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When Covid shut down much of the world down in 2020, it ended up wreaking havoc on the supply chain. Suddenly companies built for just-in-time production couldn’t find parts they needed to build their products.

Even as Covid subsided, the supply chain woes continued. Veterans of supply management like the founder of startup Amplio watched, and figured there had to be a better way to guard against these kinds of disruptions in the future using software to find parts wherever they were.

Amplio launched last year with that goal in mind, and today the startup announced a $6 million seed to build a system to help track parts shortages. Trey Closson, CEO and co-founder at Amplio says his company’s goal is to build more resilience into the electronic components supply chain.

“We help our customers understand the components that are at highest risk of leading to material shortages, and then we connect our customers to alternative sources of supply to mitigate those shortages,” Closson told TechCrunch.

He knows what he’s talking about. He spent his entire career in supply chain management, and he’s seen firsthand how disruptions can have a negative impact on a business’s ability to function. He blames “Just-in-time production” techniques for the problems we are seeing today.

“The supply chains have been designed for 30 or 40 years to optimize for cost and for the best case scenario, but the reality is that we don’t live in a world of best case scenarios. We live in a world of constant disruptions,” he said.

“The way that our platform works is that we’re connected to our customers’ systems of record or their ERP solutions, and we take in in their bill of materials and their operational data, and then combine that with external datasets to be able to show the customer their ability to source their particular components over the next six to 18 months,” he said.

What’s more, in cases where the customer isn’t able to source the components, customers can go to the Amplio marketplace to find suppliers or other manufacturers who might have surplus inventory they are trying to sell.

Closson’s most recent job was working at Koch Industries, leading international supply chain for Georgia Pacific, where he was on the front line of the Covid-induced toilet paper shortages. But he decided to focus his startup on electronic components.

“So while supply chain resilience is really critical across the market, we want to focus on the electronics industry, because it has such a tremendous impact on the global economy,” he said. He conceived of and incubated the company as part of a program run by Koch and High Alpha Innovation, the program launched by former Exact Target execs to help startups with enterprise-focused ideas.

The company currently has 6 employees, but plans to expand with the funding (which closed in May). He says as he grows the company, diversity and inclusion is a core building block. “Diversity is one of the core principles for our hiring and in decision making processes. So just from a selfish standpoint, diverse organizations make better decisions and have more creative ideas, and are ultimately more successful,” he said.

Today’s round was led by Construct Capital with participation from Slow Ventures, High Alpha Capital, Flexport Ventures, Alpaca Venture Capital and various industry angels.

Amplio helps companies find components when supply chain breaks down by Ron Miller originally published on TechCrunch

Expectations for this year’s holiday spend online were lukewarm, but initial activity — driven by deep discounts — has bucked predictions. Cyber Monday pulled in $11.3 billion in sales online according to figures from Adobe Analytics, which tracks seasonal e-commerce activity. This is 5.8% more than consumers spent on the same day last year (when $10.7 billion was recorded in sales, a drop on 2020’s $10.8 billion), and sets a record both for the day and the year so far.

The day is typically the biggest of the long weekend — in part because sales continue but people have returned to work — and it rounds out five days that overall exceeded estimates. As we reported, Thanksgiving saw $5.29 billion in sales and Black Friday had $9.12 billion in sales — both also up on earlier forecasts. The weekend between had $9.55 billion in sales. Altogether, “Cyber Week” — the period including those holidays and the days back at work as people continue to shop online — will reach $35.27 billion in sales online, up 4% over last year and accounting for 16.7% of all sales in the months of November and December.

Adobe expects $210 billion in sales for the two months, and so far in the season mobile has accounted for 44% of sales.

Salesforce separately released its own preliminary figures of $6 billion for Cyber Monday in the evening Monday. We’ll update these as we get more complete results.

Notably, although inflation is definitely being felt in the U.S., Adobe said that these figures were based on more transactions overall. At the peak, people were spending $12.8 million per minute on Monday, and Adobe said that its digital price index, which tracks prices across 18 categories, said that prices have been nearly flat in recent months.

Deep discounts — retailers perhaps anticipating needing to have something more to lure shoppers — have played a big role, too, as have the sheer availability of goods after shortages of the years before.

