm. “About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference Thursday. “It’s has been an extremely rapid…evolution.” 

By the World Health Organization’s latest stats Monday there were 1321 COVID-19 cases in Africa and 34 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.

Dr. Moeti noted that many socioeconomic factors in Africa — from housing to access to running water — make common measures to curb COVID-19, such as social-distancing or frequent hand washing, challenging. She went on to explain that the World Health Organization is looking for solutions that are adoptable to Africa’s circumstances, including working with partners and governments to get sanitizing materials to hospitals and families.

As coronavirus cases and related deaths grow, governments in Africa are responding. South Africa, which has the second highest COVID-19 numbers on the continent, declared a national disaster last week, banned public gatherings and announced travel restrictions on the U.S.

Kenya has imposed its own travel and crowd restrictions and the country’s President Uhuru Kenyatta urged citizens and businesses to opt for digital-payments as a safer means for transactions.

Across Africa’s tech ecosystem — which has seen significant growth in startups and now receives $2 billion in VC annually — a number of actors are stepping up.

Jumia Nigeria Fleet

Image Credit: Jumia

In addition to offering its logistics and supply-chain network, Jumia is collaborating with health ministries in several countries to use its website and mobile platforms to share COVID-19 related public service messages.

Heeding President Kenyatta’s call, last week Kenya’s largest telecom Safaricom waived fees on its M-Pesa mobile-money product (with over 20 million users) to increase digital payments use and lower the risk of spreading the COVID-19 through handling of cash.

Africa’s largest innovation incubator CcHub announced funding and a call for tech projects aimed at reducing COVID-19 and its social and economic impact.

A looming question for Africa’s tech scene is how startups in major markets such as Nigeria, Kenya and South Africa will weather major drops in revenue that could occur from a wider coronavirus outbreak.

Jumia is well capitalized, after going public in a 2019 IPO on the New York stock exchange, but still has losses exceeding its 2019 revenue of €160 million.

On managing business through a possible COVID-19 Africa downturn, “We’re very long-term oriented so it’s about doing what’s right with the governments and thinking about how we can help,” said Jumia’s CEO Sacha Poignonnec.

“Revenue wise, it’s really to early to tell. We do believe that e-commerce in Africa is a trend that goes beyond this particular situation.”

YC startup Felix wants to replace antibiotics with programmable viruses

Right now the world is at war. But this is no ordinary war. It’s a fight with an organism so small we can only detect it through use of a microscope — and if we don’t stop it, it could kill millions of us in the next several decades. No, I’m not talking about COVID-19, though that organism is the one on everyone’s mind right now. I’m talking about antibiotic-resistant bacteria.

You see, more than 700,000 people died globally from bacterial infections last year — 35,000 of them in the U.S. If we do nothing, that number could grow to 10 million annually by 2050, according to a United Nations report.

The problem? Antibiotic overuse at the doctor’s office or in livestock and farming practices. We used a lot of drugs over time to kill off all the bad bacteria — but it only killed off most, not all, of the bad bacteria. And, as the famous line from Jeff Goldblum in Jurassic Park goes, “life finds a way.”

Enter Felix, a biotech startup in the latest Y Combinator batch that thinks it has a novel approach to keeping bacterial infections at bay – viruses.

Phage killing bacteria in a petri dish

It seems weird in a time of widespread concern over the corona virus to be looking at any virus in a good light but as co-founder Robert McBride explains it, Felix’s key technology allows him to target his virus to specific sites on bacteria. This not only kills off the bad bacteria but can also halt its ability to evolve and once more become resistant.

But the idea to use a virus to kill off bacteria is not necessarily new. Bacteriophages, or viruses that can “infect” bacteria, were first discovered by an English researcher in 1915 and commercialized phage therapy began in the U.S. in the 1940’s through Eli Lilly and Company. Right about then antibiotics came along and Western scientists just never seemed to explore the therapy further.

However, with too few new solutions being offered and the standard drug model not working effectively to combat the situation, McBride believes his company can put phage therapy back at the forefront.

Already Felix has tested its solution on an initial group of 10 people to demonstrate its approach.

Felix researcher helping cystic fibrosis patient Ella Balasa through phage therapy

“We can develop therapies in less time and for less money than traditional antibiotics because we are targeting orphan indications and we already know our therapy can work in humans,” McBride told TechCrunch . “We argue that our approach, which re-sensitizes bacteria to traditional antibiotics could be a first line therapy.”

Felix plans to deploy its treatment for bacterial infections in those suffering from cystic fibrosis first as these patients tend to require a near constant stream of antibiotics to combat lung infections.

The next step will be to conduct a small clinical trial involving 30 people, then, as the scientific research and development model tends to go, a larger human trial before seeking FDA approval. But McBride hopes his viral solution will prove itself out in time to help the coming onslaught of antibiotic resistance.

“We know the antibiotic resistant challenge is large now and is only going to get worse,” McBride said. “We have an elegant technological solution to this challenge and we know our treatment can work. We want to contribute to a future in which these infections do not kill more than 10 million people a year, a future we can get excited about.”

GM and Ventec Life Systems partner to ramp up production of ventilators

GM said Friday that it is working with Ventec Life Systems to help increase production of respiratory care products such as ventilators that are needed by a growing number of hospitals as the COVID-19 pandemics spreads throughout the U.S.

The partnership is part of StopTheSpread.org, a coordinated effort of private companies to respond to COVId-19, a disease caused by coronavirus.

Ventec will use GM’s logistics, purchasing and manufacturing expertise to build more ventilators. The companies did not provide further details such as when production might be able to ramp up or how many ventilators would be produced.

GM Chairman and CEO Mary Barra said in a statement that GM is working closely with Ventec to rapidly scale up production.

“We will continue to explore ways to help in this time of crisis,” Barra added.

The need for ventilators is urgent as cases of COVID-19 pop up with increasing frequency as widespread testing begins. While some people with COVID-19 reported more mild symptoms, others have experienced severe respiratory problems and need to be hospitalized.

The shortage has prompted automakers to investigate ways of ramping up ventilator production. Volkswagen and Ford have reportedly either talked to the White House or committed to looking at the problem. Volkswagen said Friday it has created a task force to look into using 3D printing to make hospital ventilators.

Elon Musk tweeted Friday that Tesla and SpaceX  employees are “working on ventilators” even though he doesn’t believe they will be needed. His confirmation on Twitter that both of the companies he leads are working on ventilators comes a day after New York City Mayor Bill de Blasio made a direct plea to Musk to help alleviate a shortage at hospitals gearing up to combat COVID-19.

Musk didn’t provide specifics what “working on ventilators” means, what Tesla factory might be used, the possible capacity or when he planned to begin production.

TikTok donates $3 million to Arnold Schwarzenegger’s charity feeding kids affected by school closures

The social media giant TikTok said that it would donate $3 million to AfterSchool All-Stars, a charity founded by actor and former California Governor Arnold Schwarzenegger, to feed families whose food security was affected by the close of public schools in response to the COVID-19 outbreak.

TikTok said in a statement Thursday that families in 60 cities with After-School All-Stars chapters would receive food vouchers and gift cards that can be spent on food and other essentials through local grocery stores.

“We are all operating in uncertain times, and it’s more important now than ever before for both our local and global communities to come together to help those in need,” said Vanessa Pappas, General Manager of TikTok U.S., in a statement. “This pledge to ASAS will help more students get access to meals, safely provided to them, during this crisis. While this alone won’t mitigate the impact of the current situation, we hope it can relieve one worry for parents who are balancing social distancing mandates, work and caring for children who can no longer go to school each day.”

Chapters in cities that have been hardest hit by the epidemic will receive the aid, including Los Angeles, Miami, New York, Newark, San Francisco, Seattle and Washington. Corporate partners in the initiative include Food Land, Giant, Kroger, Publix, Ralphs, Safeway, Target and Walmart .

TikTok, which is owned by the Chinese media company Bytedance, also said it would match up to $1 million in employee donations to the ASAS to boost the organization’s ability to provide food.

“During a crisis, improvisation is critical and everyone has to look at new ways to help the most vulnerable,” said Arnold Schwarzenegger, former California Governor and Founder of After-School All-Stars, in a statement. “The After-School All-Stars programs are paused with schools closed, but we remain committed to supporting the 100,000 families we work with year-round. When I founded After-School All-Stars in 1992, the goal was always to support the families who need it the most. I’m grateful to TikTok for their donation which allows us to shift our priorities so our team can safely deliver groceries and gift cards for groceries to the families we help.”

 

Facebook’s $1,000 bonus only applies to full-time employees working from home, not contractors

Facebook CEO Mark Zuckerberg said in an internal memo earlier this week that the company will give employees working from home during the COVID-19 pandemic a $1,000 cash bonus. But, as the Intercept first reported, contractors will not receive the bonus.

When TechCrunch asked Facebook why contractors won’t get the bonus, a company spokesperson sent us a statement similar to the one it gave the Intercept, saying that “The $1,000 is for full-time employees who are working from home. For contract workers, we are sending them home and paying them in full even if they are unable to work, which is much more meaningful than a one off payment.”

The BBC reported earlier today that Zuckerberg said in a call with reporters that contract workers will also get their full salaries even if they are unable to complete all their usual tasks. But Joe Rivano Barros of the Worker Agency, which coordinates campaigns for advocacy groups like Gig Workers Rise and RAICES Texas, told the publication, “it’s great that they are letting them work from home, but it seems like the bare minimum Facebook could do.”

Facebook has an estimated 15,000 content moderators, working through third-party contractors. In the call covered by the BBC, Zuckerberg said that Facebook full-time employees will take over decisions about sensitive topics, including self-harm and suicide, in part to reduce the mental health impact of viewing such content on contractors, and added he was “personally quite worried that the isolation from people being at home could potentially lead to more depression or mental health issues, and I want to make sure that we are ahead of that supporting our community.”

A portion of Facebook’s content moderation is also performed by algorithms, though the shortcomings of its filters was highlighted this week when a bug blocked sharing of coronavirus-related content on the platform, even from legitimate new sources (posts were later restored). Human workers are still essential to Facebook’s content moderation system.

