Month: January 2023

Conventional wisdom suggests that a Series B company should be hunkering down right now, cutting costs, weathering the storm, but Israeli startup Quantum Machines is defying this approach as it continues to grow in spite of the economic uncertainty swirling around the world.

The company announced that it got an additional $20 million tacked onto its $50 million Series B originally announced in September 2021. While co-founder and CEO Itamar Sivan wasn’t ready to talk specifics when it came to growth metrics, he suggested that unlike a lot of other startups in 2022, his company was meeting its growth and revenue goals.

“It’s funny, I met with one of our investors a couple of days ago, and they said, ours might actually be the only company they met recently that was on target for 2022,” Sivans told TechCrunch. The company actually doubled its revenue last year and is expected to do so again in 2023. While he wouldn’t share an exact number, he indicated that it reached at least $10 million last year. “I cannot speak to sales or anything like that, but I can say that it has two digits in millions of dollars. So it still leaves a broad range between 10 and 99,” he said

While customers may be cutting back on some tech, Sivans sees quantum research at a critical juncture, and he believes that’s why his company is adding customers. That means external economic conditions are having little impact on his startup, especially as countries around the world jockey for position around building quantum computers.

“I believe that quantum computing in this regard is a safer field to be in in this environment because countries cannot afford to lose this race. So if a country slows down for a couple of years [because of economic concerns]…this might be an irreversible process,” he said.

Because of the sensitive nature of quantum computing research, Sivans can’t name any of his customers directly, but did say that the company now has 280 customers across government, universities and corporations in 20 countries around the world. The company lists testimonial blurbs from a variety of institutions on its website including Harvard University, Weizmann Institute of Science, Seoul National University, ENS Lyon, USC and CEA Saclay, and it’s probably safe to guess that these testimonials are from customers.

It also made its first acquisition last year when it acquired QDevil, a Danish company that has built tooling to help control parts of the quantum process. The new company should dovetail well with the existing Quantum Machines platform. The company has split into two divisions as a result of this: Quantum Control and Quantum Electronics.

As we wrote at the time of the $50 million funding, the original platform looks at the role of classical computing in the quantum process:

As Sivan explains, the classical computer has a software and hardware layer, but quantum machines have three layers: “The quantum hardware, which is the heart, and on top of that you have classical hardware […] and then on top of that you have software,” he said.

“We focus on the two latter layers. So classical hardware and the software that drives it. Now at the heart of our hardware is in fact a classical processor. So this is I think one of the most interesting parts of the quantum stack,” he explained.

The startup, which had 60 employees when we spoke in September 2021, has grown to over 140 now and is continuing to hire.

The $20 million investment infusion, which closed late last year, came from a variety of unnamed institutional investors, along with existing investors Qualcomm Ventures, Red Dot Capital Partners, Samsung NEXT, Meron Capital and Alumni Ventures. The company has now raised $100 million.

Quantum Machines continues to grow in spite of economic uncertainity by Ron Miller originally published on TechCrunch

Twitter announced an annual Blue subscription plan for hardcore users who want to commit for a year. The revamped Twitter Blue subscription was launched last December at a rate of $8 per month (or $11 per month for iOS users). Now, users have a chance to get a discount and be all in for a year for $84 if they get it on the web.

Twitter Blue is currently available in the US, the UK, Canada, Australia, and New Zealand with the company expanding the plan to Japan-based users earlier this month. The annual plan is available for all users in all these countries.

Elon Musk’s version of Twitter Blue includes features likethe blue verification mark,60-minute video uploads, and priority ranking in conversation replies. Users also get features from the older version of Twitter’s paid plan like a thread reader and an edit tweet feature along with custom icons and themes.

Since taking over the social media company, Musk has pushed on the fact that the company needs to make money and he is heavily relying on the new subscription plan to bring in a ton of revenue. Earlier this week, Financial Times reported that Twitter will be soon due for interest payment on the loans worth nearly $13 billion Musk took to purchase the company.

There have been a lot of indications of Twitter’s financial struggle. The company has had to vacate multiple international offices reportedly due to nonpayment of the rent. To cut costs, Musk has also had to shut down a data center in the US.

Twitter now offers an annual Blue subscription for hardcore users by Ivan Mehta originally published on TechCrunch

Microsoft today announced details of a much-rumored round of layoffs, confirming in afiling with the Securities and Exchange Commission (SEC) that 10,000 employees will be impacted as part of “workforce reduction” measures the company is taking in response to “macroeconomic conditions and changing customer priorities.”