“With oversupply and a softening consumer spending environment, retailers made the right call this season to drive demand through heavy discounting,” said Vivek Pandya, lead analyst, Adobe Digital Insights, in a statement. “It spurred online spending to levels that were higher than expected, and reinforced e-commerce as a major channel to drive volume and capture consumer interest.”

Discounts on electronics were as strong as 25% off (they were 8% in the same period last year), and the biggest sales were in toys with average discounts of 34%.

Adobe says it calculates its data based on one trillion visits to U.S. retail sites, covering 100 million SKUs, and 18 product categories.

A lot of the buying was being done in preparation for the holidays, and that’s reflected in most popular categories. Top products included games, gaming consoles, Legos, Hatchimals, Disney Encanto, Pokémon cards, Bluey, Dyson products, strollers, Apple Watches, drones, and digital cameras, it said. Toys as a category saw a 452% boost in sales versus a day in October.

In other trends, buy-now-pay-later transactions (BNPL) continued to be force in how purchases are being made, although they appeared to be down slightly on Monday compared to Black Friday and the weekend: part of the reason has to do with shopping-cart sizes, Adobe said: people are more likely to use BNPL when totals are higher. Overall Cyber Week BNPL orders were up 85% over last week, with revenues up 88%.

Mobile also continues to account for a big proportion of buying, although Cyber Monday’s 43% of all online sales when people are back at their desks, was definitely down from the 55% of purchases on Thanksgiving.

The big question now will be whether online retailers, and shoppers, sustain this activity or whether this was an outsized push around discounts that will settle down in the days and weeks to come. Layoffs that we’ve been seeing in the e-commerce sector, and depressed valuations for companies in the space, are two indicators of more challenging times to come.

Cyber Monday online sales hit a record $11.3B, driven by demand, not just inflation, says Adobe by Ingrid Lunden originally published on TechCrunch

Apple debuted its first podcast award today with Slate’s “Slow Burn” as a winner for this year. The company said that the award is to celebrate the “outstanding quality, innovation, and impact” of the show.

“Slow Burn” first launched in 2017, and its latest season about Roe v. Wade was released on June 1, 2022 — a month after the draft decision of the reversal leaked. The season, hosted by Slate executive editor Susan Matthews had four episodes that discuss historical events leading up to the 1973 decision by the Supreme Court ruled that constitution grants a right to abortion.

Apple said that “Slow Burn” is one of the all-time popular podcasts on the platform clocking more than 100 million downloads. While the show is free, Slate offers bonus content from its catalog through its Slate Plus subscription available for $9.99 per month. The company is also offering a $99.99 per year annual subscription for a limited time.

The company said that the showmakers are releasing six “Slow Burn” extra episodes for free that contain personal stories and extended follow-up interviews with people featured in the series.

Apple’s podcast award comes nearly three years after the company first introduced its Music Awards. In August, the company introduced two new charts — Top Subscriber Shows and Top Subscriber Channels — for paid podcasts.

The Cupertino-based tech giant said that next month, its editors from 100 countries will publish a podcast list called “shows we loved” along with year-end charts for popular podcasts.

Apple also announced a list of App Store Awards winners earlier today with social networking app BeReal snagging the iPhone app of the year title.

Slate’s ‘Slow Burn’ is the winner of Apple’s first podcast award by Ivan Mehta originally published on TechCrunch

Solana-centric crypto wallet Phantom is expanding its support to two other blockchains, Ethereum and Polygon, the company exclusively told TechCrunch.

By adding support for Ethereum and Polygon, Phantom is expanding users’ access from only Solana to all three of the ecosystems, Brandom Millman, CEO and co-founder of Phantom, said to TechCrunch. “We want to bring communities together from across web3 with a safe and easy to use self-custody product that is suitable for mainstream adoption.”

The new Ethereum and Polygon integrations are live in beta mode on Phantom’s browser and iOS and Android applications with an aim for a public launch in the first quarter of 2023, Millman said. This means users can trade, receive and swap tokens in its wallet as well as collect NFTs across all three blockchains.

“We’re graduating from a mono-chain wallet to a multi-chain wallet,” Millman said. “It was always our goal to bring Phantom to a multi-chain world. It was always our understanding that the world was moving to a more multi-chain world so it’s something that is more of a homecoming for us.”

