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  • Why Twitter anons are sending crypto to celebrities

    Welcome back to Chain Reaction.

    Last week, we talked about a hack that gave new, ironic meaning to the word “trustless.” This week, we’ll get into one of the most polarizing aspects of crypto — privacy.

    If someone forwarded you this message, you can subscribe on TechCrunch’s newsletter page.


    all mixed up

    A weekly window into the thoughts of senior crypto reporter Anita Ramaswamy:

    Tornado Cash has been the talk of the town this week in crypto circles. The U.S. government’s Office of Foreign Asset Control (OFAC), a watchdog within the Treasury, leveled sanctions against the cryptocurrency mixer for its role in helping facilitate money laundering. North Korean-backed hackers, among others, have used the Tornado Cash platform to mask stolen crypto associated with some of the highest-profile hacks in web3 to date, including last week’s Nomad heist and the hack of play-to-earn video game Axie Infinity earlier this year.

    But in imposing sanctions, OFAC was essentially using a sledgehammer to crack a nut. The agency’s official notice on the topic said that the platform had facilitated $7 billion worth of money laundering — which happens to be the total value of crypto assets that have been sent through Tornado Cash since it was created in 2019. Meanwhile, blockchain analytics provider Elliptic says only ~$1.5 billion of funds on Tornado are actually linked to crime, including ransomware attacks and fraud. The rest, Elliptic argues, could include “legitimate uses of mixers such as Tornado, such as to preserve financial privacy.”

    So what are some of those legitimate uses? One example came from Ethereum co-founder Vitalik Buterin, who confessed on Twitter that he has used the service to send donations to aid Ukraine securely without the knowledge of the Russian government.

    The OFAC’s dictum does not differentiate between criminal and legitimate use cases, though. As a result, many law-abiding crypto users are likely suffering. Two major crypto infrastructure providers, Alchemy and Infura, blocked access to their API from any wallets that used Tornado Cash. Circle has reportedly frozen ~$75,000 worth of its USDC stablecoins that were connected to Tornado through a shared wallet, according to Dune Analytics data.

    Of course, internet pranksters got in on the fun, as is usually the case in the crypto world. Some have been sending crypto through Tornado Cash to known wallets held by celebrities such as Jimmy Fallon and Shaquille O’Neal in an attempt to troll them by getting their wallets banned under the sanction rules.

    OFAC’s heavy-handed action comes across as a bungled approach that raises more questions than it resolves when it comes to enforcement. Only time will tell how the latter plays out, but in the meantime, the crypto community is, understandably, pretty upset.


    the latest pod

    This week on Chain Reaction, Jacquelyn and Anita ran the show while Lucas was on vacation. Jacquelyn was coming off of an exciting Friday night call with Vitalik himself, so she shared some of his comments on where crypto is headed. 

    We then dove into the news of Tornado Cash getting sanctioned in the U.S., Coinbase’s disappointing second-quarter earnings and the beef between Binance and India’s largest crypto exchange, WazirX, over a transaction that supposedly took place two and a half years ago (or did it)?

    Be sure to give it a listen to get up to speed on the latest tea in crypto and tune in next Tuesday for Anita and Lucas’s conversation with Li Jin, a web3 investor focused on the creator economy at Variant Fund.

    Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to keep up with us every week.


    follow the money

    Where startup money is moving in the crypto world:

    1. Jump Crypto led Injective‘s $40 million round to help expand DeFi applications.
    2. Pinata raised $21.5 millon in a newly announced Series A and seed round from investors, including Greylock and Pantera.
    3. CreatorDAO, a decentralized platform for content creators, raised $20 million in an a16z and Initialized Capital-led round with participation from celebrities including Paris Hilton and Liam Payne.
    4. Blockchain gaming company Lysto raised $12 million in a round led by Hashed, Square Peg and Beenext.
    5. Unstoppable Finance snagged $12.8 million in a round led by Lightspeed for its DeFi wallet.
    6. Kurtosis, a crypto-focused developer tool system, brought in $20 million in a Series A round led by Coatue.
    7. Blockchain payments platform Ansible Labs raised a $7 million seed round led by Archetype.
    8. Zero-knowledge cryptography startup RISC Zero scooped up $12 million in a seed round led by Bain Capital Crypto.
    9. Fair.xyz landed $4.5 million from investors including OpenSea for its NFT minting platform.
    10.  Cashmere raised $3 million at a $30 million valuation from investors including Coinbase Ventures to build a Solana enterprise wallet.

    TC+ analysis

    Here’s some of this week’s crypto analysis available on our subscription service TC+ from senior reporter Jacquelyn Melinek

    5 takeaways from Coinbase’s disappointing Q2 results 

    Coinbase, once hugely profitable in the wake of its 2021 direct listing thanks to a run in crypto-related trading activities, is now working to limit costs and brave the ongoing “winter” in its market and stick to prior profitability targets for the full year. What follows are five takeaways from Coinbase’s report that stood out to TC’s Alex Wilhelm and Ram Iyer. 

    As Telegram grows in size, so does crypto traders’ dependence on the app

    The crypto community has relied on social media sites like Twitter or messaging apps like Discord and Telegram to interact. But some say Telegram is the ultimate hub for communication and information — an imperative place to be in the crypto community. “Telegram usage is the bedrock of the crypto community,” the founder of Telegram channel unfolded, who goes by the username nakamotocat, said to TechCrunch. “Projects have come and go, players have risen and fallen, but much of the discourse between various projects and market participants resides on Telegram, and that remains a constant.”

    Ethereum co-founder sees role diminishing as blockchain becomes increasingly decentralized

    As the layer-1 blockchain Ethereum continues to focus on a road map toward greater decentralization, its co-founder, Vitalik Buterin, thinks that moment might come sooner than expected. Also looking to the future, Buterin thinks the next decade will be pivotal for crypto. “I think in general, the next 10 years, crypto has to transform into something that is not based on promises of being useful in the future but is actually useful.”

    Solana co-founder says NFTs have ‘50 different use cases’ that can onboard millions this year

    It feels like yesterday that the NFT boom captured the attention of the crypto community, making waves even outside the web3 world. But a year or so down the line, the NFT hype has somewhat died down. But that isn’t stopping some in the crypto world from staying optimistic about non-fungible tokens. “I think within NFTs, everything is just really scratching the surface,” Raj Gokal, co-founder of Solana, told TechCrunch. “I think NFTs have 50 different use cases that seem to be lumped into one. I think we expect the majority of the [crypto] projects to make use of NFTs.” 


    Thanks for reading! And — again — to get this in your inbox every Thursday, you can subscribe on TechCrunch’s newsletter page.


    Author: Anita Ramaswamy
    Posted: 14 August 2022, 3:25 pm

  • Why more fintechs may be going the debt financing route

    Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

    More debt financings means flat is the new up

    Last week, I wrote about Founderpath, an Austin-based company that offers debt financing to B2B startups.

    As I started thinking about debt and credit facilities as increasingly attractive alternatives for startups who are seeking capital — especially during a downturn such as the one we are currently experiencing — I realized that the number of companies that were securing debt capital or credit facilities appeared to be on the rise. This could be for any number of reasons. Some founders might be struggling to raise venture dollars, while others don’t want to — preferring not to dilute ownership.

    On August 8, Mexico City–based expense management startup Clara announced it had been approved for financing from Goldman Sachs for up to $150 million. The facility, it said, would allow Clara to continue to grow its corporate card, accounts payables and short-term financing offerings for businesses in LatAm. The company says it’s currently working with over 5,000 businesses across Mexico, Brazil and Colombia with ambitions to double that number by year’s end. Notably, Clara was believed to be valued at about $130 million at the time of a $30 million raise in May of 2021. Just eight months later, it had raised a Coatue-led $70 million Series B and achieved unicorn status.

    Here in the U.S., Yieldstreet announced on August 11 that it had secured a $400 million warehouse facility from Monroe Capital LLC. A spokesperson from the alternative investment startup told me that the financing is the largest of its kind to date for Yieldstreet. In June of 2021, I covered Yieldstreet’s $100 million Series C at “near unicorn” status. In announcing its latest financing, the company said it has had more than 400,000 users since its 2015 inception and more than $3 billion in funding across an ever-evolving suite of investment products. The spokesperson also told me: “This isn’t normal corporate debt — it uses a warehouse facility, which means it is targeted to support the creation of new funds and products for Yieldstreet’s platform — growing the number of available investments for users, rather than general ops or expenses.”

    A quick note about the difference between warehouse facilities and debt financings — debt is lending capital for operating reasons. Warehouse facilities are essentially a line of credit.  (Thanks to TC+ editor and resident finance expert Alex Wilhelm for the lesson.)

