Author: folgado

Data is valuable — if you know how to access it and reap the insights from it. That’s where Machinify comes in. The artificial intelligence company just raised a $10 million Series A round led by Battery Ventures with participation from GV and Matrix Partners.

“Our core notion is that today, enterprises are collecting a ton of data,” Machinify founder and CEO Prasanna Ganesan told TechCrunch. “But if you look at how many of them are successful in turning it into smarter decision-making to drive efficiency, very few companies are succeeding.”

With Machinify, enterprise customers feed the system raw data, specify what they’re trying to optimize for — whether that be revenue or some other goal — and then the machine figures out what to do from there. Based on past decisions, the machine can figure out the right thing to do, Ganesan said.

A good example of how companies use Machinify is in the healthcare space, where businesses are using the tool to increase the accuracy and speed with which they process claims. By doing so, these companies have been able to increase revenue and reduce costs.

“Machinify is laser-focused on the critical operational issues created by the deployment of what we often call Software 2.0 within enterprises,” GV general partner Adam Ghoborah said in a statement. “Software 2.0 is software that is not written by humans like traditional software but is dynamically driven by AI models and large enterprise datasets. Software 2.0 requires a completely different approach, and we believe that the Machinify platform holds the key to unlocking its value.”

Source: Tech Crunch

Google is about to have its Cambridge Analytica moment. A security bug allowed third-party developers to access Google+ user profile data since 2015 until Google discovered and patched it in March, but decided not to inform the world. When a user gave permission to an app to access their public profile data, the bug also let those developers pull their and their friends’ non-public profile fields. Indeed, 496,951 users’ full names, email addresses, birth dates, gender, profile photos, places lived, occupation and relationship status were potentially exposed, though Google says it has no evidence the data was misused by the 438 apps that could have had access.

The company decided against informing the public because it would lead to “us coming into the spotlight alongside or even instead of Facebook despite having stayed under the radar throughout the Cambridge Analytica scandal,” according to an internal memo. Now Google+, which was already a ghost town largely abandoned or never inhabited by users, has become a massive liability for the company.

The news comes from a damning Wall Street Journal report that said Google is expected to announce a slew of privacy reforms today in response to the bug. Google made that announcement about the findings of its Project Strobe security audit minutes after the WSJ report was published. The changes include stopping most third-party developers from accessing Android phone SMS data, call logs and some contact info. Gmail will restrict building add-ons to a small number of developers. Google+ will cease all its consumer services while winding down over the next 10 months with an opportunity for users to export their data while Google refocuses on making G+ an enterprise product.

Google also will change its Account Permissions system for giving third-party apps access to your data such that you have to confirm each type of access individually rather than all at once. Gmail Add-Ons will be limited to those “directly enhancing email functionality,” including email clients, backup, CRM, mail merge and productivity tools.

90 percent of Google+ sessions were less than 5 seconds

Embarrassingly, Google admits that “This review crystallized what we’ve known for a while: that while our engineering teams have put a lot of effort and dedication into building Google+ over the years, it has not achieved broad consumer or developer adoption, and has seen limited user interaction with apps. The consumer version of Google+ currently has low usage and engagement: 90 percent of Google+ user sessions are less than five seconds.” For more on G+’s demise, read our 2014 take on the beginning of the end.

Since the bug and subsequent security hole started in 2015 and was discovered in March before Europe’s GDPR went into effect in May, Google will likely be spared a 2 percent of global annual revenue fine for failing to disclose the issue within 72 hours. The company could still face class-action lawsuits and public backlash. On the bright side, G+ posts and messages, Google account data and phone numbers and G Suite enterprise content wasn’t exposed.

How Google+ looked, in case you can’t remember

Given it’s unclear whether the G+ user data was scraped or if it will be employed for a nefarious purpose, the news of the bug itself might have eventually blown over, similar to how I wrote Facebook’s recent 50 million user privacy breach may be forgotten if no evil use is found. But because Google tried to cover up the problem because it didn’t meet some threshold of severity, the company looks much worse. That casts doubt on whether Google is being transparent on tons of other controversial questions about its practices.

