Incoming IBM CEO Arvind Krishna faces monumental challenges on multiple fronts

Arvind Krishna is not the only CEO to step into a new job this week, but he is the only one charged with helping turn around one of the world’s most iconic companies. Adding to the degree of difficulty, he took the role in the midst of a global pandemic and economic crisis. No pressure or anything.

IBM has struggled in recent years to find its identity as technology has evolved rapidly. While Krishna’s predecessor Ginni Rometty left a complex legacy as she worked to bring IBM into the modern age, she presided over a dreadful string of 22 straight quarters of declining revenue, a record Krishna surely hopes to avoid.

Strong headwinds

To her credit, under Rometty the company tried hard to pivot to more modern customer requirements, like cloud, artificial intelligence, blockchain and security. While the results weren’t always there, Krishna acknowledged in an email employees received on his first day that she left something to build on.

“IBM has already built enduring platforms in mainframe, services and middleware. All three continue to serve our clients. I believe now is the time to build a fourth platform in hybrid cloud. An essential, ubiquitous hybrid cloud platform our clients will rely on to do their most critical work in this century. A platform that can last even longer than the others,” he wrote.

But Ray Wang, founder and principal analyst at Constellation Research, says the market headwinds the company faces are real, and it’s going to take some strong leadership to get customers to choose IBM over its primary cloud infrastructure competitors.

“His top challenge is to restore the trust of clients that IBM has the latest technology and solutions and is reinvesting enough in innovation that clients want to see. He has to show that IBM has the same level of innovation and engineering talent as the hyper scalers Google, Microsoft and Amazon,” Wang explained.

Cultural transformation

Altman and others want to crowdfund 1 billion masks in the next 180 days

Sam Altman, former president of Y Combinator and CEO of OpenAI, tweeted out his goal to secure 1 billion masks in 180 days. The public just needs to crowdfund those masks, first.

Altman, along with his brother Max Altman, an employee at Rippling, Radu Spineanu, the co-founder of Two Tap, Tinnei Pang, a designer at Mercari US, and others, are all working with suppliers in China to get 1 billion single-use masks to help the broader U.S. population, from service workers to those in hospitals but not directly working with COVID-19 patients.

The tech leaders will not be financing these masks themselves, but instead have asked the public to crowdfund a large order.

“This is a somewhat unusual market—the most effective way to guarantee supply is to pay up front so that factories can buy the equipment and supplies they need, and buying in bulk leads to significant cost savings,” the site reads.

“We won’t be funding any of these masks — we’re working with a few other groups to help fund getting [personal protective equipment] for medical workers. The goal of this project is to get surgical masks to places that need them at a dramatically lower rate than they could ever get themselves,” Max Altman wrote in an e-mail to TechCrunch.

According to the initiative’s website, none of the organizers will make money from the mask production.

Users can visit the 1billionmasks.com website and submit a form of “indication of interest.” If there’s enough demand, according to the team, an order form will appear on the site, and approved buyers will sign a contract and submit a payment to then “crowdfund” the masks.

If the demand hits a certain point, the team will be able to sell masks at 32 cents per mask, not inclusive of taxes and duties. If there is less demand, that price will be higher.

The masks are not meant to replace the dramatic shortage of N95 masks we’re seeing across the country, but rather to stop those not on the frontlines from buying scarce N95 masks.

N95 masks are necessary, because they filter out small particles, which is key for healthcare workers on the frontlines caring for COVID-19 patients. This doesn’t mean that others don’t need to wear masks — and in fact the WHO and CDC both recommend the use of masks broadly. Because of the recommendation, many DIY mask tutorials have been created, urging folks to use materials ranging from scarves to socks.

There has been a flurry of efforts from the private tech sector to help with medical shortages across the country. Apple, for example, sourced over 20 million protective masks and is now building “face shields.” Smaller companies are stepping up too: a heating filter company, a robotics startup and an architecture startup have all independently shifted operations to start making masks and ventilators.

The option that Altman and his team are providing has been rated for bacterial infiltration for people not on the frontlines. The mask option is closer to a surgical mask  than an N95 mask. Surgical masks do not provide as much respiratory protection as an N95 respirator, but do protect against droplets and large respiratory particles. According to the CDC, “most surgical masks do not effectively filter small particles from the air and do not prevent leakage around the edge of the mask when the user inhales.”