The impact of screening content, including violent or disturbing material, on human moderators was brought to attention last year after a major report from The Verge in February 2019 about the mental health toll experienced by many contractors. Afterward, Zuckerberg said the company would commit to paying all Facebook contractors in the U.S. “a wage that’s more reflective of the local costs of living. And for those who review content on our site to make sure it follows our community standards, we’re going even further. We’re going to provide them a higher base wage, additional benefits, and more supportive programs given the nature of their jobs.”

As part of its COVID-19 response, Facebook also said that it will pay contingent workers who cannot work as offices close because people have been ordered to work from home, following similar measures from Microsoft and other companies.

But as TechCrunch’s Jonathan Shieber and Alex Wilhelm noted, many tech companies have created a “dual-class worker system in recent years, keeping their more technical and product-oriented staff as full-time workers for the main company, while exporting elements of labor to third-party companies… Moving to comp more, or all workers, is not only good PR, though it is also that, it’s simply good ethics.”

Salesforce hires former banker Arundhati Bhattacharya as chairperson and CEO of India business

Salesforce, the global giant in CRM, said on Wednesday that former banker Arundhati Bhattacharya will be joining the company on April 20 as chairperson and chief executive of its India division.

The San Francisco-headquartered firm said Bhattacharya, who served as the chairperson of the state-run State Bank of India for nearly four decades and oversees financial services group SWIFT India, will be tasked with helping the global giant scale rapidly in India, one of its fastest growing overseas markets.

Arundhati will report to Ulrik Nehammer, General Manager of Salesforce in the APAC region. “Arundhati is an incredible business leader and we are delighted to welcome her to Salesforce as chairperson and CEO India,” said Gavin Patterson, President and CEO of Salesforce International, in a statement.

“India is an important growth market for Salesforce and a world-class innovation and talent hub and Arundhati’s leadership will guide our next phase of growth, customer success and investment in the region,” he said.

Salesforce offers a range of cloud services to customers in India, where it has over 1 million developers and more Trailhead users than in any other market outside of the U.S. The company, which competes with local players Zoho and Freshworks, counts Indian firms redBus, Franklin Templeton, and CEAT as some of its clients.

The company said it expects to add 3,000 jobs in India in the next three years and turn the nation into a “leading global talent and innovation hub” for the company. Sunil Jose, who joined the firm in 2017, oversaw some of the company’s India operations previously.

“I could not be more excited to join the Salesforce team to ensure we capture this tremendous opportunity and contribute to India’s development and growth story in a meaningful way,” said Bhattacharya in a statement.

According to research firm IDC, Salesforce and its ecosystem of customers and partners in India are expected to create over $67 billion in business revenues and create more than 540,000 jobs by 2024.

UNESCO updates distance-learning guide for the 776.7 million children worldwide affected by school closures

As schools around the world close or move classes online to mitigate the spread of COVID-19, many parents and educators are scrambling for ideas. The United Nations Education, Scientific and Cultural Organization (UNESCO) has assembled an online guide with links to distance learning apps and other resources.

According to UNESCO, “an unprecedented number of children, youth and adults are not attending schools or universities because of COVID-19,” with governments in 100 countries having announced or implemented closures. In 85 countries, schools nationwide have been closed, affecting more than 776.7 million children.

In addition to a list of national learning portals, UNESCO is also updating a list of digital education tools, including digital learning management systems like ClassDojo and Google Classroom; apps designed for smart featurephones like KaiOS; and software with a strong offline component, including Can’t Wait to Learn, Kolibri, Rumie and Ustad Mobile.

The list also covers MOOCs, self-directed learning platforms, mobile reading apps, educational software development tools and live-video platforms like Dingtalk, Hangouts Meet and Zoom.

Workers at America’s largest companies are not covered under coronavirus aid package

Workers at America’s largest companies are not covered under a bill passed by the House of Representatives on Friday that is supposed to support American workers impacted by the spread of the novel coronavirus.

The bill still has to be voted on by the Senate and approved before it can be signed into law, but its structure leaves a gaping hole in the prevention strategy the government has said is necessary to reduce the COVID-19 outbreak in the US.

“No American worker should worry about missing a paycheck if they’re feeling ill,” said Vice President Mike Pence at the Sunday press briefing from the Coronavirus Task Force. “If you’re sick with a respiratory illness stay home.”

However, millions of Americans potentially don’t have the ability to make that choice under the congressional aid package touted by both Democrats and Republicans. By excluding companies with more than 500 employees from the Congressional aid, the health and welfare of millions of Americans in industries providing goods, manufacturing, and vital services to most of the country is being left up to the discretion of their employers.

Details of the legislative compromise were first reported by The New York Times yesterday. And chart published by The New York Times illustrated just how many companies didn’t have paid sick leave policies in place as the coronavirus began to spread in the US (companies have changed policies to respond to the coronavirus).

Image courtesy of The New York Times

Big technology companies took the lead early this month in changing policies for their workers and by the end of last week many of the country’s largest employers had followed suit. But it looks like their work won’t be covered under the government’s current plan — and that any measures to extend sick leave and paid time off will be limited to a response to the current outbreak.

These large employers have already responded by closing stores or reducing hours in areas where most cases of the novel coronavirus have been diagnosed — and companies operating in most of those states are required by law to offer paid leave to their hourly employees and contractors.

Companies who have responded to the outbreak by changing their time-off and sick leave policies include Walmart, Target, Darden Restaurants (the owner of the Olive Garden restaurant chain), Starbucks, Lowes, and KFC, have joined tech companies and gig economy businesses like Alphabet (the parent company of Google), Amazon, Apple, Facebook, Instacart, Microsoft, Postmates, Salesforce, and Uber in offering extended leave benefits to employees affected by the coronavirus.

These kinds of guarantees can go a long way to ensuring that hourly workers in the country don’t have to choose between their health and their employment. The inability to pass a law that would cover all workers puts everyone at risk.

Without government stepping in, industries are crafting their own responses. Late Sunday, automakers including GM, Ford, and FiatChrysler joined the United Auto Workers union in announcing the creation of a coronavirus task force to coordinate an industrywide response for the automotive sector.

As the Pew Research Center noted last week, the bill proposed by House Democrats had initially proposed temporary federal sick leave covering workers with COVID-19 or caring for family members with two-thirds of their wages for up to three months; expiring in January 2021. The measure would have also guaranteed private employers give workers seven days of paid sick leave with another 14 days available immediately in the event of future public health emergencies.

Most workers have less than nine days of sick leave covered under current state legislation. There is no national mandate for paid sick leave. After one year on the job, 22 percent of workers have access to less than five days, while another 46 percent of employees can get five-to-nine days of paid sick leave. Only 38 percent of workers have between ten and fourteen days of leave.

The Pew Research Center also reported that the lack of access to paid sick leave increases as wages decline. Over 90 percent of workers receiving hourly rages over $32.21 have some form of paid sick leave. Only about 50 percent of workers who make $13.80 or less have access to some form of paid sick leave. For Americans who make under $10.80 an hour, only about 30 percent receive any sick leave.

How big tech is taking on COVID-19

Over the past week, one thing has become painfully clear for U.S. residents: COVID-19 is going to permeate every aspect of our lives for a long time to come. Those of us in and around tech have been noticing this for months now. First through the impact on our friends and colleagues in Asia, who have been facing fallout from the pandemic head-on for some time, and then through the domino effect on tech conferences.

First there was MWC, then Facebook’s F8, E3, WWDC. The list goes on and on. Yesterday, TechCrunch announced that we would be postponing a pair of our own events. It was the right thing to do, and increasingly not really a choice, to be honest, as more and more cities have banned large gatherings.

Tech has been keenly aware of COVID-19’s impact for a while now because being a tech company is being a global company almost by default. Now, however, the virus’s threat has come to nearly everyone’s back door. If you don’t yet know someone who has been infected with the virus, odds are good you will soon. This is our reality, for now, at least.

If there’s hope to be mustered from this event, it’s in the prospect of people helping people. Coming together, separately, at a safe social distance. The response of the current administration leaves much to be desired at the moment. As yesterday’s press conference involved praise of the “private sector” and a parade of high profile executives, the reality is that many of us may have to rely on corporates and execs to help fill in the gaps of gutted government departments.

There will be plenty of time to call out the inevitable opportunism of corporate America (and it looks like I’m going to have a lot more free time on my hands in the coming months to do exactly that), but for now, let’s note some of the folks who are pitching in by donating supplies or easing some of the burden on a strained and uncertain population.

Alibaba co-founder Jack Ma today released a statement noting plans to donate 500,000 test kits and one million face masks. The donation follows similar ones to Japan and Europe, following the devastating impact on his own country.

“Drawing from my own country’s experience, speedy and accurate testing and adequate personal protective equipment for medical professionals are most effective in preventing the spread of the virus,” Ma said in a statement. “We hope that our donation can help Americans fight against the pandemic!”

Yesterday, Zoom CEO Eric Yuan announced that his video conferencing platform would be available for free to K-12 schools in Japan, Italy and the U.S. The move comes as the service is seeing a massive spike in downloads as many businesses and schools are attempting to adapt to working and learning remotely.

Earlier this week, Bill Gates, who recently left his position on Microsoft’s board, announced the Bill & Melinda Gates Foundation was teaming up with Wellcome and Mastercard to fund treatments to the tune of $125 million. Yesterday, Facebook announced it was committing $20 million in donations to support relief efforts. Apple announced a similar $15 million in donations, along with letting customers skip the March payment on their Apple Cards without risking interest payments. IPS like AT&T, Charter, CenturyLink, Comcast, T-Mobile, Verizon, Sprint and Cox, meanwhile, have promised not to overcharge, charge late fees or terminate service, in an attempt to keep people connected.

Likely we’ll continue to see more such announcements in the coming weeks and months as companies struggle with impact to their workforces and bottom lines. Some will no doubt be more crass that others, but there’s little doubt that such gestures will be a big part of our ability to emerge from one of the scariest and most surreal moments in recent memory.

White House and House Democrats agree to funding package for paid sick leave, funding for tests

Late Friday night, after nearly two full days of negotiations, the House of Representatives is finally set to pass a bipartisan plan to provide sweeping new benefits to workers and businesses affected by the outbreak of the novel coronavirus in the U.S.

The new bill will offer paid sick leave, stronger unemployment benefits, free virus testing and more money for food assistance and Medicaid and was approved only after 13 phone calls between the House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, according to a report in The New York Times.

