Ideaforge

Last week, Spotify sent a number of USB drives to reporters with a note: “Play me.”

It’s not uncommon for reporters to receive USB drives in the post. Companies distribute USB drives all the time, including at tech conferences, often containing promotional materials or large files, such as videos that would otherwise be difficult to get into as many hands as possible.

But anyone with basic security training under their hat — which here at TechCrunch we do — will know to never plug in a USB drive without taking some precautions first.

Concerned but undeterred, we safely examined the contents of the drive using a disposable version of Ubuntu Linux (using a live CD) on a spare computer. We examined the drive and found it was benign.

On the drive was a single audio file. “This is Alex Goldman, and you’ve just been hacked,” the file played.

The drive was just a promotion for a new Spotify podcast. Because of course it was.

Jake Williams, a former NSA hacker and founder of Rendition Infosec, called the move “amazingly tone deaf” to encourage reporters into plugging in the drives to their computers.

USB drives are not inherently malicious, but are known to be used in hacking campaigns — like power plants and nuclear enrichment plants — which are typically not connected to the internet. USB drives can harbor malware that can open and install backdoors on a victim’s computer, Williams said.

“The files on the USB itself may contain active content,” he said, which when opened can exploit a bug on an affected device.

A spokesperson for Spotify did not comment. Instead, it passed our request to Sunshine Sachs, a public relations firm that works for Spotify, which would not comment on the record beyond that “all reporters received an email stating this was on the way.”

Plugging in random USB drives is a bigger problem than you might think. Elie Bursztein, a Google security researcher, found in his own research that about half of all people will plug into their computer random USB drives.

John Deere earlier this year caused a ruckus after it distributed a promotion drive that actively hijacked the computer’s keyboard. The drive contained code which when plugged in ran a script, opened the browser and automatically typed in the company’s website. Even though the drive was not inherently malicious, the move was highly criticized, as malware often acts in an automated, scripted way.

Given the threats that USB drives can pose, Homeland Security’s cybersecurity division CISA last month updated its guidance about USB drive security. Journalists are among those who are frequent targets by some governments, including targeted cyberattacks.

Remember: Always take precautions when handling USB drives. And never plug one in unless you trust it.

Source: Tech Crunch

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, we are looking at what Ant Financial’s executive shakeup could give to Alibaba’s financial affiliate and why Tencent has gone on an app-launching spree.

Return of the old boss

This week, Ant Financial, the online financial services company, 33% of which is owned by Alibaba and controlled by Jack Ma, announced Hu Xiaoming as its new chief executive. Management reshuffles aren’t rare at Alibaba, which prides itself on rotating executives every few months to stay fresh and agile in a competitive environment. The latest reshuffle is providing some clues to where Ant, the world’s most valuable private fintech company, is headed in the coming years.

Hu will take the lead in growing Ant’s domestic payments and financial services units while his predecessor and current chairman Eric Jing will manage overseas expansion and development of new technologies. Having worked at several major Chinese banks, Hu joined Alibaba in 2005 to expand the firm’s budding financial services and has since been credited with helping Ant identify paths to monetization.

Around 2009, Hu made a bold move to initiate a microloan service targeted at small and medium sellers on Alibaba’s e-commerce platform. It was a boon to millions of merchants who otherwise would not be able to borrow from traditional financial institutions because they lacked banking history. Instead, Alibaba assessed their creditworthiness based on digital records, such as online sales and customer ratings. Today, small loans are just one of the many offerings from Ant’s ever-expanding financial empire, which also operates the billion-user Alipay payments app, the world’s largest money market fund and credit-rating system Sesame Credit.

In 2014, the storied executive was assigned to lead Alibaba’s cloud business and later grew it into one of the firm’s fastest-growing segments and a serious contender to Amazon Web Services. Hu was no stranger to Alibaba Cloud, which had already been working to introduce cloud computing to the fintech unit’s existing IT environments (in Chinese). In fact, most of Alibaba Cloud’s early applications happened internally at Alibaba as the company felt the urgency to develop an IT system that was more scalable and customizable than most large international vendors could provide.

Under Hu’s helm, the cloud arm struck a major deal with the government of Hangzhou, Alibaba’s hometown in Eastern China, to ease traffic congestion using data analytics and cloud computing solutions. Government contracts are an important lever for businesses developing costly state-of-the-art technologies, for as soon as an innovation is proven in practice, private demand will pick up over time.

Hu’s experience with commercializing new technologies and cooperating with state agencies makes him the ideal leader of Ant at a critical time. Last year, Ant’s highly anticipated IPO plans were pushed back reportedly because Beijing worried the private firm had amassed too much influence. To allay concerns among regulators and big banks, Ant has in recent times pivoted to focus more on selling technology solutions rather than financial services, per se.