The three co-founders —Millman, Francesco Agosti and Chris Kalani — used to work in the Ethereum ecosystem at 0x, an Ethereum-focused financial protocol, so integrating the blockchain into Phantom’s wallet was “always something we aspired to do,” Millman said.

Phantom currently has over 2.5 million user sessions per day and over 25 million on-chain decentralized application (dApp) transactions per month. In June, it launched an in-wallet token swapper where users could transfer tokens and has completed over $1 billion in swap volume to date, with each transaction costing less than 1 cent in network fees, it said.

In January, Phantom hit a $1.2 billion valuation after closing a $109 million funding round led by Paradigm. Other investors in the crypto wallet include Andreessen Horowitz, Jump Capital, Solana and Variant.

The crypto world is quickly evolving, Millman noted. “People didn’t really think multi-chain was going to be a thing and Ethereum was seen as the only place for users and developers to interact with the world of web3. But now it’s pretty accepted that the world is moving to a multi-chain world and there’s competitors to Ethereum and Solana coming out.”

While a number of blockchains are competing for market share, Millman doesn’t think the crypto ecosystem will head “toward a world with thousands of chains,” but one with about three to five major blockchains. “We’ll see consolidation around it.”

The Phantom team will work closely with Polygon to build out a wallet compatible with the layer-2 blockchain’s ecosystem, it said. “Working with Phantom will allow us to deliver a feature-rich wallet that’s ready for mainstream consumers to use when interacting with apps powered by Polygon,” Ryan Wyatt, CEO of Polygon Studios, said in a statement.

In the future, Phantom will consider making its crypto wallet native with other blockchains, Millman said. “I think the whole wallet space is going to be growing quite a bit, especially in the wake of some of the failures around centralized systems we’ve seen recently. Non-custodial and self-custodial systems are going to be in the forefront quite a bit.”

The non-custodial wallet also aims to focus on security and protecting users against spam NFTs and phishing attacks through its automated warnings of probable malicious transactions or websites that could compromise individuals’ wallets, assets or permissions.

“We’ve gone to great lengths to improve the experience around ‘transaction preview’ [and] the ability for a user to understand what they are authorizing when interacting with a web3 application,” Millman said. “Our transaction preview technologies have prevented over 20,000 wallets from being drained with over 3,000 unique users saved in the last month alone.”

Phantom has also gone to great lengths to take down fake phishing websites and has helped remove over 2,000 fake websites targeting Solana communities, Millman added.

In the long term, Millman believes Phantom will become the “onboarding point and discovery point for users entering web3,” similar to how Google Chrome is synonymous with the internet or Web 2.0. “That’s our aim with Phantom for Web3: If a user wants to interact with web3, we want their first instinct to be to download our app. That’s our goal and north star.”

Solana-focused crypto wallet Phantom adds Ethereum and Polygon support by Jacquelyn Melinek originally published on TechCrunch

Coworking and warehouse space company Saltbox announced today the closing of a $35 million Series B led by Cox Enterprises and Pendulum Holdings. The news comes more than a year after Saltbox closed a $10.6 million Series A, bringing its total funding to $56 million.

As TechCrunch previously reported, Saltbox — which was founded in 2019 by Tyler Scriven, Maxwell Bonnie, and Paul D’Arrigo — is a pioneer of what it calls “co-warehousing.” With more than 10 facilities across the country, it allows small businesses and e-commerce outfits to ship and store goods all in one place. There are no lease requirements, and the company also offers integrated logistics services, like equipment rental.

Scriven, the company’s CEO, told TechCrunch that the company plans to use the extra capital to open at least three more locations, with two of those to open by the end of the year. The new Saltboxes are set to be situated in Miami, Minneapolis, and Phoenix. The company also wants to invest in software to create a more seamless logistics ecosystem.

“We’ve made a lot of progress over our first three years in physical infrastructure and service, and we are now going to increase our focus on software,” Scriven told TechCrunch. “Our goal is to create a frictionless end-to-end logistics ecosystem that is incredibly accessible and approachable to small businesses.”

