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In Canada’s cloud services market, venture investment opportunities abound

Canada will be home to a new venture capital fund that will invest in enterprise cloud startups. Its backer? Salesforce Ventures, the global investment arm of Salesforce, a leading cloud-hosted business software provider.

According to a recent press release from Salesforce, the $100 million Canada Trailblazer Fund has already taken stakes in four Canadian startups building cloud-based tools for the enterprise, including Tier1CRM, Traction Guest, Tulip and OSF Commerce.

(Disclosure: Salesforce’s venture arm is an investor in Crunchbase News’s parent, Crunchbase. As with all investors in Crunchbase, Salesforce Ventures has zero input in the operation or coverage of the News team.)

The companies mentioned above join a handful of other Canadian enterprise cloud companies in Salesforce’s broader investment portfolio. In the years prior to announcing the new Canada Trailblazer Fund, Salesforce Ventures made investments in Aislelabs, Vidyard and LeadSift. And Salesforce itself participated in Fredericton, New Brunswick-based Introhive’s $7.3 million Series B round back in 2015.

Almost exactly one year ago, Crunchbase News profiled Salesforce Ventures and a new AI-focused fund it announced at the time. But instead of revisiting the firm and its investments, this time we’re going to take a look at the state of the market it’s jumping into. 

Investors’ growing appetite for Canada’s cloud companies

Specifically, using Crunchbase data, we’re going to take a quick peek at Canadian companies in the “enterprise cloud” sector. To do so, we’ve pulled together a list of more than 1,000 companies in a wide variety of categories in Crunchbase. We used the enterprise applications, enterprise software, SaaS, CRM, sales automation, ERP, billing, meeting software, marketing animation, contact management and scheduling categories as a rough proxy for the kinds of markets on which Salesforce’s new fund may be interested.

And what did we find? 

For one, there’s been a general uptick in venture investment activity in Canadian cloud companies, but that growth has come in fits and starts. Below, you’ll find a chart displaying aggregated annual venture investment data for Canadian cloud companies.

The above chart is based on reported data in Crunchbase, which, especially for seed and early-stage rounds, carries some reporting delays. These may not affect dollar volume figures (fledgling companies don’t raise all that much money), but reported deal volumes will undershoot reality for up to two years.

Regardless, between 2012 and 2017, reported venture dollar volume grew by approximately 124 percent.

2018: Off to a strong start on the investment side

Although it’s not pictured in the chart, so far in 2018 there have been more than 20 reported venture funding rounds in Canada for cloud companies in the categories we searched above. Here are some of the highlights so far:

With help of the PointClickCare round, Canada’s enterprise-focused cloud service startups may be on track to raise more capital in 2018 than they did in the prior year.

Where do Canada’s cloud companies reside?

As for where the hot spots are for Canadian cloud companies, you shouldn’t be surprised that they’re based in the country’s major population centers. Below is a chart showing the distribution of headquarters for our list of cloud companies founded in the past decade.

This being said, it may make sense for Salesforce and other investors interested in Canadian cloud companies to start looking outside these major metro areas. The proportion of cloud companies founded elsewhere in Canada is on the rise. In our data set, around one-fifth of the cloud companies founded in 2008 were located outside the five major metro areas cited above. For companies founded in 2015 and 2017, half are headquartered in other Canadian metro areas.

It goes without saying that there are seemingly endless market niches in the enterprise cloud services market, and as such we just barely scratched the surface here. There are countless data points and anecdotes we didn’t cover here, like this fun fact: Slack, the seemingly ubiquitous workplace chat platform, was originally founded in Vancouver. (It’s since relocated HQ to San Francisco.) Another: Shopify, which is based in Ottawa, went public in May 2015 and raised nearly $131 million in the offering, making it one of Canada’s biggest-ever tech IPOs.

In its statement, Salesforce cited IDC research findings, which say that Canada’s public cloud software market will grow six times faster than on-premise deployments, reaching CA$4.1 billion by 2019. No doubt, there will be stiff competition among investors for an increasing number of Canadian companies seeking capital in years to come.


Source: Tech Crunch

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Our “modern” Congress doesn’t understand 21st century technology

Lorelei Kelly
Contributor

Lorelei Kelly leads the Resilient Democracy Coalition, a group working to make sure Congress succeeds in the Information Age.
More posts by this contributor

Robert Bjarnason
Contributor

Robert Bjarnason was formerly a game company executive in Silicon Valley. He is now the President and CEO of Iceland’s Citizens Foundation.