The news comes as major redundancies continue to permeate the tech industry, with Salesforce recently announcing that it was cutting its workforce by 10% impacting some 7,000 workers, while Amazon is in the midst of cutting 18,000 from its headcount.

While Microsoft underwent at least a couple of smaller round of layoffs last year, the latest reduction represents a sizable chunk of its workforce — nearly 5% of its 221,000 employees globally. The company said that the layoffs will run from now through to the end of Q3 2023, while it also plans to consolidate some of its office leases to “create higher density across our workspaces.”

In terms of severance, Microsoft said that U.S.-based employees will receive “above-market severance pay,” though it didn’t specify what that means. It also said that those impacted will continue to receive healthcare for six months, career transition services, and 60 days’ notice prior to termination.

Headwinds

In an email memo sent to employees, CEO Satya Nadella’s words followed a similar theme to that of other technology companies that have announced big layoffs over the past year. Essentially, as its customers increased their digital spending during the pandemic, they’re now reducing their spending, in part due to global economic downturn.

“As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less,” Nadella wrote. “We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”

It’s worth noting that while Microsoft is cutting some roles, it still plans to hire in other “key strategic areas.”

“We will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of
secular growth and long-term competitiveness for the company, while divesting in other areas,” Nadella continued. “These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts.”

Microsoft said that its cost-cutting measures will lead to costs of around $1.2 billion in Q2, resulting from severance pay, changes to its hardware portfolio, and its “lease consolidation” efforts.

Microsoft announces 10,000 job cuts, nearly 5% of its global workforce by Paul Sawers originally published on TechCrunch

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

This is our Wednesday show, where we niche down to a single person, think about their work and unpack the rest. This week, Natasha interviewed Roger Lee, an entrepreneur who’s spent the better part of a decade building tools for employees and employers alike. Lee is the creator of Layoffs.FYI and co-founder of Comprehensive and Human Interest.

Here’s what we got into:

Roger’s introduction to entrepreneurship during the dot-com bubble
How the pandemic de-stigmatized layoffs
How Comprehensive – described as the inverse of Layoffs.FYI – is helping employees level-up
The importance of crowdsourcing and to monetize, or not to monetize…transparency
We ended, as usual, with a lightning round and learned where Lee’s career could have gone if he didn’t take the founder path (hint: it’s not VC).

Equity drops at 10:00 a.m. PT every Monday and at 7:00 a.m. PT on Wednesdays and Fridays, so subscribe to us onApple Podcasts, Overcast, Spotify andall the casts. TechCrunch also has agreat show on crypto, ashow that interviews founders, one thatdetails how our stories come together, and more!

What’s next for the entrepreneur behind Layoffs.FYI by Theresa Loconsolo originally published on TechCrunch

Sophos is laying off about 10% of its global workforce, TechCrunch has learned. Sophos confirmed the layoffs in an email to TechCrunch.

“Sophos today announced an internal restructuring which has resulted in job losses and the start of consultation periods that potentially will affect 10% of our global employee base,” said Jitendra Bulani, a spokesperson for Sophos. The company said the layoffs were to ensure the company achieves “the optimal balance of growth and profitability,” amid the ongoing and deepening economic global slowdown.

TechCrunch learned that about 450 people were let go during this round of layoffs, though Sophos would not confirm the exact number of affected employees. TechCrunch first learned of the layoffs after hearing of several employees in India who were let go. Some affected employees in the country were informed on Tuesday and asked to submit their resignations.

“Sophos is taking these steps for two main reasons: first, to ensure that we achieve the optimal balance of growth and profitability to support Sophos’ long-term success, which is particularly important in the midst of a challenging and uncertain macro environment; and second, to allocate our investments across the company to support our strategic imperative to be a market leader in delivering cybersecurity as a service.”

Sophos told TechCrunch that the layoffs may affect all job roles, but declined to provide further details.

Sophos said the plan to cut jobs was to focus more on cybersecurity services, specifically on “managed detection and response.” This is to achieve its goal of becoming a top player in the global cybersecurity market, the spokesperson said.

More than half a million organizations worldwide use Sophos’ technologies, including endpoint detection and network, email, and cloud security, which generate over $1 billion in revenue, the firm said. Sophos said its managed services business generates over $175 million annually and is growing at over 50% per year.

