TechCrunch |
- Disinformation demands a collective defense
- Inside Mercedes’ plan to deliver hands-free driving to the masses
- Is social media (re)traumatizing you?
- Government action on tech innovation is good news for startups
- Crypto is altering the investing landscape for even the most disciplined VCs
| Disinformation demands a collective defense Posted: 09 Apr 2022 07:03 AM PDT The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics. When the term disinformation went mainstream after the 2016 election, it was largely in reference to state actors targeting political campaigns. Despite vigilance and much effort by government, the nature of the threat continues to shift faster than democracies can adapt. State actors, financially motivated disinformation-for-hire outfits and ideologically driven individuals are spreading disinformation that targets businesses, individuals and governments alike. Now well into a U.S. election year and with tumultuous shifts in the geopolitical landscape underway, we anticipate an increase in disinformation campaigns targeting democratic institutions and private sector entities. With regulation stalled and limited protection from government, companies need to take on today's threat themselves if they are to protect their ability to operate tomorrow. In just the last two years, disinformation campaigns have caused significant damage to brand, reputation and value. In 2020, the online retailer Wayfair experienced an attempt by QAnon conspiracy theorists — who gained notoriety for targeting politicians with baseless accusations of corruption and abuse — to convince consumers that the company was trafficking children with its furniture deliveries. These ludicrous claims were ignored by many but believed by enough that they inspired calls for boycotts, attempts to manipulate the company's stock value, posting physical locations of executives' home and office addresses, and efforts to grind call center operations to a halt by flooding phone lines. More recently, disinformation campaigns have leveraged false narratives about pharmaceutical companies, driven crypto scams and coin pumping, and attempted to manipulate consumer trust in high-tech solutions, such as space technologies, electric vehicles and vaccines. In just one example, our organization, Alethea Group, conducted an investigation in 2020 in which we assessed a network operated by Chinese billionaire Guo Wengui and former adviser to President Trump Steve Bannon was manipulating QAnon-related conversations in an attempt to spread election conspiracies. But the network was not just targeting elections, it was also mentioning private companies and prominent brands, including travel and hospitality, food, beverage and technology companies. As the threat has evolved, regulations governing the digital space have not kept up, and the agencies that have historically sought to defend us against disinformation face an asymmetry that is difficult to overcome alone. A combination of legislative and bureaucratic inertia, limitations on the collection of social media data and a failure to develop new technology solutions catered to the threat have only exacerbated this asymmetry, with government entities often having insufficient resources to defend against the full threat landscape. If organizations are unable to rely on government to defend them in the digital sphere, the private sector must lead in protecting customers, employees and financial bottom lines. By implementing strategies to catch nascent disinformation campaigns before they gain momentum, companies can mitigate malign attempts to manipulate their brands, reputations, stock prices and consumer trust. In addition to defending against reputational harm through launching precision messaging campaigns rooted in fact, there are often opportunities to seek recourse against those launching disinformation campaigns by exposing their efforts or taking legal action. And by sharing information with the government, companies can also increase situational awareness that enables law enforcement and the intelligence community to work within authorities to act against those seeking to harm U.S. interests. Disinformation is not only a threat to democracy; it's a threat to our economy as well. This means that businesses and individuals — not just government agencies — have an important role to play in exposing and mitigating malign influence efforts, in protecting themselves and their economic interests, and in helping to defend our society writ large. Companies can act to protect consumers and shareholders in ways that government cannot, by working to uncover and expose the threat actors targeting them and pursuing a variety of remediation options ranging from legal action to public awareness campaigns. Indeed, our collective democratic and economic interests will depend upon it.