When Facebook’s Founder Mark Zuckerberg testified before House and Senate panels earlier this month, he explained how his company uses the data of millions of Americans. This particular set of hearings was urgent because our elected leaders have realized the power that lies in Facebook’s hidden trove of networked knowledge — its potential to violate privacy and the menace it poses to the integrity of our democratic institutions.

Facebook is a business that sells social connection, its algorithms are made for targeted advertising.  The data that we users provide via friends, likes and shares makes their model lucrative. But connecting a person to a pair of shoes cannot be the same engagement algorithm that we use to build a cohesive democratic society.  Watch any hearing on Capitol Hill.

It’s a durable, if old fashioned bridge between leaders and citizens. Informed deliberation could be a lot more compelling, but it can never compete on the same turf with funny GIFs and targeted videos.   Algorithms optimized for commercial engagement do not protect public goods like democratic discourse. They are built for shareholders, not citizens. To the contrary, they can exploit and damage democracy’s most precious resource– civic trust.

One hundred cardboard cutouts of Facebook founder and CEO Mark Zuckerberg stand outside the US Capitol in Washington, DC, April 10, 2018. Advocacy group Avaaz is calling attention to what the groups says are hundreds of millions of fake accounts still spreading disinformation on Facebook. (Photo: SAUL LOEB/AFP/Getty Images)

Congress is the world’s most powerful representative assembly.  Yet, like much of the US government, it does not have adequate 21st century technology knowledge, nor modern digital infrastructure for citizen input, much less interaction.  Until we have an alternative that protects civic engagement data, the prevailing business models that rely on selling social connection will continue to be the equivalent of strip-mining democracy.  

If we think we can use a corporate profit model for civics, we will get an increasingly coarse and volatile public life. Malevolence is cheap and conspiracy scales quickly. Junk news costs little compared to credible journalism.  When clicks are the currency, the shortest path to a sale is vulgarity or shouting, which often stops inclusive participation altogether. It’s true that crowds are sometimes rowdy. But our democratic institutions are supposed to moderate this behavior and they are decades behind the private sector who themselves are struggling with online civility standards.

Another challenge is the scant institutional capacity our democracy has for coping with a digital world.  For decades, Congress has purged its own expertise, especially on technology.  The result is that it can’t match the White House when it comes to policy and it relies on the narrow perspectives of lobbyists more than ever.  Congress does make available a great deal of information but–like a banana republic of data-– it lacks the resources to purchase the analysis products for its own workflow, or to create a competitive version for itself.

The longer we wait to build modern engagement capacity for our democracy, the more citizens will pay the price. In a political system awash with anonymous money,  Congress is not building an integrity engine to audit the supply chain of data into policy.  It is not optimizing the underused capacity of public serving knowledge already on Capitol Hill. It’s actually not far beyond  hot lead type. Even the computer science interns still carry around 3 ring binders full of hard copy letters to sign.

Congress got a lot of attention for the Facebook hearings–much of it negative.  But instead of focussing on the inadequate interrogation of Mark Zuckerberg, Americans should consider creative possibilities to enrich democratic discourse.  

What if ⅓ of the committee hearing questions were open to colleagues with subject matter expertise from either party in either the House or the Senate? How about a preparatory “question challenge” to the verified citizens of the districts of the committee members? What about a curation platform to vet and incorporate audience feedback within the hearing itself?  How about a stack exchange for the fresh questions so the rest of us watching from afar could rank them? And, why doesn’t Congress already have a computational intelligence capacity for every committee– one that could assist human staff with complex input in real time or asynchronously?

This future-dream is a steep hill, but it is not impossible.  Until our governing institutions develop public-serving standards and systems,   let’s follow the lead of truly modern democracies and put the civic engagement data of our nation where it will be safe and not for sale – in our collective hands. The urgent task for Congress and the rest of us is to restore civic trust.  How about a series of follow-up hearings on who should be the information intermediaries for 21st century democracy?

Given the current international political climate, multi-lateral talks are another steep hill to climb.  But we’ve looked abroad for common good norms in the past. We can start now by recognizing that open democratic standards are a modern source of power and influence. Iceland created a civic non profit to engage citizens and protect their data.  

Estonia already gives a digital identity to online businesses.  Starting next month,  Facebook will adhere to the European Union’s privacy rules for the US, Europe and Canada. Identifying and upholding these promising practices is vital in a world where the reputation of democracy is at stake.  