    Healy Jones, VP of FP&A at Kruze Consulting, noticed my recent tweet about seeing a lot of debt financings and shared the following via email:

    “Lots of reasons this is happening, but a big one is the drop in equity valuations is driving founders to find less dilutive ways to extend runway in the hopes that they can grow into at least a flat round.”

    Kruze COO Scott Orn, who used to be a partner at a venture debt fund, added his own thoughts via email:

    • You have to plan ahead for venture debt. Put it in place relatively soon after an equity financing. That way there is no adverse selection for the lenders; everyone (founders, VCs and lenders) around the table is happy at that time. If you try to put something in place with less than six months of cash, you will not be able to get debt. If you put it in place after an equity round, you can draw it down way into the future — that’s called a forward commitment/drawdown. That gives the startup a lot of optionality.
    • It’s super important to understand all the terms. Often, founders don’t realize there are things like funding MACs, investor abandonment clauses, etc. These terms can be used by the lender to block the startup from either drawing down the money or creating a default after the money has been drawn. Either way, the company is in trouble and can’t count on the capital. So you really need to know your lender, have your VCs know your lender and pay attention to your terms. This is why we created the Sample Venture Debt Term Sheet, to explain all the terms.
    • Don’t borrow your own money. Often lenders will structure a deal with a lot of covenants, including minimum cash requirements. For example, they will lend you $4 million if you keep $2 million in the bank at all times. In that case, you’re really only getting $2 million of new capital. Furthermore, the threat of an investor abandonment or MAC clause can keep you from really using the money as well.
    • While startup interest in venture debt is up a lot, lenders are getting more conservative. Across the board, startups are asking us about venture debt way more often. Simultaneously, when I talk to the lenders, they are reducing the dollar sizes of new commitments, reducing interest-only periods, asking for more warrants and being much more picky about which startups to lend capital to.

    On my end, I know of at least two other fintechs planning to announce debt raises and/or credit facilities in coming weeks. So, this definitely feels like a trend.

    For other TC coverage on this topic, head here and here.

    Spotlight on Africa

    On August 10, TC’s man on the ground in Nigeria, Tage Kene-Okafor, wrote about fintech TeamApt raising over $50 million in a funding round led by U.S.-based QED Investors.  As Tage wrote: “In a move rarely made by Western VCs, QED announced the hiring of Gbenga Ajayi and Chidinma “Chid” Iwueke to lead its investments in Africa this January. Nigel Morris, the firm’s co-founder and managing partner, in an interview with TechCrunch, said Africa was the final piece of the puzzle for transforming QED into a global fintech-specialist VC firm.”

    I thought this was so interesting, I asked Tage if he could elaborate on the significance of this news. Below are his thoughts:

    The most funded and well-known fintechs in Africa have western elements in their business: payments gateways, cross-border and digital banking plays. TeamApt, with its agency banking business, is one of the few fintechs outside this category.

    Here’s a summary of the business. Nigeria has an average of 4.8 bank branches and 19 ATMs per 100,000 adults, compared to the world average of 13 bank branches and 40 ATMs. Reports also say that less than one-third of Nigerian adults have access to a bank branch or ATM within one kilometer of where they live. This challenge in accessing financial services, especially for the unbanked and underbanked, has given rise to agency banking, a branchless banking model that extends financial services to the last mile via a network of agents and POS machines.

    It’s a localized solution that foreign investors might be unfamiliar with. Square is the closest resemblance in the U.S. regarding merchants’ involvement and a point-of-sale angle. But it doesn’t quite capture the complete picture. Therefore it’s not strange to see that investments poured into the space have primarily come from homegrown or Africa-focused investors (Chinese-backed OPay is an exception).

    So QED Investors’ first Africa involvement, right off the bat, in TeamApt comes as a big win for the agency banking space and the local tech scene in general. Why? Because the deal wouldn’t have happened if QED didn’t take the bold step of hiring on-the-ground local expertise that understands the market.

    Western VCs have dedicated funds and established local offices in emerging markets like Latin America and Southeast Asia, yet they remain hesitant to do the same for Africa. To them, what’s convenient, for now, is testing the market by tossing a few million dollars into a handful of startups and seeing how they pan out. It’s an all right strategy; however, with the current market downturn, most of these firms will be less inclined to continue as they concentrate on their core markets. So thumbs up to QED, again, for being bullish regardless.

    And if you don’t already, follow Tage’s work! He is awesome. For more on Africa’s venture scene, head here.

    Weekly News

    From TC’s Lauren Forristal: “Amazon’s ‘One’ palm scanner payment technology will be launching at over 65 Whole Foods stores in California. This is the biggest rollout to date, with stores in Malibu, Montana Avenue, Santa Monica, Los Angeles, Orange County, Sacramento, the San Francisco Bay Area, and Santa Cruz receiving the tech that aims to modernize retail shopping.” More here.

    From TC Contributor Vadym Synegin: “Ukrainians have often pioneered market-leading companies and built products that positively impact society, especially in the fintech sector. Despite the hurdles of war, the Ukrainian fintech community is working to create better infrastructure and regulation for the country, which can attract valuable companies and institutional investors from different backgrounds.” Read “5 reasons why Ukraine’s fintech sector is growing despite war” here.

    Real estate technology startup Homeward, which in May of 2021 raised $136 million in a Series B funding round led by Norwest Venture Partners at a valuation “just north of $800 million” and secured $235 million in debt, has laid off 20% of its workforce. Reports Real Trends: “‘Buy before you sell’ firm Homeward has laid off roughly 20% of its workforce, according to a letter from CEO Tim Heyl to employees…Despite recording what Heyl calls the firm’s “strongest month ever” in May and solid second quarter results, “Heyl said the market shift was more sudden than anticipated, forcing the firm to make cuts.” At the time of its May 2021 raise, the company had 203 employees, so based on that, Homeward potentially let go of about 40 people.

    Fundings and M&A

    Seen on TechCrunch

    Truework, which helps lenders verify borrowers’ income and employment, raises $50M

    Farther, a wealth tech firm, banks $15M Series A as valuation hits $50M

    Finix raises $30 million as fintech’s spotlight picks its sides. The startup earlier this year announced that it was becoming a payments facilitator, in addition to enabling other companies to facilitate payments. The move puts it in direct competition with Stripe.

    And elsewhere

    DD360 receives $91 million to boost its proptech and fintech offering in Mexico

    Modern Life bags $15 million to back insurance advisors

    Financial Venture Studio (FVS) closes $40 million Fund II — A spokesperson told me via email that “the fund continues to outperform…Fund I is up 4x.” In February, TechCrunch reported that FVS had named Cameron Peake, a former startup founder and advisor, as its newest partner.

    Food stamp-focused Forage raises $22 million — TechCrunch first covered Forage emerging from stealth in March.

    Well, that’s it for this week. I don’t know about you, but it feels like this summer just flew by. I’m not ready for it to end… Until next time, xoxoxo Mary Ann


    Author: Mary Ann Azevedo
    Posted: 14 August 2022, 2:16 pm

  • Twilio gets hacked, teens ditch Facebook, and SpaceX takes South Korea to the moon

    Hi again! Welcome back to Week in Review, the newsletter where we quickly recap the top stories from TechCrunch dot-com this week. Want it in your inbox every Saturday? Sign up here.

    Is Facebook for old people? If you’ve got a teenager around the house, you’ve probably heard them say as much. The most read story this week is on a Pew study that suggests this generation of teens has largely abandoned the platform in favor of Instagram/YouTube/TikTok/etc.; whereas in 2014 around 71% of teens used Facebook, the study says in 2022 that number has dropped down to 32%.

    other stuff

    Mark Cuban sued over crypto platform promotion: “A group of Voyager Digital customers filed a class-action suit in Florida federal court against Cuban, as well as the basketball team he owns, the Dallas Mavericks,” writes Anita, “alleging their promotion of the crypto platform resulted in more than 3.5 million investors losing $5 billion collectively.”

    A troubling layoff trend: While tech layoffs might, maybe, hopefully be showing signs of slowing, Natasha M points out a troubling trend: some companies are announcing layoffs only to announce another round of layoffs just weeks or months later.

    SpaceX launches South Korea’s first moon mission: South Korea has launched its first-ever lunar mission — a lunar orbiter “launched atop a SpaceX Falcon 9 rocket” ahead of plans to land on the surface some time in 2030.

    Twilio gets hacked: While it’s unclear exactly what data was taken, Twilio says the data of at least 125 customers was accessed after some of its employees were tricked “into handing over their corporate login credentials” by an intense SMS phishing attack.

    Amazon’s bizarre new show: Think “America’s Funniest Home Videos,” but made up of user-submitted footage from Ring security cameras. By now most people probably realize their every step is recorded on a security camera or three — but doesn’t embracing it as Entertainment™ like this feel kind of…icky?