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| Inside Mercedes’ plan to deliver hands-free driving to the masses Posted: 09 Apr 2022 07:00 AM PDT I’m sitting in the passenger seat of a special Mercedes Benz S-Class on a blindingly bright California spring day, casually watching an autonomous delivery robot roll through a crosswalk on its way to deliver someone’s takeout meal in Santa Monica. The test driver next to me chuckles as we’re about to merge onto the highway for a demonstration of Mercedes’ Drive Pilot system, a conditional Level 3 automated driving system that consumers may be able to order by the end of this year. Mercedes is aiming to be the first automaker to bring legal Level 3 automated driving off the test track to the masses in its full-size, luxury S-Class vehicles. The question is whether it should, especially considering the Everest-sized challenges that lay ahead — even if the economic opportunities include cornering a piece of the estimated $220.4 billion autonomous driving market. The stakes are high, too. The Mercedes Level 3 system has to handle multiple tasks all at once, including recording and exchanging vast amounts of data and giving ample time and warnings for the human driver to take back control when something goes sideways. There are the legal risks that Mercedes has pledged it will take on when the system is engaged, and there are even geopolitical ones: Mercedes uses the Russian GLONASS system for its global positioning information in Germany, for instance. And yet, Mercedes is plowing ahead despite the risks, because the opportunity is just too vast to ignore. While other manufacturers like Tesla claim to have fully autonomous driving systems, Mercedes is the first to pass the required legal hurdles in the U.S. and in Germany to offer the conditional system to consumers. While the timeline is a bit fuzzy because Mercedes is still working through those legal requirements, the system could be in consumers’ hands and their driveways as soon as mid-2023. The technology Image Credits: Abigail Bassett In the trunk of one of the four development vehicles parked in the garage of the Proper Hotel in Santa Monica, sits a huge chassis of computer components. When we arrive, the trunk is open to let the components breathe, according to the test driver. There’s no room for your coveted golf bags or luggage here. These components register, record, manage and upload as much as 2.87 GB of data per minute when the car is in regular operation. If an incident occurs while the vehicle is underway, say, for example, someone cuts off the development vehicle in traffic and forces a panic stop, the system takes in as much as 33.73 gigabytes of data so that engineers can take a closer look at what happened and improve the system. Customers who own the S-Class vehicles equipped with the Drive Pilot system will not have to contend with computer components hogging up the trunk space. Instead, the vehicle will still b they will still be present in the cars so that the Level 3 system will work and be able to process and store large amounts of data. Some of that data will be kept on board, while much of it will be uploaded to a secure cloud system. That data all comes from a variety of sensors around the vehicle, a few of which will be new to future S-Class vehicles that have been ordered with the new Drive Pilot system. While the company wouldn’t disclose specific costs of the system, representatives did say that it will cost as much as their top-of-the-line Burmester audio system. That audio system on the S-Class is a $6,700 option alone, yet requires the addition of a separate $3,800 package, bringing the rough total to around $10,500. That’s getting close to the cost of Tesla’s “Full-Self Driving” system, which currently is a $12,000 option. The conditional Level 3 Drive Pilot system builds on the hardware and software used by Mercedes’ Level 2 ADAS system known as Distronic. It adds a handful of additional advanced sensors as well as software to support the features. Key hardware systems that will be added to future S-Class vehicles configured with the Drive Pilot upgrade include an advanced LiDAR system developed by Valeo SA, a wetness sensor in the wheel well to determine moisture on the road, rear-facing cameras and microphones to detect emergency vehicles, and a special antenna array located at the rear of the sunroof to help with precise GPS location. The Valeo LiDAR system is more advanced than what is on the current generation of S-Class, in that it scans at a rate of 25 times per second at a range of 200 meters (approximately 650-plus feet). This is the second generation of the system, according to the Valeo spokesperson at the event. The system sends out lasers which then create points in space to help the AI classify the type of object in and around the path of the vehicle, whether its human, animal, vehicle, tree, or building. From there, the AI uses data from the other sensors around the car, to determine more than 400 different projected paths for both itself and the potential paths for the vehicles, pedestrians, and motorcyclists around it, and choose the safest route through. The wetness sensor is a small round audio sensor positioned at the rear of the front driver wheel well and it determines how damp the road surface is. When the road is wet, droplets are thrown up against it creating an audible patter. When the system “hears” that patter, Drive Pilot will be disabled and the human in the driver seat will need to take over. The antenna array on the roof of the S-Class uses a variety of different satellites to pinpoint the exact location of the vehicle within a few centimeters. It is precise enough to recognize which lane the vehicle is in on the highway. Mercedes says it relies on Galileo, and GPS in the U.S., and the Russian GLONASS system for this positioning information in Germany. These precise GPS points are integrated into an HD map which then helps the system navigate the real world. These sensors are added to those already present in the