In an unfortunate step backward, the Facebook hearings returned us to the old familiar Russia vs. the West framework.  But it is worth remembering how –in the last century– democracy won the Cold War because of off-shored norms.

Forty three years ago, 35 national leaders gathered in Finland to collaborate on reducing tensions with the eastern bloc, then dominated by the Soviet Union. The resulting Helsinki Accords championed Rule of Law and Human Rights. These western democratic norms became the guide posts of eastern Europe’s dissidents.  In Czechloslovakia, the Charter 77 movement drew strength from exposing the hypocrisy of their government, a signatory to the Accords.  The norms were ultimately successful in 1989 with the fall of the Berlin Wall.

Democratic societies require trusted connection in order to survive. They also need credible, capable institutions.  If we Americans want to rebuild our national confidence, we’ll need a digital engagement system that optimizes for human dignity, not corporate dollars.  The first step is for Congress–our most democratic institution– to fund its own digital capacity. Even then, it will need trusted, privacy protecting partners.

There is no IPO that monetizes engaged citizens, there’s just a society that sticks together enough to keep talking, even when a lot of people are fed up and angry.  Once we decide to protect the public trust, we can succeed and even lead again. But to be cautiously hopeful and paraphrase Benjamin Franklin,  let’s offshore our democracy’s civic data norms until we can keep them ourselves.


Source: Tech Crunch

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Subscription hell

Another week, another paywall. This time, it’s Bloomberg, which announced that it would be adding a comprehensive paywall to its news service and television channel (except TicToc, its media partnership with Twitter). A paywall was hardly a surprise, but what was surprising was the price: the standard subscription is $35 a month (up from $0 a month), or $40 a month including access to online and print editions of Businessweek.

And people say avocado toast is expensive.

That’s not the only subscription coming up though. Now Facebook is considering adding an ad-free subscription option. These rumors have come and gone in the past, with no sign of change in the company’s resolute focus on advertising as its core business model. Post-Cambridge Analytica and post-GDPR though, it seems the company’s position is more malleable, and could be following the plan laid out by my colleague Josh Constine recently. He pegged the potential price at $11 a month, given the company’s revenue per user.

I’m an emphatic champion of subscription models, particularly in media. Subscriptions align incentives in a way that advertising can never do, while also avoiding the morass of privacy and ethics that plague ad targeting. Subscription revenues are also more reliable than ad dollars, making it easier to budget and improve operational efficiency for an organization.

Incentive alignment is one thing, and my wallet is another. All of these subscriptions are starting to add up. These days, my media subscriptions are hovering around $80 a month, and I don’t even have TV. Storage costs for Google, Apple, and Dropbox are another $13 a month. Cable and cell service are another $200 a month combined. Software subscriptions are probably about $20 a month (although so many are annualized its hard to keep track of them). Amazon Prime and a few others total in around $25 a month.

Worse, subscriptions aren’t getting any cheaper. Amazon Prime just increased its price to $120 a year, Netflix increased its popular middle-tier plan to $11 a month late last year, and YouTube increased its TV pricing to $40 a month last month. Add in new paywalls, and the burden of subscriptions is rising far faster than consumer incomes.

I’m frustrated with this hell. I’m frustrated that the web’s promise of instant and free access to the world’s information appears to be dying. I’m frustrated that subscription usually means just putting formerly free content behind a paywall. I’m frustrated that the price for subscriptions seems wildly high compared to the ad dollars that the fees substitute for. And I’m frustrated that subscription pricing rarely seems to account for other subscriptions I have, even when content libraries are similar.

Subscriptions can be a great tool, but everyone seems to be doing them wrong. We need to transform our thinking here if we are to move on from the manacles of the ad networks.

Before we dive in though, let’s be clear: the web needs a business model. We didn’t need paywalls on the early web because we focused on plain text from other users. Plain text is easier to produce, lowering the friction for people to contribute, and it’s also cheaper to store and transmit, lowering the cost of bandwidth.

Today’s consumers though have significantly higher standards than the original users of the web. Consumers want immersive experiences, well-designed pages with fonts, graphics, photos, and videos coming together into a compelling format. That “quality” costs enormous sums in engineering and design talent, not to mention massively increasing bandwidth and storage costs.