Social networking anxiety

Tencent has launched at least seven new social networking apps since the beginning of 2019. Each comes with a slightly different focus, whether it’s targeting college students or specializing in video-based chatting. Industry observers said Tencent made these moves to defend challengers, particularly ByteDance of which TikTok (or Douyin in China) has taken the world by storm. Although short videos don’t directly compete with Tencent’s messengers WeChat, they certainly are consuming more of people’s screen time. And there are signs that ByteDance is encroaching on Tencent’s core markets after the upstart pushed into video games and messaging.

Tencent might also worry about WeChat’s slowing growth. The slowdown is in part attributed to the app’s already enormous base — more than 1 billion monthly users — so growth has inevitably cooled. WeChat gave Tencent a timely boost at the start of the mobile internet revolution when QQ, Tencent’s messenger that dominated China’s PC era, had seen its day. Now Tencent appears to be in need of a new growth engine, be it a groundbreaking feature of WeChat to rejuvenate the app or a brand new social network to replicate the success of WeChat and QQ.

It’s worth keeping in mind that Tencent, like all other large internet companies in China, is always testing new products to meet shifting landscapes in the tech industry. Tencent is famous for pitting different departments against each other in what it calls an internal “horse race,” which spawned WeChat almost 10 years ago. In most cases, these projects failed to catch on, but the cost of making new apps is negligible for a behemoth like Tencent because much of the development process has been standardized. All it needs is a skunkworks team of a dozen employees, ideally headed by a visionary such as WeChat’s Allen Zhang.

Also worth your attention

Nvidia, the chipmaker known for its GPUs, is already working with some 370 automakers, tier-1 suppliers, developers and researchers in the field of autonomous driving. This week to its family of partners it added China’s largest ride-hailing company, Didi Chuxing . Together the pair will work on developing GPUs for Didi’s Level 4 autonomous cars (which can operate under basic situations without human intervention), the companies said in a statement. Didi, which peeled its autonomous driving unit into a separate company in August, said last month (in Chinese) at an industry conference that it had plans to soon begin testing autonomous vehicles on Shanghai streets.

Source: Tech Crunch

Artificial intelligence is a powerful tool, but it’s not a magic wand. Applying the technology requires thought and dedication, especially with legacy industries like law and insurance, which are being taken on in this way by Luminance and Omnius respectively. The companies’ founders, Emily Foges and Sofie Quidenus-Wahlforss, spoke with great insight on this on stage at Disrupt Berlin.

Luminance uses AI and natural language processing to help law firms process documents more quickly, not replacing the lawyer but providing additional intelligence and analysis of what may be hundreds or thousands of pages and saving time and money. Omnius applies AI not just to the text of insurance claims, but to the process of handling them, ensuring rapidity not only in documentation but in results like payouts.

Omnius has raised about $30 million in multiple small rounds and grants, while Luminance has raised some $23M mainly in its A and B rounds.

I’ve edited and contextualized our conversation here, but you can also watch the full panel below. I’ve made some slight changes for readability but left things mostly intact. Pull quotes belonging to Emily are on the left, Sofie’s are on the right.

The first thing I wanted to hear from the founders was why they chose these industries, and why now? After all, law and insurance are notoriously old-fashioned, some would even say backwards in many ways. How could they be sure this was an opportunity, and not a folly?

Emily Foges (Luminance): It had more to do with the capabilities of the technology, actually. We started with technology that can read a lot of language, and then we looked at what industry would benefit most from that. It was that way around.

I think the timing is 80 percent of the battle; The fact that the legal profession had got to a point of being ready to accept the use of that kind of technology was more luck than anything. But there’s been such an explosion in enterprise data that lawyers just can’t possibly cope with reading and all of the documentation that they need to — so the market was ready.

Sofie Quidenus-Wahlforss (Omnius): I think we come from a very similar background. We started on a horizontal level, with deep document understanding, and at some point we understood, if you really want to ship business value, you need to dive into one vertical.

We have different verticals to choose: manufacturing, legal, pharma… so then we were like, okay, which area is the biggest that is not transformed yet? And do we see decision makers aware of the of the need to do something? And do they have money?

The insuretech world is of course making a lot of pressure, all the new insurance companies like Lemonade, WeFox, Coya, because they claim to settle a claim in minutes. So the big guys like Alliance, they got nervous. And on the other hand you see, on the technology side, improvements in the areas of computing power, way more access to data, more flexible models. So we thought, the industry is ready, the technology’s ready, I was ready to build a big company. It’s my fourth company and I was like, this time I’ll build something huge. So everything fell into place.

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They don’t call them legacy industries for nothing, though. These domains, and some companies, that have existed for decades or even a century or more. That means legacy systems and legacy people, to put it kindly, that may not be amenable to change. Emily had some surprising stats on that, while Sofie advocated an AI-like approach to classifying and selecting clients.

Emily: Some of them are more ready than others, and I think the ones who aren’t ready need to really catch up, because we got to critical mass really quickly. We’re only three and a half years old, but we’ve got 185 law firms around the world signed up. The interesting thing was the most ready people were the law firms outside of the UK, outside of the US. It was European law firms, APAC-based law firms, South and Central American law firms who got on board first. They were more ready because to be honest, the commercial pressure was greater. And then the pressure on the US and UK law firms came from them.