Distronic system, which includes interior cameras to ensure that the driver is paying attention, as well as radar, ultrasonic, and 3D cameras outside. The added hardware is there to ensure that each system has redundancy and provides a more accurate view of both the interior and exterior of the vehicle as the system navigates the environment and, unlike the Tesla system, ensures that the driver is actually paying attention and not sleeping or watching a movie while operating the system. There ‘s a reason for all of this precise and specialized equipment. Mercedes-Benz has taken on the responsibility, including the liability, for the safe operation of the system. The legal ramifications could be immense should something go wrong and a crash occur while the system is in use by a consumer. New rules for Level 3 operationMercedes has used vehicles just like this one to test its Drive Pilot on more than 50,000 miles of roads in California and Nevada, where the company currently has conditional licenses to run the system. Once the legal hurdles are passed, which Mercedes says it expects to happen by the end of the year, the systems will be available on properly equipped S-Class vehicles, when driven in specific conditions. However, it will still be limited. The system will only be available in states where it’s legal (California, Nevada, and Florida currently). Cross the border into say, Arizona or Utah with an S-Class equipped with Drive Pilot, and the system will not be available. It’s geo-fenced. In addition to the state location, the system won’t engage unless the vehicle is on clearly marked, divided highways, freeways, or interstates driving in a traveling lane, not in an exit lane. While out on our drive, the test driver moved over to take an exit, and the system turned off and requested that he take over as soon as he indicated that he was changing lanes. And even when all of these requirements are met, the system is only available up to speeds of 40 mph (60 kmh). The ride When DRIVE PILOT is activated, the controls in the steering wheel glow turquoise. Image: Mercedes-Benz Inside, the vehicle looks almost identical to an S-Class with one key difference: On the steering wheel sits a pair of buttons that fall directly under the driver’s thumbs. These buttons, engraved with the image of the front of a car with the letter ‘A’ over the top, are used to initiate the Level 3 system when the external conditions are met. Lighting around the buttons and on the steering column turns white when the system is available, and green-blue when it is engaged. Our short ride took us down the 10 freeway in Los Angeles towards downtown LA and back to Santa Monica. Traffic was heavy stop-and-go, and there were plenty of opportunities for the system to fail. Within the first few minutes on the freeway, we encountered various road obstacles like plastic bags, cardboard boxes and more than one oblivious Angeleno making panic stops and randomly cutting into our lane of travel. In the short periods where the system was available when all conditions were met, its operating appeared to be seamless. The handover was smooth and almost unnoticeable. The driver engaged the system, took his hands and feet off the controls, and let the car drive itself, all while keeping his attention on the road ahead. The system uses maximum following distance when it’s engaged, so the gap was quite large between the S-class and the car ahead. Surprisingly, and sadly, no one decided to jump into that gap while the system was engaged, so we didn’t get to experience what might happen if a human made a sudden lane change in front of the car while operating the conditional Level 3 system. When the system lost the needed information, say when the lane markers (known sometimes as oreos), became faint, an audible tone would sound, and a message would appear for the driver to take over. At that point, the test driver would take control of the vehicle. All in, the system was only engaged for maybe 10 minutes in total over our 30-minute ride. Each engagement was relatively short as traffic sped up to over 40 mph, or the system lost the required information to manage the driving. The very short ride along didn’t give us enough time to evaluate the system, but it did offer a glimpse of just how Level 3 autonomy may work in the very near future. The real question, however, is how the system will behave in customers’ hands, and whether or not, even the very well-off, will purchase the technology. |
| Is social media (re)traumatizing you? Posted: 09 Apr 2022 06:15 AM PDT What happens when you're out of content to scroll through and react to on the internet? What's there to keep you engaged whether the content makes you angry, sad, happy or all of the above at once? What can a company like Facebook, Google or Twitter do to keep their hooks in so you keep coming back like a zombie begging for more? A new feature? An algorithm tweak? Nope. It all comes back to you. You're the one who's going to keep you engaged when there isn't enough out there to rope you back in. Not only are these companies making us chase our own tails, and by design I might add, it might be doing actual damage to our psyche. That's what has happened to mine, and it took me quite a while to realize it. HistoryMy relationship with the internet started around the age of 12. I'm 42, so that's 30 years of "learning." I'm both proud and terrified of that. I've seen every major platform evolve and have always been interested in the social side of things — even on bulletin board systems when maybe there would be two available phone lines for people to connect to. I was the weirdo waiting for someone else to log on so that I could pop a "HI HOW ARE YOU WHERE ARE YOU FROM?" on them. And yes, I'm fully aware that I was just as annoying on that iteration of the internet. The desire and need to connect has always been there for me, and computers have made it increasingly easier. Millions of people helped me cope with a cancer diagnosis in 2009, and for me to shift and say the internet can be