The fiasco could thrust Google into the same churning sea of scrutiny currently drowning Facebook, just as the company feared. Google has managed to float above much of the criticism leveled at Facebook and Twitter, in part by claiming it’s not really a social network. But now its failed Facebook knock-off from seven years ago could drag down the search giant and see it endure increasing calls for regulation, as well as testimony before Congress.

Source: Tech Crunch

Four Elon Musk tweets. One Securities and Exchange Commission lawsuit. Two settlement offers. Then some more Musk tweets taunting the SEC.

While Tesla continues to prove its doubters wrong as an automotive and energy business, the ongoing social media sideshow hangs over its finances. The stock rose to $310.70 per share on Monday, after Musk agreed to settle with the SEC last weekend. But the company ended this Friday around where it had been a week before, at $261.95 per share, seemingly driven by investor fears over the chief executive’s ongoing Twitter problem.

The SEC needs to help creative but impulsive entrepreneurs like Musk get off of social media and focus on building their companies—by being fair but firm.

So far, it’s been too easy, and that’s setting the wrong precedent. When companies go public, they’re agreeing to put the interests of their shareholders first. Impulsive tweeting breaks that bargain.

Once Musk rejected the first settlement, the SEC could have proceeded with its lawsuit and set an example. Musk’s tweets were just the kind of egregious behavior that would have been an easy win in court. The SEC wouldn’t have needed to prove any intent by Musk to defraud. It would’ve just had to prove that it was more likely than not that Musk had disclosed a materially false fact or a misleading one without context—not a high bar when you consider the very flimsy basis for Musk’s tweets.

How did we end up here?

It all started with a single tweet. On August 7, Elon Musk tweeted to his more than 22 million Twitter followers: “Am considering taking Tesla private at $420. Funding secured.” The frenzy that followed was amplified by three more Musk tweets.

Combined, these four tweets formed the basis of the SEC’s lawsuit against Musk filed in the Southern District of New York on September 27. In its suit, the SEC asked the court to remove Musk as both Chairman and CEO of Tesla, have Musk pay unquantified civil fines, and prohibit Musk from leading any publicly listed company for an unspecified time.

According to the SEC, Musk’s tweets were based on a roughly half hour meeting on July 31 between him and representatives of the Saudi sovereign wealth fund. At this meeting, the fund told Musk it’d bought nearly 5% of Tesla stock on the open market, and expressed interest in taking Tesla private. But Musk didn’t get any formal offer, he didn’t then get full legal advice about what it would take to go private, and he hadn’t even talked to the fund again before his August 7 tweets.  

Oh, and the $420 price? The SEC’s complaint claims Musk added 20% to the price of the stock at closing the day before his tweet, got $419 and rounded up to $420 because he thought his girlfriend would find it funny given 420’s significance.

Right after the SEC’s suit was filed, a reported settlement between Musk and the SEC would have allowed him to pay a $10 million fine, stay on as CEO and force him to step down as chairman for only two years. Considering what the SEC was suing for, those terms can only be described as generous. But Tesla’s board still rejected the settlement, reportedly because Musk threatened to quit if they accepted.  

The day after rejecting the settlement, Tesla lawyers were back at the SEC groveling. Musk had begrudgingly approved of settling as the company’s stock nosedived nearly 14% on the no-settlement news.  

Under the terms of settlement 2.0, the ban on Musk serving as chairman went from two to three years and the fine on Musk doubled to $20 million. Tesla also agreed to pay a fine of $20 million, to add two independent directors to its board and to elect an independent director as chairman to replace Musk. As part of the deal, Tesla is also required to implement procedures and controls to oversee Musk’s communications, including his social media usage.

Just hours after the judge presiding over the case asked Musk and the SEC to show the settlement was in the “public interest,” Musk took to Twitter again to taunt the very counterpart whose help he needs to get the court on board with the settlement: “Just want to [sic] that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!” On cue, Tesla’s stock price fell after Musk’s latest tweet. 

The SEC may still pull the plug on the deal altogether, but—if history is prologue—that seems highly unlikely.