In March 2020, private equity firm Thoma Bravo acquired Sophos in a $3.9 billion deal.

“We are grateful for the contributions of all our team members, past and present, in building Sophos into a cybersecurity leader, and in helping to keep the world safe from the evils of cybercrime,” the spokesperson said.

Sophos is joining a growing list of technology companies that have had to lay off their workforce due to financial difficulties. Tech giants including Amazon, Meta, and Microsoft have also had to let go of thousands of employees in recent months.

Sophos to lay off 450 employees globally by Jagmeet Singh originally published on TechCrunch

Boston Dynamics just released the latest demo of its humanoid robot, Atlas. The robot could already run and jump over complex terrain thanks to its feet. Now, the robot has hands, per se. These rudimentary grippers gives the robot new life. Suddenly, instead of being an agile pack mule, the Atlas becomes something closer to a human with the ability to pick up and drop off anything it can grab independently.

The claw-like gripper is made up of one fixed finger and one moving finger. Boston Dynamics says the grippers were designed for heavy lifting tasks and were first demonstrated in a Super Bowl commercial where Atlas held a keg over its head.

The videos released today show the grippers picking up construction lumber and a nylon tool bag. Next, the Atlas picks up a 2×8 and places it between two boxes to form a bridge. The Atlas then picks up a bag of tools and dashes over the bridge and through construction scaffolding. But the tool bag needs to go to the second level of the structure — something the Atlas apparently realized and quickly throws the bag a considerable distance. Boston Dynamics describes this final maneuver: “Atlas’ concluding move, an inverted 540-degree, multi-axis flip, adds asymmetry to the robot’s movement making it a much more difficult skill than previously performed parkour.”

Boston Dynamic’s Atlas is a research platform, and not available for purchase. It’s long been the star of many viral videos, and has effectively demonstrated Boston Dynamic’s robotic capabilities. In the small world of humanoid robotics, few competitors have shown similar capabilities of the Atlas. Only NASA’s Robonaut offers similar hand-like grippers.

Boston Dynamics’ latest Atlas video demos a robot that run, jump, and now, grab and throw things by Matt Burns originally published on TechCrunch

TikTok today announced it’s expanding its “state-controlled media” label to over 40 more global markets, to alert users when videos they’re seeing on the app are being published by entities whose “editorial output or decision-making process” is subject to influence by a government, the company said on Wednesday. The pilot initially began last year after Russia’s invasion of Ukraine by labeling state-controlled media in Russia, Ukraine, and Belarus. When tapped, the label provides the user with more information about what the label means and why it’s being applied.

Since its launch, accounts run by Russian media organizations like RT, Ruptly, Sputnik, RIA Novosti, TASS and dozens of others have had the label added to their videos.

The Beijing-based video entertainment app is not being progressive with this implementation of the state-controlled media label. If anything, it’s delayed. TikTok’s peers have offered a similar system for labeling state-run media for years. For instance, YouTube in 2018 said it would begin to label state-funded broadcasters, and last year blocked Russian state-run channels from monetizing through ad dollars alongside Facebook. Meta had also been labeling state-controlled media since 2020 across its platform. And, prior to Elon Musk’s takeover, Twitter’s policy since 2020 had also been to label state-owned media. (Recently, Musk has been making jokes about the label, so it’s unclear if the policy will shift.)

In TikTok’s case, the company says it evaluates the editorial independence of an operation by considering its mission statement, editorial practices and safeguards, leadership and editorial governance, and its actual editorial decisions. It also offers an appeals process if an entity feels they’ve been unfairly labeled by its trust and safety team.

The company said it has worked with a variety of experts ahead of its pilot program, including consultations with over 60 media experts, political scientists, academics, and members from various international organizations and civil society groups worldwide.

TikTok’s handling of misinformation around Russia’s invasion of Ukraine hasn’t been fully effective, however.

The company in March said it would cut off new content originally in Russia in response to the country’s new “fake news” law about the invasion, but continued to allow several prominent Russian state media accounts to post.

And it wasn’t until now that the label is reaching high-profile markets, like the U.S. Canada, parts of Europe, China and others.