According to the website, the masks could be handed out by state and local governments, institutions, organizations and companies to essential workers, like grocery shoppers or delivery people.

Deliveries would start to arrive in Long Beach three to four weeks from the first order and then continue weekly for six months. Long Beach is the drop-off point because it is the location that the team can get supplies to the quickest, according to Max Altman.

Apple and Google are launching a joint COVID-19 tracing tool for iOS and Android

Apple and Google’s engineering teams have banded together to create a decentralized contact tracing tool that will help individuals determine whether they have been exposed to someone with COVID-19.

Contact tracing is a useful tool that helps public health authorities track the spread of the disease and inform the potentially exposed so that they can get tested. It does this by identifying and ‘following up with’ people who have come into contact with a COVID-19 affected person.

The first phase of the project is an API that public health agencies can integrate into their own apps. The next phase is a system level contact tracing system that will work across iOS and Android devices on an opt-in basis.

The system uses on-board radios on your device to transmit an anonymous ID over short ranges — using Bluetooth beaconing. Servers relay your last 14 days of rotating IDs to other devices which search for a match. A match is determined based on a threshold of time spent and distance maintained between two devices.

If a match is found with another user that has told the system that they have tested positive, you are notified and can take steps to be tested and to self quarantine.

Contact tracing is a well known and debated tool, but one that has been adopted by health authorities and universities who are working on multiple projects like this. One such example is MIT’s efforts to use Bluetooth to create a privacy-conscious contact tracing tool that was inspired by Apple’s Find My system. The companies say that those organizations identified technical hurdles that they were unable to overcome and asked for help.

The project was started two weeks ago by engineers from both companies. One of the reasons that the companies got involved is that there is poor interoperability between systems on various manufacturer’s devices. With contact tracing, every time you fragment a system like this between multiple apps, you limit its effectiveness greatly. You need a massive amount of adoption in one system for contact tracing to work well.

At the same time, you run into technical problems like Bluetooth power suck, privacy concerns about centralized data collection and the sheer effort it takes to get enough people to install the apps to be effective.

Two Phase Plan

To fix these issues, Google and Apple teamed up to create an interoperable API that should allow the largest number of users to adopt it, if they choose.

The first phase, a private proximity contact detection API, will be released in mid-May by both Apple and Google for use in apps on iOS and Android. In a briefing today, Apple and Google said that the API is a simple one and should be relatively easy for existing or planned apps to integrate. The API would allow apps to ask users to opt-in to contact tracing (the entire system is opt-in only), allowing their device to broadcast the anonymous, rotating identifier to devices that the person ‘meets’. This would allow tracing to be done to alert those who may come in contact with COVID-19 to take further steps.

The value of contact tracing should extend beyond the initial period of pandemic and into the time when self-isolation and quarantine restrictions are eased.

The second phase of the project is to bring even more efficiency and adoption to the tracing tool by bringing it to the operating system level. There would be no need to download an app, users would just opt-in to the tracing right on their device. The public health apps would continue to be supported, but this would address a much larger spread of users.

This phase, which is slated for the coming months, would give the contract tracing tool the ability to work at a deeper level, improving battery life, effectiveness and privacy. If its handled by the system, then every improvement in those areas — including cryptographic advances — would benefit the tool directly.

How it works

A quick example of how a system like this might work.

  1. Two people happen to be near each other for a period of time, let’s say 10 minutes. Their phones exchange the anonymous identifiers (which change every 15 minutes).
  2. Later on, one of those people is diagnosed with COVID-19 and enters it into the system via a Public Health Authority app that has integrated the API.
  3. With an additional consent, the diagnosed user allows his anonymous identifiers for the last 14 days to be transmitted to the system.
  4. The person they came into contact with has a Public Health app on their phone that downloads the broadcast keys of positive tests and alerts them to a match.
  5. The app gives them more information on how to proceed from there.

Privacy and Transparency

Both Apple and Google say that privacy and transparency are paramount in a public health effort like this one and say they are committed to shipping a system that does not compromise personal privacy in any way.

There is zero use of location data, which includes users who report positive. This tool is not about where affected people are but instead whether they have been around other people.

