Atomico VCs say that “everybody cares” in Europe about where the startup dollars are coming from

Today, on stage at TechCrunch Berlin, four of Atomico’s most senior partners took the stage together for the first time, flying into the city from London, Stockholm, and Geneva to talk about a wide range of issues. Among the many things we discussed were direct listings, secondary investments, and the firm’s sweet spot, which, despite its global reach, largely remains on pan-European companies and largely startups needing Series A stage funding, to which Atomico typically writes checks of between $5 million and $15 million in exchange for an ownership stake of between 15 and 20 percent.

We also spent some time talking about the changing complexion of investors in Europe, where pension funds contributed just $902 million of the roughly $13 billion that investment firms in Europe raised last year, according to Atomico’s own research — and we discussed why more money came from outside of Europe to fund regional startups than within it.

We’re zooming in on that part of the conversation for readers; if you missed our discussion and would like to check out other parts of it, you can find it below.

TC: It was surprising to read in your recent state of European tech report that pension funds don’t account for more of the money being raised by venture firms, that much more of the funding continues to come from family offices and high net-worth individuals. Is the problem structural? Is it cultural?

HT: I think the world is waking up to the fact that European venture has comparative performance today with U.S. venture returns. There’s research in that area that’s relatively authoritative in that area.

As a function that yes you’re right [that this an issue]. Pension funds in Europe have roughly $4 trillion under management, but a billion dollars [invested last year in venture firms] is a three-fold increase from the year before, so it is material. But as you say, if you think about the $4 trillion that they are managing, it could probably be put to good use deploying capital into venture capital funds that are looking to change the world in a positive way, because that is what impacts the pensioners who are behind that capital. [So] hopefully we’ll continue to see that trend because there’s more to do there.

TC: Also interesting from your report is the fact that $13 billion from European VCs has been plugged into startups over the last year, which means two-thirds is coming from somewhere else. Where?

SK: This is the way it should be. The companies that that we think should be coming from Europe — a lot of the ones we look to back — are by ambition global companies, And being global also means having investors from other regions, so it’s not a bad thing. I don’t think we should be as investors saying, ‘Well, the funding has to all come from here.’ I think it’s a sign of success that European companies are getting investments from Chinese investors, from U.S. investors, which is really what’s happening.

HT: The universe of tech is expanding to involve many industries, so what’s naturally happening is that a lot of different types of venture capital, strategic, corporate, and individual [investors are]  all getting involved in what is actually happening.  I think that a reflection of where tech is going well, and has been going for the several years if not decades.

TC: Are you seeing more money specifically coming from China because of the ongoing trade war between the coutry and the U.S.?

SR: There’s an interesting point there, which is that [for] certain kinds of companies, particularly a lot of frontier, deep tech companies that are considered sensitive. Europe is kind of neutral ground, so we can get customers from the U.S., customers from China,  and there are examples like Graphcore, one of our portfolio companies, where you know this is tech that is not [saddled] with restrictions that might come with some ongoing spat, and that’s an advantage for us.

TC: In the US, over the last 10 or 15, years, far more money from the Middle East sovereign wealth funds has come into the US, raised by venture firms. Given that some of these regions don’t exactly have unimpeachable human rights records, there’s a lot of debate in the U.S. about whether or not founders and VCs should be taking theirmoney. Do European startups care? Do European venture capital firms care?

HS: I think so, not only [do they care] about what they’re doing in terms of what you know impact to the world, but what type of capital they are choosing, And more people who are becoming founders and entrepreneurs are clearly sensitive, and the people who are tackling big missions and big problems are clearly sensitive in terms of alignment with their investors. And I think that is something that will continue to be a trend that we see with the matching of the type of capital, the investor, and the entrepreneur. I think that will definitely be a continuing trend that we see.

SR: We’re very selective with our [own] LPs. A lot of our LPs are pension funds, which is a really nice virtuous cycle. The pensioners are doing well off of the investment performance that we’re working hard to deliver. And then the founders can feel good about the fact that in many cases, you know, the majority of money may be [from] pensioners.

TC: Your LPs are mostly pension funds? And family offices? And mainly European investors?

SR: I don’t have the stats at hand but I’d say mainly European, yeah.

Pear, whose seed-stage bets are followed closely, just raised $160 million for its third fund

Pear, a six-year-old, Palo Alto, Ca.-based seed-stage firm whose bets on nascent startups are closely watched by early stage investors, has closed on $160 million in capital commitments from a wide array of backers, including a previous investor, the University of Chicago.

It’s more than twice the $75 million that the firm raised for its second fund in 2016 and triple the $50 million it raised for its debut fund back in 2013. We gather the firm had to turn down quite a few interested parties, too, in order to stick to what it’s most comfortable doing and not start writing bigger checks to more mature companies.

A little less than half of its current portfolio companies were launched by college students or recent grads, many of them at nearby Stanford but also at a growing number of other top universities, including UC Berkeley, Harvard and M.I.T. Pear also invests roughly 55 percent of its capital in founders who’ve logged some time in the working world, including at Uber, Facebook and Google.

We talked last week with the firm’s cofounders, Mar Hershenson and Pejman Mar, who’ve known one another for 20 years. Nozad famously sold rugs to tech millionaires before becoming a full-time investor; one early bet was on the smartphone company Danger, which sold to Microsoft in 2008 for $500 million. Danger was cofounded by the husband of Hershenson, who is herself a three-time entrepreneur who also received backing from Nozad while growing an intellectual property startup called Sabio Labs. (It was later acquired by a now defunct software company called Magma Design Automation.)

