Tesla sues Trump Administration to end tariffs on the ‘brain’ of its vehicles

Tesla is suing the Trump Administration over tariffs on a computer chip and other parts it imports from China, joining an increasingly long list of similar lawsuits filed by hundreds of companies, including automakers Ford, Mercedes-Benz and Volvo.

Tesla, which names U.S. Trade Representative Robert Lighthizer in the lawsuit filed in the U.S. Court of International Trade, wants the court to declare the tariffs unlawful. Bloomberg was the first the report the lawsuit. Tesla is also seeking a refund for the tariffs it paid with interest. The lawsuit centers on two types of tariffs, a 25% duty enacted in 2018 and 7.5% tariff on hundreds of other products that went into effect last year.

Last year, the United States Trade Representative (USTR) denied Tesla’s request for an exemption on a new custom chip built in China.

The custom chip is part of the company’s advanced Autopilot 3.0 hardware that is intended to enable what the company describes as full self-driving (FSD) operation for all of its new vehicles. This hardware is now standard in all new Model 3, S and X vehicles. Customers pay an additional $7,000 for the software upgrade called FSD.

This hardware is contained within the Autopilot ECU (or engine control unit), a module that Tesla has described as the “brain of the vehicle.”

The module is assembled in Shanghai, China, by a company called Quanta Computer. The module, along with a range of other electronics and products that are made in China and imported into the U.S., is subject to 25% punitive tariffs.

In its request to the USTR, Tesla said it was unable to source manufacturing for the Autopilot ECU 3.0 in the United States.

Tesla was unable to find a manufacturer with the requisite expertise to produce the Autopilot ECU 3.0 with the required specifications, at the volume requested and under the timelines necessary for Tesla’s continued growth. This module is the brain of the vehicle. As such, the sourcing decision for this was not taken lightly nor simply on a cost basis. Autopilot is a complicated, safety critical feature of the Tesla experience where even the slightest imperfection can have major ramifications, so all of our decisions aim to decrease risk.

Tesla was also denied an exemption on the media control unit, or MCU, component of the Model 3’s computing system. The MCU is a combination of three printed circuit board assemblies (PCBAs) enclosed in a mechanical chassis. The PCBAs include the media control unit which controls data going to and from the vehicle’s touch display, audio speakers/microphones, radio, connectivity board (cellular internet), Bluetooth, Wi-Fi, USB charger, and back-up camera, the company explained in its request. The MCU is linked to and communicates with the vehicle’s ADAS and connectivity board modules.


Source: Tech Crunch

California will require all passenger vehicles sold in the state be zero-emission by 2035

California Governor Gavin Newsom<a href=”https://www.gov.ca.gov/2020/09/23/governor-newsom-announces-california-will-phase-out-gasoline-powered-cars-drastically-reduce-demand-for-fossil-fuel-in-californias-fight-against-climate-change/”> issued an executive order on Wednesday requiring sales of all new passenger vehicles be zero-emission by 2035.

The new order would be a huge boost for electric vehicles, and vehicles using alternative fuels like hydrogen, and could boost a sector that’s already surging in California.

As an announcement from the California Governor’s office indicates the transportation sector is responsible for more than half of all of California’s carbon pollution, 80 percent of smog-forming pollution and 95 percent of toxic diesel emissions.

“This is the most impactful step our state can take to fight climate change,” said Governor Newsom, in a statement. “For too many decades, we have allowed cars to pollute the air that our children and families breathe. Californians shouldn’t have to worry if our cars are giving our kids asthma. Our cars shouldn’t make wildfires worse – and create more days filled with smoky air. Cars shouldn’t melt glaciers or raise sea levels threatening our cherished beaches and coastlines.”

After the order, the California Air Resource Board will develop regulations that will mandate 100 percent of sales of passenger cars and trucks are zero-emission by 2035.