Saltbox also faces the changing tides of the real estate and e-commerce markets. The former is up, while the latter is seeing a bit of a slowdown. Scriven said both situations helped businesses realize the need for Saltbox as they faced supply chain and logistics quandaries and the financial challenges of keeping a business afloat.

“Our customers made it clear to us that Saltbox was essential,” Scriven said, adding that the company hopes to educate and tap into the rising crop of digital entrepreneurs on the importance of having an ordered flow of logistics.

“One of the principal ways through which we are expanding our brand presence and brand awareness is through filling that knowledge gap,” he said. “Becoming not only an operational vendor and partner to these companies, but also a source of knowledge and inspiration, a source of confidence to approach this critically important aspect of their business.”

Saltbox’s Series B comes at what has been a daunting year for Black founders. TechCrunch previously reported that Black founders raised just 0.43% — or $187 million — of the nearly $43 billion in venture capital allocated this Q3. Scriven and Bonnie, who are Black, represent outliers in a year that saw many VCs retreat to their old networks amid an economic downturn.

Scriven said it took about four months to close this round and said the company heard “far more nos than yesses.” He added, though, that having an established reputation, good product fit, and resilience helped carry them through.

Saltbox already had an established relationship with its investors. Approaching new investors is difficult during challenging economic times, Scriven noted, which is why it was imperative to lean into their existing network.

“I feel very fortunate to not only have gotten this round done but also to have gotten it down with really phenomenal investors that we know well and trusted,” Scriven continued.

Robbie Robinson, the CEO and co-founder of Pendulum Holdings, said that Scriven and the Saltbox team have managed to tap a “strategic and unique opportunity” that sits at the “intersection of community and shared services in warehousing, inventory management, and fulfillment.”

“This is evident in the company’s growth, and its ongoing expansion across geographies speaks to the high demand for this differentiated bundling of services,” Robinson said. “I am excited to join Saltbox’s board of directors and continue Pendulum’s partnership with the team as they establish an infrastructure that supports emerging and fast-growing small to medium businesses that power our economy.”

“With its mission to power the next generation of entrepreneurs to launch, grow, and scale, Saltbox is a great partner to help continue Cox’s mission to contribute to the economic well-being of an increased number of businesses and their employees,” Evelyn Bolden, the senior director of strategy and investments for Cox Enterprises, said. “Saltbox is committed to helping e-commerce owners get the most out of their business in a community-focused workspace.”

Others in the round include Playground Global, Kapor Capital, and Lincoln Properties West.

Scriven said he hopes to stay focused on making the most impact he can. That means the company will double down on its mission to help small businesses adapt to the ever-changing retail economic landscape because, as Scriven puts it, “when small businesses are threatened, the core of our economy is threatened.”

“It’s a basic necessity to ensure that SMBs have access to a highly accessible, highly approachable, human-centric logistics platform that can really meet them where they are and ensure they remain not only competitive but ultimately thrive,” Scriven said. “This is a problem that must be solved, and it is not optional to solve the problem.”

‘Co-warehouse’ company Saltbox closes $35M Series B by Dominic-Madori Davis originally published on TechCrunch

There’s no question about it: The market going into 2023 isn’t going to be what it was when 2021 ended, when growth at all costs sometimes trumped common sense.

But the market isn’t as “down” as it may seem. There’s plenty of money to be invested, and founders who have the right mix of purpose, business model and traction need to remember that opportunities for funding can still be found.

Sky-high valuations and questionable investments in 2021 have brought investors back to Earth and prompted more thorough analysis of investment opportunities. This return to discipline, demonstrated by a more tempered and stabilized volume of investor weekly pitch deck interactions, isn’t a big surprise. The pace in 2021 was unsustainable and there was bound to be a slowdown in the funds invested. However, it’s not because there is no money left.

As of September, there was around $290 billion in “dry powder” floating around — enough to fuel startup investments for the next four years — but founders are finding it harder to raise money than they have in many years. Instead of demanding growth at all costs, VCs are taking a deep breath and erring on the side of patience.

Founders may be discouraged in this environment, but they need to remember that they have “currency,” too. Founders should do their own due diligence by identifying investors who best suit their needs and focus on their core strengths and value propositions.

Due diligence isn’t only for investors

Founders should always be eager to set up meetings with investors, but they should aim to reach out to a variety of investors, too.