bad for you would be about the biggest Boomer thing I could ever do. But here I am doing just that: The internet can be bad for you and you're more of a willing participant than you think. Is it because of the trolls and terrible people out there who are hiding behind computer screens to tear you down, make fun of how you look, speak horrifically on your sexual preferences or color of your skin? Partially. The deep dark secret, though, is that your No. 1 enemy on the internet might be you. It is most certainly the case for me and some folks I've talked to over the past two years during the weirdest simultaneous slowdown and speed up in tech that I can remember in the last 30 years. The tech itself isn't all that evolved, but the need and want to connect with others is. But that's not the really traumatizing part. IntentionRecently, I deactivated my Facebook account. I don't say that as some kind of proud moment or virtue signal to point to how bad or harmful the products are or how terribly shitty the leadership is … even though I feel like both of those things are true. The reason I deactivated my Facebook account was me. Every single day I was terrorizing … myself. How? One way was by looking at a lovely Facebook feature called "Memories." The intention of that feature is to remind you of all the wonderful moments you've had during your life and allows you to ping a pal and say "Hey, remember when we got assface shit-hammered and threw eggs at a cop on a horse?" and you both laugh and then swap photos of your plant or baby, whichever one you're currently blessed enough to have at that moment. The reality of that feature is quite different. We're impressionable beings. We're affected by our surroundings, some of us more than others. I'm willing to admit that what some people call "sensitive" is somewhat of a superpower of mine. I'm empathetic. Overly empathetic. I care about others almost to my own detriment sometimes. Which made it really hard to realize that I was, in essence, destroying myself. An extreme example of this is that in Spring 2009 I was diagnosed with Hodgkin lymphoma. It was the scariest thing to ever happen to me. I felt alone. I felt nervous. I felt like I was going to die. I felt like I wanted to kill myself before the cancer could. I used Twitter to quell some of that by sharing my story and involving others. We raised a ton of money. It had a selfish origin though, because what it did for me was take the focus off of me. Ever since that moment in 2009 I've somehow and someway been reliving what my former self was up to online and reliving my experience with cancer. Daily, weekly and yearly. Fast forward to 2018 and I opened Facebook on my desktop and was presented with a very enticing premise … the ability to "rewind" and see what my former self was up to in years past. It was cool until it wasn't. Now every year I'm officially and precisely presented with exactly how I felt at my worst moment. And instead of reflecting in a positive way about how far I've come, I'm sucked right back into how it felt in the moment. It's masochistic. It took me until 2022 to fully realize just how much damage I was doing to myself on an almost daily basis. Like a lot of folks, opening Facebook was a part of my (multiple times) daily routine. I've refused to look at Apple Screen Time because I don't want to know exactly how many times I've opened Facebook in a day. My guess is 50-75 times. And how much of that activity was rewarding or productive? Probably less than 10%. Facebook opened to the public (outside of college students) in 2006. So Meta/Facebook has 16 years' worth of my own data and experiences to reengage me with. And since I'm an oversharer, it's a fucking lot for me. Using my own memories to pump up engagement is a smart growth hack, but it was also completely melting my brain. And while I relived my worst moments over and over, there was more. I was also re-traumatizing myself with everything from breakups, losing my dog and medical issues to my father passing away and the Sixers losing by 30 in 2013. Naturally for me, and a lot of others I suspect, my brain responded more to the bad than the good. You think my day was made when I saw a Facebook post in 2016 about a tasty ice cream I had? Not really. Or not nearly enough to counteract the trauma I relived in a very unhealthy and uncontrolled way. And it's not just Facebook. Twitter doesn't have an official feature for memories, but the same thing happens. Google Photos? Those, too. The last video I have of my dog Apollo, who I had for 10 years, is not a "highlight" at all. Quite the opposite. Do I feel like Google is out to get me? No. Do I feel like they should know the difference between good and bad? Of course. But how? That's what we need to figure out. It's not just your own content that gets you; it's the actions you take on others'. If you like (or heart, prayer hands, gasp, whatever … ) a post about someone passing away, whether it's someone you know or someone you saw on the big screen, you'll be reminded about it until the end of forever. Again, by design. The problem is, algorithms don't have empathy. They just show you more of the shit you interact with, good, bad or indifferent. The re-sharing leads to more reliving than reflection, and it's not always healthy. And before you show me screenshots of the extremely not obvious settings to turn these types of things off, just a reminder that I didn't even know this was harmful until I recently realized how much damage had been done over the years. Where we areWho is building what we're using? For me, it used to be friends and acquaintances. Since I covered the companies for a living and lived in the city where a lot of it was built and worked on (San Francisco/Bay Area) I gave a lot of latitude to these products. I'm tough on them but also cut them some slack since they're run by human beings. But as I pulled away from the Bay Area by proximity and also as my peers left and moved on to greener pastures, it became very clear that these companies weren't trying