Take my colleague Connie Loizos’ article from yesterday reporting on a new venture fund. The text itself is about 3.5 kilobytes uncompressed, but the total payload of the page if nothing is cached is more than 10 MB, or more than 3000x the data usage of the actual text itself. This pattern has become so common that it has been called the website obesity crisis. Yet, all of our research shows people want high-definition images with their stories, instant loading of articles on the site, and interactivity. Those features have to be paid somehow, begetting us the advertising and subscription models we see today.

The other cost is content production itself. Volunteers just haven’t produced the information we are seeking. Wikipedia is an extraordinary resource, but its depth falters when we start looking for information about our local communities, or news, or individuals who aren’t famous. The reality is that information gathering is hard work, and in a capitalist system, we need to compensate people to do it. My colleagues and I are passionate about startups and technology, but we need to eat to publish.

While an open, free, and democratized web is ideal, these two challenges demonstrate that a business model had to be attached to make it function. Advertising is one such model, with massive privacy violations required to optimize it. The other approach is charging for access.

Unfortunately, subscription seems to be an area filled with product engineers and marketers led by brain-dead executives. The default choice of Bloomberg this week and so many other publications is to simply put formerly free content behind a paywall. No consumer wants to pay for something they formerly got for free, and yet we repeatedly see examples of subscriptions designed this way.

I don’t know when media started hiring IRS accountants, but subscriptions should be seen as an upgrade, not a tax. A subscription should provide new features, content, and capabilities that didn’t exist before while maintaining the former product that consumers have enjoyed for years.

Take MoviePass for instance. Consumers can continue to watch movies as they always have in the past, but now they have a new subscription option to watch potentially more movies for a set price. Among my friends, MoviePass has completely changed the way they think of films. Instead of just seeing one blockbuster every month, they are heading to an art house film because “we’ve essentially already paid for it, so why not try it?” The pricing is clearly too cheap, but that shouldn’t distract from a product that offered a completely new experience from a subscription.

The hell is even worse though. We not only get paywalls where none existed before, but the prices of those subscriptions are always vastly more expensive than consumers ever wanted. It’s not just Bloomberg and media — it’s software too. I used to write everything in Ulysses, a syncing Markdown editor for OS X and iOS. I paid $70 to buy the apps, but then the company switched to a $40 a year annual subscription, and as the dozens of angry reviews and comments illustrate, that price is vastly out of proportion from the cost of providing the software (which I might add, is entirely hosted on iCloud infrastructure).

For product marketers, the default mentality is to extract a lot of value from the 1% of readers or users that are going to convert to paid. Subscriptions are always positioned as all-or-nothing, with limited metering or tiering, to try to force the conversion. To my mind though, the question is not how to get 1% of readers to pay an exorbitant price, but how to get say 20% of your readers to pay you a cheaper price. It’s not about exclusion, but about participation.

One way we could fix that situation would be to allow subscriptions to combine together more cheaply. We are starting to see this too: Spotify, Hulu, and Scribd appear to be investigating a deal in which consumers can get a joint subscription from these services for a lower rate. Setapp is a set of more than one hundred OS X apps that come bundled for about $10 a month.

I’d love to see more of these partnerships, because they are much more fair to the consumer and ultimately allow smaller subscription companies to compete with the likes of Google, Amazon, Apple, and others. Cross-marketing lowers subscriber acquisition costs, and those savings should ultimately stream down to the consumer.

Subscription hell is real, but that doesn’t mean the business model is flawed. Rather, we need to completely transform our thinking around these models, including the marketing behind them and the features that they offer. We also need to consider consumers and their wallets more holistically, since no one buys a subscription in a vacuum. For too long, paywall playbooks have just been copied rather than innovated upon. It’s time for product leaders to step up and build a better future.


Source: Tech Crunch

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Lobe’s ridiculously simple machine learning platform aims to empower non-technical creators

Machine learning may be the tool de jour for everything from particle physics to recreating the human voice, but it’s not exactly the easiest field to get into. Despite the complexities of video editing and sound design, we have UIs that let even a curious kid dabble in them — why not with machine learning? That’s the goal of Lobe, a startup and platform that genuinely seems to have made AI models as simple to put together as LEGO bricks.

I talked with Mike Matas, one of Lobe’s co-founders and the designer behind many a popular digital interface, about the platform and his motivations for creating it.

“There’s been a lot of situations where people have kind of thought about AI and have these cool ideas, but they can’t execute them,” he said. “So those ideas just like shed, unless you have access to an AI team.”

This happened to him, too, he explained.