After its approval this evening, the Senate will have to vote to approve the measure early next week before it can be signed into law by President Trump.

While stocks rose sharply after the President’s address, delaying the bill could cause further economic uncertainty and continue what has been a wild couple of months for financial markets beset by barrage of bad news and stopgap measures designed to boost the economy, but failing to address the actual pressures impacting global markets (driving people to invest in stock markets doesn’t solve the financial shock that stems from an economy grinding to a halt in response to a national epidemic).

As cities and states encourage (or in some cases mandate) social distancing and self-quarantines as a response to limit the spread of COVID-19, the disease caused by the novel coronavirus SARS-CoV-2, huge swaths of America’s service sectors will be affected.

That applies to startups like the retail chains b8ta and Neighborhood Goods, the beauty brand, Glossier, the Los Angeles-based arcade chain for the new millennium, Two Bit Circus; and the most celebrated of the direct to consumer startups, Warby Parker.

It’s also a factor for gig and sharing economy companies like Postmates, Instacart, Lyft, Uber, Airbnb and others — companies which were venture capital darlings for their novel approach to excess resources (be it cars, spare time, or space).

These companies have already faced criticism from lawmakers on Capitol Hill over their compensation practices for workers who may be affected by the coronavirus outbreak.

Hitting pause on America’s shopping and dining in malls and restaurants, entertainment in bars, theaters, concerts, and at plays, and the closure of public spaces, along with work-from-home policies that reduce foot traffic to local businesses or retail chains in business districts will hit low-income workers and hospitality staff, who don’t have paid-time-off or at risk of losing their jobs as business slows.

Those social distancing measures are also one of the best chances cities have to slow the spread of the virus, according to most experts. And paid time off has been shown to reduce the spread of disease, according to the New York Times report on the bill’s passage.

“Today, we will pass the Families First Coronavirus Response Act after reaching an agreement with the Administration,” Speaker Pelosi wrote on Twitter. “This legislation builds on the action that House Democrats took last week to put #FamiliesFirst with our strong, bipartisan $8.3 billion emergency funding package.”

For families’ economic security, #FamiliesFirst secures paid emergency leave with two weeks of paid sick leave and up to three months of paid family and medical leave. We have also secured enhanced Unemployment insurance for those who lose their jobs.

— Nancy Pelosi (@SpeakerPelosi) March 13, 2020

For families’ health security, #FamiliesFirst increases federal funds for Medicaid to support our local, state, tribal and territorial governments and health systems, so that they have the resources necessary to combat this crisis.

— Nancy Pelosi (@SpeakerPelosi) March 13, 2020

 

Microsoft moves its 2020 Build developer conference online

May is traditionally a month of big developer conferences, with Facebook F8, Google I/O and Microsoft Build often happening within the same two-week period. But not this year. After F8 and I/O were already canceled in favor of online events, Microsoft is now unsurprisingly following suit, too, and canceling the in-person element of Build, which was scheduled to run from May 19 to 21, citing concerns over the current coronavirus outbreak.

microsoft build logo“The safety of our community is a top priority. In light of the health safety recommendations for Washington State, we will deliver our annual Microsoft Build event for developers as a digital event, in lieu of an in-person event,” the company said in a statement to The Verge. “We look forward to bringing together our ecosystem of developers in this new virtual format to learn, connect and code together. Stay tuned for more details to come.”

The announcement doesn’t exactly come as a surprise. Indeed, it was really only a question of when Microsoft would make the call and the real surprise was how long it took Microsoft to make this call, especially given how hard Washington state has been hit by the coronavirus outbreak. Currently, a number of Washington state counties have banned events with more than 250 people. That ban was set to expire before Build.

It’s worth noting that Microsoft hasn’t actually updated the Build homepage yet and you can still buy a ticket. If I were you, I wouldn’t do that, though. You’ll get a refund, but it’s not worth the hassle.

Asian stock markets fall as COVID-19 is declared a pandemic

American stock markets plunged on Wednesday, after the World Health Organization officially declared the spread of COVID-19 a pandemic. In Asia, meanwhile, almost all the major stock indexes were also trading lower the morning after the WHO’s announcement, with the Asia Dow Index down 4% by midday.

Morning trading in East Asian markets was ongoing by the time President Donald Trump made an address in which he announced a 30-day travel ban from the European Union to the United States.

In Japan, the benchmark index, the Nikkei 225, had fallen 3.6% as of mid-afternoon. The Nikkei Jasdaq, seen as an index for smaller companies and startups, was down 3.4%. Both recovered slightly in the afternoon after a morning drop.

The Hong Kong Stock Exchange fell 3.6% by early afternoon, while the Shanghai Stock Exchange composite index was down 1.6%.

The FTSE Straits Times Index, the benchmark index for Singapore, fell 3.7% by early afternoon, while Taiwan’s TSEC was down 4%.

The Mumbai Sensex was down 6.8% as of late morning trading in India.

Y Combinator moves its online Demo Day forward one week

Just days ago, Y Combinator announced that its upcoming Demo Day event would be moving online due to “growing concern over COVID-19“. The event, previously planned to span across two days at San Francisco’s Pier 48 building, would instead be hosted entirely online on March 23rd.

More changes this evening: YC is shifting Demo Day forward one full week, from March 23rd to March 16th.

In a blog post on the change, Y Combinator CEO and partner Michael Seibel cites an “accelerated” pace from investors in recent days as having encouraged the move:

Over the last few days, a large number of investors have accelerated their outreach to our current batch of founders. They are moving quickly to make investment decisions, and we’re going to match their pace and accelerate our schedule by one week. YC W20 online Demo Day will now be on March 16.

On March 16, the YC Demo Day website will go live, a modified version of the website that investors and founders have used over the past five years. Through the website, investors will have access to a single-slide summary, a short description of the company, and a team bio. They can sort companies by industry and geography, and will be able to export the list of companies to a spreadsheet.

While YC initially said that the pitches each company traditionally does live onstage for Demo Day would be “pre-recorded and released to all investors at the same time,” the announcement of the sooner-than-expected Demo Day only mentions slide summaries, company descriptions, and team bios — suggesting plans might have changed a bit to accommodate the new schedule. Y Combinator confirmed to me that the Demo Day site will not have video presentations.

 

 

Hackers are targeting other hackers by infecting their tools with malware

A newly discovered malware campaign suggests that hackers have themselves become the targets of other hackers, who are infecting and repackaging popular hacking tools with malware.

Cybereason’s Amit Serper found that the attackers in this years-long campaign are taking existing hacking tools — some of which are designed to exfiltrate data from a database through to cracks and product key generators that unlock full versions of trial software — and injecting a powerful remote-access trojan. When the tools are opened, the hackers gain full access to the target’s computer.

Serper said the attackers are “baiting” other hackers by posting the repackaged tools on hacking forums.

But it’s not just a case of hackers targeting other hackers, Serper told TechCrunch. These maliciously repackaged tools are not only opening a backdoor to the hacker’s systems, but also any system that the hacker has already breached.

“If hackers are targeting you or your business and they are using these trojanized tools it means that whoever is hacking the hackers will have access to your assets as well,” Serper said.

That includes offensive security researchers working on red team engagements, he said.

Serper found that these as-yet-unknown attackers are injecting and repackaging the hacking tools with njRat, a powerful trojan, which gives the attacker full access to the target’s desktop, including files, passwords, and even access to their webcam and microphone. The trojan dates back to at least 2013 when it was used frequently against targets in the Middle East. njRat often spreads through phishing emails and infected flash drives, but more recently hackers have injected the malware on dormant or insecure websites in an effort to evade detection. In 2017, hackers used this same tactic to host malware on the website for the so-called Islamic State’s propaganda unit.

Serper found the attackers were using that same website-hacking technique to host njRat in this most recent campaign.

According to his findings, the attackers compromised several websites — unbeknownst to their owners — to host hundreds of njRat malware samples, as well as the infrastructure used by the attackers to command and control the malware. Serper said that the process of injecting the njRat trojan into the hacking tools occurs almost daily and may be automated, suggesting that the attacks are run largely without direct human interaction.

It’s unclear for what reason this campaign exists or who is behind it.

Twitter applies its new “manipulated media” label to video retweeted by Trump

A video retweeted by Donald Trump is the first to be marked with Twitter’s new “manipulated media” tag. The company formally unveiled a new policy last month that said media that has been “significantly and deceptively altered or fabricated” is likely to be labeled if it is determined to be deliberately misleading.

The video, originally tweeted by White House director of social media Dan Scavino and shared by Trump, used footage taken during a speech by Democratic presidential candidate Joe Biden and was edited to make it appear as if Biden, speaking in Kansas City on Saturday, misspoke and accidentally endorsed Trump for re-election.

In the edited version of the video, Biden appears to say “Excuse me. We can only re-elect Donald Trump.” What Biden actually said was “Excuse me. We can only re-elect Donald Trump if in fact we get engaged in this circular firing squad here. It’s gotta be a positive campaign.”

Just in: Twitter applied its new manipulated media label for the first time to a deceptively edited video of Joe Biden. It was shared by White House social media director Dan Scavino, and retweeted by the president. pic.twitter.com/PggcCwMNkx

— Cat Zakrzewski (@Cat_Zakrzewski) March 8, 2020

The manipulated media label began appearing on the video to some users on Sunday evening. Twitter first announced a draft of its new policy in November, which it said was created after gathering user feedback and consulting with academic experts like Witness, the Reuters Institute and New York University researchers.

In order to determine if a piece of media violates the policy, Twitter says it looks at its metadata, the tweet’s context and the Twitter user’s public information.

Twitter’s new policy was enacted after years of criticism that the company has not done enough to prevent harassment on the platform. It has also faced calls from Democrats and other critics of Trump to remove the president from this platform, including last October after they said he posted tweets meant to intimidate individuals involved in the impeachment investigation against him, and in 2018 when he made a tweet that antagonized North Korean leader Kim Jong-un over a potential nuclear war.

In each case, Twitter said it would reveal questionable tweets by public leaders, but believes keeping them on the platform is a part of public discourse.

The first SpaceX Dragon capsule is taking its final flight

Last night, SpaceX launched its first generation Dragon capsule on its twentieth — and final — resupply run to the International Space Station.

The launch marks the Dragon’s last mission as the capsule makes way for SpaceX’s updated and improved Dragon 2 capsule, which will begin making resupply runs to the space station in October.