What’s wrong with Musk’s tweets?

The main issue is whether Musk’s tweets were false or at least misleading. Under the SEC’s rules, you can’t make a false material statement or not give enough context in making a statement to make sure it’s not misleading. You can easily see how Musk’s tweets can count as either false or—without any caveats about how preliminary the talks were—at least misleading.

Saying “funding secured,” means Tesla actually had the more than $70 billion probably needed to take the company private. No such funding was actually secured. No deal terms were discussed let alone agreed on with the Saudis. Even if Musk did have funding, approval was far from certain. Any going-private transaction would have required board approval. The Saudis had told Musk their investment may be contingent on Tesla building a factory in the Middle East, a condition which at least one Tesla board member described as a “non-starter.”

It’s not hard to imagine what led to Musk’s tweets. He has been outspoken about being hampered by the myriad requirements that come with being publicly listed. He called an analyst’s questions “boneheaded” and “dry” during Tesla’s May earning call. For years, he’s expressed frustration with short sellers. Musk must’ve genuinely been excited about the prospect of the Saudis taking Tesla private so he’d no longer have to deal with any of this.  

It’s true that disclosure requirements are onerous. It takes countless expensive lawyer hours just to make a single filing with the SEC, only to then have to make another filing the next quarter or with the next material development. The SEC itself moves slowly. It took until 2013 to accept tweets as a form of disclosure. It took until 2014 for it to agree that a hyperlink in a tweet is enough for disclaimer language, as opposed to needing the full disclaimer language within the limited characters allowed in a tweet.

But the SEC’s rules exist for a reason. They are intended to level the information differential between companies and their shareholders, and protect the millions of investors in public companies in the process. Musk may have been well intentioned in his tweets, but that doesn’t put him above the law, or make it okay for him to cause Tesla’s stock price to go on a rollercoaster ride. He can complain all he wants about the SEC’s rules, but these rules have been a requirement for public companies long before Tesla went public. By choosing the public route to get liquidity, Musk and Tesla knowingly signed up for these trade-offs.

Missed opportunity to set clear precedent

Ultimately, what matters most with any action that the SEC takes is the precedent it sets.

The SEC had a unique opportunity here to set an example of Musk’s egregious behavior. Instead, SEC Chairman Jay Clayton’s statement about the settlement made it look like the SEC was making an exception for Musk because he is so central to Tesla. Clayton said penalties for violating securities laws should be balanced with “the skills and support of certain individuals” that are important “to the future success of a company.”

In other words, it seems, you can behave more recklessly the more important you are.

Musk is absolutely central to Tesla, but that doesn’t mean he has to be the one to wear every hat at the company. There’s a reason Tesla has legal, policy and comms departments that go through rounds of approval before making corporate disclosures. It is not much to have asked Musk to call a lawyer in these departments before tweeting.

Instead of setting this double standard based on centrality of a director to a company, the SEC could have taken Musk to court and allowed the court to set a standard applicable to all directors equally. By going that route, Musk would have also had his day in court to argue before an impartial arbiter why the SEC’s actions in suing him were “unjustified.”

Even if the SEC did not want this one case drag on, leaving Tesla investor in limbo in the interim, it could have at least taken more time before agreeing to the second settlement. The specter of a continuing lawsuit would have served as a stronger deterrent than the two days it took from filing suit to coming to a settlement. Based on Musk’s tweets taunting the SEC after the settlement was agreed, it’d be hard to argue that he’s learned his lesson.

Instead Musk’s cult of being the be-all and end-all on all matters big or small at Tesla will continue. This ultimately disempowers others within the company, lulling them into a false sense of security based on the sacrosanct words of one person. According to the SEC, an investment bank analyst emailed Tesla’s Head of Investor Relations, Martin Viecha, on August 7 following Musk’s tweets asking for a clarification about the funding. Viecha responded within ten minutes with, “I can only say that the first Tweet clearly stated that ‘financing is secured’. Yes, there is a firm offer.”  

Viecha couldn’t have actually known that financing was secured any more than Musk did. He did not actually know whether or not there was a firm offer. But Tesla’s corporate culture clearly didn’t allow him to second guess the words of Musk, to the ultimate detriment of the entire company and its investors.