“I started researching because I wanted to see if I could use it myself. And there’s this hard to break through veneer of words and frameworks and mathematics — but once you get through that the concepts are actually really intuitive. In fact even more intuitive than regular programming, because you’re teaching the machine like you teach a person.”

But like the hard shell of jargon, existing tools were also rough on the edges — powerful and functional, but much more like learning a development environment than playing around in Photoshop or Logic.

“You need to know how to piece these things together, there are lots of things you need to download. I’m one of those people who if I have to do a lot of work, download a bunch of frameworks, I just give up,” he said. “So as a UI designer I saw the opportunity to take something that’s really complicated and reframe it in a way that’s understandable.”

Lobe, which Matas created with his co-founders Markus Beissinger and Adam Menges, takes the concepts of machine learning, things like feature extraction and labeling, and puts them in a simple, intuitive visual interface. As demonstrated in a video tour of the platform, you can make an app that recognizes hand gestures and matches them to emoji without ever seeing a line of code, let alone writing one. All the relevant information is there, and you can drill down to the nitty gritty if you want, but you don’t have to. The ease and speed with which new applications can be designed and experimented with could open up the field to people who see the potential of the tools but lack the technical know-how.

He compared the situation to the early days of PCs, when computer scientists and engineers were the only ones who knew how to operate them. “They were the only people able to use them, so they were they only people able to come up with ideas about how to use them,” he said. But by the late ’80s, computers had been transformed into creative tools, largely because of improvements to the UI.

Matas expects a similar flood of applications, even beyond the many we’ve already seen, as the barrier to entry drops.

“People outside the data science community are going to think about how to apply this to their field,” he said, and unlike before, they’ll be able to create a working model themselves.

A raft of examples on the site show how a few simple modules can give rise to all kinds of interesting applications: reading lips, tracking positions, understanding gestures, generating realistic flower petals. Why not? You need data to feed the system, of course, but doing something novel with it is no longer the hard part.

And in keeping with the machine learning community’s commitment to openness and sharing, Lobe models aren’t some proprietary thing you can only operate on the site or via the API. “Architecturally we’re built on top of open standards like Tensorflow,” Matas said. Do the training on Lobe, test it and tweak it on Lobe, then compile it down to whatever platform you want and take it to go.

Right now the site is in closed beta. “We’ve been overwhelmed with responses, so clearly it’s resonating with people,” Matas said. “We’re going to slowly let people in, it’s going to start pretty small. I hope we’re not getting ahead of ourselves.”


Source: Tech Crunch

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UK watchdog orders Cambridge Analytica to give up data in US voter test case

Another big development in the personal data misuse saga attached to the controversial Trump campaign-linked UK-based political consultancy, Cambridge Analytica — which could lead to fresh light being shed on how the company and its multiple affiliates acquired and processed US citizens’ personal data to build profiles on millions of voters for political targeting purposes.

The UK’s data watchdog, the ICO, has today announced that it’s served an enforcement notice on Cambridge Analytica affiliate SCL Elections, under the UK’s 1998 Data Protection Act.

The company has been ordered to give up all the data it holds on one US academic within 30 days — with the ICO warning that: “Failure to do so is a criminal offence, punishable in the courts by an unlimited fine.”

The notice follows a subject access request (SAR) filed in January last year by US-based academic, David Carroll after he became suspicious about how the company was able to build psychographic profiles of US voters. And while Carroll is not a UK citizen, he discovered his personal data had been processed in the UK — so decided to bring a test case by requesting his personal data under UK law.

Carroll’s complaint, and the ICO’s decision to issue an enforcement notice in support of it, looks to have paved the way for millions of US voters to also ask Cambridge Analytica for their data (the company claimed to have up to 7,000 data points on the entire US electorate, circa 240M people — so just imagine the class action that could be filed here… ).

The Guardian reports that Cambridge Analytica had tried to dismiss Carroll’s argument by claiming he had no more rights “than a member of the Taliban sitting in a cave in the remotest corner of Afghanistan”. The ICO clearly disagrees.

Cambridge Analytica/SCL Group responded to Carroll’s original SAR in March 2017 but he was unimpressed by the partial data they sent him — which ranked his interests on a selection of topics (including gun rights, immigration, healthcare, education and the environment) yet did not explain how the scores had been calculated.

It also listed his likely partisanship and propensity to vote in the 2016 US election — again without explaining how those predictions had been generated.

So Carroll complained to the UK’s data watchdog in September 2017 — which began sending its own letters to CA/SCL, leading to further unsatisfactory responses.