Alongside cargo to resupply the ISS, the Dragon will be bringing along payloads for experimental research aboard the space station. Including an Adidas experiment to see how it can manufacture midsoles in space; a project from the faucet maker, Delta, to see how water droplets form in zero gravity; and Emulate is sending up an organ-on-a-chip to examine how microgravity affects intestinal immune cells and how heart tissue can be cultured in space.

It’s been twelve years since SpaceX first won a $1.6 billion contract to resupply the space station, and over that time, the space industry has changed dramatically.

The company’s technical innovations around manufacturing and reusing rocket components revolutionized the space industry and created an environment where entrepreneurs believed in the possibility of competing with industry giants like Aerojet Rocketdyne, Boeing, and Lockheed Martin.

Since SpaceX first emerged to challenge those longtime government contractors, which had a lock on government space missions, a wave of commercial activity has emerged around the International Space Station, supporting the creation of new industries.

Earlier this week, Axiom Space announced that it would be using SpaceX to ferry the first entirely private crew of passengers to the International Space Station for a ten-day trip (albeit at a cost of $55 million). Axiom’s vision of building a private orbiting space station off of the existing International Space Station is a bold step forward for the commercialization of space — and one which would be less likely if not for SpaceX’s work and the success of the first Dragon.

Stanford cancels classes in response to novel coronavirus outbreak

Following on the heels of several major cancellations of events the past few days, including the SXSW conference in Austin and the tech conference SaaStr, Stanford University, which is located in the heart of Silicon Valley in Palo Alto, California, announced late Friday that the school would cancel in-person classes for the final two weeks of the university’s winter quarter in response to the expanding outbreak of novel coronavirus, or COVID-19.

In a statement posted by the university, Stanford’s provost Persis Drell announced that the university would cancel two weeks of classes leading up to the university’s winter quarter exams, and “to the extent feasible” migrate classes to online formats.

In addition, professors are being encouraged by the administration to find ways of delivering functionally equivalent course material through online formats, and all exams for winter quarter are expected to be delivered remotely. The policy takes effect immediately starting with classes this coming Monday, March 9.

Furthermore, the university is canceling its annual Admit Weekend, where newly-admitted prospective freshman visit the palm-lined campus and learn more about the school before making a final decision on where to head for their undergraduate degrees. Tours of the campus have also been canceled.

The university in a separate note today acknowledged that two students are in self-isolation after “possible exposure” to the novel coronavirus. The university emphasized that neither student has affirmatively tested positive for the infection at this time.

The San Francisco Bay Area has seen increasing numbers of potential exposures to the novel coronavirus. Stanford itself has been on the vanguard of responding to the global pandemic, announcing the development of its own test earlier this week to detect the infection.

Microsoft will pay hourly workers regular wages even if their hours are reduced because of COVID-19 concerns

As more COVID-19 cases are identified in the United States, some companies are asking employees to work from home if possible. But that impacts the jobs of people who work in on-site operations, including many who are paid by the hour. Today Microsoft said that it will continue paying all vendor hourly service providers in Puget Sound and Northern California their usual wage, even if their work hour are reduced.

The announcement specifically refers to Microsoft workers in the Puget Sound region and Northern California, but the company said it will “[explore] how to best move forward in a similar way in other parts of the country and the world that are impacted by COVID-19.”

In a blog post, Microsoft president Brad Smith wrote that employees in those regions who can work from home have been asked to do so.

“As a result, we have reduced need in those regions for the on-site presence of many of the hourly workers who are vital to our daily operations, such as individuals who work for our vendors and staff our cafes, drive our shuttles and support our on-site tech and audio-visual needs,” he said. “We recognize the hardship that lost work can mean for hourly employees. As a result, we’ve decided that Microsoft will continue to pay all our vendor hourly service providers their regular pay during this period of reduced service needs.”

Smith added, “While the work to protect public health needs to speed up, the economy can’t afford to slow down. We’re committed as a company to making pubic health our first priority and doing what we can to address the economic and social impact of COVID-19. We appreciate that what’s affordable for a large employer may not be affordable for a small business, but we believe that large employers who can afford to take this type of step should consider doing so.”

Microsoft is among several tech companies that have asked employees in places where COVID-19 cases have been identified to work from home, like Washington state and California, including Google, Lyft and Square. Concerns about the COVID-19 have also led to the cancellations of major events, like Mobile World Congress and Google’s I/O developer conference.

Did African startups raise $496M, $1B or $2B in 2019?

Five years ago, it was hard to come by any numbers for annual VC investment in Africa. These days the challenge is choosing which number to follow.

That’s the case for three venture funding studies for Africa that turned up varied results.

The numbers and variance

Investment stats released by media outlet Disrupt Africa, data-base WeeTracker and Africa focused fund Partech have left some people scratching their heads.

From high to low, Partech pegged total 2019 VC for African startups at $2 billion, compared to WeeTracker’s $1.3 billion estimate and Disrupt Africa’s $496 million.

That’s a fairly substantial spread of $1.5 billion between the assessments. The variance filtered down to country VC valuations, though it was a little less sharp.

Africa VC markets 2019Partech and WeeTracker shared the same top-three countries for 2019 VC investment in Africa — Nigeria, Kenya, and Egypt — but with hundred-million dollar differences.

Disrupt Africa came up with a different lead market for startup investment on the continent — Kenya — though its $149 million estimate for the East African country was some $500 million lower than Partech and WeeTracker’s VC leader, Nigeria.

So what accounts for the big deviations? TechCrunch spoke to each organization (and reviewed the reports) and found the contrasting stats derive from different methodologies — namely defining what constitutes a startup and an African startup.

Partech’s larger overall VC valuation for the continent comes from broader parameters for companies and quantifying investment.

“We do not limit the definition of startups by age of the incorporation or size of funds raised,” Partech General Partner Tidjane Deme told TechCrunch.

This led the fund, for example, to include Visa’s $200 million investment in Nigerian financial-services company Interswitch . The corporate round was certainly tech-related, though few would classify Interswitch — which launched in 2002, acquires companies, and has a venture fund — as a startup.

Partech’s higher annual VC value for Africa’s startups could also connect to tallying confidential investment data.

“We…collect and analyze undisclosed deals, accessing more detailed information thanks to our relationships within the ecosystem,” the fund’s report disclosed.

WeeTracker’s methodology also included data on undisclosed startup investments and opened up the count to funding sources beyond VC.

“Debt/loans, grants/awards/prizes/non-equity assistance, crowdfunding, [and] ICOs are included,” WeeTracker clarified in a methodology note.

Disrupt Africa used a more conservative approach across companies and investment. “We are a bit more narrow on what we consider a startup to be,” the site’s co-founder Tom Jackson told TechCrunch.

“In the clearest scenario, an African startup would be headquartered in Africa, founded by an African, and have Africa as its primary market,” Disrupt Africa’s report stated  — though Jackson noted all these factors don’t always align.

“Disrupt Africa tackles this issue on a case-by-case basis,” he said.

Partech was more liberal in its definition of an African startup, including investment for tech-companies that count Africa as their primary market, but not insisting they be incorporated or operate HQs on the continent.

Andela FoundersThat opened up inclusion of large 2019 rounds to Africa focused, New York headquartered tech-talent accelerator Andela and investment to Opera’s verticals, such as OPay in Nigeria.

In addition to following a more conservative definition of African startup, Disrupt Africa’s report was more particular to early-stage ventures. The site’s report primarily counted investment for companies founded within the last five year and excluded “spin-offs of corporates or any other large entity…that [has]…developed past the point of being a startup.”

Commonalities across reports

For all the differences on annual VC counts for Africa, there were some common threads across WeeTracker, Partech, and Disrupt Africa’s investment reports.

The first was the rise of Nigeria — which has Africa’s largest population and economy — as the top destination for startup VC investment on the continent.

The second was the prominence of fintech as the most funded startup sector across Africa, gaining 54% of all VC in Partech’s report and $678 million of the $1.3 billion to startups in WeeTracker’s study.

VC inequality

An unfortunate commonality in each report was the preponderance of startup investment going to English speaking Africa. No francophone country made it into the the top five in any of the three reports. Only Senegal registered on Partech’s country-list, with a small $16 million in VC in 2019.

The Dakar Angel Network launched last year to bridge the resource gap for startups in French-speaking African countries.

Final sum

There may not be a right or wrong stat for annual investment to African startups, just three reports with different methodologies that capture unique snapshots.

Partech and WeeTracker offer a broader view of multiple types of financial support going to tech companies operating in Africa. Disrupt Africa’s assessment is more specific to a standard definition of VC going to startups originating and operating in Africa.

Three reports with varying numbers on the continent’s startup investment is a definite upgrade to what was available not so long ago: little to no formal data on VC in Africa.

India lifts ban on cryptocurrency trading

India’s Supreme Court on Wednesday overturned central bank’s two-year-old ban on cryptocurrency trading in the country in what many said was a “historic” verdict.

The Reserve Bank of India had imposed a ban on cryptocurrency trading in April 2018 that barred banks and other financial institutions from facilitating “any service in relation to virtual currencies.”

At the time, RBI said the move was necessary to curb “ring-fencing” of the country’s financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor were they stamped by the government.

The 2018 notice from the central bank sent a panic to several local startups and companies offering services to trade in cryptocurrency. Nearly all of them have since shut shop.

In the ruling today, the bench, headed by Justice Rohinton F Nariman, overruled central bank’s circular on the grounds of disproportionality.

A group of petitioners including trade body the Internet and Mobile Association of India had challenged central bank’s circular, in part, arguing that India should look at most other nations that are not only allowing cryptocurrency trading, but have moved to launch their own virtual currencies.

Nitin Sharma, a tech investor, said the top court’s ruling was “historic” as it finally brought some clarity to the matter.

“Historic day for Crypto in India. We can now innovate. The entire country can participate in the Blockchain revolution,” said Nischal Shetty, founder and chief executive of Bitcoin exchange platform WazirX.

New York’s Governor Cuomo requires insurers to waive cost sharing for COVID-19 tests

In a move that other states might want to emulate, New York State Governor Andrew M. Cuomo said that the state’s Department of Financial Services is requiring health insurers in the state to waive cost sharing associated with testing for the new coronavirus, COVID-19.