to change the world at all even if some of their byproducts were positive. Starting something is much easier than keeping something going, at least when it comes to keeping things safe to use. I'm sure Mark Zuckerberg had a few good intentions when starting Facebook. Jack Dorsey with Twitter, too. But both companies are businesses. Businesses require growth. Growth brings in more money. Through that lens, it's easy to draw the assumption that humanity would bankrupt them. Brands, marketers and advertisers need the tidal wave of content coming to generate engagement and clicks, otherwise the whole model breaks down. Facebook's motto used to be "Move fast and break things" whereas now it's more than likely "If it ain't broke for us, who cares if it's broke for our users." The feedback loop (involving your own stuff and stuff from others) is addictive. As with anything, it can be positive. It can also be destructive. I have trusted my mental health with people who also may have mental health issues (which is fine) at best and, at worst, don't give a flying fuck about how anyone feels. I don't need to link to all of the instances where people have literally died because of decisions and mistakes made by the companies running products that millions open 50-75 times a day. Solutions?It doesn't feel good that my crappy experiences are helping companies become stronger, bigger and better picks for people hoping to make a lucky buck in the stock market. I chose this, though. Nobody made me sign up for Facebook or Twitter, even though it's quite ingrained in society now and for the industry I'm in. I'd likely be labeled a luddite or something if I denounced and withdrew from these platforms fully. Me leaving isn't a big deal, but droves of folks would be bad for business. I know for a fact that there are small groups inside of big companies that think about a wide spectrum of user experiences, but more often than not the bad or uncomfortable experiences don't get a lot of attention, because that would distract from the real goal: making more money. When I covered Zynga I asked those who worked there if they felt bad about the carefully orchestrated and manipulative loops their games sent people through. The answers were usually a combination of "the good outweighs the bad" or "bad outcomes are an edge case." They weren't. They knew they weren't. But justification is a hell of a drug. In the case of Memories, Facebook in essence, handed me a double-edged sword that sharpens itself over time without warning. How will things get better? The small groups working on user experiences should be bigger. Involve more people. Should they think about different sorts of people and should they drive real change within a company even if it costs the company money at first. Do you want more users? Or do you want slightly less, but happier and safer, users? I shouldn’t have to ask this question. Maybe Google Photos could prompt me about my feelings when it comes to a certain photo or video as part of the upload flow. I could choose to participate or skip it. But I can hear a product manager shouting "who wants all that friction?" as we speak. Bummer. Maybe the answer is to never share any sad shit ever on the internet; then you'll never have to see it again. Not very true to reality, though. At least for our generation and the ones following ours. Do we need some government involvement? Sure. Should the argument for "freedom" and fear of overreaching senators stall out a drive to make things better for human beings? No. Even the tobacco industry needed oversight, so why not social media? Am I altruistic? Yes. Do I think Facebook should be shut down? No. But I do think that there should be more of an infusion of people who actually care about their fellow human beings at the wheel. What I'm experiencing isn't "just an edge case," it's a side effect with real consequences that don't get enough thought or follow-through. At the end of the day, I just don't want to be reminded about making this very point in this very post 10 years from now just for there to be no change. So the next time you find yourself closing your device in a super bad mood, ask what or who put you in that mood. It might in fact, It was most likely you. |
| Government action on tech innovation is good news for startups Posted: 09 Apr 2022 06:13 AM PDT The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics. Much has been written in this space about the Defense Department's efforts to tap Silicon Valley's innovation — and the steep hill tech firms have to climb to ultimately win DOD contracts and cross the "Valley of Death." The good news is that the U.S. government has heard Silicon Valley's pleas to cut bureaucracy and foster new ways of doing business and is taking action. The Critical 4CsOver the past year strong, bipartisan alignment has emerged between the executive and legislative branches around a set of actions aimed at closing gaps and removing barriers to success, best thought of as the "Critical 4Cs”: Culture, Contracting, Congressional Budget Cycles and Champions. Let's start with Champions. The American people are fortunate to have two of Silicon Valley's greatest champions in Deputy Secretary Kathleen Hicks and Under Secretary for Research and Engineering (R&E) and (CTO) Heidi Shyu. They, along with other champions in the Pentagon, fully understand the challenge and have taken concrete steps from the top down to prime the DOD system for innovation. For example, Hicks and her former software czar led a huge effort in 2021 to deliver DOD's Software Modernization Strategy, which aims to better organize the Pentagon's internal processes for adopting new software technologies across the enterprise. The strategy also produces, in effect, the formal policy “demand signal” for scaling up Silicon Valley tech across the DOD. Hicks has also visibly empowered the CTO, her management group and the Innovation Steering Group to map the Pentagon's innovation efforts, examine its alignment and acquisition practices and engage honestly with — and incorporate the views of — industry's smaller tech stakeholders as moving forward. DOD has also established new programs to recruit and grow tech talent and thereby attract and retain a greater pool of defense tech champions. This gets at another key "4C": building a tech savvy — and tech driven — culture within the DOD. Under Shyu, an experienced senior procurement and acquisition executive who holds degrees in math and engineering, the Pentagon has been launching a raft of efforts to help it “go faster.” As head of Research and Engineering, Shyu helps coordinate the hundreds of innovation offices and efforts across the Defense Department. She's been taking concrete action to strengthen the position of small tech innovators and reduce barriers to working with DOD. Among them is a Technology Vision released in February, which prioritizes the Pentagon's key focus areas such as Trusted AI, Space, Advanced Computing and Software. Under Secretary Shyu has also asked Congress for authority to assist small innovators through an expanded Small Business Innovation and Research (SBIR) grants process to mature experimental programs and increase the odds that they become programs of record. This is one of many efforts underway aimed at easing the systemic "contracting C" barriers to promising programs. In the last "C," Congressional budget, the Biden administration proposed in its FY2023 budget a 9.5% increase over the FY22 funding level for the Defense Department's Research, Development, Technology and Engineering. If adopted by Congress, it would represent a significant effort to advance modernization and tech adoption, building on the measures passed by Congress in the FY22 National Defense Authorization Act (NDAA) and FY22 Budget The FY22 legislation specifically authorized and funded DOD's plans to reduce barriers to tech adoption and provided additional funding for software and SBIR programs. For example, the FY22 NDAA Section 833 directed DOD to develop a pilot program to implement unique acquisition mechanisms for emerging technologies. Meanwhile, Section 834 mandated accelerated procurement and fielding of advanced tech — both intended to address speed and reduce the pain of the Contracting "C" as funding levels were envisioned to rise in FY23. Congressional members and staffers continue to hear from Silicon Valley startups about the lack of planned funding at the end of SBIR funding cycles, but Congress's challenge, they say, is balancing rapid innovation success with oversight and accountability for such taxpayer funding. They don't write blank checks. This is why Under Secretary Shyu's request to Congress to expand the SBIR cycle is important. Unintended consequencesAs Congress and the Pentagon continue to address the "4C" challenges, they must avoid creating new ones. For example, when broader spending and authorities for software and new tech were passed, Congress created new reporting requirements to account for how the money was being used, in some cases, disincentivizing innovation. As one DOD program executive put it, "Now I must provide quarterly quantitative and qualitative reports on progress to include comparisons of similar programs. Thanks, but I'll stick with [traditional programs] and focus on delivering products instead of reports." New reporting burdens can eclipse the intent and create cultural antibodies to doing new things among well-respected yet overworked program executives. There has to be a balance between "oversight" and "free for all." Watch this space. Gaps remainA recent report from the consultancy firm Mitre outlined why simply throwing more money and expanding latitude in the SBIR grants process is an incomplete solution to solving the problem of rapid tech adoption. In a nutshell, all defense acquisition is rooted in the formal requirements process, the lengthy Pentagon process that articulates what the military needs and why, and its related acquisition and budget processes that establish how much it can buy, how and when. If a particular new technology isn't in that requirements and budget process, it would be difficult for the Pentagon to fund and adopt it. The current processes often pit program executives and contracting officers against the innovation teams and end users who want advanced tech now — a dynamic that makes it easier to keep the status quo. In order to make tech adoption a reality, these formal processes need an overhaul to keep progress moving in the right direction. It's one thing to develop or test out new tech, it's another thing to deem it a hard requirement and get it into the formal buying cycle to scale it across the world's largest, most complex fighting force and its networks. Authorization to Operate (ATO) presents a substantial hurdle for startups and end users alike. If a company's software or hardware is deemed secure on one Army network, why isn't it secure on another? Often firms must go through separate approval processes for each office, branch, or Pentagon agency. This could be streamlined without making tech adoption itself a security vulnerability, including by more effectively leveraging cloud resources. Clearly more work is needed to address ATO challenges if new tech is to be scaled at the speeds and levels Pentagon leadership desires. The U.S. government clearly recognizes the serious national security and financial imperatives for rapidly adopting Silicon Valley's most innovative and applicable commercial/dual-use solutions. But as the adage goes, "Rome wasn't built in a day" and continued efforts will be needed to close gaps and mitigate unintended consequences. Startups need to continue to actively engage with the Pentagon and Congress to communicate specific examples of their “pain points” and offer constructive ideas, while at the same time adjusting to a business, compliance and contracting culture vastly different from the Valley. By working together toward success, the Pentagon and Silicon Valley are truly capable of anything, including defending the free world against the worst existential threats.