The system works by assigning a random, rotating identifier to a person’s phone and transmitting it via Bluetooth to nearby devices. That identifier, which rotates every 15 minutes and contains no personally identifiable information, will pass through a simple relay server that can be run by health organizations worldwide.

Even then, the list of identifiers you’ve been in contact with doesn’t leave your phone unless you choose to share it. Users that test positive will not be identified to other users, Apple or Google. Google and Apple can disable the broadcast system entirely when it is no longer needed.

All identification of matches is done on your device, allowing you to see — within a 14-day window — whether your device has been near the device of a person who has self-identified as having tested positive for COVID-19.

The entire system is opt-in. Users will know up front that they are participating, whether in app or at a system level. Public health authorities are involved in notifying users that they have been in contact with an affected person. Apple and Google say that they will openly publish information about the work that they have done for others to analyze in order to bring the most transparency possible to the privacy and security aspects of the project.

“All of us at Apple and Google believe there has never been a more important moment to work together to solve one of the world’s most pressing problems,” the companies said in a statement. “Through close cooperation and collaboration with developers, governments and public health providers, we hope to harness the power of technology to help countries around the world slow the spread of COVID-19 and accelerate the return of everyday life.”

You can find more information about the contact tracing API on Apple’s page here including specifications.

Tesla resurrects long-range RWD Model 3 for the Chinese market

Tesla is now producing and selling the long-range rear-wheel drive version of its Model 3 electric vehicle at its Shanghai factory, a month after receiving approval from the Chinese government.

The move might not be a milestone, but it’s notable because Tesla discontinued production of the long-range RWD Model 3 in the U.S. and now only offers that variant as a dual-motor all-wheel drive. It also marks a shift from Tesla’s initial plan to sell a more basic version of the Model 3 in China.

The company updated its China website showing the standard range plus — the first vehicle to produced at the Shanghai factory — as well as the long range RWD and performance versions of the Model 3. Bloomberg was the first to report the change. The long range RWD version starts at 366,550 yuan, or about $52,000 after incentives. Deliveries of the long-range RWD version are expected to begin in June.

The standard-range plus Model starts at 323,800 yuan, or about $46,000, before local subsidies.

The standard-range-plus Model 3 can travel 276 miles on a single charge, according to Tesla’s China website. The same website says the long-range RWD Model 3 has 668 km, or 415-mile range. Those range estimates are based on the New European Driving Cycle, a forgiving standard that Europe replaced several years ago with the WLTP. The real-word range is likely much lower.

Tesla model 3 long range RWD china

Image Credits: Tesla/screenshot

Tesla started producing a standard-range-plus rear-wheel-drive version of the Model 3 at its Shanghai factory late last year. The first deliveries began in early January. The March approval from the Ministry of Industry and Information Technology gave Tesla permission to add another variant to its Chinese portfolio.

Eventually, Tesla plans to manufacture the Model Y electric vehicle at the China factory.

Airbnb is buying trust during the COVID-19 travel slowdown

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Airbnb’s recent moves in the wake of a global travel slowdown are interesting and worth understanding in chronological order. What it details is a company spending heavily today to keep up its future health. Demand will return to the world travel market in time — how much, no one knows — and Airbnb wants to be a well-liked participant in the return to form.

Building off our last look at the company, we should understand how Airbnb intends to not only survive, but come out the other side of the pandemic with enough user trust to get back to work

An IPO promise

Tips, tactics and cashflow strategies for startup survival during a crisis

We’re in unprecedented times and are likely at the beginning of a long journey back to normal  —  whatever the new “normal” turns out to be.

While governments rush to get debt-relief packages in place, the high-risk, high-reward tech sector will need something different. To survive, the community requires fancy footwork, hard choices and a lot of shared pain between founders, staff, investors, suppliers and customers.

With my startup Moonfruit, a DIY website and e-commerce platform I co-founded with Wendy Tan-White (now a VP at X) and eirik pettersen (currently CTO at Secret Escapes), we survived the 2001 dot-com crash, when the entire tech sector was decimated for years to come, as well as the 2008 financial crisis, when we were lucky enough to experience rapid countercyclical growth. These experiences made us stronger and ultimately led to our successful exit in 2012 and post-acquisition growth to $150 million ARR.

I’ve spent the last five years as a general partner at Entrepreneur First, raising $200 million of funds and advising hundreds of startups through formation, growth and fundraising — but right now I work with many of them daily on survival.