Setting the 2035 target would achieve reductions in greenhouse gases above 35 percent and an 80 percent improvement in oxides of nitrogen emissions from cars.

The board will also develop regulations that require operations of medium- and heavy-duty vehicles to be fully zero-emission by 2045 where feasible.

Under the order, state agencies in partnership with the private sector will be required to accelerate deployment of affordable fueling and charging options. The order also requires broad accessibility to zero-emission vehicles, according to a statement.

What it won’t require is for Californians who own gasoline-powered cars to give them up or deny car owners the ability to sell their gas-powered cars in the used car market.

With the initiative, California is joining fifteen countries that have already committed to phasing out gas-powered cars, according to a statement.

Built into the order is an assumption that zero-emission vehicles will be cheaper and better than fossil fuel powered cars, but there are significant hurdles — and opportunities before the market gets there.

There’s going to need to be a massive buildout of charging stations and fueling stations for electric and hydrogen powered vehicles. New charging technologies will need to be put in place to enable faster charging, and new financing models will need to be put in place to ensure the kind of accessibility that the California government is requiring.

All of these opportunities should have startups chomping at the bit, and several companies like the new electric vehicle manufacturers launching to compete with Tesla, the new charging technology developers and others will have Newsom to thank for the sudden boost in their valuations.

 


Source: Tech Crunch

Scaling to $100 million ARR: 3 founders share their insights

Last week at TechCrunch Disrupt, Alex Wilhelm hosted a panel titled “Getting to $100 million ARR” on the Extra Crunch Stage. He was joined by three executives, including Vineet Jain, CEO and co-founder at Egnyte, Michal Tsur, president and co-founder at Kaltura and Sid Sijbrandij, CEO at GitLab.

The panelists discussed their path to building successful companies — all of which could go public in the next year or two.

Here are our five favorite takeaways from the panel. These notions should offer founders some inspiration, and perhaps a little guidance as they scale their own startup. After all, $100 million in ARR is merely the pre-IPO milestone. After that things get even harder.

Everyone faces hard times, but you can work through them

Jain told the story of how his company was just two years old in 2013 when he was trying to raise its Series B and facing rejection at every turn. What’s worse, he was at risk of running out of money in 30 days, the startup death knell.

“In 2011, when I was trying to raise a Series B, I had dealt with 13 rejections from Monday morning partner meetings at all the venture firms that I can think of [there] on Sand Hill Road — and I was thinking, ‘Okay, how will I run my payroll?’ I was 30 days out from running out of cash,” Jain said.

A chance breakfast with a VC he knew from a previous venture led to a meeting with his firm, Kleiner Perkins. Jain said he had figured Kleiner wouldn’t be interested in his startup because it was too early-stage, but the friend told him to give it a shot. He got his Series B term sheet later that week.

What worked there? It was key that the VC knew him, believed in him, and, as Jain said, personal reputation matters. In this case it saved Egnyte, now worth hundreds of millions of dollars.

On the theme of working through hard times, Kaltura’s Tsur said every startup will face a bad quarter or two, but that the best way to cope was to analyze and fix underlying problems.

“If somebody tells you that they did not have such a quarter, they’re probably lying,” she said.

“I’ve been running products and platforms for most of my time with Kaltura, so I’ve always been looking at it from a product perspective. And you know, ultimately whenever we have plateaued, we look very seriously at whether it’s the market, whether it’s the product, whether it’s the people. And, you know, ultimately, adjust as much as we could,” said Tsur.

It’s not the size of your A round that matters, it’s getting it done


Source: Tech Crunch

Tesla experienced an hour-long network outage early Wednesday

Tesla owners were locked out of their vehicles and the accompanying app for about an hour Wednesday morning, thanks to an outage that affected the company’s entire network, according to several sources.

The Tesla outage was caused by an internal break of their application programming interface (or API), according to sources familiar with the outage.