The pair said that little will change with this new, far bigger fund. The goal remains to be the “best partner on the ground for the entrepreneur from ground zero,” said Hershenson, meaning Pear doesn’t need to see revenue or even customers so much as to trust a team and its vision.

Asked more specifically what it is that they look for, Nozad likened it to understanding “really good wine; it’s hard to explain it in words but once you have it, you know it.” Adds Hershenson, “We spend a lot of time with founders and a lot of it comes down to their commitment, how mission driven they are, and their ability to attract talent. You want a captain of the ship, someone who leaves last and who wants to build a product for many people.”

Certainly, the two have plenty of opportunities to meet founders, opportunities that they’ve created for the firm by focusing — to an extreme degree — on building community. In the last year, alone, Pear has hosted roughly 100 events, from a speaker series where it brings in investors and CEOs to speak to founders and students, to workshops, bootcamps, pitch nights, CEO dinners, hackathons and demo days. (Hershenson says one of her favorite evenings every quarter are dinners she separately has with other women engineers.)

Hershenson and Nozad are also building an organization to help scale their work — as well as hopefully outlast the two of them, they say — and which now includes three partners in addition to the two of them: Ajay Kamat, who focuses on consumer startups and previously founded the of Pear-funded startup Wedding Party, which he sold to Instacart; Ian Taylor, who heads up Pear’s “Dorm” programs and concentrates on supporting student founders; and Nils Bunger, who previously founded the desktop virtualization company Pano Logic before founding MobileSpan, a maker of enterprise file-sharing software that he sold to Dropbox. Bunger focuses, unsurprisingly, on helping Pear to uncover promising business-to-business startups.

The approach seems to be working. Among dozens of other startups, Pear was early to a number of big and growing companies, including the now publicly traded blood diagnostics company Guardant Health, the delivery company DoorDash, the HR and payroll software company Gusto, and Branch, a company that helps brands drive sales through its linking infrastructure.

Some of its newer bets seem interesting, too. Among these is Nightfall, a company whose tech scans structured and unstructured data in hundreds of apps for sensitive information that it then acts to secure, and which launched publicly last month with $20.3 million in funding. Another is ixLayer, a young San Francisco-based infrastructure startup promising to make it easier for its customers to offer home DNA tests by providing them all the services they need, from a custom storefront marketplace and patient portal, to EHR data access, and payment handling.

Indeed, like another six-year-old firm that we wrote about yesterday called SignalFire, Pear isn’t focused on themes so much as on founders, no matter where they might find them. As Nozad told us last week during our call, “We’re not a  research-driven fund, We think founders know better than us. We want to see future through their eyes.”

If you’re interested in learning more about Pear and its portfolio companies, the team interviewed roughly a dozen of their founders for the video below about how Pear has helped in their respective entrepreneurial journeys. Among those to sing the firm’s praises: Tony Xu of DoorDash and Shubham Goel and Ray Zhou of the relationship intelligence platform Affinity.

 

SignalFire, just six years old, has raised $500 million across two new funds

SignalFire, a six-year-old, San Francisco-based venture firm that prides itself on mining what it says is more actionable data about, well, the world, has just raised a pair of funds that total $500 million in capital commitments.

One of the vehicles is a $200 million “seed” fund that SignalFire will use to write checks up to $5 million in nascent startups; the other is a $300 million fund designed to invest in those of the firm’s portfolio companies that are beginning to pull away from the pack and need growth-stage funding.

Both are a major step up for the young firm, which closed its debut fund with $53 million in 2015 before raising $330 million in capital across two funds in 2017.

According to firm founder Chris Farmer — who founded SignalFire after logging several years at both Bessemer Venture Partners and General Catalyst — the firm also has many more people investing the money. Altogether, SignalFire now employs 30 people across an engineering and data science unit; a unit dedicated to portfolio operations; and a unit that does the actual venture investing.

The latter now features three general partners in addition to Farmer. Among them: Ilya Kirnos, a former software engineer at Oracle, then Google, who joined Farmer at the outset and is also the firm’s CTO; Wayne Hu, who joined SignalFire in 2015 and today leads many of its seed-stage investments; and Walter Kortschak, who joined the firm in 2016 after spending 26 years at the private equity firm Summit Partners, where he established the firm’s West Coast investment practice.

Others associated with the company include Alex Garden, the co-founder and CEO of the food-focused robotics company Zume, and Ross Mason, the British-born founder of MuleSoft, both of whom are venture partners; along with Tawni Cranz, who spent a decade with Netflix, including as its chief talent officer, and is today an advisor who holds the title of venture operating partner with the firm. (Another managing partner, Tony Huie, says on LinkedIn that he left the firm full-time to become the COO of one of its portfolio companies, an online privacy startup called Pango.)

Certainly, SignalFire is a firm that trusts its instincts. Its bets “north of $20 million” or else “in that ballpark,” according to Farmer, include the push notification tools company OneSignal; Jyve, a company that connects retailers with on-demand workers who can stock their shelves; ClassDojo, which makes a communications app for primary schools; Stampli, which makes a cloud-based accounts payable system; and Grammarly, which makes a digital writing assistant.