Much as a product is dependent on its market, a founder is dependent on their investors. Not all investor meetings are equal, so founders need to research their potential investors thoroughly.

DocSend’s recent pre-seed report found that the average number of investors contacted dropped from 69 to 60 in 2022, but the average number of meetings scheduled increased from 39 to 52. This could be a sign that early-stage founders are starting to practice due diligence on their end as well, vetting investors and bringing different expectations to every meeting.

Early-stage founders still have currency: Fundraising in times of greater VC scrutiny by Ram Iyer originally published on TechCrunch

Israeli urban trip planning app Moovit unveiled a new feature Tuesday that allows users to follow a transit line’s movements along the map in real time. The new feature, which is in addition to Moovit’s real time arrival countdown, brings a new level of accuracy and certainty to users’ commutes, the company says.

“Live Location offers the ability to see transit lines, displayed on the map as icons, move along the map as they progress (or are delayed) along their journey,” Yovav Meydad, Moovit’s chief growth and marketing officer, told TechCrunch via email. “The feature is accessible from every Moovit screen where the real-time arrival countdown is available via the Action Bar along the bottom of the screen.”

The live location feature is now available for buses, trains, trams, subways, ferries and cable cars — anything with GPS tracking installed — in more than 220 cities across 38 countries, and Moovit says more will follow.

It’s a handy feature, and one that Google Maps added to its own service about four years ago.

Riders who want to see where their line currently is need to tap on the ‘Live Location’ button on the bottom bar of the screen. A map will open and an icon will show up moving along the transit line, allowing Moovit users to stare at their phones in angst, watching the little bus icon inch closer and closer to their stop.

Riders will also be able to see when the tracking data was last updated and receive service alerts for that line, Meydad said, noting that users can view several lines moving on the map at the same time.

“This additional layer of context allows users to have all they need to compare options in real-time to make the best decision for them to easily reach their destination,” said Meydad.

Moovit users can now track transit vehicles on map in real time by Rebecca Bellan originally published on TechCrunch

Pearpop, a marketplace for social collaborations, announced today that it has raised an extension to its 2021-era Series A funding round. The company has added $18 million to its Series A, bringing its valuation to $300 million. Since its launch in October 2020, Pearpop has raised $34 million in funding.

The new investment includes funding from Ashton Kutcher and Guy Oseary’s Sound Ventures and Alexis Ohanian’s Seven Seven Six. Blockchange Ventures, Avalanche’s Blizzard Fund and C2 Ventures also participated in the round.

Pearpop allows creators and brands to buy collaborations with celebrities like Madonna and creators like Sommer Ray. These celebrities and influencers are able to sell the chance to collaborate with them on TikTok. Or, they can run “challenges” that invite people to use a specific sound on a TikTok for the chance to win cash. Pearpop has attracted numerous brands including Amazon, Netflix, Chipotle, Rakuten, Universal Pictures, Sonos and Beyond Meat, as well as celebrities like Doja Cat, The Weeknd, Madonna, Shawn Mendez and Post Malone.

“We’ve reached a critical mass on the creator side, as we now have more than 200,000 on our platform,” Pearpop CEO and founder Cole Mason told TechCrunch in email. “We’ve paid out over $10 million to creators, and we’ve been proud to see how Pearpop has opened up an opportunity for creators without a massive following: 71% of earnings have gone to creators with under one million followers.”

As for the new funding, Mason says Pearpop will use it to boost hiring, advance the platform’s current functionality, build out sales partnerships and more.

“We’re going to use the funding to accelerate our tech and engineering hiring as our product features and functionality get more advanced and we leverage intelligence and data in new ways our industry hasn’t seen,” Mason said. “Beyond that, we’ll continue to build out a strong sales and partnerships team capable of attracting and partnering with some of the biggest and most iconic brands in the world.”

In addition to the new funding, Pearpop is also announcing that it’s launching two new products called Ovation and Passport.

Ovation builds on Pearpop’s current Challenges product by allowing brands to turn customers into advocates. The product lets brands mobilize targeted audiences that have engaged with a product in the past. Mason says that every brand wants to incentivize their communities to advocate on their behalf, and Ovation makes this possible. On the other hand, customers will be able to monetize their social presence.