There’s a chance that the glitch could have something to do with the rollout of new two-factor authentication security features, which Tesla chief executive Elon Musk called “embarrassingly late,” in an August tweet.

Two-factor authentication, which is also known as two-step verification, combines something you know, like a password, with something you have, like your phone. It allows the app to verify that the real account holder — or car owner — is logging in and not a hacker.

Some websites do this by sending you a code by text message. But hackers can intercept these. A more secure way of doing it is by sending a code through a phone app, often called an authenticator, which security experts prefer.

While Tesla’s cars have had pin code entry since 2018, and they include GPS features that let owners track the vehicle, the lack of two-factor authentication has been an issue.

The Tesla app is a critical tool for owners, giving them control over numerous functions on their vehicles. Tesla owners have been calling out for the two-factor feature as an extra layer of security.

Glitches like these are not a great look for the automaker, which needs to convince an increasingly large consumer population that its electric vehicles are the ones to choose as more options emerge to challenge Tesla’s dominance in the electric vehicle marketplace.

A slew of cars will be hitting the road in 2021 and 2022 to challenge Tesla across nearly each of its price points and locking out owners for an extended period of time is not a great way to convince would-be buyers to shell out money for Tesla cars.

Still, the company is moving forward with plans that could sway consumer sentiment — specifically by working toward reducing the cost of its cars through battery innovations like the kind the company announced yesterday.

At the company’s much ballyhooed battery press conference Tesla CEO Elon Musk and Drew Baglino, the SVP of powertrain and energy engineering at the company, laid out plans and progress to eventually have 10 to 20 terawatt hours of annual battery production. The eventual goal is to reduce batteries enough to be able to build and sell an electric vehicle for $25,000.

Tesla did not respond to a request for comment by the time of publication.


Source: Tech Crunch

TC Sessions Mobility 2020 kicks off in two weeks

Holy cats, it’s less than two weeks until TC Sessions: Mobility 2020 kicks off for two program-packed days focused squarely on mobility and transportation technology. On October 6-7, thousands of people from around the world will gather virtually to talk trends, demo products, share insight and discover new opportunities to drive their business into the future.

Don’t have your pass yet? We offer different price levels to accommodate a range of budgets: General admission, group discounts, student discounts and our brand-new Expo Ticket — just $25. Want to showcase your startup in the expo? Buy an Early-Stage Startup Exhibitor Package while you can. We have only a few spots left.

Don’t wait: Buy your pass today. Prices increase on October 5.

Now that we have the housekeeping out of the way, let’s talk about what you can expect at TC Sessions: Mobility 2020.

We packed the event agenda with world-class speakers. You’ll hear from and engage with the industry’s top leaders and innovators across the mobility spectrum. Interested in electric vehicles? No one knows more about the batteries that fuel them than JB Straubel, co-founder and CEO of Redwood Materials and Celina Mikolajczak, vice president of battery technology for Panasonic Energy of North America. There’s a conversation you won’t want to miss.

Does Polestar have enough of what it takes to go head-to-head with Tesla? Get the info when Polestar CEO, Thomas Ingenlath joins us for a fireside chat about the company and the future of electric vehicles.

Nothing happens without funding, but are VC dollars enough to move the industry needle in the right direction? Investors Reilly Brennan, Amy Gu and Olaf Sakkers will debate the uncertain future of mobility technology.

You’ll find more than 40 early-stage startups (and even a few more established companies) holding forth in our expo. Whether you’re looking for new partners, potential customers, a baby unicorn for your portfolio, employment opportunities or simple inspiration, explore the expo and get your networking mojo running.

Love it or hate it, networking is essential to success. Take advantage of CrunchMatch, our free AI-powered platform. It’s the perfect tool for navigating a virtual conference. Answer a few quick questions when you register and CrunchMatch will search for and find attendees who align with your business goals. You can use it for random, free-form searching, too. Schedule 1:1 video calls to talk shop, view product demos, pitch investors or impress potential employers.