If you’re trying to suss out a theme among these, don’t bother. SignalFire claims to have access to 100 major data sets that its “competitive data nerds” pore over to figure out what’s happening in the world — and where things are moving (think talent flows and consumer spending, among other things). In short, it doesn’t “invest in people” or else take a thematic approach, as do many of its venture peers.

What SignalFire doesn’t have yet is a big exit. In fact, Farmer says its only notable exit to date was the sale early last year of TextRecruit, a text message, live online chat and AI platform for hiring, to iCIMS, an applicant tracking system. (Terms were undisclosed.)

Then again, SignalFire looks to be just getting started, as do many of its startups, a growing number of which are highly valued by the private investors who’ve piled into them.

Just one example, the men’s health company Ro, is not quite three year’s old yet it was most recently valued at half a billion dollars, on roughly $175 million in funding.

There’s also Zume, which is just four years old and backed by SignalFire and was reportedly valued at $2.25 billion when it closed on a giant round from SoftBank Vision Fund late last year. It’s now reportedly in talks to close more funding at a $4 billion valuation.

See Atomico’s most senior VCs on stage at Disrupt Berlin

Atomico is among the most widely respected venture firms in Europe, ranking right up there with friendly rivals like Accel London and Index Ventures.

It’s also just 13 years old at this point, compared with its more established peers. It’s easy to overlook this, considering the impact the firm has made on the European startup scene since Swedish billionaire Niklas Zennström — who’d previously cofounded Skype and Kazaa — first swung open its doors.

Consider that four funds and $1.5 billion dollars in asset under management later, Atomico is now among Europe’s largest early-stage funds. It also has one of the most enviable portfolios, with companies that include Klarna (valued at $5.5 billion), Graphcore (valued at $1 billion), Stripe (valued at $35 billion) and Compass (valued at $6.4 billion), as well as a growing long list of past winners, including Climate Corp., which sold to Monsanto for $1.1 billion back in 2013.

In fact,  it was through this last investment  that Atomico first met Siraj Khaliq, who is today among the most senior members of the Atomico team and who will be joining us on stage at TechCrunch Berlin next week for a wide-ranging discussion about where Atomico is shopping — and how the different geographies it covers are evolving.

Khaliq previously cofounded and served as CTO of The Climate Corp. and today leads Atomico’s “frontier” investment team. He’ll be talking with us along the firm’s other most senior members, including Niall Wass, who co-leads the firm’s consumer investment team; Sophia Bendz, who lead Atomico’s Nordic investment sourcing, as well as its angel program; and Hiro Tamura, who co-leads the firm’s consumer investment team with Wass and also leads its later-stage investing team. (Tamura is also the longest serving partner at Atomico after Zennström.)

What excites them, what concerns them, and how are they trying to prepare for 2020? We’re thrilled to be sitting down with them to talk about these questions and much more.

If you care about what’s happening on the ground in Europe, this is one conversation you won’t want to miss. Tickets to the show are still available. You can find the entire Disrupt Berlin agenda here.

 

Elon Musk found not liable in case brought against him by British diver

After a three-day trial, Elon Musk was found not liable for defamation in a federal court today in Los Angeles, where Musk reportedly owns a cluster of six homes as well as oversees the operations of both SpaceX and Tesla.

British diver Vernon Unsworth had brought the suit against Musk in the fall of 2018 after Musk tweeted that Unsworth was a “pedo guy,” meaning a pedophile. Why: after Musk and his employees developed what they called a mini-submarine or escape pod to save a children’s soccer team from a flooded cave in Thailand in July of 2018, Unsworth — a stranger to Musk and an experienced diver with knowledge of the cave — called the production a “PR stunt” when asked about the effort in an interview with CNN.

Musk could “stick his submarine where it hurts,” Unsworth told the reporter.

Soon after, Musk hit the “tweet” button, publishing the now-infamous insult.

Unsworth brought the suit after Musk doubled down on his accusation, describing Unsworth as a “child rapist” in August 2018 emails to Buzzfeed. He claimed in court this week that since “being branded a pedophile” by Musk, he has felt “vulnerable and sometimes, when I’m in the U.K., I feel isolated.”

Unsworth — who in addition to being a diver is a financial consultant who divides his time between England and Thailand — was seeking damages from Musk to the tune of $190 million, including actual, assumed, and punitive damages. Indeed, this week, his team tried to make the point that what he was seeking is a pittance for Musk, who was told to estimate his own net worth during the trial and guessed it to be roughly $20 billion, based on his Tesla and SpaceX holdings.

During the trial, Musk apologized repeatedly for the “pedo guy” tweet, saying that what he’d really meant was “creepy old man.” Musk’s attorney also defended Musk’s temper, telling Unworth at one point: “Do you believe Mr Musk is so cold-hearted that he was sending over this sub with no regard for the children’s lives? . . . Are you willing to apologize to Mr Musk for saying that it was just a PR stunt?”

Unsworth declined, saying his insult was “to the tube and not Mr. Musk personally.”

In the end, the court decided Musk’s outburst wasn’t meant as a statement of fact.

CNBC notes in a separate report that the verdict could “set a precedent where free speech online, libel and slander are concerned” as among the first court cases brought by a private individual over a tweet.

Whether it emboldens Musk is another question. Musk is an avid user of Twitter and this isn’t the first time tweets have landed him in hot water.

A tweet-related battle with the Securities and Exchange Commission last year ultimately cost Musk $20 million and his role as chairman of Tesla for at least three years.