For most companies, I think this crisis will look more like 2001 than 2008, though there will be some who are lucky enough to grow through it. The good news is, having been through this before, I know there are things you can do as a founder or as an investor that can mitigate the damage. In the U.K., I’m in several conversations about making emergency equity funding more available, and I hope this happens all over the world too.

Here is a tactical guide to surviving the crisis.

Amid unicorn layoffs, Boston startups reflect on the future

As domestic and global economies grapple with the COVID-19 era, its impact on startups is coming into focus: All will be impacted, many will suffer and some will close.

Boston, a city that TechCrunch keeps tabs on, has seen a number of well-known startups struggle in recent weeks. Their misfortunes come quickly after companies in the region recorded huge venture raises, generating notable momentum.

In December, TechCrunch wrote that “despite winter’s chill, the Northeast’s tech ecosystem is white-hot,” taking into account Boston’s historical gains in the venture world. And earlier in 2020 we covered a few huge rounds that the city’s own Toast and Flywire had put together; worth $520 million as a pair, the two venture deals stood out for how large they were and how close to one another they were announced.

Indeed, looking at preliminary venture data from Crunchbase, Boston was on track to crush its 2019 tally of venture rounds of $50 million or more in 2020. That record-setting pace is now in doubt. 

To get a feel for Boston’s new reality, we’ve collected the region’s recent news and spoke to area investors and founders, including David Cancel of Drift (the previous founder of Compete and other companies), Drew Volpe of First Star VC and a team of folks from Underscore VC.

TechCrunch had intended to start a monthly series on Boston and its venture capital and startup scenes later this month. We’re kicking it off early because the news is already here.

Slowdown

Earlier this week, restaurant management platform Toast cut 50% of its staff. The Boston-based company was valued at $5 billion in recent months, and — before the pandemic hit — was planning to spend the next few years gearing up to go public. Toast sits uniquely between fintech and restaurant tech, industries that have been arguably impacted the most by COVID-19’s spread and widespread restaurant closures.

Legal Capsule by LexCounsel

Possibility of Non-Payment of Lease Rent Due to COVID-19 Amidst the outbreak of novel coronavirus (“COVID-19”) and its consequential countrywide lockdown, shutting down majority of the commercial, industrial and retail activities, the much forgotten ‘Force Majeure’ clause in contracts and leases is now receiving close scrutiny. In simple terms, ‘Force Majeure’ events relieve a party from

So many fintech eggs in so many baskets

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

The whole crew was present this week: NatashaDanny and Alex, along with our intrepid producer Chris. And like the last few episodes it was good to have everyone around as there was so very much to get through. Even better there was a lot of good, non-COVID-19 news to cover. Yes, there were bad tidings and some COVID-19 material as well, but, hey, not everything can be fun.

We started with a look at Clearbanc and its runway extension not-a-loan program, which may help startups survive that are running low on cash. Natasha covered it for TechCrunch. Most of us know about Clearbanc’s revenue-based financing model; this is a twist. But it’s good to see companies work to adapt their products to help other startups survive.

Next we chatted about a few rounds that Danny covered, namely Sila’s $7.7 million investment to help build technology that could take on the venerable and vulnerable ACH, and Cadence’s $4 million raise to help with securitization. Even better, per Danny, they are both blockchain-using companies. And they are useful! Blockchain, while you were looking elsewhere, has done some cool stuff at last.

Sticking to our fintech theme — the show wound up being super fintech-heavy, which was an accident — we turned to SoFi’s huge $1.2 billion deal to buy Galileo, a Utah-based payments company that helps power a big piece of UK-based fintech. SoFi is going into the B2B fintech world after first attacking the B2C realm; we reckon that if it can pull the move off, other financial technology companies might follow suit.

Tidying up all the fintech stories is this round up from Natasha and Alex, working to figure out who in fintech is doing poorly, who’s hiding for now, and who is crushing it in the new economic reality.

Next we touched on layoffs generally, layoffs at Toast, AngelList, and not LinkedIn — for now. Per their plans to not have plans to have layoffs. You figure that out.

And then at the end, we capped with good news from Thrive and Index. We didn’t get to Shippo, sadly. Next time!

Equity drops every Monday at 7:00 AM PT and Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.