We added a new event this year — Pitch Night. Ten early-stage startups will compete in front of a panel of VC judges on October 5, the night before Mobility 2020 officially opens. Five of those intrepid startups will earn the right to pitch from the main stage on October 6. Talk about a must-see throwdown.

So much to do in just two short days — we haven’t even talked about the breakout sessions. TC Sessions Mobility 2020 is right around the corner. Get excited, get focused and get ready to take advantage of every juicy opportunity. But first, get your pass — whatever flavor floats your autonomous boat — before the prices go up.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

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Source: Tech Crunch

Explore the global markets of micromobility at TC Sessions: Mobility

While electric scooters first launched at scale in the U.S., they quickly made their way overseas. Now, there’s a bustling electric scooter market in Europe, China, Latin America and one that’s growing in parts of Africa.

At TC Sessions: Mobility on October 6 & 7, we’ll explore the journey of electric scooters and bikes from the U.S. to a number of countries across Europe all the way to Rwanda in Africa with Spin co-founder Euwyn Poon, Gura Ride founder Tony Adesina and Voi co-founder Fredrik Hjelm.

Euwyn Poon, Co-founder and President at Spin

Spin, which got its start as a bike-share operator in San Francisco, shifted entirely to electric scooters in 2018. Now, it’s owned by Ford and recently launched its electric scooter operations in Germany. The plan is to later expand beyond Germany and into France, as well as the U.K.

Spin President and Co-founder Euwyn Poon will talk about what it’s been like expanding abroad and its plans for further growth.

Tony Adesina, Founder and CEO at Gura Ride

While there is much adoption throughout other parts of the world, there are only a handful of operators in Africa, such as Medina Bike in Marrakech, Morocco, Awa Bike in Lagos, Nigeria and Gura Ride in Kigali, Rwanda. Many of the larger micromobility operators, like Bird, Lime, Yellow, VOI, Tier and others have yet to make their way into Africa.

Gura Ride, founded by Tony Adesina, is currently live in six cities throughout Rwanda, offering electric bikes and electric scooters to riders. We’ll chat with Adesina about the state of micromobility in Africa and why he thinks adoption has been slower on the continent.

Fredrik Hjelm, Co-founder and CEO at Voi

With $136 million in venture funding, Voi has become a behemoth that operates in 38 cities across 10 European countries. Voi, like other electric scooter companies, paused some operations amid the COVID-19 pandemic. But Hjelm ultimately saw the pandemic as an opportunity to change the way people travel around cities, he said in late May after bringing on board Bird’s former UK chief. Meanwhile, Voi partnered with BlaBlaCar that same month to offer shared electric scooter rides via BlaBlaCar’s apps. We’ll discuss with Hjelm Voi’s roadmap and how it’s navigated COVID-19.

Get your tickets for TC Sessions: Mobility to hear from these thought-leaders along with several other fantastic speakers from Waymo, Lyft, Nuro and more. Tickets are just $145 until September 12 at 11:59 p.m. PDT, with discounts for groups, students and exhibiting startups. And we’ve introduced a $25 Expo Ticket for those who want to peruse our early stage startups and check out the breakout sessions! We hope to see you there!

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Source: Tech Crunch

WellSaid Labs research takes synthetic speech from seconds-long clips to hours

Millions of homes have voice-enabled devices, but when was the last time you heard a piece of synthesized speech longer than a handful of seconds? WellSaid Labs has pushed the field ahead with a voice engine that can easily and quickly generate hours of voice content that sounds just as good or better than the snippets we hear every day from Siri and Alexa.

The company has been working since its public debut last year to advance its tech from impressive demo to commercial product, and in the process found a lucrative niche that it can build from.

CTO Michael Petrochuk explained that early on, the company had essentially based its technology on prior research — Google’s Tacotron project, which established a new standard for realism in artificial speech.