As part of the settlement, Musk also agreed to a condition stipulating that he get pre-approval before sending social media posts containing information that is “material” to Tesla investors. In April of this year, the two sides struck an updated deal that narrowed the scope of what Musk can’t tweet about without first receiving outside approval.

Unsworth had reportedly fought not to cry during the trial, saying he was “effectively given a life sentence with no parole.” He said, “It feels very raw. I feel humiliated, ashamed, dirtied.”

Unsworth was among the rescuers who ultimately led the young soccer team to safety. He received an honorable mention from the Thai government along with 186 other people. Among them: Elon Musk.

Omar Hamoui leaves Sequoia for LA-based Mucker Capital as it looks to lead more Series A deals

Mucker Capital, the now eight-year-old, Santa Monica, Calif.-based pre-seed startup accelerator and venture outfit, has brought aboard Omar Hamoui, a partner at Sequoia Capital for the last six-plus years, as its third general partner.

Hamoui joins firm co-founders Erik Rannala and William Hsu, along with several other investors on the team who are collectively working to fund pre-seed, seed-stage and — with Hamoui’s help — Series A-stage deals in the LA region, as well as elsewhere in the U.S.

Mucker’s largest exit to date appears to be the LA-based shopping and rewards platform Honey, which was recently scooped up by PayPal for $4 billion in cash; Mucker was its first investor and the company went through its accelerator program. The firm also has stakes in ServiceTitan, NEXT Trucking, Emailage and AuditBoard, among others of its bets.

To find out more about Hamoui’s previously unreported move, we were in touch earlier today with Rannala to catch up a bit.

TC: When did you start talking with Omar? Did this move involve a recruiter? Is he moving to LA for the role? 

ER: We’ve known Omar for several years. He had moved back to Southern California — he’s originally from here — and was covering LA and the surrounding areas for Sequoia. We got to know him better while collaborating on companies and he ended up leading rounds in two of our portfolio companies, NEXT Trucking and Papaya.

While we’d been historically more focused on pre-seed and seed, we had also been opportunistically investing in post-seed and early Series A rounds for some time. Somewhat serendipitously, Omar actually broached the topic with us independently. Given how well we were already working together, it made a lot of sense for him to join the team.

TC: How many funds have you raised to date? What sizes have they been?

ER: We’re currently investing out of our fourth seed fund [which closed last year]. We’d also raised a separate early-stage vehicle to invest in follow-on rounds for our pre-seed and seed investments and other post-seed and early Series A opportunities. In total, we raised a little less than $90 million last year.

TC: What will Omar be doing, specifically? How will the general partners divide up your coverage?

ER: Omar will be focused primarily on post-seed and early Series A investments, writing $2 million to $3 million checks. The three of us will collaborate across all our seed and early-stage investments, though Omar will be point person on post-seed, and Will and I will continue to focus on pre-seed and seed.

TC: You’ve been at this for a bit with Mucker Capital . What, if anything, has changed in the last year or two in terms of the LA scene?

ER: The LA ecosystem has been scaling and maturing rapidly since we started Mucker. The technical labor force here is roughly the same size as the Bay Area, so we’ve always had a wealth of talent. And the quality and sophistication of entrepreneurs and technical talent just keeps getting better and better as the ecosystem grows and evolves. We continually see more people relocating to LA, and downstream investors spending more time here.

The vast majority of follow-on funding here still comes from Bay Area firms, which isn’t a surprise considering so many firms are headquartered there, [so] overall, we believe LA is still underfunded relative to the size of the ecosystem and the opportunities here. That’s one of the reasons we’ve been expanding the scope of our post-seed and early-stage investing and bringing on a third partner to focus on it. As there are more exits like Honey, Snap and Oculus, we see more and more people recirculating back into the ecosystem, starting companies, angel investing and joining startups. [In the meantime], indigenous venture capital here in LA has lagged behind the growth in number and quality of opportunities that we see.

TC: You aren’t focused exclusively on LA, correct?

ER: Over the past couple of years, we’ve continued to expand the geographic scope of our investments — finding companies in places where Silicon Valley VCs haven’t really been investing, especially at the pre-seed and seed stage. Some of our recent investments are Modus in Seattle, GoFor in Ottawa, Resilia in New Orleans, Pei in Austin and Kast in San Diego.

TC: What company did Mucker miss, and what did you learn from the experience?

RN: One investment we passed on very early was Dollar Shave Club, and it’s certainly one we regret. We met Michael Dubin a few months after he launched the site and his original marketing video went viral. We obviously didn’t get it. Generic razor blades from Korea? Funny video? Pass!

In “60 Minutes” appearance, YouTube’s CEO offers a master class in moral equivalency

Susan Wojcicki may be one of the most powerful women in Silicon Valley, but she also holds the unenviable role of being ultimately responsible for a lot of garbage that we, along with our parents, siblings, friends, neighbors, colleagues, and children — not to mention billions of strangers — now consume on YouTube.

That garbage, along with valuable content, is inevitable on a platform that Wojcicki says sees 500 hours of video downloaded to the platform every single minute. But it doesn’t meant that YouTube can’t do more, particularly given the vast financial resources of its parent company, Alphabet, which had a stunning $117 billion in financial reserves as of this summer — more than any company on the planet.

Instead, as Wojcicki explains to reporter Lesley Stahl on tonight’s episode of “60 Minutes,” the company has broadly drawn a line at taking down videos that cause “harm,” versus videos that spread might merely hatred and disinformation.

