Spaceflight Industries to sell its satellite rideshare launch business to Japan’s Mitsui & Co. and Yamasa

Spaceflight Industries, owner of both Spaceflight, Inc. and BlackSky, is selling the Spaceflight, Inc. portion of its business to Japanese industrial megacorporation Mitsui & Co, and Yamasa both of which will co-own the company in a 50/50 joint venture after its closing. The deal will see Spaceflight continue to operate as an independent business based in the U.S. and headquartered in Seattle, with the same mission of providing rideshare launch services for small satellite payloads.

Meanwhile, Spaceflight Industries will use the funds generated from the sale (the terms of the deal were not disclosed) to re-invest in its BlackSky business. BlackSky is an Earth observation company that deals in geospatial intelligence, and that currently operates four satellites in orbit, with eight more planned to join its constellation sometime later this year.

The deal also means that Mistui & Co, which is one of Japan’s largest businesses and which operates in a variety of sectors including infrastructure, energy production, IT, food, consumer products, mining, chemicals and more, will now be in the rocket launch rideshare business as well. Mitsui also has an aerospace arm that includes a space business which provides satellite development, launch and operation services, but noted in a press release that Spaceflight will become “the cornerstone” of its space strategy pending close of the deal.

Spaceflight, Inc. has been offering its services since 2010, and has launched a total of 271 satellites on 29 separate rocket launches, with 10 missions set to take place in 2020 alone. The company’s business seems poised to grow as more launch providers and more small satellite operators enter the market, with many predictions indicating sharp uptakes in orbit-based businesses to come over the next decade.

This arrangement is perhaps indicative of things to come in the space industry, as more young companies look at their overall business and determine how best to delineate things to continue their growth and return funds on investment to stay on mission. SpaceX, for instance, has confirmed it’s looking at spinning out its Starlink business and taking that public, a move that could generate significant funds for it to then funnel back into its core launch business in pursuit of its goals of making humans multi-planetary.

The deal still has to undergo review by the Committee on Foreign Investment in the United States (CFIUS) because there’s a national security interest involved, given Spaceflight’s past work. This is expected to take multiple months, and the companies say they anticipate the deal will close sometime during Q2 2020 if everything is approved.

Space Angels’ Chad Anderson on entering a new decade in the ‘entrepreneurial space age’

Space as an investment target is trending upwards in the VC community, but specialist firm Space Angels has been focused on the sector longer than most. The network of angel investors just published its most recent quarterly overview of activity in the space startup industry, revealing that investors put nearly $6 billion in capital into space companies across 2019.

I spoke to Space Angels CEO Chad Anderson about what he’s seen in terms of changes in the industry since Space Angels began publishing this quarterly update in 2017, and about what’s in store for 2020 and beyond as commercial space matures and comes into its own. Informed by data released publicly, SEC filings and investor databases — as well as anonymized and aggregated info from Space Angels’ own due diligence process and portfolio company management — Anderson is among the best-positioned people on either the investment or the operator side to weigh in on the current and future state of the space startup industry.

“2019 was a record year — record number of investments, record number of companies, a record on all these fronts,” Anderson said. “2019 in its own right was a huge year, but then you look at everything that happened over the last decade. We always refer to this last decade as ‘the entrepreneurial space age’ […] and you see everything that’s happened over the last 10 years, you see it all culminating in a record year like this one.”

Volvo creates a dedicated business for autonomous industrial and commercial transport

Volvo Group has established a new dedicated business group focused on autonomous transportation, with a mandate that covers industry segments like mining, ports and moving goods between logistics hubs of all kinds. The vehicle maker has already been active in putting autonomous technology to work in these industries, with self-driving projects including at a few quarries and mines, and in the busy port located at Gothenburg, Sweden.

The company sees demand for this kind of autonomous technology use growing, and decided to establish an entire business unit to address it. The newly-formed group will be called Volvo Autonomous Solutions, and its official mission is to “accelerate the development, commercialization and sales of autonomous transport solutions,” focused on the kind of transportation “where there is a need to move large volumes of goods and material on pre-defeined routes, in receptive flows.”