“Despite being released two years ago, Tacotron 2 is still state of the art. But it has a couple issues,” explained Petrochuk. “One, it’s not fast — it takes three minutes to produce one second of audio. And it’s built to model 15 seconds of audio. Imagine that in a workflow where you’re generating 10 minutes of content — it’s orders of magnitude off where we want to be.”

WellSaid completely rebuilt their model with a focus on speed, quality and length, which sounds like “focusing” on everything at once, but there are always plenty more parameters to optimize for. The result is a model that can generate extremely high-quality speech with any of 15 voices (and several languages) at about half real-time — so a minute-long clip would take about 36 seconds to generate instead of a couple hours.

This seemingly basic capability has plenty of benefits. Not only is it faster, but it makes working with the results simpler and easier. As a producer of audio content, you can just drop in a script hundreds of words long, listen to what it puts out, then tweak its pronunciation or cadence with a few keystrokes. Tacotron changed the synthetic speech space, but it has never really been a product. WellSaid builds on its advances with its own to create both a usable piece of software, and arguably a better speech system overall.

As evidence, clips generated by the model — 15-second ones, so they can compete with Tacotron and others — reached a milestone of being equally well-rated as human voices in tests organized by WellSaid. There’s no objective measure for this kind of thing, but asking lots of humans to weigh in on how human something sounds is a good place to start.

As part of the team’s work to achieve “human parity” under these conditions, they also released a number of audio clips demonstrating how the model can produce much more demanding content.


It generated plausible-sounding speech in Spanish, French and German (I’m not a native speaker of any of them, so can’t say more than that), showed off its facility with complex and linguistically difficult words (like stoichiometry and halogenation), words that differ depending on context (buffet, desert), and so on. The crowning achievement must be a continuous 8-hour reading of the entirety of Mary Shelley’s “Frankenstein.”

But audiobooks aren’t the industry that WellSaid is using as a stepladder to further advances. Instead, they’re making a bundle working in the tremendously boring but necessary field of corporate training. You know, the sorts of videos that explain policies, document the use of internal tools and explain best practices for sales, management, development tools and so on.

Corporate learning stuff is generally unique or at least tailored to each company, and can involve hours of audio — an alternative to saying, “Here, read this packet” or gathering everyone in a room to watch a decades-old DVD on office conduct. Not the most exciting place to put such a powerful technology to work, but the truth is with startups that no matter how transformative you think your tech is, if you don’t make any money, you’re sunk.

A screenshot of WellSaid Labs' synthetic speech interface.

Image Credits: WellSaid Labs

“We found a sweet spot in the corporate training field, but for product development it has helped us build these foundational elements for a bigger and greater space,” explained Head of Growth Martín Ramírez. “Voice is everywhere, but we have to be pragmatic about who we build for today. Eventually we’ll deliver the infrastructure where any voice can be created and distributed.”

At first that may look like expanding the corporate offerings slowly, in directions like other languages — WellSaid’s system doesn’t have English “baked in,” and given training data in other languages should perform equally well in them. So that’s an easy way forward. But other industries could use improved voice capability as well: podcasting, games, radio shows, advertising, governance.

One significant limitation to the company’s approach is that the system is meant to be operated by a person and used for, essentially, recording a virtual voice actor. This means it’s not useful to the groups for whom an improved synthetic voice is desirable — many people with disabilities that affect their own voice, blind people who use voice-based interfaces all day long, or even people traveling in a foreign country and using real-time translation tools.

“I see WellSaid servicing that use-case in the near future,” said Ramírez, though he and the others were careful not to make any promises. “But today, the way it’s built, we truly believe a human producer should be interacting with the engine, to render it at a natural human-parity level. The dynamic rendering scenario is approaching quite fast, and we want to be prepared for it, but we’re not ready to do it today.”

The company has “plenty of runway and customers” and is growing fast — so no need for funding just now, thank you, venture capital firms.