It may be Musk in the headlines these days, but other public-company CEOs have social media accounts too. What they say—or don’t say—can equally hurt investors and their own companies. If Musk can get away relatively unharmed with bending the rules, what will stop others from trying? The SEC’s indirect acknowledgement that the settlement terms with Musk are justified by Musk’s centrality to Tesla is exactly the kind of precedent other Silicon Valley leaders could latch onto to justify inappropriate social media behavior.

As counterintuitive as it may sound in a world where the most powerful seem to tweet with impunity, we should at least be holding directors of public companies fully accountable for tweets that violate securities law. Tweets and social media posts have real world consequences. Tesla shareholders deserve the brilliant technologist they bet their money on, not a social media troll.

The SEC’s handling of Musk’s tweets is so far a missed opportunity to make that point clear.

Source: Tech Crunch

Facebook just snatched some talent to fuel its invasion of LinkedIn’s turf. A source tells TechCrunch that members of coding interview practice startup Refdash including at least some of its executives have been hired by Facebook. The social network confirmed to TechCrunch that members of Refdash’s leadership team are joining to work on Facebook’s Jobs feature that lets business promote employment openings that users can instantly apply for.

Facebook’s big opportunity here is that it’s a place people already browse naturally, so they can be exposed to Job listings even when they’re not actively looking for a company or career change. Since launching the feature in early 2017, Facebook has focused on blue-collar jobs like service and retail industry jobs that constantly need filling. But the Refdash team could give it more experience in recruiting for technical roles, connecting high-skilled workers like computer programmers to positions that need filling. These hirers might be willing to pay high prices to advertise their job listings on Facebook, siphoning revenue away from LinkedIn.

Facebook confirms that this is not an acquisition or technically a full acquihire, as there’s no overarching deal to buy assets or talent as a package. It’s so far unclear what exactly will happen to Refdash now that its team members are starting at Facebook this week, though it’s possible it will shut down now that its leaders have left for the tech giant’s cushy campuses and premium perks. Refdash’s website now says that “We’ve temporarily suspended interviews in order to make product changes that we believe will make your job search experience significantly better.”

Founded in 2016 in Mountain View with an undisclosed amount of funding from Founder Friendly Labs, Refdash gave programmers direct qualitative and scored feedback on their coding interviews. Users would do a mock interview, get graded, and then have their performance anonymously shared with potential employers to match them with the right companies and positions for their skills. This saved engineers from having to endure grueling interrogations with tons of different hirers. Refdash claimed to place users at startups like Coinbase, Cruise, Lyft, and Mixpanel.

A source tells us that Refdash focused on understanding people’s deep professional expertise and sending them to the perfect employer without having to judge by superficial resumes that can introduce bias to the process. It also touted allowing hirers to browse candidates without knowing their biographical details, which could also cut down on discrimination and helps ensure privacy in the job hunting process (especially if people are still working elsewhere and are trying to be discreet in their job hunt).

It’s easy to imagine Facebook building its own coding challenge and puzzles that programmers could take to then get paired with appropriate hirers through its Jobs product. Perhaps Facebook could even build a similar service to Refdash, though the one-on-one feedback sessions it’d conduct might not be scalable enough for Menlo Park’s liking. If Facebook can make it easier to not only apply for jobs but interview for them too, it could lure talent and advertisers away from LinkedIn to a product that’s already part of people’s daily lives.

The co-founders of Refdash have something of a track record in building companies that get acquihired to help add new features to existing services. Nicola Otasevic and Andrew Kearney were respectively the founder and tech lead for Room 77, which was picked up by Google in 2014 to help rebuild its travel search vertical. At the time it was described as a licensing deal although Refdash’s founders these days call it an acquisition.

Building tools to improve the basic process of hiring via remote testing could help Facebook get an edge on technical recruiting, but it’s not the only one building such features. LinkedIn’s stablemate Skype (like LinkedIn, owned by Microsoft) last year unveiled Interviews to let recruiters test developers and others applying for technical jobs with a real-time code editor. LinkedIn has not (yet?) incorporated it into its platform.