Passport uses blockchain technology to give creators visibility into audience engagement across multiple platforms and sources to allow brands to understand creator impact. Mason says Passport reflects Pearpop’s continued belief that data will be central to the growth of the creator economy. The platform aims to continue investing in data to support both brands and creators.

Earlier this year, Pearpop launched Pearproof, a web3 app that allows creators to mint NFTs of their social media posts. Pearproof’s NFTs use a proprietary algorithm that allows the assets to gain value as a post itself garners more social engagement. These NFTs start off at a “vinyl” level on a tier system that Pearproof developed. As it gets more popular, the NFT can “level up” to silver, gold, platinum and other levels. The creator can decide what rewards are associated with these levels. The project leverages the Solana blockchain, which Pearproof chose for its low transaction costs and lesser environmental impact.

Pearpopannounced $16 million in funding in April 2021, which was split between a $6 million funding round co-led by Ashton Kutcher and Guy Oseary’s Sound Ventures and Slow Ventures, with participation from Atelier Ventures and Chapter One Ventures; and a $10 million additional investment led by Alexis Ohanian’s Seven Seven Six with participation from Bessemer.

“We have no shortage of ideas in the roadmap to help Creators earn a living doing what they love,” Mason said. “Our long-term vision is to continue to unlock the value of every social media user on the planet, while setting the standard for collaboration and creator monetization.”

Pearpop raises $18M at a $300M valuation to scale its social collaboration marketplace by Aisha Malik originally published on TechCrunch

SolarWinds and Log4j have made software supply chain security issues a topic of intense interest and scrutiny for businesses and governments alike.

SolarWinds was a terrifying example of what can go wrong with the integrity of software build systems: Russian intelligence services hijacked the software build system for SolarWinds software, surreptitiously adding a backdoor to a piece of software and hitching a ride into the computer networks of thousands of customers. Log4J epitomizes the garbage-in, garbage-out problem of open source software: If you’re grabbing no-warranties code from the internet, there are going to be bugs, and some of these bugs will be exploitable.

What’s less talked about, though, is that these attacks represent only a fraction of the different types of software supply chain compromises that are possible.

Let’s take a look at some of the lesser-known, but no less serious, types of software supply chain attacks.

Unauthorized commits

This class of attacks describes an unauthorized user compromising a developer laptop or a source code management system (e.g., GitHub) and then pushing code.

A particularly famous example occurred when an attacker compromised the server hosting the PHP programming language and inserted malicious code into the programming language itself. Although discovered quickly, the code, if not corrected, would have enabled widespread unauthorized access across large swaths of the internet.

Fortunately, recently developed tools like Sigstore and gitsign reduce the probability of this type of attack and the damage if such an attack does occur.

Publishing server compromise

Recently an attacker, potentially the Chinese intelligence services, hacked the servers that distribute the Chinese messaging app MiMi, replacing the normal chat app with a malicious version. The malware allowed the attackers to monitor and control the chat software remotely.

This attack stems from the fact that the software industry has failed to treat critical points in the software supply chain (like publishing servers or build systems) with the same care as production environments and network perimeters.

Open source package repository attacks

From the Python Package Index, which houses Python packages, to npm, the world’s software now literally depends on vast stores of software packages, the open source software programmer’s equivalent of the Apple App Store.

Software supply chain security is broader than SolarWinds and Log4J by Ram Iyer originally published on TechCrunch

Deepgram, a company developing voice-recognition tech for the enterprise, today raised $47 million in new funding led by Madrona Venture Group with participation from Citi Ventures and Alkeon. An extension of Deepgram’s Series B that kicked off in February 2021, led by Tiger Global, it brings the startup’s total raised to $86 million, which CEO Scott Stephenson says is being put toward R&D in areas like emotion detection, intent recognition, summarization, topic detection, translation and redaction.

“We’re pleased that Deepgram achieved its highest-ever pre- and post-money valuation, even despite the challenging market conditions,” Stephenson told TechCrunch in an email interview. (Unfortunately, he wouldn’t reveal what exactly the valuation was.) “We believe that Deepgram is in a strong position to thrive in this tougher macroeconomic environment. Deepgram’s speech AI is the core enabling technology behind many of our customers’ applications, and the demand for speech understanding grows as companies seek greater efficiency.”