Source: Tech Crunch

We’re updating The TechCrunch List soon. Founders, send in your recommendations of the most helpful lead VCs

Earlier this year, we launched The TechCrunch List, a carefully curated group of VCs who lead rounds recommended by thousands of founders for their acumen and friendliness, grouped by market focus, stage and geography.

Since the launch of the List, we’ve seen great engagement: tens of thousands of founders have each come back multiple times to use the List to scout out their next fundraising moves and understand the ever-changing landscape of venture investing.

We last revised The TechCrunch List at the end of July 30 with 116 new VCs based on founder recommendations, but as with all things venture capital, the investing world moves quickly. That means it’s already time to begin another update.

To make sure we have the best information, we need founders — from new founders who might have just raised their VC rounds to experienced founders adding another round to their cap tables — to submit recommendations. Thankfully, our survey is pretty short (about two minutes), and the help you can give other founders fundraising is invaluable. Please submit your recommendation soon.

Since our last update in July, we have already had 840 founders submit new recommendations, and we are now sitting at about 3,500 recommendations in total now. Every recommendation helps us identify promising and thoughtful VCs, helping founders globally cut through the noise of the industry and find the leads for their next checks.

If you have questions about the List, our methodology or about how to submit, we have a handy Frequently Asked Questions page. Otherwise, get those recommendations in. We’ll close this latest batch of recommendations off on Friday, Sept. 25, and publish a newly updated List in the next two to three weeks.


Source: Tech Crunch

Tech must radically rethink how it treats independent contractors

Despite a surging stock market and many major tech players having record quarters, we’re still seeing layoffs throughout tech and the rest of corporate America. Salesforce recorded a huge quarter, passing $5 billion in revenue, only to lay off around 1000 people. LinkedIn is laying off 960 people one day after reporting a 10% increase in revenue.

These layoffs may seem like a contraction in size for these huge enterprises, but it’s actually the beginning of something I call The Great Unbundling of Corporate America. They still need to grow, they still need to innovate, they still need to get work done and they’re not simply canceling projects and giving up on contracts.

Just as COVID-19 has accelerated the move to remote work, our current crisis has accelerated the trend toward hiring independent contractors. Back in 2019 a New York Times report found that Google had a shadow workforce of 121,000 temporary workers and contractors, overshadowing their 102,000 full-timers. ZipRecruiter reported in 2018 that tech, along with its record employment growth, was showing an increasing share of listings for independent contractors.

A study from the Bureau of Labor Statistics found that between 6.9% and 9.6% of all workers are now independent contractors, and according to Upwork, that may be as high as 35%. Mark my words — companies are using this time as an opportunity to swing the pendulum toward independent contractors and trimming the fat, justifying it with a vague gesture toward “an unprecedented time.”

That’s why, in my opinion, you’re seeing the NASDAQ hitting record highs despite everyone’s turmoil — depressingly, investors can see that large companies are tightening up and cleaning up waste, while finding an affordable workforce at will. As they have unbundled themselves from our physical offices, large enterprises are going to unbundle themselves from having to have a set number of employees.

When Square allowed its entire workforce to work remotely permanently. It wasn’t just because they wanted them to feel more creative and productive, but was likely a move away from having quite as much expensive, needless office space.

Similarly, if there is work that a full-time employee does that could be done by a flexible, independent contractor, why not make that change too? And it’ll be a lot easier to make without as many people at the office.

The argument I’m making is not anti-contractor, though.

I can’t think of any point in history where it’s been better to create a freelance business — the startup costs are significantly lower, and as companies move toward remote work, you can theoretically take business nationally (or internationally) like never before. Companies’ moves toward replacing W-2 workers with contractors is an opportunity for people to create their own miniature freelance empires, unbundling themselves from corporate America’s required hours, and potentially creating a way to weather future storms by taking away any single company’s leverage on their income.