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| Crypto is altering the investing landscape for even the most disciplined VCs Posted: 09 Apr 2022 06:00 AM PDT The long-awaited re-correction of private tech startup valuations and fundraising expectations has a web3-sized asterisk next to it. While many funds are returning to more conservative check-writing, with a focus on profitability and business fundamentals, crypto remains a sector in the spotlight that attracts dedicated billion-dollar funds and investment terms that remind us more of 2021 than 2022. So, is it hype, the promise of innovation in crypto, or a little bit of both? Venture capitalists and founders across all fundraising stages spoke to current investment strategies when it comes to investing in this cohort of startups. The contrasting strategies come down to technical differences in cap tables, the culture of communities that many companies in this space are built upon, and, of course, the non-crypto world's fear of missing out. Tokens and the future of future equityWeb3 cap tables typically range across four different categories, Chris Matta, president of 3iQ Digital Assets, explained to TechCrunch. The first is the traditional cap table, which is similar to traditional technology companies and follows a classic business model that's more "accessible and understandable by investors," but would not include a token model. The second is a hybrid cap table that has a core list of traditional equity holders along with some investors who are in a token conversion agreement that will grant them token allotments once the token tied to the company is launched. "These business models focus on the token but use the equity as a transition structure," Matta said. Third is a token-first structure, which has a "lean cap table" consisting of the startup founders that’s a pure placeholder on the road to a fully tokenized structure, i.e., the primary capital-raising vehicle, Matta said. "These structures were popular in the 2017-2018 [Initial Coin Offering] days and have become less prevalent today." Lastly, decentralized autonomous organizations (DAOs) that have popped up in the past 12 months generally have no centralized entity but have typical rights and governance structures that a traditional non-web3 company would have. There's also a simple agreement for future tokens (SAFT), where investors don't own equity in the company, but see value in its token and will eventually get the company's native coin, Yida Gao, general partner at Shima Capital, said. Alternatively, there are simple agreements for future equity (SAFE), in which a company provides an investor rights to future equity without specifying the price per share during the initial investment. Influx of cash-rich attention"The days are long but the years are short in crypto," Stan Miroshnik, partner and co-founder of 10T Holdings, said to TechCrunch. "When we started the fund (over three years ago), the premise was really there was no one tooled up to write a $50 million check into the blockchain space at all." In the past 12 months, there’s been a combination of traditional growth investors and crypto-focused investors tapping deeper into the space. Then there are strong existing venture asset managers with more dedicated crypto strategies like Andreessen Horowitz (a16z), Lightspeed Venture Partners, Bain Capital and Sequoia Capital, to name a few. Yet, things are accelerating across the board in crypto. Last year, about $32 billion of capital pooled into the crypto world, and this year, $11.35 billion has been invested to date, according to data compiled by PitchBook. There's a clear difference between traditional equity investing and putting capital to work in web3 and crypto companies in terms of ownership, Gao told TechCrunch. "In traditional equity investing you want to have a Series A or seed stage investor have 20 to 30% ownership of the company," he said. "But having 20 to 30% ownership of a token or of a network is very bad and frowned upon by the community. And web3 is all about the community." |
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