    Haus hits hard times: Haus, a company that ships specialized low-alcohol drinks direct to consumers, is looking for a buyer after a major investor backed out of its Series A. The challenge? Investor diligence for an alcohol company can take months, and Haus just doesn’t “have the cash to support continued operations at this time.”

    woman pouring wine

    Image Credits: Haus

    audio stuff

    How clean is the air you breathe every day? Aclima co-founder Davida Herzl wants everyone to be able to answer that question, and sat down with Jordan and Darrell on this week’s Found podcast to explain her mission. Meanwhile on Chain Reaction, Jacquelyn and Anita explain the U.S. gov’s crackdown of the cryptocurrency mixer Tornado Cash, and the Equity crew spent Wednesday’s show discussing whether the turbulent market conditions of late will mean we see fewer early-stage endeavors in the months ahead.

    additional stuff

    What lies behind the paywall? A lot of really good stuff! Here’s what TechCrunch+ subscribers were reading most this week…

    Building an MVP when you can’t code: Got a great idea but can’t code? You can still get the ball rolling. Magnus Grimeland, founder of the early-stage VC firm Antler, lays out some of the key principles to keep in mind.

    Are SaaS valuations staging a recovery?: “…the good news for software startup founders,” writes Alex, “is that the period when the deck was being increasingly stacked against them may now be behind us.”

    VCs and AI-powered investment tools: Do VCs want AI-powered tools to help them figure out where to put their money? Kyle Wiggers takes a look at the concept, and why not all VCs are on board with it.


    Author: Greg Kumparak
    Posted: 13 August 2022, 8:16 pm

  • You’re not that special (I swear, there’s a startup angle here)

    Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

    For longtime Startups Weekly readers, you’ll remember that edtech used to be my primary beat. Like, day one beat. Most of my coverage was focused on edtech’s rise in the early innings of the pandemic, the unicorn mad rush and even some IPOs. Duolingo continues to be the company that I know the most about, mostly because I wrote thousands of words about its savvy owl and wild founding story.

    While I’m more focused on fintech these days, I was curious if edtech is still a big deal or if the sector — like most during the downturn — is facing a reset. This week, I interviewed seven leading venture capitalists who have a focus on education technology to better understand how the sector is faring during the downturn.

    The big takeaway? Edtech is facing a reality check in the form of discipline. Investors explained that the whole startup ecosystem is slower this year; edtech is no different. If anything, as USV’s Rebecca Kaden put it, “The boom in the category in the last couple years means most of our education-focused portfolio is funded quite well [ … ] rounds would be opportunistic rather than out of need, and most are focused on building their businesses for the next couple years.”

    As Kaden describes, it’s time to focus and edtech, luckily, has the capital to do it. It makes me think a bit about advice that my friend often gives our friend group: We’re not that special, and that’s a good thing. He means in the kindest way, and the lesson there is that feelings of change, stress or anxiety are not as deep as we may think when we first feel them. What we’re experiencing is shared by other people in their mid-20s, or, well, other sectors in startup land right now. All that matters is if you’ve invested in yourself long enough before the spotlight turns on that when the lights go down, you’re still there. Just quieter and maybe focused a bit more on backstage.

    Anyway, for the full survey, read my TechCrunch+ piece: “7 investors discuss why edtech startups must go back to basics to survive.” You can also check out my accompanying analysis, “Edtech isn’t special anymore, and that’s a good thing.” 

    In the rest of this newsletter, we’ll get into one Haus’ closed doors, SoftBank execution fund and a pitch deck teardown you don’t want to miss. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter

    Bring the Haus down

    I wrote about Haus, a buzzy VC-backed aperitif company going up for sale in light of a collapsed Series A. CEO and co-founder Helena Price Hambrecht spoke to TechCrunch about what went down between the company and its potential lead investor, the reasoning they got behind the fallen deal and what’s next.

    Here’s what’s important: I’ve never seen an entrepreneur so transparent about the challenges, and unfortunate outcomes, that happen within startups. Here’s an excerpt from my interview with her.

    “It’s always dangerous to be low on cash. We got there, and it’s unfortunate, but I know there are many companies in this position right now,” Hambrecht says. “I have been sharing my work online for over 20 years now. It’s definitely something in my DNA. If me sharing this process is helpful for another founder in a tough spot and considering their options, then it makes all of this a little more worth it.”

    As for what’s next for the entrepreneur, a Silicon Valley branding veteran, there’s no immediate plans to jump into a new startup.

    “My goal, right now, is to be as helpful as I can to make this ABC process have the best outcome possible. After that, I’m going to take some time to process the last four years; it’s been so extraordinary, as well as brutal and traumatic; I’m going to rest and process that.”

    Magnifying Glass Focusing Sunlight Into a Point Repetition on Turquoise Colored Background High Angle View; technical due diligence

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

    So, when is the SoftBank Execution Fund III dropping?

    This week on Equity, your favorite trio dug into the numbers and nuance behind the headlines. It meant SoftBank, Coinbase and deals from ByteDance, Haus and Axios.

    Here’s why it’s important: Part of the conversation hovered around SoftBank’s losses on losses, which was really the highlight of the show. Do we see a redemption arc forming for one of the biggest, buzziest investors of the past few years? And what does Tiger Global think? So many questions, and it’s always fun to get Mary Ann and Alex’s take.

    SoftBank Group President Masayoshi Son Keynote Address at The JCI World Congress

    Image Credits: Kiyoshi Ota / Bloomberg / Getty Images

    Pitch Deck Teardown: Five Flute’s $1.2M pre-seed deck

    TC’s Haje Jan Kamps is back with another pitch deck teardown, this time looking at the deck that helped Five Flute raise a $1.2 million pre-seed round.

    Here’s why it’s important: If you haven’t been following along with this series, you’re — and I mean this in the kindest way — missing out. Haje goes slide by slide, and in this case, taught me a lot about why more can be more in terms of length of deck and why a “chockablock of words” is a top mistake founders make. Read the story here and pitch Haje for the series if you so dare.

    If you missed last week’s newsletter

    Read it here: “Venture investors to founders: Turn down for what?” We also have a companion podcast out, which you can listen to here: “Founders, whales and the sea change in the entrepreneurial energy.”

    Seen on TechCrunch

    Coinbase’s earnings fall short of expectations as crypto winter rages

    Finix raises $30 million as fintech’s spotlight picks its sides

    Mark Cuban, Mavericks in hot water over Voyager ‘Ponzi scheme’

    Cloud security startup Wiz reaches $100M ARR in just 18 months

    Seen on TechCrunch+

    The best cloud unicorns aren’t as overvalued as you might think

    Some frank advice for open source startups seeking product-market fit

    How digital health startups are navigating the post-Roe legal landscape

    Same time, same place, next week? Talk soon,

    N


    Author: Natasha Mascarenhas
    Posted: 13 August 2022, 6:08 pm

  • Is the future of the microchip industry going to be Made in America?

    Welcome to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

    With all eyes on Taiwan and worries mounting around semiconductor supply, the U.S. CHIPS Act is particularly timely. But it is not unique: Other countries similarly aspire to reduce their reliance on imported chips. Let’s explore.Anna

    From cheap as chips to billion-dollar incentives

    U.S. president Joe Biden signed the CHIPS and Science Act of 2022 into law earlier this week after the bill received broad bipartisan support in the House and Senate.

    The H and I in CHIPS stand for “Helpful Incentives,” hinting at the main component of the initiative: $52.7 billion in public subsidies.

    Biden described the new bill on Twitter as “a once-in-a-generation law that invests in America by supercharging our efforts to make semiconductors here at home.”


    Author: Anna Heim
    Posted: 13 August 2022, 5:01 pm

  • TechCrunch staff asks: What’s really the best Taylor Swift song?

    While TechCrunch is a Very Serious Publication, at times we wind up a little off-topic in our internal conversations. We talk video games. We talk bad reality television. We riff on sports and pets and our families. And we talk about music.

    Naturally, with as diverse a group as our team, viewpoints vary. But one notable point of commonality is Taylor Swift. Yes, your tech news is frequently prepared by a dyed-in-the-wool Swiftie. Perhaps even more often than not.

    This raises an important question: Which Taylor tune is really the best? After realizing how many of us scribblers had an opinion on the matter, we decided to make our case in a public manner. What follows is a series of arguments – written in three-views style, albeit with more players – about which Taylor Swift song truly sits above the rest.

    We welcome your public comment, of course, but note in advance that if you don’t agree with at least one of us, we all think that you are flat-out wrong.

    Alex Wilhelm: Wildest Dreams

    I view my Taylor Swift fandom as indicative of her universality. I am presently counting down for new records from In Flames, Lorna Shore, and other heavy metal bands that very few readers of this article are going to put on when they drop. That’s fine; musical tastes are personal. And yet here we are, sharing our passion for Swift’s singing and songwriting, despite our different musical preferences more generally.