The rush to remote work is also likely to push more workers into the freelance economy too. By having to create a remote office, with a remote presence in meetings and having to manage and organize our days, the average worker has all but adjusted to the life of a freelancer.

Where some might have gone to an office and had things simply happen to them, the remote world requires an attention to your calendar and active outreach to colleagues that, well, models how one might run a freelance business. Those with core skillsets that can be marketed and sold to multiple clients should be thinking about whether being a wage slave is necessary anymore, and with good reason.

That said — corporate America, and especially tech, has to treat this essential workforce with a great deal more empathy and respect than they have thus far.

Uber and Lyft were ordered to treat drivers as employees in part due to the fact that they never treated their contractors like parts of the company. Other than the obvious lack of benefits (paid time off, health insurance, etc.), Uber, like many large enterprises, treats contractors as disposable rather than flexible, despite them being the literal driving force of the company. When Uber went public, they gave a nominal bonus for drivers that had completed 2500 to 40,000 trips, with a chance to buy up to $10,000 of stock — at the IPO price. These drivers, that had been the very reason that many people became millionaires and billionaires when Uber went public, were given the chance to maybe make money, if they sold the stock quickly enough.

It’s an abject lesson on how to not build loyalty with independent contractors. It’s also a lesson on what the next big company that wants to build themselves off the back of the 1099’er should do.

What I’m suggesting is a radical rethinking of freelance contracting. I want you to see independent contractors as a different kind of worker, not as a way of skirting getting a full-time employee. A freelancer, by definition, is someone that you don’t monopolize, and someone that you should actively give agency and, indeed, part of the network you’re building. One of the issues of corporate America’s approach to freelance work is an us-versus-them approach to employment — you’re either part of us or you’re simply a thing we pick up and put down. What I’m suggesting is treating your freelancers as an essential part of your strategy, and compensating them as such. Freelancers should own equity and should have skin in the game — they may be working with you on a number of projects and take literal ownership of vast successes throughout your history.

Contracted work has only become mercenary through the treatment of the freelance worker. Where tech has succeeded in creating hundreds of thousands of independent contractor positions, it also has to lead the way in reimagining how we may treat them and reward them for their work. And corporate America needs to take a step beyond simply seeing them as a cheaper, easier way to do business. They’re so much more.


Source: Tech Crunch

Edtech investors are panning for gold

The spotlight on edtech grows brighter and harsher: On one end, remote-learning startups are attracting millions in venture capital. On the other, many educators and parents are unimpressed with the technology that enables virtual learning and gaps remain in and out of the classroom.

It’s clear that edtech’s nebulous pain points — screen time, childcare and classroom management — require innovation. But as founders flurry to a sector recently rejuvenated with capital, the influx of interest has not fostered any breakout solutions. As a result, edtech investors must hone their skills at sorting the innovators from the opportunists amid the rush.

Lucky for us, investors shared notes during TechCrunch Disrupt and offline regarding how they are separating the gold from the dust, giving us a peek into their due diligence process (and inboxes).

Putting profitability over growth

The pandemic has broadly forced founders to get more conservative and prioritize profitability over the usual “growth at all costs” startup mentality. Growth still matters, but within edtech, the boom comes with a big focus on profitability, efficacy, outcomes and societal impact.

“The goal of all of education is personalized learning, when every student receives exactly the instruction in the way that they need it at the time that they need it. And that’s really, really difficult to do if you’re trying to have one person teach 180 students,” said Mercedes Bent of Lightspeed Venture Partners. “And so I’ve been excited to see more solutions that are focused on creating smaller class sizes that are also focused on allowing students to connect with people outside of their homes as well.”

During Disrupt, Reach Capital’s Jennifer Carolan brought up a recent Netflix documentary, “The Social Dilemma,” which illustrates the impact screen time can have on society. When vetting companies, Carolan said she wanted to see founders who have considered how their products may impact young users.


Source: Tech Crunch