TikTok confirmed to TechCrunch the label will roll out now to the following countries:

Afghanistan, Armenia, Austria, Azerbaijan, Belgium, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Ireland, Italy, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malta, Mongolia, Netherlands, Poland, Portugal, Republic of Cyprus, Republic of Moldova, Romania, Slovakia, Slovenia, Spain, Sweden, Tajikistan, Turkmenistan, United Kingdom, United States, Uzbekistan.

The expansion comes amid a renewed crackdown on the short-form video app in the U.S., which former President Donald Trump had originally tried to ban in 2020 due to national security threats, only to have the ban stopped by the courts and later, the Biden administration.

But in recent weeks, a number of U.S. states and the U.S. House have now banned TikTok from government-issued devices, over mounting security concerns that TikTok shares data with the Chinese government. Forbes also accused the company of spying on its journalists and, last year, BuzzFeed, reported TikTok staff in China was accessing U.S. user data, leading TikTok to move the data to Oracle servers in the U.S.

TikTok rolls out its ‘state-controlled media’ label to 40 more countries by Sarah Perez originally published on TechCrunch

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

I’m a co-founder of a very early-stage startup. My co-founder and I are considering bringing on a third co-founder, who was recently laid off. She is currently in the United States on an H-1B with a grace period that will expire soon.

What are the fastest, least risky immigration options that we should consider? What’s going on with potential increases to USCIS filing fees?

— Careful Co-Founder

Dear Careful,

It’s wonderful to hear that you’re expanding your team and supporting your prospective co-founder.

This is the right time to hire international talent, since filing fees for most work visas and green cards will likely increase later this year. The U.S. Department of Homeland Security, which oversees U.S. Citizenship and Immigration Services (USCIS), earlier this month issued a proposal that would substantially increase fees for many non-immigrant visas, and would slow the premium processing time from 15 calendar days to 15 business days (roughly three calendar weeks), among other changes.

For instance, the filing fee for an H-1B application (new, renewal, or transfer) will increase from $460 to $780. DHS is accepting public comments on this proposal until March 6, 2023, and I urge you and other employers, particularly early-stage startups, to weigh in on these changes.

First, buy time

Before I dive into your first question, I highly recommend talking with an immigration attorney ASAP about your prospective hire’s situation and timing. An immigration attorney can suggest strategies tailored to your startup and aimed at mitigating risks. Calculating the grace period after a layoff can be tricky, as it involves a lot of factors, and you want to ensure that your co-founder maintains valid status in the U.S. and has the proper authorization for any required international travel.

Since your prospective co-founder’s 60-day grace period is ending soon, she can get additional time quickly by applying online for a change of status from H-1B to B-1 business visitor status, which will enable her to request to stay in the U.S. for another six months. It will also give you time to prepare an H-1B transfer filing and seek to change her status back to an H-1B or another work visa.

Remember that the B-1 status is not a work visa and does not grant work authorization, which means she will not be authorized to be employed by your startup. However, she can do a few things that immigration officials do not consider as work, such as:

Attend business meetings or consultations;
Attend a convention or conference;
Negotiate contracts.

Dear Sophie: What are some fast options for hiring someone on an expiring grace period? by Ram Iyer originally published on TechCrunch

Deal Box, a capital markets advisory and token offering packaging platform, has launched its venture arm with plans to invest $125 million in startups using web3 technology, the company shared Wednesday.

“We believe in the transformative power of web3, and we plan to invest in both web3 startups and companies that use web3 technology, including blockchain, to impact and reshape people’s everyday lives,” Thomas Carter, CEO of Deal Box, said to TechCrunch.

Deal Box was founded in 2005 and has more than $200 million in total deal flow with over 500 packaged clients, according to its website. It has partnered with investing- and digital asset-focused businesses like Tezos, Vertalo, tZERO, Texture Capital, Fundopolis and Resolute Capital Partners, to name a few.

The venture arm, Deal Box Ventures, will focus on startups across five fund areas: emerging growth, real estate, fintech, social impact and what it calls “FunTech,” which will look at “action sports, innovative leisure and experiential consumer products changing the way we rest and play,” the company stated.

“On the FunTech side, we know that football, soccer and basketball teams have emerged as behemoths in terms of team valuations,” Carter said. “There’s a lot of consolidation opportunities in action sports and the potential is quite large. It’s an extraordinary moment for these action sports categories as they become institutionalized and more recognized.”

For the fintech category, AI and blockchain will be the quickest path to enterprise value creation, Carter added.