    The universality point is not merely one about her musical type being welcome by folks of many musical bents, however. It goes deeper.

    Listening to Taylor’s discography is to watch her grow up. And as – per a quick peruse of her Wikipedia page – she and I are within a half-year of age, her transition from youth to young adult to 30-something has also been my own; her catalog essentially tracks my own maturity arc. But as we can see from her older and younger fans, the same life progression resonates with folks even apart from the age that she and I share.

    Why is that? Lyrics, in essence. Taylor’s tunes kick off somewhere in the realm of youthful insecurity (“Fifteen,” etc.), progress into an era of confidence (“Shake It Off”), through a period of experimentation and anger (“Look What You Made Me Do”), and finally wind up in the pandemic era, when she managed to make cottage-core cool (“Cardigan,” “‘Tis the Damn Season”), writing to us from a place of emotional resilience, now past her more turbulent 20s.

    Yep, that hits home. Inside those albums are a host of standout tunes, some of which I mentioned above. Which is my favorite? As an imported Rhode Islander with some claim to Midwest roots, you might imagine that “The Last Great American Dynasty” would be my go-to. It’s a killer tune, but not my all-time fave.

    No, the best Taylor Swift song is “Wildest Dreams.” Why? It is the platonic ideal of Taylor’s patented mix of melancholy, melody, and optimism; it blends her eras, her growing up, really, into a single, perfect, song. By bringing so much of what Taylor does well into a package of less than four minutes, it’s the correct song to cite as her best.

    Thanks, Tay. Keep writing.

    Dominic-Madori Davis: State of Grace (Taylor’s Version)

    If I remember correctly, one of the first vinyls I ever bought was Taylor Swift’s “Red.” I was in high school, and something about that album encapsulated the anger, confusion, and wistful hopefulness I felt at the time. I never considered myself a Swiftie growing up, but looking back, much of her music laid the soundtrack for my life.

    Last year, for some reason, I listened to “Seven” more than 350 times as we all re-entered life after pandemic lockdowns; the newness yet the familiarity of life left me longing for something only that tune could touch.

    There was “August,” the salt air, and the “Long Pond Sessions.” I think of the masterful lyrics of “This Love” from “1989” or even “New Year’s Eve” from “Reputation.” The album “Lover” was quite nice, and who hasn’t screamed the chorus of “Cruel Summer” at least once in their heads, in their cars, with their friends? “Evermore” can have a shoutout here; I remember “Cowboy Like Me” was the first song I dramatically put on when I realized my crush had a girlfriend, and “Long Story Short” followed when they broke up.

    Perhaps mostly, I recall those early Taylor days with me spinning around in my bedroom listening to “Enchanted” or looking out the window as my mother drove me home with “The Best Day” playing softly in the background. I remember when I first heard “Tear Drops on My Guitar” on the radio. I was a kid in the backseat of my mom’s car.

    I don’t think anyone knew at the time what that hit single would lead to, and each time Taylor re-releases her old albums, I feel like that child once again in the backseat, even though I’m an adult, somewhere in New York City, finally understanding what those emotions all mean.

    Though, no matter what Taylor does, I am always drawn back to “Red.” I love “The Lucky One,” and it reminds me of when I went to school in Los Angeles and had my first encounter with Hollywood. I was new to town, in the Angel City, around those seeking fortune and fame. I once wrote a college essay about “Treacherous,” about those moments of intense passion and often unrequited love. Even when I turned 22, nearly a decade after the album was released, the first song I put on at midnight as — well, I think it’s obvious at this point.

    What I’m trying to say is that it’s pretty hard to choose what Taylor’s best song is. It for sure exists on “Red,” as that album holds some of her best lyrics; scathing, raw, forgiving, and sanguine. I mean, have you ever called someone up again just to break them like a promise?

    Today, I’m much older than when that album first came out. I’m not sure what her best work is, but I can say this for sure: The acoustic version of “State of Grace” matched with the stadium rendition hits the tense two-sided coin that is the uncertain lust of one’s 20s. That’s where I am right now — so at least for today, I’ll have to go with that one.

    Amanda Silberling: All Too Well (Taylor’s Version)

    I wouldn’t call myself a Swiftie, mostly because when I was most primed for Taylor Swift fandom – my teenage years – I was suffering from an undiagnosed case of internalized misogyny, trying to make everyone think I was cool because I listened to the Velvet Underground. Now, as an adult, basically all I know about Taylor Swift is that she’s obsessed with the number 13, her fans should maybe stop harassing journalists for writing an 8/10 album review, and that she gets way too much flack for being a woman who dates people and writes about it.

    But something I am unequivocally obsessed with is whatever the internet is talking about on any given day, so every time a new (Taylor’s Version) dropped, I wanted to know what the discourse was about. And the Swiftie discourse was never louder than the day that the 10-minute version of “All Too Well” dropped. Ten minutes? What is this, some progressive metal song that Alex would listen to?

    But that song deserves to be 10 minutes long, and I’m a terminally online millennial with a social media addiction, so if I can be entertained by an artist I’m not obsessed with for 10 minutes, you know she’s good.

    I didn’t even know that Taylor Swift had dated Jake Gyllenhaal until that song dropped (chill, she’s not complaining about her 10-years-ago ex, she’s re-recording music that Scooter Braun is holding hostage, which is really badass of her, so get over yourself). But damn. “You called me up again just to break me like a promise/so casually cruel in the name of being honest.” Fuck internalized misogyny; Taylor Swift can write. That lyric took me right back to when my high school crush told me that he wouldn’t date me because I wasn’t mentally healthy enough. To be fair, he was right – don’t worry, I’m in therapy now! – but did he have to say it like that? If “casually cruel in the name of being honest” doesn’t yank you straight back to your failed attempts at teenage romance, I envy you.

    When Taylor’s version of “All Too Well” dropped, I probably tweeted something about how I never even knew the original version, but this song slapped – and then my internet friend Giovanni sent me a playlist he made called “T Swift is good, actually,” which he just always has on hand to convince people that Taylor Swift is good.

    I gotta say, he did convince me.

    Anita Ramaswamy: Blank Space

    Much like Amanda, my own adolescence was defined by music that was a far cry from Taylor Swift’s sugary pop-country crossover tunes. I found solace in sitting in the back row of my class, blasting “I’m Not Okay” by My Chemical Romance into my skull through a single earbud because it was uncool to use both simultaneously. Swift, meanwhile, was a conventionally attractive blonde woman who didn’t make me feel particularly seen as a gangly, outspoken Indian high schooler surrounded by, well, pageant queens (I grew up in Scottsdale, Arizona. Leave me alone).

    But there’s a distinct moment I remember Swift really seeing me, piercing through my soul, laying it bare. It’s when I saw her in the “Blank Space” music video, destroying a classic car with a golf club outside a luxurious mansion. This was the moment that marked, in my eyes, Swift’s transformation from a perfect pop princess into a real person, with anger and raw emotion and plenty of flaws.

    The best part is that Swift was doing it all on her own terms and refusing to be put in a box: “Keep you second-guessing like, oh my god, who is she?” After years of having her narrative defined by what other people said about her, here Swift was, getting loud and wild and signaling to the world that she was going to do what she wanted to do, regardless of what people thought. Demanding to be seen as she is, and in the process, seeing me.

    Annie Saunders: They’re all the best and if you wanna fight about it we meet in the park at dawn

    As a 30-something woman who recently exited a 10-year marriage, it goes without saying I’ve been listening to a ton of Taylor Swift. Nonstop Taylor Swift. An absolute wall of Taylor Swift.

    So sure, “We Are Never Ever Getting Back Together” and “I Knew You Were Trouble” were totally contenders here. They’re absolute fucking bops that have been on repeat for the last year-plus. My 4-year-old son knows all the words to at least a dozen Taylor Swift songs; at the moment, he sings “Wildest Dreams” till he falls asleep every night, adding weight to Alex’s argument.

    I eschewed Swift for a good chunk of my late 20s and early 30s (see Amanda’s point re: internalized misogyny), and it’s only now — with the context of the pandemic, 15 years in the workforce, a divorce, a child, Trump, #metoo — that I recognize what a confidence-booster she’s been not just for me, but for lots and lots of women around my age.

    This is hard! She has so many songs that validate my emotions! I mean, ever take a hard listen to “Mad Woman” and recall all the times you’ve been gaslit? What about “The Man”? “I’m so sick of running as fast as I can, wondering if I’d get there quicker if I was a man.” It’s a must-listen in advance of a salary negotiation. I sometimes feel like she wrote “Long Story Short” just for me.