The distinction is laughable. “So if you’re saying, “Don’t hire somebody because of their race, that’s discrimination,” according to Wojcicki, “and so that would be an example of something that would be a violation against our policies.” Meanwhile, as Stahl notes, a video stating that “white people are superior” but that doesn’t explicitly incite action on the part of viewers would be fine with Youtube. If that video says “nothing else, yes,” confirms Wojcicki.

It’s a horrifying position for the company to take and for Wojcicki to be responsible, and ultimately, Wojcicki’s best defense, in her own words, is that the service is better because she knows she can make it better. It’s exceedingly cold comfort.

If you missed the episode, you can watch it here, or read the transcript below.

 

[STAHL STUDIO:]  

TO GRASP THE PHENOMENAL SCALE OF YOUTUBE: CONSIDER THAT PEOPLE SPEND 1 BILLION HOURS WATCHING VIDEOS ON IT — EVERY DAY. IT IS THE MOST USED SOCIAL NETWORK IN THE U-S.  MORE QUERIES ARE TYPED INTO THE WEBSITE’S SEARCH-BAR THAN ANYWHERE ONLINE EXCEPT GOOGLE… WHICH OWNS YOUTUBE.

BUT THE SITE HAS COME UNDER INCREASING SCRUTINY, ACCUSED OF PROPAGATING WHITE SUPREMACY, PEDDLING CONSPIRACIES AND PROFITING FROM IT ALL. THEY RECENTLY AGREED TO PAY A RECORD $170 MILLION DOLLARS TO SETTLE ALLEGATIONS THAT THEY TARGETED CHILDREN WITH ADS. YOUTUBE IS BEING FORCED TO CONCENTRATE ON CLEANSING THE SITE.

WE VISITED THE COMPANY’S HEADQUARTERS IN SAN BRUNO, CALIFORNIA, TO MEET SUSAN WOJCICKI, THE 51-YR-OLD CEO, IN CHARGE OF NURTURING THE SITE’S CREATIVITY, TAMING THE HATE AND HANDLING THE CHAOS.

 

VIDEO:

SUSAN: We have 500 hours of video uploaded every single minute to YouTube.

STAHL: Fi– say that again.

SUSAN: So we have 500 hours of video uploaded every minute to YouTube.

STAHL: That is breathtaking.

SUSAN: It, it is, it is. We have a lot of video.

 

AND A LOT OF INFLUENCE ON OUR LIVES, AND HOW WE PASS OUR TIME.    

SOT: MUSIC

 

OVER A BILLION PEOPLE LISTEN TO MUSIC ON YOUTUBE EVERY MONTH: IT’S THE PLANET’S TOP MUSIC SITE. THERE’S A CHILDREN’S CHANNEL; WITH OVER 44-BILLION VIEWS.   

 

STAHL: Do you let your children watch YouTube, including the young ones?

SUSAN: So I allow my younger kids to use YouTube Kids, but I limit the amount of time that they’re on it.  I think too much of anything is not a good thing. But there’s a lot you can learn on YouTube. I think about how YouTube in many ways is this global library. You wanna see any historical speech – you could see it. You want to be able to learn a language –

STAHL: Make a soufflé?

SUSAN: – wanna laugh, you just wanna see something funny. A soufflé! Oh, yeah, cooking. Cooking’s a great example.

 

SO’S WATCHING PEOPLE BINGE EAT. (NAT) A GROWING NUMBER OF AMERICAN ADULTS ARE TURNING TO IT FOR THEIR NEWS… SPORTS… MEDICAL INFORMATION. IT’S NOW MANKIND’S LARGEST “HOW TO” COLLECTION: (NAT)HOW TO TIE A TIE… TIE THE KNOT…OR SPEAK THAI.

THE SITE HAS PRODUCED WHOLE NEW PASTTIMES WHERE MILLIONS WATCH STRANGERS OPEN BOXES… (NAT) WHISPER… SLEEP…  YOUTUBE’S ARTIFICIAL INTELLIGENCE ALGORITHMS KEEP RECOMMENDING NEW VIDEOS SO USERS WATCH MORE AND MORE AND MORE.

 

STAGE: HAPPY FRIDAY!

 

WOJCICKI INVITED US TO THE WEEKLY ALL-STAFF MEETING. SHE’S SURPRISINGLY DOWN-TO-EARTH FOR ONE OF THE MOST POWERFUL PEOPLE IN SILICON VALLEY, (NAT) WHERE HER TRAJECTORY STARTED IN AN UNLIKELY WAY.

 

SUSAN: I owned a garage. And I was worried about covering the mortgage. So I was willing to rent my garage to any student. But then two students appeared. One was named Sergey Brin. The other was named Larry Page. They are the founders of Google.

STAHL: Yes, they are.

SUSAN: But at the time they were just students. They looked like any other students.

 

LARRY AND SERGEY ENDED UP HIRING HER AS THEIR FIRST MARKETING MANAGER: SHE WAS GOOGLE EMPLOYEE 16.  AS THE COMPANY GREW, SO DID HER ROLE AND SO DID HER FAMILY.. SHE HAS 5 CHILDREN. GOOGLE BOUGHT YOUTUBE ON HER RECOMMENDATION, FOR OVER $1.6 BILLION, AND 8 YEARS LATER SHE BECAME CEO – WITH A MANDATE TO MAKE IT GROW AND MAKE IT PROFITABLE. AND SHE DID! IT’S ESTIMATED WORTH IS $160-BILLION.