Launched in 2015, Deepgram focuses on building custom voice-recognition solutions for customers such as Spotify, Auth0 and even NASA. The company’s data scientists source, create, label and evaluate speech data to produce speech-recognition models that can understand brands and jargon, capture an array of languages and accents, and adapt to challenging audio environments. For example, for NASA, Deepgram built a model to transcribe communications between Mission Control and the International Space Station.

“Audio data is one of the world’s largest untapped data sources. [But] it’s difficult to use in its audio format because audio is an unstructured data type, and, therefore, can’t be mined for insights without further processing,” Stephenson said. “Deepgram takes unstructured audio data and structures it as text and metadata at high speeds and low costs designed for enterprise scale … [W]ith Deepgram, [companies] can send all their customer audio — hundreds of thousands or millions of hours — to be transcribed and analyzed.”

Where does the audio data to train Deepgram’s models come from? Stephenson was a bit coy there, although he didn’t deny that Deepgram uses customer data to improve its systems. He was quick to point out that the company complies with GDPR and lets users request that their data be deleted at any time.

“Deepgram’s models are primarily trained on data collected or generated by our data curation experts, alongside some anonymized data submitted by our users,” Stephenson said. “Training models on real-world data is a cornerstone of our product’s quality; it’s what allows machine learning systems like ours to produce human-like results. That said, we allow our users to opt out of having their anonymized data used for training if they so choose.”

Through Deepgram’s API, companies can build the platform into their tech stacks to enable voice-based automations and customer experiences. For organizations in heavily regulated sectors, like healthcare and government, Deepgram offers an on-premises deployment option that allows customers to manage and process data locally. (Worth noting, In-Q-Tel, the CIA’s strategic investment arm, has backed Deepgram in the past.)

Deepgram — a Y Combinator graduate founded by Stephenson and Noah Shutty, a University of Michigan physics graduate — competes with a number of vendors in a speech-recognition market that could be worth $48.8 billion by 2030, according to one (optimistic?) source. Tech giants like Nuance, Cisco, Google, Microsoft and Amazon offer real-time voice transcription and captioning services, as do startups like Otter, Speechmatics, Voicera and Verbit.

The tech has hurdles to overcome. According to a 2022 report by Speechmatics, 29% of execs have observed AI bias in voice technologies — specifically imbalances in the types of voices that are understood by speech recognition. But the demand is evidently strong enough to prop up the range of vendors out there; Stephenson claims that Deepgram’s gross margins are “in line with top-performing software businesses.”

That’s in contrast to the consumer voice-recognition market, which has taken a turn for the worse as of late. Amazon’s Alexa division is reportedly on pace to lose $10 billion this year. And Google is rumored to be eyeing cuts to Google Assistant development in favor of more profitable projects.

In recent months, Stephenson says that Deepgram’s focus has been on on-the-fly language translation, sentiment analysis and split transcripts of multiway conversations. The company’s also scaling, now reaching over 300 customers and more than 15,000 users.

On the hunt for new business, Deepgram recently launched the Deepgram Startup Program, which offers $10 million in free speech-recognition credits on Deepgram’s platform to startups in education and corporate. Firms participating don’t need to pay any sort of fee and can use the funds in conjunction with existing grant, seed, incubator and accelerator benefits.

“Deepgram’s business continues to grow rapidly. As a foundational AI infrastructure company, we haven’t seen a reduction in demand for Deepgram,” Stephenson said. “In fact, we’ve watched businesses look for ways to cut costs and delegate repetitive, menial tasks to AIs — giving humans more time to pursue interesting, consequential work. Examples of this include reducing large cloud compute costs by switching big cloud transcription to Deepgram’s transcription product, or in new use cases like drive-thru ordering and triaging the first round of customer service responses.”

Deepgram currently has 146 employees distributed across offices in Ann Arbor and San Francisco. When asked about hiring plans for the rest of the year, Stephenson declined to answer — no doubt cognizant of the unpredictability of the current global economy and the optics of committing to a firm number.

Deepgram lands new cash to grow its enterprise voice-recognition business by Kyle Wiggers originally published on TechCrunch