    I can’t do it; I can’t choose. I celebrate her entire oeuvre. It’s all the best. And if you don’t think so, I’m up for fighting about it … because I listen to so much Taylor Swift.


    Author: Amanda Silberling
    Posted: 13 August 2022, 4:15 pm

  • Digital pensions platform Penfold raises $8.5M Series A led by Bridford Group

    Penfold, a digital pensions platform, has closed a £7m ($8.49m) Series A funding round led by Bridford Group, an investment group.

    Also participating in the round was Jeremy Coller, Chief Investment Officer and Chairman of Coller Capital. Penfold also raised additional funding via a crowdfund amongst its customer base. The cash will be used to expand Penfold’s workplace pension division.

    Chris Eastwood, Co-Founder at Penfold, commented (in a statement): “It’s been a big year for Penfold – from launching our workplace pension offering, to reaching £100m AUA.”

    Bridford Group, lead investor, commented: “The pensions industry represents a huge market – with £8trn in savings in the UK alone. Despite this, many people remain uninterested and unengaged in their pensions. With so many people not saving enough, there’s a real opportunity for a new provider to step in.” 


    Author: Mike Butcher
    Posted: 13 August 2022, 8:00 am

  • After the FBI raid at Mar-a-Lago, online threats quickly turn into real-world violence

    Threats of violence reached a fever pitch — reminiscent of the days leading up to the Capitol attack — following the news that the FBI raided Trump’s Florida beach club to retrieve classified documents the former president may have unlawfully taken there.

    After Trump himself confirmed Monday’s raid at Mar-a-Lago, pro-Trump pundits and politicians rallied around declarations of “war,” and Trump’s ever-fervent supporters called for everything from dismantling the federal law enforcement agency to committing acts of violence against its agents. The situation escalated from there in record time, with online rhetoric boiling over quickly into real-world violence.

    By Thursday, an armed man identified as Ricky Shiffer attempted to force his way into an FBI office in Cincinnati, Ohio, brandishing a rifle before fleeing. Law enforcement pursued Shiffer and he was fatally shot during the ensuing standoff with police.

    Analysts with the Institute for Strategic Dialogue (ISD), a nonprofit that researches extremism and disinformation, found evidence that Shiffer was driven to commit violence by “conspiratorial beliefs related to former President Trump and the 2020 election…interest in killing federal law enforcement, and the recent search warrant executed at Mar-a-Lago earlier this week.” He was also reportedly present at the January 6 attack — another echo between this week’s escalating online threats and the tensions that culminated in political violence at the Capitol that day.

    Shiffer appears to have been active on both Twitter and Truth Social, the platform from Trump’s media company that hosts the former president and his supporters. As Thursday’s attack unfolded, Shiffer appeared to post to Truth Social about how his plan to infiltrate the FBI office by breaking through a ballistic glass barrier with a nail gun had gone awry. “Well, I thought I had a way through bullet proof glass, and I didn’t,” the account posted Thursday morning. “If you don’t hear from me, it is true I tried attacking the F.B.I., and it’ll mean either I was taken off the internet, the F.B.I. got me, or they sent the regular cops…”

    In posts on Truth Social, the account implored others to “be ready to kill the enemy” and “kill the FBI on sight” in light of Monday’s raid at Mar-a-Lago. It also urged followers to heed a “call to arms” to arm themselves and prepare for combat. “If you know of any protests or attacks, please post here,” the account declared earlier this week.

    By Friday, that account was removed from the platform and a search of Shiffer’s name mostly surfaced content denouncing his actions. “Why did you censor #rickyshiffer‘s profile? So much for #truth and #transparency,” one Truth Social user posted on Friday. Still, online conspiracies around the week’s events remain in wide circulation on Truth Social and elsewhere, blaming antifa for the attack on the Ohio FBI office, accusing the agency of planting documents at Mar-a-Lago and sowing unfounded fears that well-armed IRS agents will descend on Americans in light of Friday’s House passage of the Inflation Reduction Act.

    “‘Violence against law enforcement is not the answer no matter what anybody is upset about or who they’re upset with,’ FBI director Christopher Wray said in light of emerging threats of violence this week. Trump appointed Wray to the role in 2017 after infamously ousting former FBI director James Comey.”

    Friday is also the five-year anniversary of the Unite the Right rally, which saw white nationalists clad in Nazi imagery marching openly through the streets of Charlottesville, Virginia. The ensuing events left 32-year-old protester Heather Heyer dead and sent political shockwaves through a nation that had largely grown complacent about the simmering threat of white supremacist violence.


    Author: Taylor Hatmaker
    Posted: 12 August 2022, 11:15 pm

  • Roon wants to educate patients with freshly sourced info on their conditions

    As individuals try to manage medical information and understand their conditions, many typically turn to Google or WebMD — neither of which does much to verify or provide the latest information. But Roon plans to change this with a medical education platform for vetted information, sourced strictly from doctors, patients, and caregivers.

    By curating the data it makes available around individual conditions, Roon is meant to reassure patients and caregivers that it’s accurate and well sourced.

    “We do pay lip service to caregivers, but there’s so much more that can and should be done to recognize the important role they play in managing health,” said Roon co-founder Rohan Ramakrishna, who is also a neurosurgeon. “And so when we build this medical canon of information, we take that all into account, so that we can meet the unique needs of both patients and caregivers within any individual condition.”

    Along with Ramakrishna are Pinterest’s former head of creator partnerships, Vikram Bhaskaran, and partner engineering, Arun Ranganathan. They entered the health tech space with Roon, hoping to reinvent what it means to receive medical information after working as caregivers themselves.

    Image Credits: Roon

    Bhaskaran and Ranganathan realized it was unnecessarily difficult to look up information about their loved ones’ conditions. After connecting on the idea with Ramakrishna, Roon was born.

    “There’s so much medical misinformation…in 2022, it’s crazy that patients don’t have anywhere to go to answer questions,” Bhaskaran told TechCrunch in an interview.

    The company claims to be “humanizing medicine” for people who have questions but don’t have a place to turn to.

    Roon is meant to provide what they consider “medically vetted” information to caregivers and patients about grave medical conditions. To begin with, they are only providing information related to glioblastomas, a type of brain tumor, and have 200 active users. The company hopes to expand to include dementia, pediatric cancers, and ALS.

    “Everything we build starts with actually finding the experts in a condition and really enabling them to create content that is suited for patients and caregivers,” Bhaskaran said.

    Someone using the platform is given a medical starter kit — organized information to provide a general understanding of the condition; then they can ask specific questions if it wasn’t already answered on the platform’s FAQ.

    Image Credits: Roon

    Although the company claims there is little to no competition, obviously anyone can still do a simple Google search and receive information (although it may not be as concise) or turn to WebMD (which aggregates and summarizes information). One thing the founders also emphasized to TechCrunch was that doctors typically spend time answering the basic questions and not delving fully into the condition — though for the patient and caregiver their doctor can still be a source of information.

    For a deeper look at a given condition, patients and caregivers may want to hear directly from today’s specialists, as well as others who can share their experience firsthand. That’s the curated content Roon hopes to make available.

    Despite being a little over a year old, the company has garnered support in the form of a $7.5 million seed round led by Firstmark, TMV and Sequoia, with participation from SV Angel, Maveron and M13. The company also secured 11 angel investors and four advisors.

    For now the company says they are being “a little bit vague on where we’re heading because we’ve had some big insights about how we take this, but all pieces of it will get better.” However, the founders told TechCrunch this round’s funds will be used to expand their team and begin implementing more condition information.

    “There’s all this time, energy and money being spent on making shopping easier,” Ramakrishna said. “What if we could spend that same amount of energy and ingenuity in making the experience of health so much better?”


    Author: Andrew Mendez
    Posted: 12 August 2022, 10:55 pm

  • It might be time for companies in San Francisco to call employees’ bluff

    Spend any amount of time in New York, and you’ll feel it. Manhattan and Brooklyn are teeming with activity. It’s electrifying to be there after years spent relatively locked down.

    The question, and one asked this week by the San Francisco Chronicle, is why San Francisco isn’t bouncing back in the same way.

    As reporter Roland Li writes: “There’s always been a disparity — New York has 10 times the population of San Francisco — but the coastal tourism and economic hubs have diverged in striking ways as they recover from the pandemic.”

    Consider, writes Li, that while the construction of major commercial property projects in Manhattan were completed during the pandemic — and while much of that new office space is almost fully leased — over in San Francisco, projects have stalled and existing buildings struggle to find tenants because of work-from-home policies.

    One possible way to fill those buildings is to convert them into housing. Wall Street, Li observes, has been doing exactly that for decades. But while in New York, there is clear demand for housing, with rents rising to record prices even now, in San Francisco, it’s not as plain that enough people would — at this moment — rent converted office space even if it were made available.