“The company’s reply refused to address the ICO’s questions and incorrectly stated Prof Caroll had no legal entitlement to it because he wasn’t a UK citizen or based in this country. The ICO reiterated this was not legally correct in a letter to SCL the following month,” the ICO writes today. “In November 2017, the company replied, denying that the ICO had any jurisdiction or that Prof Carroll was legally entitled to his data, adding that SCL did “.. not expect to be further harassed with this sort of correspondence”.”

In a strongly worded statement, information commissioner Elizabeth Denham further adds:

The company has consistently refused to co-operate with our investigation into this case and has refused to answer our specific enquiries in relation to the complainant’s personal data — what they had, where they got it from and on what legal basis they held it.

The right to request personal data that an organisation holds about you is a cornerstone right in data protection law and it is important that Professor Carroll, and other members of the public, understand what personal data Cambridge Analytica held and how they analysed it.

We are aware of recent media reports concerning Cambridge Analytica’s future but whether or not the people behind the company decide to fold their operation, a continued refusal to engage with the ICO will potentially breach an Enforcement Notice and that then becomes a criminal matter.

Since mid-March this year, Cambridge Analytica’s name (along with the names of various affiliates) has been all over headlines relating to a major Facebook data misuse scandal, after press reports revealed in granular detail how an app developer had used the social media’s platform’s 2014 API structure to extract and process large amounts of users’ personal data, passing psychometrically modeled scores on US voters to Cambridge Analytica for political targeting.

But Carroll’s curiosity about what data Cambridge Analytica might hold about him predates the scandal blowing up last month. Although journalists had actually raised questions about the company as far back as December 2015 — when the Guardian reported that the company was working for the Ted Cruz campaign, using detailed psychological profiles of voters derived from tens of millions of Facebook users’ data.

Though it was not until last month that Facebook confirmed as many as 87 million users could have had personal data misappropriated.

Carroll, who has studied the Internet ad tech industry as part of his academic work, reckons Facebook is not the sole source of the data in this case, telling the Guardian he expects to find a whole host of other companies are also implicated in this murky data economy where people’s personal information is quietly traded and passed around for highly charged political purposes — bankrolled by billionaires.

“I think we’re going to find that this goes way beyond Facebook and that all sorts of things are being inferred about us and then used for political purposes,” he told the newspaper.

Under mounting political, legal and public pressure, Cambridge Analytica claimed to be shutting down this week — but the move appears more like a rebranding exercise, as parent entity, SCL Group, maintains a sprawling network of companies and linked entities. (Such as one called Emerdata, which was founded in mid-2017 and is listed at the same address as SCL Elections, and has many of the same investors and management as Cambridge Analytica… But presumably hasn’t yet been barred from social media giants’ ad platforms, as its predecessor has.)

Closing one of the entities embroiled in the scandal could also be a tactic to impede ongoing investigations, such as the one by the ICO — as Denham’s statement alludes, by warning that any breach of the enforcement notice could lead to criminal proceedings being brought against the owners and operators of Cambridge Analytica’s parent entity.

In March ICO officials obtained a warrant to enter and search Cambridge Analytica’s London offices, removing documents and computers for examination as part of a wider, year-long investigation into the use of personal data and analytics by political campaigns, parties, social media companies and other commercial actors. And last month the watchdog said 30 organizations — including Facebook — were now part of that investigation.

The Guardian also reports that the ICO has suggested to Cambridge Analytica that if it has difficulties complying with the enforcement notice it should hand over passwords for the servers seized during the March raid on its London office – raising questions about how much data the watchdog has been able to retrieve from the seized servers.

SCL Group’s website contains no obvious contact details beyond a company LinkedIn profile — a link which appears to be defunct. But we reached out to SCL Group’s CEO Nigel Oakes, who has maintained a public LinkedIn presence, to ask if he has any response to the ICO enforcement notice.

Meanwhile Cambridge Analytica continues to use its public Twitter account to distribute a stream of rebuttals and alternative ‘facts’.


Source: Tech Crunch

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The formula behind San Francisco’s startup success

Why has San Francisco’s startup scene generated so many hugely valuable companies over the past decade?

That’s the question we asked over the past few weeks while analyzing San Francisco startup funding, exit, and unicorn creation data. After all, it’s not as if founders of Uber, Airbnb, Lyft, Dropbox and Twitter had to get office space within a couple of miles of each other.