Source: Tech Crunch

Homeland Security has said it has “no reason to doubt” statements by Apple, Amazon and Supermicro denying allegations made in a Bloomberg report published earlier this week.

It’s the first statement so far from the U.S. government on the report, casting doubt on the findings. Homeland Security’s statement echos near-identical comments from the U.K.’s National Cyber Security Center.

Bloomberg said, citing more than a dozen sources, that China installed tiny chips on motherboards built by Supermicro, which companies across the U.S. tech industry — including Amazon and Apple — have used to power servers in their datacenters. The chip can reportedly compromise data on the server, allowing China to spy on some of the world’s most wealthy and powerful companies.

Apple, Amazon and Supermicro later published statements on their websites. Bloomberg said it’s sticking by its story. And yet, this latest twist isn’t likely to leave anyone less confused, days after the story was first published.

Homeland Security protects the nation’s cyber defenses from both domestic and foreign threats. It’s rare for the government to issue a statement on an apparent threat which, according to Bloomberg, is a classified matter that’s been under federal investigation for three years.

The reality is that days after this story broke, it seems many of the smartest, technically minded, rational cybersecurity experts still don’t know who to believe — Bloomberg, or everyone else.

And until someone gets their hands on these apparent chips, don’t expect that to change any time soon.

Source: Tech Crunch

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own.

These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses.

Investors are pouring millions into the creation of a network of shared kitchens, storage facilities, and pickup counters that established chains and new food entrepreneurs can access to cut down on overhead and quickly spin up new concepts in fast food and casual dining.

Powering all of this is a food delivery market that could grow from $35 billion to a $365 billion industry by 2030, according to a report from UBS’s research group, the “Evidence Lab”.

“We’ve had conversations with the biggest and fastest growing restaurant brands in the country and even some of the casual brands,” said Jim Collins, a serial entrepreneur, restauranteur, and the chief executive of the food-service startup, Kitchen United. “In every board room for every major restaurant brand in the country… the number one conversation surrounds the topic of how are we going to address [off-premise diners].”

Collins’ company just raised $10 million in a funding round led by GV, the investment arm of Google parent company, Alphabet. But Alphabet’s investment team is far from the only group investing in the restaurant infrastructure as a service business.

Perhaps the best capitalized company focusing on distributed kitchens is CloudKitchens, one of two subsidiaries owned by the holding company City Storage Solutions.

Cloud Kitchens and its sister company Cloud Retail are the two arms of the new venture from Uber co-founder and former chief executive, Travis Kalanick, which was formed with a $150 million investment.

As we reported at the time, Travis announced that he would be starting a new fund with the riches he made from Uber shares sold in its most recent major secondary round. Kalanick said his 10100, or “ten one hundred”, fund would be geared toward “large-scale job creation,” with investments in real estate, e-commerce, and “emerging innovation in India and China.”

If anyone is aware of the massive market potential for leveraging on-demand services, it’s Kalanick. Especially since he was one of the architects of the infrastructure that has made it possible.

Other deep pocketed companies have also stepped into the fray. Late last year Acre Venture Partners, the investment arm formed by The Campbell Soup Co., participated in a $13 million investment for Pilotworks, another distributed kitchen operator based in Brooklyn.

Meanwhile, Kitchen United has been busy putting together a deep bench of executive talent culled from some of the largest and most successful American fast food restaurant chains.

Former Taco Bell Chief Development Officer, Meredith Sandland, joined the company earlier this year as its chief operating officer, while former McDonald’s executive Atul Sood, who oversaw the burger giant’s relationship with online delivery services, has come aboard as Kitchen United’s Chief Business Officer.

The millions of dollars spicing up this new business model investors are serving up could be considered the second iteration of a food startup wave.

An earlier generation of prepared food startups crashed and burned while trying to spin up just this type of vision with investments in their own infrastructure. New York celebrity chef David Chang, the owner and creator of the city’s famous Momofuku restaurants (and Milk Bar, and Ma Peche), was an investor in Maple, a new delivery-only food startup that raised $25 million before it was shut down and its technology was absorbed into the European, delivery service, Deliveroo.