Each fund totals $25 million, and the sum across the five funds is $125 million, Carter said. “This will be an achievable target to raise per fund, and we will have larger funds launching after.” This amount is “the best foundation for achieving the results we want to achieve over the next three to five years,” Carter added.

Deal Box has taken strategic institutional funds from family offices and high net worth and ultra-high net worth individuals, Carter shared. There has also been interest from institutional investors, other family offices and sovereign wealth funds, Carter added. “So far, we’ve brought in just under $5 million and have circled close to $40 million.”

The firm has closed initial strategic investments in three startups — Total Network Services, Rypplzz and Forward-Edge AI — as part of its web3 investment thesis.

The resilience of the web3 companies that can survive the recent downturn should be an indicator of them “doing something with significance that meets a real need in the market and hopefully good decision-making,” Carter said. Many projects in the web3 space were speculative, but Deal Box hopes to show investors and founders alike that blockchain and web3 technology can be used while “still playing within the boundaries” of the U.S. Securities and Exchange Commission.

“There’s never been a time for technology to make a bigger impact on innovation and people’s everyday lives,” Carter said. “This is the beginning of a new wave. We’re witnessing the rise of the fourth industrial revolution.”

Deal Box’s venture arm to invest $125M in startups using web3 technology by Jacquelyn Melinek originally published on TechCrunch

Commerce has gone through quite a change over the past three years. First was the quick shift to online during the pandemic, then came the reckoning after people began venturing out again.

During this time, commerce companies, both brick-and-mortar and online, were looking to technology to get their companies up-and-running, but were finding it a bit tough with the absence of a big developer team to manage deployment.

Bryan Mahoney and Henry Davis, both former Glossier executives, saw the writing on the wall in 2020 and started Arfa, which is now Chord, a platform as a service, to provide commerce infrastructure software that gives brands and startups sophisticated technology and data without the requirement of a huge technology team. We profiled the company in 2021 when it raised an $18 million Series A round.

They found that not all commerce companies were ready, willing and able to invest in technology. However, as spending in places like Facebook and Google became more expensive and it was harder to acquire customers, companies started to see how data and technology could work in their favor.

“Companies are realizing they don’t have to be technology companies,” CEO Mahoney told TechCrunch. “We talk an awful lot in the industry about headwinds, and those headwinds to some extent are accelerants pushing these brands a little bit closer to the core, but making them realize that the solutions they’ve had, or the reluctance to spend on technology, is not going to work.”

Chord has 21 customers signed onto its platform, including Blue Bottle Coffee, Caraway, Loverboy and Joopiter. Meanwhile, Mahoney said December was the company’s busiest month so far, and year over year revenue growth was an increase of 360%.

For the past 18 months many of the customers were asking to see how their data could be used in more predictive capabilities. To do that, Chord is back with a $15 million Series A extension co-led by new investor Bright Pixel Capital and existing investor Eclipse. New investors in the round include GC1 Ventures, TechNexus Venture Collaborative and Anti Fund VC joining existing investors Imaginary Ventures, Foundation Capital and White Star Capital.

The new funding enabled Chord to build on its leadership team to add former Mailchimp chief data science officer David Dewey as new chief technology officer; Susie Korb as vice president of finance, a similar role she held at Toast; and Jamie Deveney, vice president of data, who was previously in the same role at Imperfect Foods.

In addition, Mahoney intends to deploy the new funds into data capability expansion, marketing, product development to support larger customers and its machine learning-powered data infrastructure that provides brands with a look at how key customer metrics will change over time.

In total, Chord raised $33 million. Mahoney did not disclose the company’s valuation, but did say “it’s in line with current multiples in the market.”

Technically the company should have looked at raising a classic Series B, but Chord wasn’t quite there yet, Mahoney admits. Proving that sometimes the grass isn’t always greener on the other side, he explained that the company’s initial investment came with a big valuation, which put pressure on the company to grow into it, even with no customers and no revenue at the time.

When Mahoney and Davis reached out to investors last summer, they took that past pressure into account, and as they spoke with investors, realized that they were actually in between a Series A and B, but didn’t want to push themselves in another “grow into the valuation” situation.

“We said let’s be really honest about what is going on in the market, and let’s be honest about where we are,” Mahoney said. “We are still a Series A company, but having really good traction is the time to get the fundraising going regardless of how we finally reach out to the investors.”

Chord connects new funding to predictive commerce metrics so brands can grow by Christine Hall originally published on TechCrunch