Sofie: We thought, cool, the transformation is happening already. But after a while, 2018, we were like, okay, this market is not moving as fast as we thought . We looked at our proof of concept, our pilots we did with insurance companies and were like, wow, every big insurance company in Europe wants to have an AI pilot project but who’s really ready to start with AI full production?

And this is something I can really recommend for every startup trying to transform an industry from scratch: classifying your customers. Who is a laggard, who is an early adopter, who is early mainstream, is an innovator? Then we decided together with the board, okay, we’ll only focus on innovators and early adopters, and the rest should wait, or we can both wait for each other — but we cannot waste our time.

Source: Tech Crunch

Every once in a while on VC Twitter, a comment or statement seems so outlandish, so completely outrageous, that it must be — certainly has to be — false. Such as it was for Primary Ventures investor Jason Shuman, who commented on the recent prices for pitch deck advice in the Valley today:

You can almost hear that plaintive scream, “My mind is officially blown” (Shuman doesn’t scream, mind you). And indeed, in a world where more and more founders are worried about a bubble; assets are more, let’s say, Notionally expensive than ever before; and everything just seems a little bit crazy these days, it seems downright, fucking insane to think that a PowerPoint file and some “thoughts” are worth tens of thousands of dollars, and a goddamn term sheet to boot.

But they are.

Or at the very least, they can be. And I say that as the guy who wrote an article last week entitled, “How to avoid the startup trap of the parasitic consultant.”

For sure, not every pitch deck consultant is worth top dollar, any more than not every croissant in New York’s West Village is worth $10. But some are, and certainly an elect chosen set of consultants are worth every penny they demand.

The best consultants are not luxuries to plaster on your WeWork’s walls, but critical tools to invest in your startup. Framing a startup’s thesis, product, team, and market exactly right is a qualitative skill that can’t be learned from reading a book or scanning through a founder friend’s deck or two. Get a single slide wrong, or hell, a single bullet point wrong and the whole thing can blow up in a pitch meeting in thirty seconds or less.

Trust me. As a former VC investor, I have gotten hung up on single sentences before. A founder has put their life’s work into a company, synoptically condensed it to a handful of slides, and I am stuck on eight words. But those eight words make no sense, and once something doesn’t make sense, the whole edifice of excitement and confidence comes crashing down. Eight words — one badly chosen verb and adjective.

A good pitch deck consultant may barely move the needle on a fundraise, while a superstar may not just get you a better term sheet, they may fundamentally transform the entire course of your startup’s trajectory. Those are the stakes.

And of course, it’s not just pitch deck consultants who can do this. The right PR consultants can potentially get you traction that no one else can. The right sales consultants may lock in those critical early design customers that represent the difference between an orderly liquidation and a massive Series A. The right product marketing specialists or pricing experts may be what drives conversions and eliminates churn.

What’s so hard today for founders is that the Valley has indeed matured, and all these consultants and more are available. There are the hucksters and the tricksters, the bon vivants thriving on naive capital, the idiot clowns cloaked in their own compelling pitch decks.

But as the market has expanded for these services, at least some superstars are emerging from the marketplace, people who can offer more value for you in a week or two than the mediocrities can in a year.

Your job as founder is to constantly probe and find those diamonds, and get them working on your idea at any cost — even costs that might at times seem insane.

The thing with tech startups today is that they are built upon strata of superstardom. Superstar talents lead to superstar products, superstar VC capital, and ultimately, superstar exits. Superstar momentum is real. Yes, yes, yes, not every time, and every stage in the pipeline is multiplied by a stochastic chance of failure, for sure. But idiocy has rarely been a path to success.

And so as with all parts of innovation, it’s all about making the right investments in the right people and the right ideas. $50K or even $500K for a consultant won’t do anything if they are the wrong person working on the wrong idea — parasites are parasites after all. But leverage that early seed capital into the right people working on the right problems, and that’s where the magic happens.

And so I can understand some of the outrage over these figures, as well as the lingering presumption behind them that VCs care more about a startup’s deck than the underlying startup itself. Those frustrations are palpable and not insane, but let’s not avoid the tough question: everything has some value attached to it. It shouldn’t surprise anyone that top experts in their fields, who understand their own leverage, would take advantage of their expertise and drive their own prices higher.

Paying tens of thousands of dollars for a pitch deck consultant isn’t a prerequisite for securing a venture capital round. There are founders whose entire skill is securing capital for their companies who have never paid a penny for this skill.

Yet ultimately, all early-stage startups face the same challenge: too many activities, too little time. Something, somewhere is going to have to get outsourced today and the quality of that external work is largely going to be determined by how much you are willing to pay for it. What you choose to spend whatever capital you have will determine the trajectory of your startup. So whether it is pitch decks or another activity, never blink from those top dollars. It may very well be what gets you the top dollar in the end.

Source: Tech Crunch