Asian streaming startup M17, still recovering from a failed IPO, raises another $25M

M17, the Taiwanese streaming company that controversially priced on the NYSE but didn’t list, has returned to the private markets after it raised a $25 million funding round.

The round was led by Terry Tsang — CEO of Hong Kong-based games company Madhead — with participation from Pavilion Capital, Stonebridge Ventures and existing investors. This new investment follows a $35 million investment in June, which came just a week after the botched IPO. There’s likely more coming: M17 said it expects to receive “additional funding” in the next two months.

When it filed to go public back in June, M17 originally aimed to raise $115 million but weak interest saw that figure cut to $60 million. (That sum is matched by these two rounds.) But even that didn’t happen as the company priced, rang the bell (with photos) but ultimately didn’t debut. It officially blamed “settlement issues” although founder Jeffrey Huang took to Facebook to lash out at investment banks Citigroup and Deutsche Bank who he blamed.

Back to the here and now, M17 said that it is on target to book $170 million in sales for this year. That’s up from $79.5 million in 2017, although the business posted an overall loss of $36.4 million for the year. The company didn’t give guidance on its expected profit/loss for the year.

M17 is the company’s most lucrative unit, but it does also other services including dating via Paktor which merged with M17 last year. Overall, M17’s revenue grew impressively to reach $37.9 million in the first quarter of 2018 but that came with a $24.8 million loss, according to the listing document, which underlined the challenge of making the business profitable.

Added to that, finances were (likely still are) tight.

At the time of its listing application, M17 said it had $31.4 million in cash and cash equivalents so these funding rounds are fairly critical to the firm. Nonetheless, the company said it plans to invest the capital on growth, including infrastructure and features, resources and “training,” and expansion into the U.S.

M17 has released two new apps, a TikTok -like short video service called PiePie and, for the U.S. market, a streaming app called LiveAF. In case, you’re wondering, that’s Live Artistic Freedom rather than any other words you might be thinking of.

The company said it has some 600 employees spread across seven offices in Taiwan, Singapore, Hong Kong, Japan, South Korea, the U.S, and Malaysia.

Cities that didn’t win HQ2 shouldn’t be counted out

The more than year-long dance between cities and Amazon for its second headquarters is finally over, with New York City and Washington, DC, capturing the big prize. With one of the largest economic development windfalls in a generation on the line, 238 cities used every tactic in the book to court the company – including offering to rename a city “Amazon” and appointing Jeff Bezos “mayor for life.”

Now that the process, and hysteria, are over, and cities have stopped asking “how can we get Amazon,” we’d like to ask a different question: How can cities build stronger start-up ecosystems for the Amazon yet to be built?

In September 2017, Amazon announced that it would seek a second headquarters. But rather than being the typical site selection process, this would become a highly publicized Hunger Games-esque scenario.

An RFP was proffered on what the company sought, and it included everything any good urbanist would want, with walkability, transportation and cultural characteristics on the docket. But of course, incentives were also high on the list.

Amazon could have been a transformational catalyst for a plethora of cities throughout the US, but instead, it chose two superstar cities: the number one and five metro areas by GDP which, combined, amounts to a nearly $2 trillion GDP. These two metro areas also have some of the highest real estate prices in the country, a swath of high paying jobs and of course power — financial and political — close at hand.

Perhaps the take-away for cities isn’t that we should all be so focused on hooking that big fish from afar, but instead that we should be growing it in our own waters. Amazon itself is a great example of this. It’s worth remembering that over the course of a quarter century, Amazon went from a garage in Seattle’s suburbs to consuming 16 percent — or 81 million square feet — of the city’s downtown. On the other end of the spectrum, the largest global technology company in 1994 (the year of Amazon’s birth) was Netscape, which no longer exists.

The upshot is that cities that rely only on attracting massive technology companies are usually too late.

At the National League of Cities, we think there are ways to expand the pie that don’t reinforce existing spatial inequalities. This is exactly the idea behind the launch of our city innovation ecosystems commitments process. With support from the Schmidt Futures Foundation, fifty cities, ranging from rural townships, college towns, and major metros, have joined with over 200 local partners and leveraged over $100 million in regional and national resources to support young businesses, leverage technology and expand STEM education and workforce training for all.

The investments these cities are making today may in fact be the precursor to some of the largest tech companies of the future.

With that idea in mind, here are eight cities that didn’t win HQ2 bids but are ensuring their cities will be prepared to create the next tranche of high-growth startups. 

Austin

Austin just built a medical school adjacent to a tier one research university, the University of Texas. It’s the first such project to be completed in America in over fifty years. To ensure the addition translates into economic opportunity for the city, Austin’s public, private and civic leaders have come together to create Capital City Innovation to launch the city’s first Innovation District at the new medical school. This will help expand the city’s already world class startup ecosystem into the health and wellness markets.