Their anticipation of the growth of this sector comes in part from direct customer feedback, the automaker notes. It’s seen “significant increase in inquires from customers,” according to a statement from Martin Lundstedt, Volvo Group’s President and CEO.

Officially, Volvo Autonomous Solutions won’t be a formal new business area under its parent company until January 2020, but the company is looking for a new head of the unit already, and it’s clear they see a lot of potential in this bourgeoning market.

Unlike autonomous driving for consumer automobiles, this kind of self-driving for fixed route goods transportation is a nice match to the capabilities of technology as they exist today. These industrial applications eliminate a lot of the chaos and complexity of driving in, say, urban environments and with a lot of other human-driven vehicles on the road, and their routes are predictable and repeatable.

Police hijack a botnet and remotely kill 850,000 malware infections

In a rare feat, French police have hijacked and neutralized a massive cryptocurrency mining botnet controlling close to a million infected computers.

The notorious Retadup malware infects computers and starts mining cryptocurrency by sapping power from a computer’s processor. Although the malware was used to generate money, the malware operators easily could have run other malicious code, like spyware or ransomware. The malware also has wormable properties, allowing it to spread from computer to computer.

Since its first appearance, the cryptocurrency mining malware has spread across the world, including the U.S., Russia, and Central and South America.

According to a blog post announcing the bust, security firm Avast confirmed the operation was successful.

The security firm got involved after it discovered a design flaw in the malware’s command and control server. That flaw, if properly exploited, would have “allowed us to remove the malware from its victims’ computers” without pushing any code to victims’ computers, the researchers said.

The exploit would have dismantled the operation, but the researchers lacked the legal authority to push ahead. Because most of the malware’s infrastructure was located in France, Avast contacted French police. After receiving the go-ahead from prosecutors in July, the police went ahead with the operation to take control of the server and disinfect affected computers.

The French police called the botnet “one of the largest networks” of hijacked computers in the world.

The operation worked by secretly obtaining a snapshot of the malware’s command and control server with cooperation from its web host. The researchers said they had to work carefully as to not be noticed by the malware operators, fearing the malware operators could retaliate.

“The malware authors were mostly distributing cryptocurrency miners, making for a very good passive income,” the security company said. “But if they realized that we were about to take down Retadup in its entirety, they might’ve pushed ransomware to hundreds of thousands of computers while trying to milk their malware for some last profits.”

With a copy of the malicious command and control server in hand, the researchers built their own replica, which disinfected victim computers instead of causing infections.

“[The police] replaced the malicious [command and control] server with a prepared disinfection server that made connected instances of Retadup self-destruct,” said Avast in a blog post. “In the very first second of its activity, several thousand bots connected to it in order to fetch commands from the server. The disinfection server responded to them and disinfected them, abusing the protocol design flaw.”

In doing so, the company was able to stop the malware from operating and remove the malicious code to over 850,000 infected computers.

Jean-Dominique Nollet, head of the French police’s cyber unit, said the malware operators generated several million euros worth of cryptocurrency.

Remotely shutting down a malware botnet is a rare achievement — but difficult to carry out.

Several years ago the U.S. government revoked Rule 41, which now allows judges to issue search and seizure warrants outside of their jurisdiction. Many saw the move as an effort by the FBI to conduct remote hacking operations without being hindered by the locality of a judge’s jurisdiction. Critics argued it would set a dangerous precedent to hack into countless number of computers on a single warrant from a friendly judge.

Since then the amended rule has been used to dismantle at least one major malware operation, the so-called Joanap botnet, linked to hackers working for the North Korean regime.

Another day, another reversal in stock fortunes as recession fears grow

U.S. stock markets plummeted today as recession fears continue to grow.

Yesterday’s good news about a reprieve on tariffs for U.S. consumer imports was undone by increasing concerns over economic indicators pointing to a potential global recession coming within the next year.