The initiative paves the way for low-cost emergency room, urgent care, and hospital visits for patients worried that they may have contracted the virus.

The Governor also said that New Yorkers receiving Medicaid coverage will not be expected to pay a co-pay for any testing related to the novel coronavirus, COVID-19. The steps are designed to ensure that residents of the state won’t have to worry about cost as an obstacle for getting tested. Any tests that are being conducted at the State’s Wadsworth Lab are fully covered.

Cuomo’s administration also outlined other actions health insurers are either going to be required or advised to take — including informing New Yorkers of available benefits, offering telehealth medical advice and treatment, and preparing insurers to cover the costs of COVID-19 immunizations if a vaccine becomes available.

“We have the best health-care system in the world, and we are leveraging that system including our state-of-the-art Wadsworth testing lab to help contain any potential spread of the novel coronavirus in New York,” Governor Cuomo said, in a statement. “Containing this virus depends on us having the facts about who has it – and these measures will break down any barriers that could prevent New Yorkers from getting tested.”

The state’s initiative will prevent insurers from forcing cost-sharing on in-network provider office visits or urgent care visits, when the purpose is a test for the novel COVID-19 coronavirus. The initiative is also designed to ensure that New Yorkers receiving Medicaid coverage have their costs covered.

Employees who are in self-funded employer-based plans not regulated b ERISA statutes need to contact employers to see how the new regulations will effect them.

The State is also requiring insurers to devote resources to inform consumers of available benefits; provide and promote telehealth services; encourage and verify whether provider networks are adequately prepared to handle potential increases in demand for services including offering access to out-of-network services; covering the costs of immunizations if they become available; expand access to prescription drugs; and ensure proper emergency care.

Rajeev Suri to step down as Nokia CEO; Pekka Lundmark to take over

Rajeev Suri, the chief executive of Nokia, is stepping down from his leadership role after overseeing the Finnish networking giant for more than half a decade. Pekka Lundmark, the outgoing President and CEO of energy firm Fortum, has been elected as the President and Chief Executive Officer of Nokia, the Finnish company announced on Monday.

The networking giant said Suri had expressed his intention to step down from the role and that they have been working to formulate a smooth transition. “After 25 years at Nokia, I have wanted to do something different,” said Suri, who will leave his current position on August 31 and continue to serve as an advisor to the Nokia Board until January 1 next year. Lundmark is expected to start in his new role on September 1 this year.

The announcement comes days after Bloomberg News reported that Nokia was exploring a range of strategic options including selling portions of its business assets to merger potential merger deals.

“Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader. I leave the company with a belief that a return to better performance is on the horizon and with pride for what we have accomplished over time. Pekka is an excellent choice for Nokia. I look forward to working with him on a smooth transition and wish him the best success in his new role,” said Suri, in a statement.

The company, like its rivals Ericsson and Huawei, is building technologies and products for 5G networks. But some analysts have argued that Nokia’s move to buy Alcatel-Lucent, maker of communications systems, distracted it from becoming the market leader for 5G networks-compatible products and technologies.

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” said Risto Siilasmaa, Nokia Board Chair, in a statement.

Nokia’s Technology unit, which manages the company’s patent portfolio, reported 3% growth in its operating profit to 1.24 billion euros ($1.35 billion) in 2019, while its sales slipped 1% to 1.49 billion euros. The company’s future prospects received a boost after U.S. Attorney General William Barr urged the nation and its allies last week to consider investing in Nokia and Ericsson to counter Huawei’s dominance in 5G technology, fueling speculation of merger and acquisition activities.

The company’s board said in Lundmark, it is getting a leader who has “consistently delivered robust total shareholder returns, successfully renewed the company’s strategy, and positioned it to be a strong player in the transforming global energy sector.”

In a statement, Lundmark said, “together we can create shareholder value by delivering on Nokia’s mission to create the technology to connect the world. I am confident that the company is well-positioned for the 5G era and it is my goal to ensure that we meet our commitments to our customers, employees, shareholders and other stakeholders.”

This is a developing story…

Why you can’t overlook the small details in the pursuit of innovation

This week, we read a very short story, The Great Silence, as we start to head toward the end of Ted Chiang’s Exhalation collection. This story asks questions about how we connect with nature, and also how to think about innovation and where new ideas come from.

We will finish the remaining two stories in the collection in the coming week, and then it will be time (sadly!) to change books. I’ll announce the next book in the book club hopefully shortly.

Some further quick notes:

  • Want to join the conversation? Feel free to email me your thoughts at bookclub@techcrunch.com (we got a real email address!) or join some of the discussions on Reddit or Twitter (hashtag TCBookClub)
  • Follow these informal book club articles here: https://techcrunch.com/book-review/. That page also has a built-in RSS feed for posts exclusively in the Book Review category, which is very low volume.
  • Feel free to add your comments in our TechCrunch comments section below this post.

Reading The Great Silence

This is a quite short story with a simple message. The narrator is a parrot discussing humanity’s quest to seek out artificial life elsewhere in the universe. The parrot, observing these actions, reflects on why humanity spends so much time looking for intelligence elsewhere, when it itself is intelligent, and located right next to us. The devastating line Chiang delivers comes toward the end:

But parrots are more similar to humans than any extraterrestrial species ever will be, and humans can observe us up close; they can look us in the eye. How do they expect to recognize an alien intelligence if all they can do is eavesdrop from a hundred light-years away?

The author offers us some obvious points to think about around environmental destruction and species extinction, and those are obvious enough that I think any reader can sort of surmise how the story connects to those issues.

So I want to instead connect this discussion to a theme dear to the heart of TechCrunch readers, and that is the quest for science and innovation.

To me, Chiang isn’t just criticizing our disdain for the animal species around us, but is also critiquing an innovation community that constantly strives for the big and “shiny” discoveries when so many smaller and local discoveries have yet to be made.

We invest billions of dollars into satellites and telescopes and radar arrays hoping to capture some fleeting glimpse into an alien world somewhere in the galaxy. And yet, there are deeply alien worlds all around us. It’s not just parrots — Earth is filled with species that are incredibly different from us in physiology, behavior, and group dynamics. What if the species most alien to our own in the whole galaxy is located right under our noses?

Of course, there would be huge headlines in finding even a single-celled organism on another planet (assuming there was even some way to detect such life in the first place). But that is precisely the type of narrow-minded, novelty-seeking behavior that Chiang is pointing out here.

Nonetheless, innovation can be a weird beast. It isn’t hard to look around the Valley these days and be dismayed at just how adrift a huge part of the industry is. We are creating more “smart” products than ever, yet huge social challenges and scientific frontiers remain completely unfunded. It’s easier to raise funding to start up an upgraded handbag company with a new brand and marketing strategy than it is to build an engineering team to push quantum computing forward.

There are certainly many valid arguments for moving our money to more “worthwhile” pursuits. Yet, fresh ideas that change industries can sometimes come from the oddest places, with even frivolous products occasionally creating fundamental advances in technology. Facebook as a social network might be a time sink for its users, but its huge scale also triggered all kinds of new data center infrastructure technologies that have been widely adopted by the rest of the tech industry. Solving a frivolous problem became the means to solving a problem of more depth.

In the end, you need to seek answers. Don’t overlook the obvious around us or get inured to the quotidian challenges that may just be the fount of innovation. Maybe figuring out the communication of parrots does nothing for us. Or maybe, exploring that area will open up whole new ideas for how to communicate and understand the neural patterns of speech. We can’t know until we tread along the path.

Now, to take one aside before we close out: Exhalation is a collection of previously-published short stories, but Chiang manages to work in his arch-symbol of breath and air into this piece in a fairly tight way:

It’s no coincidence that “aspiration” means both hope and the act of breathing.

When we speak, we use the breath in our lungs to give our thoughts a physical form. The sounds we make are simultaneously our intentions and our life force.

It’s a symbol we saw most substantively in Exhalation (the short story itself, not this whole collection) which we talked about a few posts ago. It’s a gorgeous little motif, and Chiang nicely embeds it to create an empathetic connection between humans and animals.

Some question about Omphalos

For the next and penultimate short story Omphalos, here are some questions to think about as you read the story.

  • What is the meaning of belief? How does belief influence both our views on our place in the world and our approaches to science and the scientific method?
  • Does existence and existentialism flow from external symbols or internal rationales?
  • How do religion and science mix? How did Chiang frame this narrative to make this question easier to contend with?
  • The story focuses on the dynamics of archaeology and astronomy — why these two disciplines and not some other field of science?
  • What’s the ultimate message of the story? Or is there more than one that can be read into the text?

GDC 2020 has been canceled

Well, after what I’m sure was a hectic few days for the folks planning the Game Developers Conference in San Francisco, the team announced today that they have officially decided to cancel the event happening this March, saying in a blog post that they hoped they would be able to reschedule an event for “later in the summer.”

In recent days, nearly all of the event’s top corporate sponsors announced that they would not be sending employees to the event due to concerns surrounding coronavirus. Microsoft, Unity, Epic, Amazon, Facebook and Sony had all bowed out of the event. GDC’s statement did not reference the virus.

The company behind GDC detailed that they will be refunding conference and expo attendees in full, though a blog post details that the group hopes to host a GDC event later in the summer, noting, “We will be working with our partners to finalize the details and will share more information about our plans in the coming weeks.”

GDC is just the latest tech conference to be shuttered in the wake of worldwide concern surrounding the outbreak of coronavirus. Yesterday, Facebook announced it would be canceling the in-person component of its F8 conference and we have already seen the cancellation of GSMA‘s Mobile World Congress in Barcelona.

AWS partners with Kenya’s Safaricom on cloud and consulting services

Amazon Web Services has entered a partnership with Safaricom — Kenya’s largest telco, ISP and mobile payment provider — in a collaboration that could spell competition between American cloud providers in Africa.

In a statement to TechCrunch, the East African company framed the arrangement as a “strategic agreement” whereby Safaricom will sell AWS services (primarily cloud) to its East Africa customer network.

Safaricom — whose products include the famed M-Pesa mobile money product — will also become the first Advanced Consulting Partner for the AWS partner network in East Africa.

“The APN is…the program for technology…businesses who leverage AWS to build solutions and services for customers…and sell their AWS offerings by providing valuable business, technical, and marketing support,” Safaricom said.