Baltimore

Baltimore is home to over $2 billion in academic research, ranking it third in the nation behind Boston and Philadelphia. In order to ensure everyone participates in the expanding research-based startup ecosystem, the city is transforming community recreation centers into maker and technology training centers to connect disadvantaged youth and families to new skills and careers in technology. The Rec-to-Tech Initiative will begin with community design sessions at four recreation centers, in partnership with the Digital Harbor Foundation, to create a feasibility study and implementation plan to review for further expansion.

Buffalo

The 120-acre Buffalo Niagara Medical Center (BNMC) is home to eight academic institutions and hospitals and over 150 private technology and health companies. To ensure Buffalo’s startups reflect the diversity of its population, the Innovation Center at BNMC has just announced a new program to provide free space and mentorship to 10 high potential minority- and/or women-owned start-ups.

Denver

Like Seattle, real estate development in Denver is growing at a feverish rate. And while the growth is bringing new opportunity, the city is expanding faster than the workforce can keep pace. To ensure a sustainable growth trajectory, Denver has recruited the Next Generation City Builders to train students and retrain existing workers to fill high-demand jobs in architecture, design, construction and transportation. 

Providence

With a population of 180,000, Providence is home to eight higher education institutions – including Brown University and the Rhode Island School of Design – making it a hub for both technical and creative talent. The city of Providence, in collaboration with its higher education institutions and two hospital systems, has created a new public-private-university partnership, the Urban Innovation Partnership, to collectively contribute and support the city’s growing innovation economy. 

Pittsburgh

Pittsburgh may have once been known as a steel town, but today it is a global mecca for robotics research, with over 4.5 times the national average robotics R&D within its borders. Like Baltimore, Pittsburgh is creating a more inclusive innovation economy through a Rec-to-Tech program that will re-invest in the city’s 10 recreational centers, connecting students and parents to the skills needed to participate in the economy of the future. 

Tampa

Tampa is already home to 30,000 technical and scientific consultant and computer design jobs — and that number is growing. To meet future demand and ensure the region has an inclusive growth strategy, the city of Tampa, with 13 university, civic and private sector partners, has announced “Future Innovators of Tampa Bay.” The new six-year initiative seeks to provide the opportunity for every one of the Tampa Bay Region’s 600,000 K-12 students to be trained in digital creativity, invention and entrepreneurship.

These eight cities help demonstrate the innovation we are seeing on the ground now, all throughout the country. The seeds of success have been planted with people, partnerships and public leadership at the fore. Perhaps they didn’t land HQ2 this time, but when we fast forward to 2038 — and the search for Argo AISparkCognition or Welltok’s new headquarters is well underway — the groundwork will have been laid for cities with strong ecosystems already in place to compete on an even playing field.

Minds, the blockchain-based social network, grabs a $6M Series A

Minds, a decentralized social network, has raised $6 million in Series A funding from Medici Ventures, Overstock.com’s venture arm. Overstock CEO Patrick Byrne will join the Minds Board of Directors.

What is a decentralized social network? The creators, who originally crowdfunded their product, see it as an anti-surveillance, anti-censorship, and anti-“big tech” platform that ensures that no one party controls your online presence. And Minds is already seeing solid movement.

“In June 2018, Minds saw an enormous uptick in new Vietnamese of hundreds of thousands users as a direct response to new laws in the country implementing an invasive ‘cybersecurity’ law which included uninhibited access to user data on social networks like Facebook and Google (who are complying so far) and the ability to censor user content,” said Minds founder Bill Ottman.

“There has been increasing excitement in recent years over the power of blockchain technology to liberate individuals and organizations,” said Byrne. “Minds’ work employing blockchain technology as a social media application is the next great innovation toward the mainstream use of this world-changing technology.”

Interestingly, Minds is a model for the future of hybrid investing, a process of raising some cash via token and raising further cash via VC. This model ensures a level of independence from investors but also allows expertise and experience to presumably flow into the company.

Ottman, for his part, just wants to build something revolutionary.

“The rise of an open source, encrypted and decentralized social network is crucial to combat the big-tech monopolies that have abused and ignored users for years. With systemic data breaches, shadow-banning and censorship, people over the world are demanding a digital revolution. User-safety, fair economies, and global freedom of expression depend on it – we are all in this battle together,” said Ottman.

DoorDash customers say their accounts have been hacked

Food delivery startup DoorDash has received dozens of complaints from customers who say their accounts have been hacked.

Dozens of people have tweeted at @DoorDash with complaints that their accounts had been improperly accessed and had fraudulent food deliveries charged to their account. In many cases, the hackers changed their email addresses so that the user could not regain access to their account until they contacted customer services. Yet, many said that they never got a response from DoorDash, or if they did, there was no resolution.

Several Reddit threads also point to similar complaints.