The Dow Jones Industrial Average dropped more than 800 points on Wednesday — its largest decline of the year — while the S&P 500 fell by 85 points and the tech-heavy Nasdaq dropped 240 points.

The downturn in the markets came a day after the Dow closed up 373 points after the U.S. Trade Representative announced a delay in many of the import taxes imposed by the Trump administration planned to impose on Chinese goods.

In the U.S. it was concerns over the news that the yield on 10-year U.S. Treasury notes had dipped below the yield of two-year notes. It’s an indicator that investors think the short term prospects for a country’s economic outlook are better than the long-term outlook for economic health.

China’s industrial and retail sectors both slowed significantly in July. Industrial production including manufacturing, mining and utilities grew by 4.8 percent in July (a steep decline from 6.3% growth in June).  Meanwhile retail sales in the country slowed to 7.6 percent, down from 9.8 percent in June.

Germany also posted declines over the summer months indicating that its economy had contracted by 0.1% in the three months to June.

Globally, the protracted trade war between the U.S. and China are weighing on economies — as are concerns about what a hard Brexit would mean for the economies in the European Union .

The stocks of Alphabet, Amazon, Apple, Facebook, Microsoft, Netflix, and Salesforce, were all off by somewhere between 2.5% and 4.5% in today’s trading.

The future of autonomous vehicles runs off roads and on to farms, construction sites and mines

Fully self-driving passenger cars are not “just around the corner.” While the well-capitalized leaders — funded by corporations, multibillion-dollar VC funds or advertising revenue — are on more stable financial ground, many other full-stack autonomous vehicle startups may be looking for the off-ramp.

With no clear path to funds outside of venture capital, full-stack startups face two options: 1) get acquired for the talent and technology or 2) close shop. Cruise and Argo AI were big startup exits. Daimler Trucks acquired Torc Robotics (which did not follow the VC-startup model). And nuTonomy was marketed as a $450 million acquisition by Delphi/Aptiv.

But the most recent VC-backed valuations for some AV startups have stagnated at or below the $450 million mark, which doesn’t give much upside from their previous valuations in the height of the AV fervor. Without much further upside, it is more likely that many passenger car AV companies will close shop.

Full-stack autonomous passenger vehicle startups are dead.

But wait…

Passenger car autonomy projects attracted a lot of capital and top talent in the past decade and produced tremendous technological advances in autonomous perception, path planning and control. What happens to the talent and technology when the passenger AV bubble bursts?

Well, there are more vehicles than just passenger cars. The DARPA Grand Challenge held over a decade ago is cited as the catalyst behind the GoogleX self-driving car project and the explosion of passenger car AVs. The advances made during the challenges also spilled over to off-highway vehicles. Since then, autonomous vehicles have been developed and deployed in defense as well as commercially in large-scale agriculture and mining.

It is widely observed that industrial, agriculture, construction and mining applications are better suited for near-term autonomy. There are defined automation tasks with clear ROI, there are fewer human-machine interactions and there are geo-fenced areas that bound the operational and safety requirements. These are simply more controlled environments than on city streets. Automation also can help offset critical labor shortages. It is difficult to attract a workforce at remote mines in the middle of vast deserts. Labor shortages for agriculture add tremendous uncertainty for growers who don’t know if they will be able to prepare and harvest their crops during short time windows.

With the help of those DARPA participants, Caterpillar developed semi- and fully autonomous haulage trucks and announced they have hauled more than 1 billion tons of material. Komatsu followed a day later by announcing that they reached the 2 billion ton milestone. These haulage trucks are the size of a house. John Deere, Case IH, New Holland and others have developed semi- and fully autonomous tractors on their own, and with the help of R&D companies. Most of these programs have been around for more than a decade now, but the rate of technological progress pales to that of the recent startup efforts.

What’s next?