    Indeed, new telecommuting policies are clearly having a major impact on where people live, and many Bay Area employees who could flee the region’s high prices have. (California — led by San Francisco, and followed by Los Angeles — lost more than 352,000 residents between April 2020 and January 2022, according to California Department of Finance statistics.)

    It might be time to consider whether these fully distributed plans continue to make sense. In his piece, Li partly draws a line from the “jarring crowds” on New York’s city streets, to April of last year when then-Mayor Bill de Blasio announced that city workers would soon be going back to the office — a move quickly followed by private companies.

    Called back by employers, New Yorkers who’d left during the pandemic suddenly found themselves looking anew for housing, if even to spend just two or three days in the office.

    The gambit continues to work, seemingly. The Partnership for New York City, which says it surveyed more than 160 employers between a two-week period in late April and early May, found that 38% of their Manhattan workers are now back in the office on the average weekday, while 28% are fully remote. Meanwhile average attendance is expected to rise to 49% next month.

    That doesn’t mean employees are back full time. They might never be, given that even the loudest critics of remote work have been forced to soften their stance, including JPMorgan Chase CEO Jamie Dimon. As Bloomberg reported in May, Dimon told shareholders in an April letter that working from home “will become more permanent in American business” and estimated that about 40% of his 270,000-person workforce would work under a hybrid model. Soon after, a senior tech executive from the bank told some teams they could spend two and not three days back in the office if they wanted, based on internal feedback.

    Those two to three days a week could be saving New York, and it may be time for more San Francisco employers who’ve been loath to make demands of their own employees to consider doing the same.

    Small businesses in San Francisco are increasingly desperate for the economic activity that office employees would bring back; if civic duty isn’t top of mind for local tech companies, there continues to be a strong argument that hybrid settings allow employees to enjoy a better work-life balance, more camaraderie with their colleagues and also to get ahead in their careers.

    Many blame San Francisco’s inability to bounce back on its lack of affordable housing, and there’s no question the city is self-sabotaging on this front. In San Francisco, “instead of bright-line rules, where a developer knows ‘I’m allowed to build this here,’ everything is a negotiation and every project proceeds on an ad hoc basis,” Jenny Schuetz, a housing economist at the Brookings Institution, told The Atlantic in May.

    But forever abandoning return-to-office plans won’t solve the problem. Meanwhile, two-and-a-half years after the pandemic sent everyone home, and amid a slowing U.S. economy that makes it harder to switch jobs (and newly relaxed CDC COVID guidelines), it could be time for more outfits to ask employees to come into the office two to three times a week and see what happens from there.

    It’s not employers’ responsibility to “fix” San Francisco. At the same time, there might not be much left to come back to if they wait too long.


    Author: Connie Loizos
    Posted: 12 August 2022, 10:48 pm

  • Daily Crunch: Samsung’s vice chairman receives presidential pardon for bribery conviction

    To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

    Last night was a full moon, somehow it’s already halfway through August, and did you know there’s a Beach Plum LaCroix flavor? The world’s gone topsy-turvy, but at least it’s time for the weekend.

    What did you do this week that made you feel alive? Can you do more of that next week? And that concludes our microtherapy session. Now, let’s get on with the news.  — Christine and Haje

    The TechCrunch Top 3

    • Pardon me: A presidential pardon is restoring Samsung’s vice chairman Jay Lee’s ability to take the company’s helm. Lee had been convicted on bribery charges in 2017, and the pardon will erase it, Kate writes.
    • 5G begets 4G: Yeah, you read that right. Amazon launched AWS Private 5G so companies can build their own 4G networks…for now, Paul writes. This is something that has been in the works since late 2021, and the company said eventually there will be capabilities for 5G networks.
    • Location obliteration: Natasha L explains how Google was fined $40 million by Australia’s government, which found the tech giant had misled consumers about its Android location tracking settings.

    Startups and VC

    Don’t miss Brian’s Actuator newsletter, which is usually all about the state of hardware and robotics, but today is mostly about Amazon and iRobot.

    And for your daily dose of levity, don’t miss Amanda’s excellent piece of satire: FWD: fwd: From the CEO: BeCareful while you BeReal!

    A few more highlights:

    What does the future look like for e-commerce aggregators?

    Man figure consisting of glowing pixels runs through darkness

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

    In the video game Katamari Damacy, players control an avatar who rolls a sticky ball that captures anything it touches. The goal: create a sphere large enough to become a star or moon.

    E-commerce aggregators work in much the same way by purchasing smaller brands, then optimizing their manufacturing and sales channels to boost market share.

    This model was effective in a prevaccine era when consumers stopped visiting stores, but is the brand-rollup model still viable today?

    “Decreased consumer confidence, inflated brand value and a freeze in investment capital are creating a perfect storm,” says David Wright, co-founder and CEO of e-commerce accelerator Pattern. “Unless aggregators change how they operate, their future is bleak at best and nonexistent at worst.”

    (TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

    Big Tech Inc.

    Have you seen these ransomware group members? The U.S. government is offering $10 million in exchange for information leading to the identification and location of members of the Russia-based Conti ransomware operative, Carly writes.

    Speaking of alleged fraudulent behavior, Manish writes about India’s anti-money-laundering agency freezing $46.4 million in assets belonging to Singapore-based crypto exchange Vauld while it looks into the company’s business practices.

    Meanwhile, Brian looks into what’s happening over at Boston Dynamics after being acquired by Hyundai in 2020, which includes a new artificial intelligence and robotics institute buoyed by $400 million.


    Author: Christine Hall
    Posted: 12 August 2022, 10:05 pm

  • This startup is setting a DALL-E 2-like AI free, consequences be damned

    DALL-E 2, OpenAI’s powerful text-to-image AI system, can create photos in the style of cartoonists, 19th century daguerreotypists, stop-motion animators and more. But it has an important, artificial limitation: a filter that prevents it from creating images depicting public figures and content deemed too toxic.

    Now an open source alternative to DALL-E 2 is on the cusp of being released, and it’ll have no such filter.

    London- and Los Altos-based startup Stability AI this week announced the release of a DALL-E 2-like system, Stable Diffusion, to just over a thousand researchers ahead of a public launch in the coming weeks. A collaboration between Stability AI, media creation company RunwayML, Heidelberg University researchers and the research groups EleutherAI and LAION, Stable Diffusion is designed to run on most high-end consumer hardware, generating 512×512-pixel images in just a few seconds given any text prompt.

    Stability AI Stable Diffusion

    Stable Diffusion sample outputs. Image Credits: Stability AI

    “Stable Diffusion will allow both researchers and soon the public to run this under a range of conditions, democratizing image generation,” Stability AI CEO and founder Emad Mostaque wrote in a blog post. “We look forward to the open ecosystem that will emerge around this and further models to truly explore the boundaries of latent space.”

    But Stable Diffusion’s lack of safeguards compared to systems like DALL-E 2 poses tricky ethical questions for the AI community. Even if the results aren’t perfectly convincing yet, making fake images of public figures opens a large can of worms. And making the raw components of the system freely available leaves the door open to bad actors who could train them on subjectively inappropriate content, like pornography and graphic violence.

    Creating Stable Diffusion

    Stable Diffusion is the brainchild of Mostaque. Having graduated from Oxford with a Masters in mathematics and computer science, Mostaque served as an analyst at various hedge funds before shifting gears to more public-facing works. In 2019, he co-founded Symmitree, a project that aimed to reduce the cost of smartphones and internet access for people living in impoverished communities. And in 2020, Mostaque was the chief architect of Collective & Augmented Intelligence Against COVID-19, an alliance to help policymakers make decisions in the face of the pandemic by leveraging software.

    He co-founded Stability AI in 2020, motivated both by a personal fascination with AI and what he characterized as a lack of “organization” within the open source AI community.

    Stable Diffusion Obama

    An image of former president Barack Obama created by Stable Diffusion. Image Credits: Stability AI

    “Nobody has any voting rights except our 75 employees — no billionaires, big funds, governments or anyone else with control of the company or the communities we support. We’re completely independent,” Mostaque told TechCrunch in an email. “We plan to use our compute to accelerate open source, foundational AI.”

    Mostaque says that Stability AI funded the creation of LAION 5B, an open source, 250-terabyte dataset containing 5.6 billion images scraped from the internet. (“LAION” stands for Large-scale Artificial Intelligence Open Network, a nonprofit organization with the goal of making AI, datasets and code available to the public.) The company also worked with the LAION group to create a subset of LAION 5B called LAION-Aesthetics, which contains 2 billion AI-filtered images ranked as particularly “beautiful” by testers of Stable Diffusion.

    The initial version of Stable Diffusion was based on LAION-400M, the predecessor to LAION 5B, which was known to contain depictions of sex, slurs and harmful stereotypes. LAION-Aesthetics attempts to correct for this, but it’s too early to tell to what extent it’s successful.