“We chose to partner with AWS because it offers customers the broadest and deepest cloud platform…This agreement will allow us to accelerate our efforts to enable digital transformation in Kenya,” said Safaricom CEO Michael Joseph.

“Safaricom will be able to offer AWS services to East-African customers, allowing businesses of all sizes to quickly get started on AWS cloud,” the company statement continued.

For now, the information provided by Safaricom is a bit sparse on the why and how of the partnership between the American company and East African mobile, financial and ISP provider.

TechCrunch has an inquiry into Amazon and some additional questions posed to Safaricom, toward additional coverage.

An initial what-this-all-means take on the partnership points to an emerging competition between American cloud service providers to scale in Africa by leveraging networks of local partners.

The most obvious rival to the AWS-Safaricom strategic agreement is the Microsoft -Liquid Telecom collaboration. Since 2017, MS has partnered with the Southern African digital infrastructure company to grow Microsoft’s AWS competitor product — Azure — and offer cloud services to the continent’s startups and established businesses.

MS and Liquid Telecom have focused heavily on the continent’s young tech companies. “We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s  Head of Innovation Partnerships Oswald Jumira told TechCrunch in 2018.

Amazon hasn’t gone fully live yet with e-commerce services in Africa, but it has aggressively positioned AWS and built a regional client list that includes startups — such as fintech venture Jumo — and large organizations, such Absa and Standard Bank.

Partnering with Safaricom plugs AWS into the network of one East Africa’s most prominent digital companies.

Safaricom, led primarily by its M-Pesa mobile money product, holds remarkable dominance in Kenya, Africa’s 6th largest economy. M-Pesa has 20.5 million customers across a network of 176,000 agents and generates around one-fourth ($531 million) of Safaricom’s ≈ $2.2 billion annual revenues (2018).

Compared to other players — such as Airtel  Money and Equitel Money — M-Pesa has 80% of Kenya’s mobile money agent network, 82% of the country’s active mobile-money subscribers and transfers 80% of Kenya’s mobile-money transactions, per the latest sector statistics.

A number of Safaricom’s clients (including those it provides payments and internet services to) are companies, SMEs and startups.

Extending AWS services to them will play out next to the building of Microsoft’s $100 million Africa Development Center, with an office in Nairobi, announced last year.

Dahmakan, a Malaysian “full-stack” food delivery startup, raises $18 million Series B

Dahmakan, a full-stack food delivery startup based in Malaysia, announced today that it has closed a $18 million Series B. Investors include Rakuten Capital, White Star Capital, JAFCO Asia and GEC-KIP Fund, along with participation from South Korean food delivery app Woowa Brothers, and returning investors Partech Partners and Y Combinator.

This brings Dahmakan’s total funding to about $28 million. Its previous round of financing was announced last May.

Launched by former executives from FoodPanda, Dahmakan was the first Malaysian startup to participate in Y Combinator’s startup accelerator program. Operational costs for food delivery companies are notoriously high, and eat away at their profitability, but Dahmakan is among several startups that use “cloud” kitchens, located closer to customers, in order to reduce delivery costs.

The foundation of the startup’s full-stack platform is an operating system that controls nearly every step of its operations, from recipe development to last-mile delivery, and its cloud kitchens are part of “satellite” hubs placed around different cities to be closer to customers.

Instead of delivering from restaurants, Dahmakan creates its own meals, offering about 40 options each week from a database of 2,000 dishes. It selects its weekly menu based on customer data, including food preferences and spending habits, along with market research.

Then customers are given a menu and pick from a schedule of delivery times. Other startups trying to make food delivery more efficient in Southeast Asia by using a vertically-integrated model and cloud kitchens include Grain, which s backed by investors including Openspace Ventures, First Gourmet and Singha Ventures.

In a press statement about Dahmakan’s funding, White Star Capital managing partner Eric Martineau-Fortin said “Dahmakan is well-positioned to serve the growing demand for food delivery services in Southeast Asia with its unique, technology-forward approach of taking control of the entire value chain to provide affordable delivery options to SEA’s rising middle class.”

On-demand tutoring app Snapask gets $35 million to expand in Southeast Asia

Snapask, an on-demand tutoring app, announced today that it has raised $35 million in Series B funding. Earmarked for the startup’s expansion in Southeast Asia, the round was led by Asia Partners and Intervest.

Launched in Hong Kong five years ago, Snapask has now raised a total of $50 million and operates in Hong Kong, Taiwan, Malaysia, Indonesia, Thailand, Japan and South Korea. Its other investors have included Kejora Ventures, Ondine Capital and SOSV Chinaccelerator (Snapask participated in its accelerator program).

Founder and CEO Timothy Yu said Snapask will expand into Vietnam and focus on markets in Southeast Asia where there is a high demand for tutoring and other private education services. It will also open a regional headquarter in Singapore and develop video content and analytics products for its platform.

The company now has a total of 3 million students, with 1.3 million who registered over the past twelve months (including a recent surge that Yu attributes to students studying at home after COVID-19 related school cancellations). Over the past year, 100,000 tutors have applied, taking Snapask’s current total to 350,000 applicants.

Yu says that over 2 million questions are asked by students each month on the platform, with each subscriber typically asking about 60 questions a month, during tutoring sessions that last between 15 to 20 minutes. The majority, or about two-thirds, of the questions are about math and science-related topics.

One thing all of Snapask’s markets have in common are highly-competitive public exams to enter top universities, says Yu. The exams have both a positive and negative effect on education, he adds.

“Students have a very clear objective about what topics they need to study, so that is driving a very lucrative market in the tutoring industry. But I think what Snapask focuses on is that exams are important, but you should do it the right way. We’re about self-directed learning. It’s not necessary to go to three-hour classes every day after school. If you need specific help on a question, you can ask for it immediately.”

While at university, Yu worked as a math tutor, and sometimes spent a total of two hours commuting to sessions that lasted the same amount of time. In markets like Malaysia or Indonesia, many educators chose to work in major cities, leaving students in rural areas with less options. The goal of Snapask is to help solve those issues and connect tutors with more students.

Yu says the average time for students to connect with a tutor after asking a question is about 15 to 20 minutes, which it is able to do because of machine learning-based technology that matches them based on educational styles, subject and availability. Snapask’s matching algorithms are also based on how students engage with tutors (for example, if they respond better to concise or longer, more elaborate answers). Students can also pick up to 15 to 20 tutors for their favorites list, who are prioritized when matching.

Yu says Snapask screens tutors by looking at their university transcripts and public exam results. Then they go through a probation period on the platform to assess how they interact with students. The platform also tracks how many messages are sent during a tutoring session and response times to make sure that tutors are explaining students’ questions instead of just giving them the answers.

Tutors can talk to up to 10 students at a time through Snapask’s platform. Yu says Snapask tutors in Hong Kong, Singapore, Japan and South Korea who spend about two hours per day answering questions usually make about $1,200 a month, while those who work about four to five hours a day can make about $4,000 to $5,000 a month. The company uses different pricing models in Southeast Asian markets, and Yu says tutors there can make about 50% to 60% more than they would at traditional tutoring jobs.

Other study apps focused on students some of the same markets as Snapask include ManyTutors and Mathpresso, whose products combine tutoring services with tools that let students upload math questions, which are then scanned with optical character recognition to provide instant answers. Yu says Snapask is focusing on one-on-one tutoring because it wants to differentiate by creating a “holistic experience.”

“A lot of students come to Snapask after using OCR tools, which we know that user surveys, but they can’t get to certain steps. They still need someone to help them understand what is happening,” he says. “So we try not to use technology for every component in teaching, but to make it more efficient and scalable, and we’re creating a holistic experience to differentiate us.”

Graphcore, the AI chipmaker, raises another $150M at a $1.95B valuation

The UK has a strong history when it comes to chips and processors, but the global chip market has seen some ups and downs of late. Today comes some big news that underscores how investors are doubling down on one of the big hopefuls for the next generation of chipmaking to see it through the winter. Graphcore, the Bristol-based startup that designs processors specifically for artificial intelligence applications, announced that it has raised another $150 million in funding for R&D and to continue bringing on new customers. It’s valuation is now $1.95 billion.

Graphcore has now raised over $450 million and says that it has some $300 million in cash reserves — an important detail considering the doldrums that have plagued the chipmaking market in the last few months, and could become exacerbated now with the slowdown in production due to the coronavirus outbreak.

The funding is an extension of its Series D, it said, and brings the total valuation of the company to $1.95 billion. (For reference, the original Series D in December 2018 valued Graphcore at $1.7 billion.) This latest round includes investments from Baillie Gifford, Mayfair Equity Partners and M&G Investments — all new backers — as well as participation from previous investors Merian Chrysalis, Ahren Innovation Capital, Amadeus Capital Partners and Sofina. Other backers of the startup include BMW and Microsoft, Atomico and Demis Hassabis of DeepMind.

Graphcore’s big claim to fame has been the development of what it calls its Intelligence Processing Unit (IPU) hardware and corresponding Poplar software — which is designed specifically for the kind of simultaneous, intensive calculations demanded of AI applications innovators create next generation machine intelligence solutions. Graphcore describes the IPU as the first processor to be designed specifically for AI, although a number of other companies including Nvidia, Intel and AMD have made huge investments into this area and have ramped up their pace of development to meet market demands and hopefully overtake what have been limitations in the wider area of AI processing.

This D2 round comes ahead of what it describes as strong demand for 2020, and is happening on the heels of a strong year for Graphcore, the company said, including a commercial deal with one of its previous strategic backers.

“2019 was a transformative year for Graphcore as we moved from development to a full commercial business with volume production products shipping,” said Nigel Toon, founder and CEO. “We were pleased to publicly announce our close partnership with Microsoft in November 2019, jointly announcing IPU availability for external customers on the Azure Cloud, as well as for use by Microsoft internal AI initiatives. In addition, we announced availability of the DSS8440 IPU Server in partnership with Dell Technologies and the launch of the Cirrascale IPU-Bare Metal Cloud. We also announced some of our other early access customers which include Citadel Securities, Carmot Capital, and Qwant, the European search engine company.”