From our vantage point as investors, we believe that we will see a similar spillover from the passenger car AV bubble into industrial, agriculture, construction and mining sectors. This will enhance existing autonomous programs, open up new ROI use cases in those sectors and reshape the autonomous vehicle business model in some of the sectors as smaller players gain access to top talent and technology.

The most significant technologies that will spill over into the off-highway vehicle market are machine perception, reinforcement learning for more complex robotic motion planning and functionally safe, mission-critical engineering requirements.

Perception systems deployed on mining and agricultural vehicles are not as cost-constrained as passenger cars. The price tags for some 700-series CAT haulage trucks exceed $5,000,000. These vehicles are equipped with ruggedized lidar, radar, cameras, etc., mostly for safety awareness. Costs of these systems will decline thanks to the cost-constrained designs for sensors driven by the automotive market.

Camera-based inference will allow these vehicles to further understand elements in their environment — allowing them to perform more complex navigational tasks and operations. Sensor fusion may allow agricultural vehicles to deploy optimal inputs to fields or mining vehicles to understand ore characteristics to increase productivity per scoop.

Reinforcement learning allows operators to “teach” algorithms to perform complex tasks and will create new use cases requiring complex robotic actuation. These use cases could be harvesting more than just broad-acre crops, moving dirt on-site, picking-and-placing of construction equipment for staging and much more. These robotic applications can be integrated on top of existing autonomous mobility platforms.

The most important criterion for these startups is an uncompromising approach to robustness and safety. Autonomy only achieves its full potential if the solution works with minimal downtime and improves safety (which is also tied to equipment replacement costs, worker compensation and insurance).

Recognizing these trends, we’ve made an investment into an AV startup that is deploying autonomous systems on Bobcat skid-steer and excavator vehicles in construction and working with large mining operations to automate all vehicles on the mine site.

We’ve also invested in an early-stage agriculture robotics company automating on-field applications that have been, thus far, untouched by automation.

This is only the start. There are many more opportunities in off-highway autonomy, and we’re continuing our search for companies in other off-highway applications.

SafeAI raises $5M to develop and deploy autonomy for mining and construction vehicles

Startup SafeAI, powered by a founding talent team with experience across Apple, Ford and Caterpillar, is emerging from stealth today with a $5 million funding announcement. The company’s focus is on autonomous vehicle technology, designed and built specifically for heavy equipment used in the mining and construction industries.

Out the gate, SafeAI is working with Doosan Bobcat, the South Korean equipment company that makes Bobcat loaders and excavators, and it’s already demonstrating and testing its software on a Bobcat skid loader at the SafeAI testing ground in San Jose. The startup believes that applying advances in autonomy and artificial intelligence to mining and construction can do a lot to not only make work sites safer, but also increase efficiencies and boost productivity — building on what’s already been made possible with even the most basic levels of autonomy currently available on the market.

What SafeAI hopes to add is an underlying architecture that acts as a fully autonomous (Level 4 by SAE standards, so no human driver) platform for a variety of equipment. Said platform is designed with openness, modularity and upgradeability in mind to help ensure that its clients can take advantage of new advances in autonomy and AI as they become available.

“We have seen and experienced deploying autonomous mining truck in production for last 10 years,” explained SafeAI Founder and CEO, Bibhrajit Halder in an email. “Now it’s time to take it to next level. At SafeAI, we are super excited to built the future of autonomous mine by creating autonomous mining equipment that just works.”

While SafeAI doesn’t have product in market yet, it is running its software on actual construction hardware at its proving ground, as mentioned, and it’s working with an as-yet unnamed large global mining company to deploy SafeAI in a mining truck, according to Halder. The company’s plan is to focus its efforts entirely on deploying fully Level 4 autonomy as its first available commercial product, with a vision of a future where multiple pieces of mining equipment are working together “seamlessly,” the CEO says.

Today’s $5 million round includes investment led by Autotech Ventures, and includes participation from Brick & Mortar Ventures, Embark Ventures and existing investor Mont Vista Capital.

Bitcoin has surged above $8,000 and theories around why abound

Bitcoin is now trading at around $8,130, up a whopping 60.84 percent over the past month, with the price surging $3,086.14 over the period.