We hadn’t thought our data-centric approach would yield a clear recipe for success. San Francisco private and newly public unicorns are a diverse bunch, numbering more than 30, in areas ranging from ridesharing to online lending. Surely the path to billion-plus valuations would be equally varied.

But surprisingly, many of their secrets to success seem formulaic. The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and ability to post massive, sustained losses; high-powered investors; and a preponderance of easy-to-explain business models.

No, it’s not a recipe that’s likely replicable without talent, drive, connections and timing. But if you’ve got those ingredients, following the principles below might provide a good shot at unicorn status.

First you conquer, then you earn

Losing money is not a bug. It’s a feature.

First, lose money until you’ve left your rivals in the dust. This is the most important rule. It is the collective glue that holds the narratives of San Francisco startup success stories together. And while companies in other places have thrived with the same practice, arguably San Franciscans do it best.

It’s no secret that a majority of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations. Uber, called the world’s most valuable startup, reportedly lost $4.5 billion last year. Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that. Even Airbnb, whose model of taking a share of homestay revenues sounds like an easy recipe for returns, took nine years to post its first annual profit.

Not making money can be the ultimate competitive advantage, if you can afford it.

Industry stalwarts lose money, too. Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history. Square, valued at nearly $20 billion, has never been profitable on a GAAP basis. DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year (and more than $100 million in each of the two preceding years). Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.

We could go on. But the basic takeaway is this: Losing money is not a bug. It’s a feature. One might even argue that entrepreneurs in metro areas with a more fiscally restrained investment culture are missing out.

What’s also noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits themselves. Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business. Today, Uber and Lyft have decimated the value of taxi medallions.

Not making money can be the ultimate competitive advantage, if you can afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share. Then, when rivals are out of the picture, it’s possible to raise prices and start focusing on operating in the black.

Raise money from investors who’ve done this before

You can’t lose money on your own. And you can’t lose any old money, either. To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously backed valuable, unprofitable Northern California startups.

It’s not a mysterious list. Most of the names are well-known venture and seed investors who’ve been actively investing in local startups for many years and commonly feature on rankings like the Midas List. We’ve put together a few names here.

You might wonder why it’s so much better to lose money provided by Sequoia Capital than, say, a lower-profile but still wealthy investor. We could speculate that the following factors are at play: a firm’s reputation for selecting winning startups, a willingness of later investors to follow these VCs at higher valuations and these firms’ skill in shepherding portfolio companies through rapid growth cycles to an eventual exit.

Whatever the exact connection, the data speaks for itself. The vast majority of San Francisco’s most valuable private and recently public internet and technology companies have backing from investors on the short list, commonly beginning with early-stage rounds.

Pick a business model that relatives understand

Generally speaking, you don’t need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does. Instead, it’s more along the lines of: “They have an app for getting rides from strangers,” or “They have an app for renting rooms in your house to strangers.” It may sound strange at first, but pretty soon it’s something everyone seems to be doing.

It’s not a recipe that’s likely replicable without talent, drive, connections and timing. 

A list of 32 San Francisco-based unicorns and near-unicorns is populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and Airbnb. While there are some lesser-known enterprise software names, they’re not among the largest investment recipients.

Part of the consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center. If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less space-constrained suburban setting.

Reading between the lines of red ink

While it can be frustrating to watch a company lurch from quarter to quarter without a profit in sight, there is ample evidence the approach can be wildly successful over time.

Seattle’s Amazon is probably the poster child for this strategy. Jeff Bezos, recently declared the world’s richest man, led the company for more than a decade before reporting the first annual profit.

These days, San Francisco seems to be ground central for this company-building technique. While it’s certainly not necessary to locate here, it does seem to be the single urban location most closely associated with massively scalable, money-losing consumer-facing startups.

Perhaps it’s just one of those things that after a while becomes status quo. If you want to be a movie star, you go to Hollywood. And if you want to make it on Wall Street, you go to Wall Street. Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while losing eye-popping sums of money, then you go to San Francisco.


Source: Tech Crunch

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Gillmor Gang: Paywall

The Gillmor Gang — Denis Pombriant, Keith Teare, Esteban Kolsky, Michael Markman, and Steve Gillmor . Recorded live Friday, May 4, 2018.

G3: Trust Me — Mary Hodder, Halley Suitt Tucker, Francine Hardaway, and Tina Chase Gillmor. Recorded live Friday, May 4, 2018.