See Toon speaking at our recent Disrupt conference in Berlin about the prospect for chips here:

Created to help employees figure out health benefits, HealthJoy raises $30 million

HealthJoy, a platform designed to make it easier for employees to use their healthcare benefits, has raised $30 million in Series C funding led by Health Velocity Capital. Returning investors also participated, including U.S. Venture Partners, Chicago Ventures, Epic Ventures, Brandon Cruz and Clint Jones. This brings HealthJoy’s total funding so far to $53 million.

By integrating with healthcare service providers and partnering with benefit consultant agencies, HealthJoy simplifies the process of finding and using benefits. Its features include an AI-based virtual assistant and healthcare concierges. The startup says it has a monthly login rate of 33% and that its clients, which now includes 500 employers, see a tenfold increase in the employee use of benefits, including telemedicine.

Since TechCrunch covered HealthJoy’s Series B round last year, the company has launched two new services. One is a price transparency tool called HealthJoy Rewards that allows companies to provide incentives for employees to use more cost-efficient services.

“For example, an MRI in Chicago can vary in price from around $500 for an independent clinic to around $3,500 in a hospital system,” HealthJoy founder and CEO Justin Holland told TechCrunch. “Our rewards platform allows companies to customize the incentive, but we provide nearly 100 recommendations. We’re showing an amazing ROI for companies that have adopted the program since we’re targeting high-cost procedures.”

The second new service is called HealthJoy EAP, an employee assistance program that Holland says is a priority for further development. It gives 24/7 access to short-term counseling, with several sessions available for free.

“Addressing mental heath is of extreme importance for companies in today’s world. Access to traditional counseling is on decline in many rural areas due to lack of access. In cities, costs have risen so many users are priced out of the market,” he says.

The funding will also be used to improve HealthJoy’s virtual assistant, develop new services, integrate with more partners and aggregate data. HealthJoy plans to add 200 employees in its Chicago office during 2021, with the goal of doubling its engineering team. Future plans include working with more small- to medium-sized businesses and a potential partnership to serve Medicare recipients.

Other startups focused on employee benefits include League, Catch and Collective Health. Holland says HealthJoy integrates with, instead of competing with, benefits administration platforms and differentiates by being able to work with any benefits package.

Health Velocity Capital partner Saurabh Bhansali will join HealthJoy’s board of directors. In a press statement, Bhansali said “HealthJoy offers proven technology solutions to help navigate employees through our nation’s complex and costly healthcare system, one that costs US employees over $1.2 trillion each year. Healthjoy has shown that it can deliver substantial cost savings to employers while simplifying the employee healthcare experience.”

Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million

Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.

The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times  published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank  Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.

EV fleet management gets another venture-backed contender as Electriphi raises $3.5 million

Electriphi, a provider of charging management and fleet monitoring software for electric vehicles, has joined the scrum of startups looking to provide services to the growing number of electric vehicle fleets in the U.S.

The San Francisco-based company has just raised $3.5 million in seed funding from investors including Wireframe Ventures, the Urban Innovation Fund, and Blackhorn Ventures. Lemnos Labs and Acario Innovation also participated in the round.

Electriphi’s pitch has resonated with school districts. It counts the Twin Rivers Unified School District in Sacramento, Calif. as one of its benchmark customers.

“Twin Rivers Unified School District has the largest fleet of electric school buses in North America, and our ambition is to transition to a fully electric fleet in the coming years,” said Tim Shannon, transportation services director, Twin Rivers Unified School District, in a statement. “This is a significant undertaking, and we needed a trusted partner that could provide us state-of-the-art charging management and help us with data collection and monitoring.”

There are several companies pursuing this market — all with either a bit of a head start, significant corporate backers, or more capital. Existing offerings from EVConnect, GreenLots,  GreenFlux, AmplyPower all compete with Electriphi.

The company is betting that the experience of co-founder, Muffi Ghadiali, a former senior director at ChargePoint who led hardware and software development for fast charging infrastructure, can sway customers. Joining Ghadiali is Sanjay Dayal, who previously worked at Agralogics, Tibco, Xamplify, Versata and Sybase

There’s also the sheer scale of the opportunity, which is likely to see multiple companies emerge as winners.

“There are millions of public and commercial fleet vehicles in the U.S. alone that we rely on daily for transportation, delivery and services, ” said Paul Straub, managing partner, Wireframe Ventures. “Many of these are beginning to consider electrification and the opportunity is tremendous.”

The Org nabs $8.5M led by Founders Fund to build a global database of company org charts

LinkedIn has cornered the market when it comes to putting your own professional profile online and using it to network for jobs, industry connections and professional development. But when it comes to looking at a chart of the people, and specifically the leadership teams, who make up organizations more holistically, the Microsoft-owned network comes up a little short: you can search by company names, but chances are that you get a list of people based on their connectivity to you, and otherwise in no particular order (including people who may no longer even be at the company). And pointedly, there is little in the way of verification to prove that someone who claims to be working for a company really is.

Now, a startup called The Org is hoping to take on LinkedIn and address that gap with an ambitious idea: to build a database (currently free to use) of organizational charts for every leading company, and potentially any company in the world, and then add on features after that, such as job advertising, for example organizations looking to hire people where there are obvious gaps in their org charts.

With 16,000 companies profiled so far on its platform, a total of 50,000 companies in its database and around 100,000 visitors per month, The Org is announcing $11 million in funding: a Series A of $8.5 million, and a previously unannounced seed round of $2.5 million.

Led by Founders Fund, the Series A also includes participation from Sequoia and Balderton, along with a number of angels. Sequoia is actually a repeat investor: it also led The Org’s $2.5 million seed round, which also had Founders Fund, Kevin Hartz, Elad Gil, Ryan Petersen, and SV Angel in it. Keith Rabois, who is now a partner at Founders Fund but once held the role of VP of business and corporate development at LinkedIn, is also joining the startup’s board of directors.

Co-headquartered in New York and Copenhagen, Denmark, The Org was co-founded by Christian Wylonis (CEO) and Andreas Jarbøl, partly inspired by a piece in online tech publication The Information, which provided an org chart for the top people at Airbnb (currently numbering 90 entries).

“This article went crazy viral,” Wylonis said in an interview. “I would understand why someone would be interested in this outside of Airbnb, but it turned out that people inside the company were fascinated by it, too. I started to think, when you take something like an org chart and made it publicly facing, I think it just becomes interesting.”

So The Org set out to build a bigger business based on the concept.

For now, The Org is aimed at two distinct markets: those outside the company who might most typically be interested in who is working where and doing what — for example, recruiters, those in human resources departments who are using the data to model their own organizational charts, or salespeople; and those inside the company (or again, outside) who are simply interested in seeing who does what.

The Org is aiming to have 100,000 org charts on its platform by the end of the year, with the longer-term goal being to cover 1 million. For now, the focus is on adding companies in the US before expanding to other markets.

But while the idea of building org charts for many companies sounds easy enough, there is also a reason why it hasn’t been done yet: it’s not nearly as simple as it looks. That is one reason why even trying to surmount this issue is of interest to top VCs — particularly those who have worked in startups and fast-growing tech companies themselves.

“Today, information about teams is unstructured, scattered, and unverified, making it hard for employees and recruiters to understand organizational structures,” said Roelof Botha, partner at Sequoia Capital, in a statement.

“Organizational charts were the secret weapon to forging partnerships during my 20 years as an entrepreneur in Silicon Valley and Europe. Yet, they are a carefully guarded secret, which have to be painstakingly put together by hand,” said Lars Fjeldsoe-Nielsen, general partner at Balderton Capital, in a statement. “The Org is surfacing this critical information, improving efficiency from the sales floor to the boardroom.”

“Up-to-date org charts can be useful for everything from recruiting to sales, but they are difficult and time consuming to piece together,” added Rabois in a statement. “The Org is making this valuable information easily accessible in a way we were never able to do at LinkedIn.”

The approach that The Org is taking to building these profiles so far has been a collaborative one. While The Org itself might establish some company names and seed and update them with information from publicly available sources, that approach leaves a lot of gaps.

This is where a crowdsourced, wiki-style approach comes in. As with other company-based networking services such as Slack, users from a particular company can use their work email addresses to sign into that organization’s profile, and from there they can add or modify entries as you might enter data in a wiki — the idea being that multiple people getting involved in the edits helps keep the company’s org chart more accurate.

While The Org’s idea holds a lot of promise and seems to fill a hole that other companies like LinkedIn — or, from another direction, Glassdoor — do not address in their own profiling of companies, I can see some challenges, too, that it might encounter as it grows.

Platforms that provide insights into a company landscape, such as LinkedIn or Glassdoor, are ultimately banked more around individuals and their own representations. That means that by their nature these platforms may not ever provide complete pictures of businesses themselves, just slices of it. The Org, on the other hand, starts from the point of view of presenting the company itself, which means that the resulting gaps that arise might be more apparent if they never get filled in, making The Org potentially less useful as a tool.

Similarly, if these charts are truly often closely guarded by companies (something I don’t doubt is true, since they could pose poaching risks, or copycats in the form of companies attempting to build org structures based on what their more successful competitors are doing), I could see how some companies might start to approach The Org with requests to remove their profiles and corresponding charts.

Wylonis said that “99%” of companies so far have been okay with what The Org is building. “The way that we see it is that transparency is of interest to the people who work there,” he said. “I think that everyone should strive for that. Why block it? The world is changing and if the only way to keep your talent is by hiding your org chart you have other problems at your company.”

He added that so far The Org has not had any official requests, “but we have had informal enquiries about how we get our information. And some companies email us about changes. And when an individual person gets in touch and says, ‘I don’t want to be here,’ we delete that. But it’s only happened a handful of times.” It’s not clear whether that proportion stays the same, or goes up or down, as The Org grows.

In the meantime, the other big question that The Org will grapple with is just how granular should it go?

“I hope that one day we can have an updated and complete org chart for every business, but that might prove difficult,” Wylonis said. Indeed, that could mean mapping out 1 million people at Walmart, for example. “For the biggest companies, it may be that it works to map out the top 500, with the top 30-40 for smaller companies. And people can always go in and make corrections to expand those if they want.”

Well, Bill Gates is never going to buy a Tesla now

Elon Musk is not one to mince words, but he may have just lost a potential customer because of a cutting tweet.

That customer is renowned big deal Bill Gates, who sat down recently with YouTuber Marques Brownlee, who joined the platform in 2009 and has amassed more than 10 million viewers. Gates and Brownlee have met before, and the idea was to have Gates discuss some of what the Bill & Melinda Gates Foundation has planned for this year, which marks the 20th anniversary of the organization.