Ando, which Chang founded, was another attempt at creating a business with a single storefront for takeout and a massive reliance on delivery services to do the heavy lifting of entering new neighborhoods and markets. That company wound up getting acquired by UberEats after raising $7 million in venture funding.

Those losses are slight compared to the woes of investors in companies like Munchery, ($125.4 million) Sprig, ($56.7 million) and SpoonRocket ($13 million). Sprig and Spoonrocket are now defunct, and Munchery had to pull back from markets in Los Angeles, New York, and Seattle as it fights for survival. The company also reportedly was looking at recapitalizing earlier in the year at a greatly reduced valuation.

What gives companies like Kitchen United, Pilotworks and Cloud Kitchens hope is that they’re not required to actually create the next big successful concept in fast food or casual dining. They just have to enable it.

Kitchen United just opened a 12,000 square foot facility in Pasadena for just that purpose — and has plans to open more locations in West Los Angeles; Jersey City, N.J.; Atlanta; Columbus, Ohio; Phoenix; Seattle and Denver. Its competitor, Pilotworks, already has operations in Brooklyn, Chicago, Dallas, and Providence, R.I.

While the two companies have similar visions, they’re currently pursuing different initial customers. Pilotworks has pitched itself as a recipe for success for new food entrepreneurs. Kitchen United, by comparison is giving successful local, regional, and national brands a way to expand their footprint without investing in real estate.

“One of the directions that the company was thinking of going was toward the restaurant industry and the second was in the food service entrepreneurial sector,” said Collins. “Would it be a company that served restaurants with their expansions? Now, we’re in deep discussions with all kinds of restaurants.”

Smaller national fast food chains like Shake Shack, or fast casual chains like Dennys and Shoney’s could be customers, said Collins. So could local companies that are trying to expand their regional footprint. Los Angeles’ famous Canter’s Deli is a Kitchen United customer (and an early adopter of a number of new restaurant innovations) and so is The Lost Cuban Kitchen, an Iowa-based Cuban restaurant that’s expanding to Los Angeles.

Kitchen United is looking to create kitchen centers that can house between 10-20 restaurants in converted warehouses, big box retail and light industrial locations.

Using demographic data and “demand mapping” for specific cuisines, Kitchen United said that it can provide optimal locations and site the right restaurant to meet consumer demand. The company is also pitching labor management, menu management and delivery tools to help streamline the process of getting a new location up and running.

“In all of the facilities, all of the restaurants have their own four-walled space,” says Collins. “There’s shared infrastructure outside of that.”

Some of that infrastructure is taking food deliveries and an ability to serve as a central hub for local supplier, according to Collins. “One of the things that we’re going to be launching relatively soon here in Pasadena, is actually in-service days where local supplier and purveyors can come in and meet with seven restaurants at once.”

It’s also possible that restaurants in the Kitchen United spaces could take advantage of restaurant technologies being developed by one of the startup’s sister companies through Cali Group, a holding company for a number of different e-sports, retail, and food technology startups.

The Pasadena-based kitchen company was founded by Harry Tsao, an investor in food technology (and a part owner of the Golden State Warriors and the Los Angeles Football Club) through his fund Avista Investments; and John Miller, a serial entrepreneur who founded the Cali Group.

In fact, Kitchen United operates as a Cali Group portfolio company alongside Miso Robotics, the developer of the burger flipping robot, Flippy; Caliburger, an In-n-Out clone first developed by Miller in Shanghai and brought back to the U.S.; and FunWall, a display technology for online gaming in retail settings.

“Kitchen United’s data-driven approach to flexible kitchen spaces unlocks critical value for national, regional, and local restaurant chains looking to expand into new markets,” said Adam Ghobarah, general partner at GV, and a new director on the Kitchen United board. “The founding team’s experience in scaling — in addition to diverse exposure to national chains, regional brands, regional franchises, and small upstart eateries — puts Kitchen United in a strong position to accelerate food innovation.”