The cryptocurrency’s meteoric rise is reminiscent of its rocketing growth in the latter half of 2017, when prices reached over $18,400 on the back of buoyant capital markets, rampant speculation, and a turbulent political climate in Northern Asia spurred by saber rattling between President Donald Trump and North Korea’s dictator, Kim Jong-un.

While geopolitical tension is once again gripping the market (thanks to the ongoing trade war between the U.S. and China), that may only be one factor contributing to Bitcoin’s surge.

“Anticipation of the upcoming supply shock [of new BTC introduced via mining] may be creating upward pressure on the price of Bitcoin,” wrote Alyse Killeen, a partner at the investment and advisory firm Stillmark, in an email. “Bitcoin is introduced to the market when the Bitcoin protocol rewards miners who validate blockchain transactions. Specifically, the Bitcoin protocol gives BTC to miners for adding blocks to the blockchain. Today, miners earn 12.5 BTC for adding a new block that is accepted by the network. In May 2020, the time of the next ‘halvening‘, that reward will be reduced to 6.25 BTC, thereby reducing the total number of BTC introduced to the market on a daily basis.”

Killeen also noted that Bitcoin is inherently more valuable today than it was at the same time last year. More Americans can access Bitcoin through apps like Cash and Robinhood, and TD Ameritrade’s BTC contracts and (soon) eTrade.

Technology advances are also making Bitcoin more useful and more secure, Killeen wrote. The development of the Lightning Network is proceeding and creating a new application ecosystem, while the Blockstream Satellite network is creating redundancies in blockchain availability.

In fact, the number of businesses that take Bitcoin or other cryptocurrencies expanded exponentially yesterday thanks to an agreement between the U.S. dollar-pegged stablecoin purveyor Gemini (owned by the Winkelvoss twins of Facebook and Social Network fame) and the payment network Flexa, whose technology is undergirded by cryptocurrencies.

Using Gemini’s exchange and clearing house and Flexa’s transaction technology most of the stores an American consumer encounters in their trip to the mall now accept Bitcoin or other cryptocurrencies as payments.

That adoption doesn’t explain the bump in Bitcoin prices entirely. And skeptics of digital cryptocurrencies argue that there could be a simpler explanation for the rise in digital currencies right now — good old fashioned price manipulation.

As crypto-skeptic David Gerard wrote in this blog post yesterday:

It’s because the price of Bitcoin is a proxy for margin trading — and rather than investing in the commodity itself, you can make more money by manipulating this thin and ill-regulated market to burn the margin traders.

This also allows the large holders — the “whales,” and the exchanges themselves — to cash out to whatever little actual-money US dollars are available, in a trading system where the liquidity is mostly fake dollars called “tethers.”

Willy Woo explains how short squeezes work in crypto. This is a pattern we see over and over:

1) When the market is majority short, there’s too much money to be had to allow them to win.

2) Whales keep buying up the market until the shorts get liquidated.

3) At liquidation the short seller has to buy back at market price.

4) A tidal wave of buys cascade through the orderbooks, a chain reaction, the price goes vertical.

5) Whale payday. The whales that bought up the market sheparding the price up now dump their positions at profit.

6) Blow-off. The price comes down to its organic levels.

Other investors, like Travis Scher at the Digital Currency Group think that it’s as simple as a new class of investor looking at Bitcoin as a new store of value and a haven for investors looking to escape volatile public markets.

“I spend very little time trying to understand or explain short-term crypto price movements, as the price and the fundamentals often seem to move in diametrically opposed directions. So all I can say with certainty is that there are more buyers than sellers in recent months,” Scher wrote in an email. “But in this case, I do think that one factor driving the rally is that the narrative around Bitcoin as digital gold is growing. We fully expect Bitcoin to replace gold as the leading non-government controlled store of value over the coming decade.”

Facebook hit with three privacy investigations in a single day

Third time lucky — unless you’re Facebook.