Unsurprisingly, the conversation touched on climate change and in pretty short order sustainable transportation, with Brownlee bringing up Tesla and asking if, when “premium” electric cars grow more affordable, they’ll also become more ubiquitous.

Gates didn’t exactly malign Tesla with his answer, telling Brownlee: “The premium today is there, but over the next decade — except that the [mileage] range will still be a little bit less — that premium will come to zero. [When we look at all the sectors addressing climate change] passenger cars is certainly one of the most hopeful, and Tesla, if you had to name one company that’s help drive that, it’s them.”

What Gates did next, however, did not sit well with Musk, apparently. He expressed excitement about his first new electric car, which happens not to be a Tesla.

Said Gates: “Now all the car companies, including some new ones, are moving super fast to do electric cars. The biggest concern is, will the consumers overcome that range anxiety? I jut got a Porsche Taycan, which is an electric car. I have to say, its a premium price car, but it’s very, very cool. That’s my first electric car and I’m enjoying it a lot.”

Musk felt compelled to weigh in with a  tweet after learning about the exchange.

Specifically, a Twitter account associated with an unofficial Tesla newsletter, tweeted “a lot of people are going to watch the interview and they are going to trust Bill’s word for it and not even consider EVs. Why? Because Bill Gates is a really smart guy!”

To which Musk responded, “My conversations with Gates have been underwhelming tbh.”

My conversations with Gates have been underwhelming tbh

— Elon Musk (@elonmusk) February 18, 2020

It’s funny, because they are both billionaire geniuses, and it’s unexpected.

It’s also nasty enough that you might guess that Gates — a car collector who has said his first splashy purchase after founding Microsoft was a Porsche 911 supercar — won’t be buying a Tesla or talking up the company again any time soon.

Voodoo Games thrives by upending conventional product design

Will Robbins
Contributor

Will Robbins is an early-stage investor at Contrary.
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Voodoo Games is one of the most interesting startups alive today. In mid-2018, it had 150 million MAUs and raised $200 million from Goldman Sachs, yet I’ve never heard anyone mention the company. That might be normal for an obscure enterprise SaaS play, but Voodoo is consumer-facing through and through.

Quantitative success aside, Voodoo upends much of the conventional thinking about product design and gaming. If it can do it, how can similar strategies apply to other products?

But first, some background: What is Voodoo Games?

Voodoo is best described as a product conglomerate. Take a look at its App Store page. It has dozens of generic-looking apps. The basic playbook is:

  • Quickly build a relatively low-quality, single-purpose game.
  • Make sure one mechanic is really fun. It doesn’t matter if users churn 20 minutes after downloading it.

Oyo’s revenue surged in FY19, but loss widened, too

Budget-lodging startup Oyo reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019, and pledged to cut down on its spending as the India-headquartered startup grows more cautious about its aggressive expansion.

The six-year-old startup’s growing revenue, up from $211 million in financial year ending March 31, 2018, is in line with the company’s ambitions to be in a clear path to profitability this year, said Abhishek Gupta, Global CFO of OYO Hotels & Homes, in a statement.

But the startup’s loss has widened, too. Its consolidated loss increased from 25% in FY18 to 35% in FY19, it said. In India, where Oyo clocked $604 million in revenue in FY19, it was able to reduce its loss to 14% (from 24%) of revenue in FY19 to $83 million.

The startup, which today operates more than 43,000 hotels with over a million rooms in 800 cities in 80 nations, said its expansion to China and other international markets contributed to the loss.

“These markets constituted 36.5% of the global revenues. While consistently improving operating economics in mature markets like India where it’s already seeing an improvement in gross margins, the company is determined to bring in the same fiscal discipline in emerging markets in the coming financial year,” the startup said in a statement.

Oyo has come under scrutiny in recent months for its aggressive expansion in a manner that some analysts have said is not sustainable. The startup, which rebrands and renovates independent budget hotels, has also engaged in sketchy ways to sign up new hotels, as documented by the New York Times earlier this year.

In recent months, Oyo executives have acknowledged that the startup grew too fast and is confronting a number of “teething issues.” Oyo has laid off at least 3,000 employees, mostly in India, in last three months.

Local Indian laws require every startup to disclose their annual financials. Most of them filed their financials in early October.

More to follow shortly…

Can we debate free will versus destiny in four pages?

The informal TechCrunch book club (which is now a whole week off schedule thanks to the news cycle — let’s see if we can catch up here shortly!) is now venturing into the very, very short story What’s Expected of Us, the third piece in Ted Chiang’s Exhalation collection. If you’re one of those people that fall behind in book clubs, don’t fret: you’ve had two weeks to read four pages. You can probably read the short story before finishing this post.

If you haven’t already, be sure to check out the previous editions of this book club which explores the first two (larger) short stories in the collection, The Merchant and the Alchemist’s Gate, a beautiful story exploring predestination and fate, and Exhalation, a vital yet subtle story about climate change, the connections between people and society, and so, so much more.

Next, we will read the lengthier story The Lifecycle of Software Objects — some reading questions are posted at the bottom of this article.

Some further quick notes:

  • Want to join the conversation? Feel free to email me your thoughts at danny+bookclub@techcrunch.com or join some of the discussions on Reddit or Twitter.
  • Follow these informal book club articles here: https://techcrunch.com/book-review/. That page also has a built-in RSS feed for posts exclusively in the Book Review category, which is very low volume.
  • Feel free to add your comments in our TechCrunch comments section below this post.

What’s Expected of Us

We are only three stories into Exhalation, but already there are threads that are starting to connect these disparate stories, none more important than the meaning of fate in lives increasingly filled with technological determinism.

Chiang loves to presuppose these novel technologies that prove that our fates are fixed. In The Merchant and the Alchemist’s Gate, he imagines these teleporting gates that allows users to move forward and backwards in time, while in this story, it is the Predictor that sends a light signal back in time by one second after the button is clicked, forcing the device’s user to confront the fact that the future is already predetermined when the light burns bright.

While these two stories have certain symmetries, what’s interesting to me is how different their conclusions are from each other. In The Merchant and the Alchemist’s Gate, Chiang notes that while our destinies may be fixed, and even if we had a time machine, we couldn’t change the past to affect our futures, he essentially argues that the journey itself is often its own reward. The past may indeed be immutable, but our understanding of the past is in fact quite malleable, and learning the context of our previous actions and those of others is in many ways the whole point of existence.

In What’s Expected of Us though, the Predictor creates a dystopic world where lethargy among people runs supreme. Here’s a simple device that transmits a basic signal across a short period of time, but provides overwhelming evidence that free will is essentially a myth. For many, that’s enough for at least some people to become catatonic and just stop eating entirely.

Our occasional fiction review contributor on Extra Crunch Eliot Peper wrote in with his favorite passage and a thought, which gets at one of Chiang’s solutions:

“Pretend that you have free will. It’s essential that you behave as if your decisions matter, even though you know they don’t. The reality isn’t important; what’s important is your belief, and believing the lie is the only way to avoid a waking coma. Civilization now depends on self-deception. Perhaps it always has.”

As science reveals a clockwork determinism behind reality’s veil, it becomes ever more important for us to believe the opposite in order to build a better future. A belief in free will is enfranchising. It is the spark of hope that inspires us to push back against the invisible systems that shape our lives — creating a chance for change.

Peper gets at the core message of this story, but frankly, self-deception isn’t easy (as any less-than-perfectly-confident startup founder who has attempted to persuade investors about their product can tell you). It’s one thing to say “pretend it all doesn’t matter,” but of course it does matter, and you intrinsically acknowledge and comprehend the deception. It’s like that self-help dreck about setting artificial deadlines to get stuff done — yet their very artificiality is precisely why they are ineffective. As Chiang writes about the Predictor, “The person may appear to lose interest in it, but no one can forget what it means; over the following weeks, the implications of an immutable future sink in.” Fate locks into our very souls.

Chiang notes though that people respond differently to this realization. Some become catatonic, but it is implied in the story that others find a different path. Of course, those paths are all laid out before the Predictor even arrived — no one can choose their destiny, even about how they will confront the knowledge of fate and destiny itself.

Yet, even without that choice, we must move on. Structurally, the story (similar again to The Merchant and the Alchemist’s Gate) is told retrospectively, with a future agent sending a note back in time warning about the consequences of the Predictor. Rhetorically asking whether anything would change by this note, the future agent says no, but then says that “Why did I do it? Because I had no choice.”

In other words, maybe everything is indeed predetermined. Maybe everything in our lives can’t be changed. And yet, we are still going to move forward in time, and we are still going to take the actions we are predetermined to make. Maybe that requires self-deception to muddle through it. Or maybe, we just need to vigorously commit to the actions in front of us — regardless of whether we had the ability to choose them in the first place.

The Lifecycle of Software Objects

The next short story in the collection is a bit more sprawling, touching on a huge numbers of topics around virtual worlds, the entities we raise in them, and what that means for us as humans. Here are some questions to think about as you read the story:

  • What’s it mean to love something? We understand love in the context of (human) children, but can you love an AI? Can you love an inanimate object like a statue? Is there a line when our ability to love stops?
  • What makes an entity sentient? Does it take experience delivered from others, or can sentience be constructed out of thin air?
  • Chiang sometimes fast-forwards time in a variety of different circumstances: hothouses to accelerate AI learning, and for the human characters themselves in the plot. What is the meaning of time in the context of the story? How do the concepts of time and experience interact?
  • The author touches on but doesn’t deeply explore the legal questions around “human rights” in the context of sentient AI beings. How should we think about what rights these entities have? Which characters’ views best represented your own?
  • How can we define concepts like consciousness, sentience, and independence? What elements of the story seem to indicate where Chiang defines the boundaries between those definitions?
  • One of the central under-tones of the plot is the challenge of money and the profitability of AI. Should AI be judged in terms of the utility it provides humans, or the ability of AI to create their own worlds and cultures? How do we think about “success” (very broadly conceived) in the context of what these computer programs can do?
  • How will human empathy change in the coming years as we surpass the uncanny valley and more and more technologies connect with our emotional heartstrings? Is this ultimately an evolution for humanity or just another challenge to overcome in the years ahead?