(SOT POP)

YOUTUBE MAKES MOST OF ITS MONEY FROM ADS – (NAT) SPLITTING REVENUE WITH PEOPLE WHO CREATE ALL KINDS OF VIDEOS(NAT) FROM DO-IT-YOURSELF LESSONS… TO HIP-HOP LESSONS. THE MORE POPULAR ONES CAN BECOME MULTI-MILLION DOLLAR ENTREPRENEURS.

 

[Ad: Joe Biden promised Ukraine a billion dollars if they fired the prosecutor investigating his son’s company…]

 

YOUTUBE ALSO MAKES MONEY FROM POLITICAL ADS, A THORNY ISSUE BECAUSE SOME OF THEM HAVE BEEN USED TO SPREAD LIES ON SOCIAL MEDIA. 

 

STAHL: Facebook is facing a lot of controversy because it refuses to take down a President Trump ad about Biden which is not true. Would you run that ad?

SUSAN: So that is an ad that, um, right now would not be a violation of our policies.

STAHL: Is it on YouTube right now?

SUSAN: It has been on YouTube.

STAHL: Can a politician lie on YouTube?

SUSAN: For every single video I think it’s really important to look at it. Politicians are always accusing their opponents of lying. That said, it’s not okay to have technically manipulated content that would be misleading. For example, there was a video uploaded of Nancy Pelosi. It was slowed down just enough that it was unclear whether or not she was in her full capacity ’cause she was speaking in a slower voice.

 

PELOSI AD: Why would I work with you if you’re investigating me…

 

SUSAN: The title of the video actually said drunk, had that in the title. And we removed that video.

STAHL: How fast did you remove it?

SUSAN: Very fast.

 

BUT NOT COMPLETELY. WE JUST DID A SEARCH AND THERE IT WAS STILL AVAILABLE. THE COMPANY KEEPS TRYING TO ERASE THE PURPORTED NAME OF THE IMPEACHMENT WHISTLE-BLOWER, BUT THAT TOO IS STILL THERE. WHICH RAISES DOUBTS ABOUT THEIR SYSTEM’S ABILITY TO CLEANSE THE SITE. 

IN THE 2016 ELECTION CYCLE, YOUTUBE FAILED TO DETECT RUSSIAN TROLLS, WHO POSTED OVER 1,100 VIDEOS, ALMOST ALL MEANT TO INFLUENCE AFRICAN-AMERICANS – LIKE THIS VIDEO. 

 

SOT: Please don’t vote for Hillary Clinton.  She’s not our candidate… She’s a f**king old racist bitch.

 

YOUTUBE IS AN “OPEN PLATFORM” MEANING ANYONE CAN UPLOAD A VIDEO, AND SO THE SITE HAS BEEN USED TO SPREAD DISINFORMATION, VILE CONSPIRACIES, AND HATE. THIS PAST MARCH A WHITE SUPREMACIST LIVE-STREAMED HIS KILLING OF DOZENS OF MUSLIMS IN CHRISTCHURCH, NEW ZEALAND. HE USED FACEBOOK, BUT FOR THE NEXT 24 HOURS COPIES OF THAT FOOTAGE WERE UPLOADED ON YOUTUBE TENS OF THOUSANDS OF TIMES. 

 

SUSAN: This event was unique because it was really a made-for-Internet type of crisis. Every second there was a new upload. And so our teams around the world were working on this to remove this content. We had just never seen such a huge volume.

STAHL: I can only imagine when you became CEO of YouTube that you thought, “Oh, this is gonna be so fun. It’s “people are uploading wonderful things like

SUSAN: funny cat videos.

STAHL: –funny. And look at what we’re talking about here. Are you worried that these dark things are beginning to define YouTube?

SUSAN: I think it’s incredibly important that we have a responsibility framework, and that has been my number one priority. We’re removing content that violates our policies. We removed, just in the last quarter, 9 million videos.

STAHL: You recently tightened your policy on hate speech.

SUSAN: Uh-huh.

STAHL: Why.. why’d you wait so long?

SUSAN: Well, we have had hate policies since the very beginning of YouTube.  And we–

STAHL: But pretty ineffective.

SUSAN: What we really had to do was tighten our enforcement of that to make sure we were catching everything and we use a combination of people and machines. So Google as a whole has about 10,000 people that are focused on controversial content.

STAHL: I’m told that it is very stressful to be looking at these questionable videos all the time. And that there’s actually counselors to make sure that there aren’t mental problems with the people who are doing this work.  Is that true?

SUSAN: It’s a very important area for us. We try to do everything we can to make sure that this is a good work environment. Our reviewers work 5 hours of the 8 hours reviewing videos.  They have the opportunity to take a break whenever they want.

STAHL: I also heard that these monitors, reviewers, sometimes, they’re beginning to buy the conspiracy theories.

SUSAN: I’ve definitely heard about that. And we work really hard with all of our reviewers to make sure that, you know, we’re providing the right services for them.

 

SUSAN WOJCICKI SHOWED US TWO EXAMPLES OF HOW HARD IT IS TO DETERMINE WHAT’S TOO HATEFUL OR VIOLENT TO STAY ON THE SITE.

 

[email protected]: [SEE KICK] So this is a really hard video to watch.

STAHL: Really hard.