    Stable Diffusion

    A collage of images created by Stable Diffusion. Image Credits: Stability AI

    In any case, Stable Diffusion builds on research incubated at OpenAI as well as Runway and Google Brain, one of Google’s AI R&D divisions. The system was trained on text-image pairs from LAION-Aesthetics to learn the associations between written concepts and images, like how the word “bird” can refer not only to bluebirds but parakeets and bald eagles, as well as more abstract notions.

    At runtime, Stable Diffusion — like DALL-E 2 — breaks the image generation process down into a process of “diffusion.” It starts with pure noise and refines an image over time, making it incrementally closer to a given text description until there’s no noise left at all.

    Boris Johnson Stable Diffusion

    Boris Johnson wielding various weapons, generated by Stable Diffusion. Image Credits: Stability AI

    Stability AI used a cluster of 4,000 Nvidia A100 GPUs running in AWS to train Stable Diffusion over the course of a month. CompVis, the machine vision and learning research group at Ludwig Maximilian University of Munich, oversaw the training, while Stability AI donated the compute power.

    Stable Diffusion can run on graphics cards with around 5GB of VRAM. That’s roughly the capacity of mid-range cards like Nvidia’s GTX 1660, priced around $230. Work is underway on bringing compatibility to AMD MI200’s data center cards and even MacBooks with Apple’s M1 chip (although in the case of the latter, without GPU acceleration, image generation will take as long as a few minutes).

    “We have optimized the model, compressing the knowledge of over 100 terabytes of images,” Mosaque said. “Variants of this model will be on smaller datasets, particularly as reinforcement learning with human feedback and other techniques are used to take these general digital brains and make then even smaller and focused.”

    Stability AI Stable Diffusion

    Samples from Stable Diffusion. Image Credits: Stability AI

    For the past few weeks, Stability AI has allowed a limited number of users to query the Stable Diffusion model through its Discord server, slowing increasing the number of maximum queries to stress-test the system. Stability AI says that more than 15,000 testers have used Stable Diffusion to create 2 million images a day.

    Far-reaching implications

    Stability AI plans to take a dual approach in making Stable Diffusion more widely available. It’ll host the model in the cloud behind tunable filters for specific content, allowing people to continue using it to generate images without having to run the system themselves. In addition, the startup will release what it calls “benchmark” models under a permissive license that can be used for any purpose — commercial or otherwise — as well as compute to train the models.

    That will make Stability AI the first to release an image generation model nearly as high-fidelity as DALL-E 2. While other AI-powered image generators have been available for some time, including Midjourney, NightCafe and Pixelz.ai, none have open sourced their frameworks. Others, like Google and Meta, have chosen to keep their technologies under tight wraps, allowing only select users to pilot them for narrow use cases.

    Stability AI will make money by training “private” models for customers and acting as a general infrastructure layer, Mostaque said — presumably with a sensitive treatment of intellectual property. The company claims to have other commercializable projects in the works, including AI models for generating audio, music and even video.

    Stable Diffusion Harry Potter

    Sand sculptures of Harry Potter and Hogwarts, generated by Stable Diffusion. Image Credits: Stability AI

    “We will provide more details of our sustainable business model soon with our official launch, but it is basically the commercial open source software playbook: services and scale infrastructure,” Mostaque said. “We think AI will go the way of servers and databases, with open beating proprietary systems — particularly given the passion of our communities.”

    With the hosted version of Stable Diffusion — the one available through Stability AI’s Discord server — Stability AI doesn’t permit every kind of image generation. The startup’s terms of service ban some lewd or sexual material (although not scantily-clad figures), hateful or violent imagery (such as antisemitic iconography, racist caricatures, misogynistic and misandrist propaganda), prompts containing copyrighted or trademarked material, and personal information like phone numbers and Social Security numbers. But while Stability AI has implemented a keyword filter in the server similar to OpenAI’s, which prevents the model from even attempting to generate an image that might violate the usage policy, it appears to be more permissive than most.

    (A previous version of this article implied that Stability AI wasn’t using a keyword filter. That’s not the case; TechCrunch regrets the error.)

    Stable Diffusion women

    A Stable Diffusion generation, given the prompt: “very sexy woman with black hair, pale skin, in bikini, wet hair, sitting on the beach.” Image Credits: Stability AI

    Stability AI also doesn’t have a policy against images with public figures. That presumably makes deepfakes fair game (and Renaissance-style paintings of famous rappers), though the model struggles with faces at times, introducing odd artifacts that a skilled Photoshop artist rarely would.

    “Our benchmark models that we release are based on general web crawls and are designed to represent the collective imagery of humanity compressed into files a few gigabytes big,” Mostaque said. “Aside from illegal content, there is minimal filtering, and it is on the user to use it as they will.”

    Stable Diffusion Hitler

    An image of Hitler generated by Stable Diffusion. Image Credits: Stability AI

    Potentially more problematic are the soon-to-be-released tools for creating custom and fine-tuned Stable Diffusion models. An “AI furry porn generator” profiled by Vice offers a preview of what might come; an art student going by the name of CuteBlack trained an image generator to churn out illustrations of anthropomorphic animal genitalia by scraping artwork from furry fandom sites. The possibilities don’t stop at pornography. In theory, a malicious actor could fine-tune Stable Diffusion on images of riots and gore, for instance, or propaganda.

    Already, testers in Stability AI’s Discord server are using Stable Diffusion to generate a range of content disallowed by other image generation services, including images of the war in Ukraine, nude women, an imagined Chinese invasion of Taiwan and controversial depictions of religious figures like the Prophet Muhammad. Doubtless, some of these images are against Stability AI’s own terms, but the company is currently relying on the community to flag violations. Many bear the telltale signs of an algorithmic creation, like disproportionate limbs and an incongruous mix of art styles. But others are passable on first glance. And the tech will continue to improve, presumably.

    Nude women Stability AI

    Nude women generated by Stable Diffusion. Image Credits: Stability AI

    Mostaque acknowledged that the tools could be used by bad actors to create “really nasty stuff,” and CompVis says that the public release of the benchmark Stable Diffusion model will “incorporate ethical considerations.” But Mostaque argues that — by making the tools freely available — it allows the community to develop countermeasures.

    “We hope to be the catalyst to coordinate global open source AI, both independent and academic, to build vital infrastructure, models and tools to maximize our collective potential,” Mostaque said. “This is amazing technology that can transform humanity for the better and should be open infrastructure for all.”

    Stability AI terrorist

    A generation from Stable Diffusion, given the prompt “9/11 2.0 September 11th 2022 terrorist attack.”

    Not everyone agrees, as evidenced by the controversy over “GPT-4chan,” an AI model trained on one of 4chan’s infamously toxic discussion boards. AI researcher Yannic Kilcher made GPT-4chan — which learned to output racist, antisemitic and misogynist hate speech — available earlier this year on Hugging Face, a hub for sharing trained AI models. Following discussions on social media and Hugging Face’s comment section, the Hugging Face team first “gated” access to the model before removing it altogether, but not before it was downloaded more than a thousand times.

    War in Ukraine Stability AI

    “War in Ukraine” images generated by Stable Diffusion. Image Credits: Stability AI

    Meta’s recent chatbot fiasco illustrates the challenge of keeping even ostensibly safe models from going off the rails. Just days after making its most advanced AI chatbot to date, BlenderBot 3, available on the web, Meta was forced to confront media reports that the bot made frequent antisemitic comments and repeated false claims about former U.S. President Donald Trump winning reelection two years ago.

    The publisher of AI Dungeon, Latitude, encountered a similar content problem. Some players of the text-based adventure game, which is powered by OpenAI’s text-generating GPT-3 system, observed that it would sometimes bring up extreme sexual themes, including pedophelia — the result of fine-tuning on fiction stories with gratuitous sex. Facing pressure from OpenAI, Latitude implemented a filter and started automatically banning gamers for purposefully prompting content that wasn’t allowed.

    BlenderBot 3’s toxicity came from biases in the public websites that were used to train it. It’s a well-known problem in AI — even when fed filtered training data, models tend to amplify biases like photo sets that portray men as executives and women as assistants. With DALL-E 2, OpenAI has attempted to combat this by implementing techniques, including dataset filtering, that help the model generate more “diverse” images. But some users claim that they’ve made the model less accurate than before at creating images based on certain prompts.

    Stable Diffusion contains little in the way of mitigations besides training dataset filtering. So what’s to prevent someone from generating, say, photorealistic images of protests, pornographic pictures of underage actors, “evidence” of fake moon landings and general misinformation? Nothing really. But Mostaque says that’s the point.