@stevegillmor, @mickeleh, @kteare, @DenisPombriant, @ekolsky

Produced and directed by Tina Chase Gillmor @tinagillmor

Liner Notes

Live chat stream

The Gillmor Gang on Facebook

G3: Trust Me

G3 chat stream

G3 on Facebook


Source: Tech Crunch

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A friendly robotic arm plays tic-tac-toe to help rehabilitate patients

Researchers at Ben-Gurion University of the Negev in Israel are building a tic-tac-toe game to help patients with their rehabilitation exercises. The game is played on a grid of boxes and includes “embodied” and non-embodied play. Embodied play means a robotic arm will grab and place a marker – in this case a small cup – and non-embodied play includes bright lights that light up to mark the computer’s spot.

The system uses a Kinova arm and cups. The cups are part of the rehabilitation process and help users learn to grasp and manipulate objects after an illness or accident.

“Playing Tic Tac Toe with a set of cups (instead of X’s and O’s) is one example of a game that can help rehabilitate an upper limb,” said Dr. Shelly Levy-Tzedek. “A person can pick up and place many cups while enjoying a game and improving their performance of a daily task.”

Interestingly the speed of the robot had an effect on the users. A slower robot would make users perform more slowly while a faster robot sped up the game. This could be used to modify the game for individual patients and individual needs. Because the robot never gets tired the rehabilitation staff can pay attention to the minute movements of a patient, catering the speed and type of play as appropriate for their specific rehabilitation regimens.

The research paper appeared in Restorative Neurology and Neuroscience.


Source: Tech Crunch

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You can now easily buy movie tickets with Google Assistant

Google Assistant is gaining some new capabilities thanks to a deal with Fandango which should make ordering movie tickets a quick and easy process. Simply tell Google Assistant that you want to buy some movie tickets and you’ll see what’s playing nearby, you can dial in the specificity to find out just what’s playing at a specific theater of what theaters a particular flick is going to be at.

The deal is going live on May the Fourth™ in honor of the Star Wars™ marketing holiday and the fact that advanced tickets for Solo: A Star Wars Story™ are going on sale today.

This functionality is something that’s been available on Siri, but Google Assistant allows you to make the purchase without downloading the Fandango app which had pretty much negated most of the utility this feature had on Siri.

For now, this launch is just for Google Assistant on Android phones but if you’re perplexingly a heavy user of the Google Assistant app on iOS than you’ll be able to get your movie ticket ordering functionality sometime later this year.


Source: Tech Crunch

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A cyberattack knocked a Tennessee county’s election website offline during voting

After a distributed denial-of-service attack knocked some servers offline during a local election in Tennessee this week, Knox County is working with an outside security contractor to investigate the cause. The attack took the Knox County Election Commission site displaying results of the county mayoral primary offline during Tuesday night voting. The county resorted to distributing printed results during the outage.

“Tonight, Our web servers suffered a successful denial of service attack,” Knox County wrote on Twitter on Tuesday night. “Election results were not affected, as our election machines are never connected to the Internet.”

The day after the incident, Knox County Mayor Tim Burchett reassured voters that the attack did not compromise the vote. Election systems that can go online are far less secure than systems that are not able to connect to the internet.

“Although the crash did not affect the vote tallies or the integrity of the election, this is not something that should happen,” Burchett said in a statement. “I want to know what happened, and I think an independent review will help to determine that so we can move forward and work to prevent similar issues in the future.”

Burchett disputed outside claims that his office had acted “prematurely” in dismissing any risk to the integrity of the Knox County vote, reiterating that the county’s voting system “is never connected to internet, never at risk.”

In a report from Knox County’s IT Department, Director Dick Moran noted “extremely heavy and abnormal network traffic” consistent with a DDoS attack and observed that the IP addresses involved originated from both domestic and international locations. Moran drew a distinction between a DDoS attack that can knock servers offline and a hack intended to infiltrate systems or servers.

Sword & Shield Enterprise Security, a Knoxville-based security firm, has been contracted to conduct an analysis of the attack and “determine the exact nature” of the server’s time offline.

The county site that was affected by the attack only displayed results to the public, it did not receive or tabulate them. Still, DDoS attacks are sometimes used as a diversionary tactic to create chaos. TechCrunch has reached out to Sword & Shield with additional questions about the sophistication and extent of the attack.

Given its enhanced coordination with states as part of recent initiatives to secure national election systems, TechCrunch has also been in touch with Homeland Security about its role in providing support to Knox County and will update this story when we have more information.

To protect election systems from hacking, states are getting cozier with Homeland Security


Source: Tech Crunch