The social networking giant was hit by a trio of investigations over its privacy practices Thursday following a particularly tumultuous month of security lapses and privacy violations — the latest in a string of embarrassing and damaging breaches at the company, much of its own doing.

First came a probe by the Irish data protection authority looking into the breach of “hundreds of millions” of Facebook and Instagram user passwords were stored in plaintext on its servers. The company will be investigated under the European GDPR data protection law, which could lead to fines of up to four percent of its global annual revenue for the infringing year — already some several billions of dollars.

Then, Canadian authorities confirmed that the beleaguered social networking giant broke its strict privacy laws, reports TechCrunch’s Natasha Lomas. The Office of the Privacy Commissioner of Canada said it plans to take Facebook ti federal court to force the company to correct its “serious contraventions” of Canadian privacy law. The findings came in the aftermath of the Cambridge Analytica scandal, which vacuumed up more than 600,000 profiles of Canadian citizens.

Lastly, and slightly closer to home, Facebook was hit by its third investigation — this time by New York attorney general Letitia James. The state chief law enforcer is looking into the recent “unauthorized collection” of 1.5 million user email addresses, which Facebook used for profile verification, but inadvertently also scraped their contact lists.

“It is time Facebook is held accountable for how it handles consumers’ personal information,” said James in a statement. “Facebook has repeatedly demonstrated a lack of respect for consumers’ information while at the same time profiting from mining that data.”

Facebook spokesperson Jay Nancarrow said the company is “in touch with the New York State attorney general’s office and are responding to their questions on this matter.”

A new cryptocurrency mining malware uses leaked NSA exploits to spread across enterprise networks

Two years after highly classified exploits built by the National Security Agency were stolen and published, hackers are still using the tools for nefarious reasons.

Security researchers at Symantec say they’ve seen a recent spike in a new malware, dubbed Beapy, which uses the leaked hacking tools to spread like wildfire across corporate networks to enslave computers into running mining code to generate cryptocurrency.

Beapy was first spotted in January but rocketed to more than 12,000 unique infection across 732 organizations since March, said Alan Neville, Symantec’s lead researcher on Beapy, in an email to TechCrunch. The malware almost exclusively targets enterprises, host to large numbers of computers, which when infected with cryptocurrency mining malware can generate sizable sums of money.

The malware relies on someone in the company opening a malicious email. Once opened, the malware drops the NSA-developed DoublePulsar malware to create a persistent backdoor on the infected computer, and uses the NSA’s EternalBlue exploit to spread laterally throughout the network. These are the same exploits that helped spread the WannaCry ransomware in 2017. Once the computers on the network are backdoored, the Beapy malware is pulled from the hacker’s command and control server to infect each computer with the mining software.

Not only does Beapy use the NSA’s exploits to spread, it also uses Mimikatz, an open-source credential stealer, to collect and use passwords from infected computers to navigate its way across the network.

According to the researchers, more than 80 percent of Beapy’s infections are in China.

Hijacking computers to mine for cryptocurrency — known as cryptojacking — has been on the decline in recent months, partially following the shutdown of Coinhive, a popular mining tool. Hackers are finding the rewards fluctuate greatly depending on the value of the cryptocurrency. But cryptojacking remains a more stable source of revenue than the hit-and-miss results of ransomware.

In September, some 919,000 computers were vulnerable to EternalBlue attacks — many of which were exploited for mining cryptocurrency. Today, that figure has risen to more than a million.

Typically cryptojackers exploit vulnerabilities in websites, which, when opened on a user’s browser, uses the computer’s processing power to generate cryptocurrency. But file-based cryptojacking is far more efficient and faster, allowing the hackers to make more money.

In a single month, file-based mining can generate up to $750,000, Symantec researchers estimate, compared to just $30,000 from a browser-based mining operation.

Cryptojacking might seem like a victimless crime — no data is stolen and files aren’t encrypted, but Symantec says the mining campaigns can slow down computers and cause device degradation.