    Stable Diffusion protest

    Given the prompt “protests against the dilma government, brazil [sic],” Stable Diffusion created this image. Image Credits: Stability AI

    “A percentage of people are simply unpleasant and weird, but that’s humanity,” Mostaque said. “Indeed, it is our belief this technology will be prevalent, and the paternalistic and somewhat condescending attitude of many AI aficionados is misguided in not trusting society … We are taking significant safety measures including formulating cutting-edge tools to help mitigate potential harms across release and our own services. With hundreds of thousands developing on this model, we are confident the net benefit will be immensely positive and as billions use this tech harms will be negated.”

    Note: While the images in this article are credited to Stability AI, the company’s terms make it clear that generated images belong to the users who prompted them. In other words, Stability AI doesn’t assert rights over images created by Stable Diffusion.


    Author: Kyle Wiggers
    Posted: 12 August 2022, 8:55 pm

  • TechCrunch+ roundup: Down-funnel growth metrics, RIF planning, is e-commerce aggregation over?

    In the video game Katamari Damacy, players control an avatar who rolls a sticky ball that captures anything it touches. The goal is to create a sphere large enough to become a star or moon.

    E-commerce aggregators work in much the same way by purchasing smaller brands, then optimizing their manufacturing and sales channels to boost market share.

    This was effective in a pre-vaccine era when consumers stopped visiting stores, but is the brand-rollup model still viable today?


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    “Decreased consumer confidence, inflated brand value, and a freeze in investment capital are creating a perfect storm,” says David Wright, co-founder and CEO of Pattern, an e-commerce accelerator. “Unless aggregators change how they operate, their future is bleak at best and nonexistent at worst.”

    Scaling an online business until it’s large enough to flip sounds great, but Wright (who clearly has a vested interest) says small brands should partner with companies that can help them navigate the market, not swallow them whole.

    “It’s comparable to the financial crisis of 2008, when poor financial products were lumped together in order to diversify risk and make them look better than they actually were,” he writes.

    “We all know how that turned out.”

    Thanks for reading — I hope you have a great weekend.

    Walter Thompson
    Editorial Manager, TechCrunch+
    @yourprotagonist

    Pitch Deck Teardown: Five Flute’s $1.2M pre-seed deck

    Follow-on funding is harder to come by, but seed-stage founders who have a strong idea and good presentation skills can still close rounds.

    To wit: Five Flute, an issue-tracking platform for hardware product managers, recently raised a $1.2M SAFE note to ramp up its marketing and hire more technical talent.

    Five Flute’s founders shared their slightly redacted pitch deck with us. Besides the standard slides for TAM and GTM strategies, their presentation does a compelling job of describing the problems to be solved and why they believe they’re poised for success:

    “We’ve felt this pain personally.”

    Dear Sophie: Which immigration options are best for a decentralized team in the US?

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

    Image Credits: Bryce Durbin/TechCrunch

    Dear Sophie,

    We just raised a $20 million Series A, and we need to hire more engineers to fully develop our product.

    In addition, we’d like to bring our overseas PEO contractors to the States to join us more locally and in-timezone.

    We’re excited about being decentralized — which immigration options are best for us?

    — Elated Entrepreneur

    To optimize for growth, study your down-funnel metrics

    Illustration showing man tweaking funnel with lever to optimize for growth; growth marketing down funnel

    Image Credits: erhui1979 (opens in a new window) / Getty Images

    Early-stage startups put a lot of time and energy into marketing and acquisition: These levers direct new customers into the top of your sales funnel to drive growth. And investors love growth.

    But in August 2022, they like revenue even better, which is why Jonathan Martinez says companies should turn their attention to down-funnel metrics.

    “Varying messaging by user cohort is your largest lever for moving users through the funnel,” writes Martinez in his latest TechCrunch+ post.

    “It’s imperative to slice users into their respective buckets, because it opens the opportunity for unique targeting and messaging.”

    How to conduct a reduction in force: Planning, execution and follow-up

    Office chairs piled in corner of empty office

    Image Credits: Pulp Photography (opens in a new window) / Getty Images (Image has been modified)

    It’s hard to argue with the proverb “measure twice and cut once,” especially when it comes to laying off employees.

    Few managers have overseen a reduction in force, which is why Nigel Morris, co-founder and managing partner of QED Investors, has been sharing a five-page document with his portfolio company CEOs to give them guidance.

    “We broke the process down into three parts: planning, execution and follow-up,” he writes in a TechCrunch+ post that condenses the advice he’s giving the founders he works with.

    “The unavoidable reality is that while you’ll need to conduct the RIFs in an organized manner that is grounded in strong business rationale, there is always an overarching need to deliver the message with empathy and respect.”

    7 investors discuss why edtech startups must go back to basics to survive

    Graduation cap as a part of laptop; edtech investor survey 2022

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

    Pre-pandemic, edtech was not an especially frothy sector: In 2019, these startups received approximately $7 billion in VC funding, according to Crunchbase.

    Last year, that figure rose to $20 billion after efforts to limit the spread of COVID-19 impacted students of every age.

    To learn more about how edtech is faring during the current downturn, Natasha Mascarenhas spoke to seven VCs about the advice they’re offering portfolio companies, where edtech is crossing over into other sectors, and how they prefer to be pitched:

    • Ashley Bittner and Kate Ballinger, Firework Ventures
    • Jan Lynn-Matern, founder and partner, Emerge Education
    • Malvika Bhagwat and Kriti Bansal, Owl Ventures
    • Jomayra Herrera, partner, Reach Capital
    • Rebecca Kaden, general partner, Union Square Ventures

    “I would say the past few years have been more of an anomaly, and we are getting back to a more sustainable pace,” said Reach Capital partner Jomayra Herrera.


    Author: Walter Thompson
    Posted: 12 August 2022, 7:40 pm

  • TrashBot uses AI to sort recyclables

    There are a number of startups working to improve trash sorting with robots. AMP Robotics is near the top of the list, coupling a picker and a conveyor belt to sort materials in large, automated facilities. The technology aims to correct human shortcomings when it comes to recycling. Too often people either don’t bother to separate trash, or simply don’t understand where things go.

    Founded in 2015, CleanRobotics hopes to correct the issue at the point of disposal. The Colorado firm’s flagship trashbot system uses on-board machine learning and robotic systems to sort materials from a single disposal point. It claims the machines are able to do so with roughly 90% accuracy — not perfect, but certainly better that what humans generally do.

    “Recycling rules are confusing and consumers are often so confused that their recycling accuracy is less than chance, leading to highly contaminated recyclables, which no one is buying,” CEO Charles Yhap said in a release. “Our system improves material diversion from landfills, resulting in more recyclables and less waste.”

    Given the on-board AI/ML, the trash sorting robot is, naturally, gathering data to help improve the sorting process. CleanRobotics notes, “The recycling bin of the future doesn’t stop there, it also generates high-quality data for waste audits, triggers fullness alerts, and features a large display for video content. And thanks to cloud connectivity, your TrashBot fleet only gets smarter over time.”

    It’s easy to imagine other commerce-related data being utilized, based on the specific trash the system collects.

    This week, the company announced a $4.5 million Series A led by Melco International Development Limited and featuring SOSV/HAX, Undivided VC and Longmont Evergreen Opportunity Fund. The funding will go toward CleanRobotics’ plans to produce “hundreds” of systems, in addition to those already installed in high-traffic areas like shopping malls and airports.

    In particular, the company says it’s eyeing partnerships in China, Australia and Singapore. Funding will also go toward making additional hires, improving manufacturing and ramping up research and development.


    Author: Brian Heater
    Posted: 12 August 2022, 7:28 pm

  • The Silicon Peach is still ripe: Atlanta’s venture ecosystem stands strong

    Atlanta’s venture ecosystem is looking pretty peachy.

    In H1 2022, Atlanta companies raised $1.6 billion in funding, according to a recent PitchBook report. If the second half of the year is the same, it places the city on track to nearly hit the $3.7 billion in capital it raised last year. Another promising sign is that seed-stage deal volume appears to have remained consistent year over year, which signals healthy economic conditions for startups. There were 56 seed-stage deals in H1 2022, surpassing the 50 closed in H1 2021.

    TechCrunch conducted a city vibe check with those in the Atlanta area to see how the ecosystem is faring. The verdict? The Silicon Peach is doing just fine. Lisa Calhoun, a general partner at Valor Ventures, said the city was the most promising of any metro area in the United States. Her fund invests broadly throughout the South and is still actively negotiating term sheets in the city.

    “The venture capital opportunity in the South is better than it’s ever been,” Calhoun told TechCrunch. “A lot of new founders are starting companies at astonishing rates; in terms of deal flow, we’ve never had so much.”


    Author: Dominic-Madori Davis
    Posted: 12 August 2022, 7:00 pm

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