SUSAN: And as you can see, these are prisoners in Syria. So you could look at it and say, “Well, should this– it be removed, because it shows violence, it’s graphic,” but it’s actually uploaded by a group that is trying to expose the violence.

 

SO SHE LEFT IT UP. THEN SHE SHOWED US THIS WORLD WAR TWO VIDEO.

 

STAHL:  I mean it’s totally historical footage that you would see on the History Channel.

 

BUT SHE TOOK IT DOWN!

 

STAHL:  Why?

SUSAN: There is this word down here that you’ll see, 1418.

 

1418 IS CODE USED BY WHITE SUPREMACISTS TO IDENTIFY ONE ANOTHER  

 

SUSAN: For every area we work with experts, and we know all the hand signals, the messaging, the flags, the songs, and so there’s quite a lot of context that goes into every single video to be able to under- stand what are they really trying to say with this video.

 

THE STRUGGLE FOR WOJCICKI IS POLICING THE SITE… WHILE KEEPING YOUTUBE AN OPEN PLATFORM. 

 

[email protected] You can go too far and that can become censorship. And so we have been working really hard to figure out what’s the right way to balance responsibility with freedom of speech.

 

BUT THE PRIVATE SECTOR IS NOT LEGALLY BEHOLDEN TO THE FIRST AMENDMENT. 

 

STAHL: You’re not operating under some– freedom of speech mandate. You get to pick.

SUSAN: We do. But we think there’s a lot of benefit from being able to hear from groups and underrepresented groups that otherwise we never would have heard from.

 

[Lauren Southern: But with name calling of Nazi or propagandist…]

 

BUT THAT MEANS HEARING FROM PEOPLE WITH ODIOUS MESSAGES ABOUT GAYS, 

[Crowder: Mr. Lipsy Queer from Vox.] WOMEN [Naked Ape: Sex robot] AND IMMIGRANTS:

 

Nick Fuentes: I think the easiest way for Mexicans to not get shot and killed at Walmart —

 

WOJCICKI EXPLAINED THAT VIDEOS ARE ALLOWED AS LONG AS THEY DON’T CAUSE HARM: BUT HER DEFINITION OF “HARM” CAN SEEM NARROW.

 

SUSAN: So if you’re saying, “Don’t hire somebody because of their race, that’s discrimination.  And so that would be an example of something that would be a violation against our policies.

STAHL: But if you just said, “White people are superior” by itself, that’s okay.

SUSAN: And nothing else, yes.

 

BUT THAT IS HARMFUL IN THAT IT GIVES WHITE EXTREMISTS A PLATFORM TO INDOCTRINATE. 

 

SPENCER:  We want a flourishing, healthy white race.

 

AND WHAT ABOUT MEDICAL QUACKERY ON THE SITE? LIKE TUMERIC CAN REVERSE CANCER; BLEACH CURES AUTISM; VACCINES CAUSE AUTISM. 

ONCE YOU WATCH ONE OF THESE, YOUTUBE’S ALGORITHMS MIGHT RECOMMEND YOU WATCH SIMILAR CONTENT. BUT NO MATTER HOW HARMFUL OR UNTRUTHFUL, YOUTUBE CAN’T BE HELD LIABLE FOR ANY CONTENT, DUE TO A LEGAL PROTECTION CALLED “SECTION 230.”

 

STAHL: The law under 230 does not hold you responsible for user-generated content. But in that you recommend things, sometimes 1,000 times, sometimes 5,000 times, shouldn’t you be held responsible for that material, because you recommend it?

SUSAN: Well, our systems wouldn’t work without recommending. And so if–

STAHL: I’m not saying don’t recommend. I’m just saying be responsible for when you recommend so many times.

SUSAN: If we were held liable for every single piece of content that we recommended, we would have to review it. That would mean there’d be a much smaller set of information that people would be finding. Much, much smaller.

 

SHE TOLD US THAT EARLIER THIS YEAR YOUTUBE STARTED RE-PROGRAMMING ITS ALGORITHMS IN THE US TO RECOMMEND QUESTIONABLE VIDEOS MUCH LESS…  AND POINT USERS WHO SEARCH FOR THAT KIND OF MATERIAL TO AUTHORATATIVE SOURCES, LIKE NEWS CLIPS. WITH THESE CHANGES WOJCICKI SAYS THEY HAVE CUT DOWN THE AMOUNT OF TIME AMERICANS WATCH CONTROVERSIAL CONTENT BY 70 PERCENT.  

 

STAHL: Would you be able to say to the public: we are confident we can police our site?

 

SUSAN: YouTube is always going to be different than something like traditional media where every single piece of content is produced and reviewed.  We have an open platform. But I know that I can make it better.  And that’s why I’m here.

SoFi founder Mike Cagney’s already well-funded new startup is raising another $100 million

Figure Technologies, a nearly two-year-old, San Francisco-based fintech cofounded by Mike Cagney, the founder of the more established fintech company SoFi, is raising a whole lot of money — again.

By February of this year, Figure had already raised $120 million in equity funding from a gaggle of investors, including RPM Ventures, partners at DST Global, Ribbit Capital, DCM, DCG, Nimble Ventures, and Morgan Creek. In May, it announced that it had closed an up to $1 billion uncommitted asset-based financing facility on its own custom blockchain from Jefferies and WSFS Institutional Services.