GV’s Ghobarah actually sees the investment of a piece with other bets that Alphabet’s venture capital arm has made around the food industry.

The firm is a backer of the fully automated hamburger preparation company, Creator, which has raised roughly $28 million to develop its hamburger making robot (if Securities and Exchange Commission filings can be believed). And it has backed the containerized farming startup, Bowery Farming, with a $20 million investment.

Ghobarah sees an entirely new food distribution ecosystem built up around facilities where Bowery’s farms are colocated with Kitchen United’s restaurants to reduce logistical hurdles and create new hubs.

“As urban farming like Bowery scales up… that becomes more and more realistic,” Ghobarah said. “The other thing that really stands out when you have flexible locations … all of the thousands of people who want to own a restaurant now have access. It’s not really all regional chains and national chains… With a satellite location like this… [a restaurant]… can break even at one third of the order volume.”

Source: Tech Crunch

In what might be the most ridiculous stunt ever pulled in the art world, a Banksy piece has, in a sense, self-destructed. Right in front of an audience of would-be buyers.

A framed canvas version of Banksy’s Girl with Balloon was set to be auctioned at Sothebys in London. As the auction came to a close with a final bid of £860,000 (a little over $1.1 million), the print’s frame began… beeping. Then, whirring. Seconds later, the canvas slid through the bottom of the frame, now almost entirely shredded.

The anonymous artist has long expressed a dislike of art galleries reselling their works, down to creating a piece featuring an audience of bidders battling over a print that reads, simply, “I can’t believe you morons actually buy this shit”. This seems to be Banksy’s latest way of expressing their discontent.

Of course, it’s easy to argue that the whole thing makes the piece even more desirable, because, well… art. If people with mountains of cash are buying art to have a ridiculously rare conversation piece that they hope others recognize, this one just rocketed up the list. It’s now that piece. Or technically those pieces, I guess.

Curiously, the canvas didn’t make it all the way through the shredder — did it jam, or was that intentional? By leaving about 1/3 of the print in the frame, the shredded bits are left attached and dangling… thus preventing them from splitting the pile of shreds into 50 more auctions with everyone vying for a slice.

So how did it all work? Writer Zoe Smith shared a video on Twitter this morning that she notes appeared briefly on Banksy’s Instagram before being pulled down (Update: it’s now back up! See below). It shows what looks to be the inside of the frame (which, in hindsight, seems comically large), shredder and all:

Update — here’s the video, as reposted by Banksy:

In the same video, it’s claimed that this was all put in process “a few years ago”. It appears that the “shredder” is a series of X-acto style blades which the canvas was raked over.

Meanwhile, a news post on Artsy suggests that the shred could’ve been triggered by someone in the audience with “a device in his hand”.

But what about power? In a video of the piece being removed post-shreddage, there doesn’t seem to be any wires behind the frame, nor anything plugged in. The piece itself is detailed as having been given to its previous owner by Banksy in 2006. Both the speakers in the frame and the motors of the shredder would require a power source. Keeping a battery ready and waiting for 12 years seems… unlikely.

The Sotheby’s listing for the piece notes that it was “Authenticated by Pest Control”. Pest Control is Banksy’s “handling service”, which will go out to verify supposed Banksy pieces to try to make sure no one drops a pile of cash on a one-of-a-kind Borksy. Perhaps part of the verification process involved double checking everything within the frame.

Some folks on Twitter, meanwhile, theorize that the original print could still be hidden within the frame, with what emerged having been shredded and rolled up in the frame long ago. That video Banksy posted showing the blades within the frame makes that seem unlikely… but could it be pranks all the way down?

Banksy posted a too-perfect still of the shred in process, with the caption “Going, going, gone…”

(Top image left via Sothebys; Top image right via Banksy on Instagram)

Update: There are conflicting reports of the final bid. Some say £953,829 (around $1.25 million), others £860,000 (around $1.1 million). Banksy’s video above indicates that it was at £860,000 when the hammer dropped, so we’ve updated the post and headline accordingly. The final exact amount will vary due to auction house fees.

Source: Tech Crunch