Now, according to paperwork filed with the SEC earlier this month, it appears that Figure has closed or is about to close on $103 million in Series C funding.

Presumably, investors are interested partly in the company’s growing spate of products. While Figure started out providing home loans to older customers who aren’t earning income and have much of their wealth tied up in their homes — a fast-growing demographic — it has more recently begun to chase after a demographic that Cagney knows well through SoFi, which is younger people looking to refinance their student loans.

Figure talked recently with American Banker about the company’s interest in competing more directly with SoFi, citing the $1.4 trillion in outstanding loan debt as the primary reason it’s swooping into the space, and with the “same mousetrap” that Figure has developed to quickly process home loans, which it then securitizes and sells.

Specifically, all of Figure’s financial services business is executed entirely on its blockchain, Provenance, which further has a native token, Hash, that’s used to both access the blockchain and to memorialize off-chain exchange of fiat currency.

Cagney co-founded Figure with his wife, June Ou, who is the company’s chief operating officer. She was previously chief technology officer at SoFi, where Cagney lost his job in 2017 as CEO after a board investigation into sexual misconduct at the company.

Others of Figure’s cofounders include Alana Ackerson and Cynthia Chen. Ackerson was previously the CEO of the Thiel Foundation. Chen was most recently a venture partner with DHVC (Danhua Capital), a venture capital firm based in Palo Alto, Ca.

According to Figure’s website, it plans to introduce a money market product “soon.” Figure has also talked in the past of expanding into other lines of business, including wealth management, unsecured consumer loans, and checking accounts, all offered through partner banks.

In the meantime, SoFi has similarly been expanding beyond student loan refinancing under the leadership of current CEO Anthony Noto. Earlier this year, for example, SoFi made fractional share buying and exchange-traded funds available to its users. It also launched a mobile-first cash management account.

Ockam raises $4.9 million in seed funding to make it easier for developers to secure and scale their IoT apps

Ockam, a two-year-old, Bay Area-based company that’s selling tools to developers so they can establish an “architecture for trust” within their connected device applications, has raised $4.9 million in seed funding, including from Core Ventures, Okta Ventures, SGH Capital, and Future Ventures.

This serverless platform for IoT development is being led by CEO Matthew Gregory and CTO Mrinal Wadhwa, two cofounders with noteworthy backgrounds.

Before launching Ockam in the fall of 2017, Gregory was an “intrapreneur” at Microsoft, where he says he helped lead Azure’s pivot into open source software and container services. He also spent a couple of years at Salesforce as a product manager and, interestingly, spent a few years years ago as a system engineer working for Stars & Stripes, a syndicate of the yacht-racing competition America’s Cup where he tells us he led an engineering effort to build custom systems of sensors, analytics software and wireless communications tools needed to help the racing team make better decisions.

Wadhwa was meanwhile the CTO of another privately held IoT company, Fybr, that promises real-time data analytics capable of decision making at the edge (versus in the cloud).

Some of what the startup is promising is that, using its technology, IoT systems developers will be able to build more scalable connected systems — as well, crucially, as more secure ones How? Partly through crytpographic keys and partly by assigning credentials to different entities, from devices to people to assets to services (among other things).

The company is one of a growing spate of companies hoping developers will increasingly turn to them instead of building out their own software infrastructure. For example, Particle, a seven-year-old, San Francisco-based platform for Internet of Things devices that has ambitions similar to those of Ockam, recently closed on $40 million in funding in a round that brought its total funding to $81 million).

Ockam raised its seed funding over two tranches, including a $3.2 million round that closed in May and an additional $1.7 million injection from Future Ventures in more recent weeks.

Storm Ventures just closed its sixth fund with $130 million

Storm Ventures, a now 19-year-old, Sand Hill Road venture firm in Menlo Park, Ca., has closed on $130.4 million, shows a new SEC filing. The outfit began its fundraising late last, according to an earlier filing. It had closed its previous fund with $180 million in 2015.

Storm distinguishes itself in numerous ways, including its exclusive focus on seed and Series A stage enterprise startups, including mobile, SaaS and cloud infrastructure companies.

The partners also have a penchant for helping far-flung startups grow the footprint around the blog. Tae Hea Nahm, for example, a founding managing director of the firm (and cofounder of four mobile companies before that, including Airespace and MobileIron), was born in Seoul, he has told us in the past that he spends a considerable amount of time in South Korea to attend startup board meetings but also to visit with Samsun and others of Storm’s LPs, which includes Korea Telecom.

Ryan Floyd, another of the firm’s cofounders, meanwhile recently posted about his “hunt” for European founders, partly because they are more focused on revenue from the outset than some of their U.S. peers (an increasingly attractive quality in all startups suddenly).

Some of Storm’s most notable bets at the moment include Workato, a Cupertino, Ca.-based work automation platform, which two weeks ago announced $70 million in Series C funding led by Redpoint.

Storm — which was involved in the company’s Series A  and B rounds — also participated in the financing.

Another bet is Honeycomb, a three-year-old, San Francisco-based startup whose product promises developer teams that they can see production more clearly so they can resolve issues more quickly. The company raised $11.4 million in Series A funding led by Scale Venture Partners in September; Storm, which had participated in the company’s seed round, also participated among others.

Among Storm’s other, more recent first-time investments, the outfit joined the $6.75 million Series A round of Talview, a two-year-old, Palo Alto, Ca.-based talent assessment and hiring platform, that announced its newest funding in August. More on the company here.