DoorDash is now a $4 billion company after raising $250 million last month, and serves more than 1,000 cities across the U.S. and Canada.

After receiving a tip, TechCrunch contacted some of the affected customers.

Four people we spoke to who had tweeted or commented that their accounts had been hacked said that they had used their DoorDash password on other sites. Three people said they weren’t sure if they used their DoorDash password elsewhere.

But six people we spoke to said that their password was unique to DoorDash, and three confirmed they used a complicated password generated by a password manager.

DoorDash said that there has been no data breach and that the likely culprit was credential stuffing, in which hackers take lists of stolen usernames and passwords and try them on other sites that may use the same credentials.

Yet, when asked, DoorDash could not explain how six accounts with unique passwords were breached.

“We do not have any information to suggest that DoorDash has suffered a data breach,” said spokesperson Becky Sosnov in an email to TechCrunch. “To the contrary, based on the information available to us, including internal investigations, we have determined that the fraudulent activity reported by consumers resulted from credential stuffing.”

The victims that we spoke to said they used either the app or the website, or in some cases both. Some were only alerted when their credit cards contacted them about possible fraud.

“Simply makes no sense that so many people randomly had their accounts infiltrated for so much money at the same time,” said one victim.

If, as DoorDash claims, credential stuffing is the culprit, we asked if the company would improve its password policy, which currently only requires a minimum of eight characters. We found in our testing that a new user could enter “password” or “12345678” as their password — which have for years ranked in the top five worst passwords.

The company also would not say if it plans to roll out countermeasures to prevent credential stuffing, like two-factor authentication.

Making way for new levels of American innovation

New fifth-generation “5G” network technology will equip the United States with a superior wireless platform unlocking transformative economic potential. However, 5G’s success is contingent on modernizing outdated policy frameworks that dictate infrastructure overhauls and establishing the proper balance of public-private partnerships to encourage investment and deployment.

Most people have heard by now of the coming 5G revolution. Compared to 4G, this next-generation technology will deliver near-instantaneous connection speed, significantly lower latency – meaning near-zero buffer times – and increased connectivity capacity to allow billions of devices and applications to come online and communicate simultaneously and seamlessly.

While 5G is often discussed in future tense, the reality is it’s already here. Its capabilities were displayed earlier this year at the Olympics in Pyeongchang, South Korea, where Samsung and Intel  class="m_4430823757643656150MsoHyperlink">showcased a 5G enabled virtual reality (VR) broadcasting experience to event goers. In addition, multiple U.S. carriers including Verizon, AT&T and Sprint have announced commercial deployments in select markets by the end of 2018, while chipmaker Qualcomm unveiled last month its new 5G millimeter-wave module that outfits smartphones with 5G compatibility.

BARCELONA, SPAIN – 2018/02/26: View of the phone company QUALCOMM technology 5G in the Mobile World Congress.
The Mobile World Congress 2018 is being hosted in Barcelona from 26 February to 1st March. (Photo by Ramon Costa/SOPA Images/LightRocket via Getty Images)

While this commitment from 5G commercial developers is promising, long-term success of 5G is ultimately dependent on addressing two key issues.

The first step is ensuring the right policies are established at the federal, state and municipal levels in the U.S. that will allow the buildout of needed infrastructure, namely “small cells”. This equipment is designed to fit on streetlights, lampposts and buildings. You may not even notice them as you walk by, but they are critical to adding capacity to the network and transmitting wireless activity quickly and reliably. 

In many communities across the U.S., 20th century infrastructure policies are slowing the emergence of bringing next-generation networks and technologies online. Issues including costs per small cell attachment, permitting around public rights-of-way and deadlines on application reviews are all less-than-exciting topics of conversation but act as real threats to achieving timely implementation of 5G according to recent research from Accenture and the 5G Americas organization.

Policymakers can mitigate these setbacks by taking inventory of their own policy frameworks and, where needed, streamlining and modernizing processes. For instance, current small cell permit applications can take upwards of 18 to 24 months to advance through the approval process as a result of needed buy-in from many local commissions, city councils, etc. That’s an incredible amount of time for a community to wait around and ultimately fall behind on next-generation access. As a result, policymakers are beginning to act. 

13 states, including Florida, Ohio, and Texas have already passed bills alleviating some of the local infrastructure hurdles accompanying increased broadband network deployment, including delays and pricing. Additionally, this year, the Federal Communications Commission (FCC) has moved on multiple orders that look to remedy current 5G roadblocks including opening up commercial access to more amounts of needed high-, mid- and low-band spectrum.

The second step is identifying areas in which public and private entities can partner to drive needed capital and resources towards 5G initiatives. These types of collaborations were first made popular in Europe, where we continue to see significant advancement of infrastructure initiatives through combined public-private planning including the European Commission and European ICT industry’s 5G Infrastructure Public Private Partnership (5G PPP).

The U.S. is increasing its own public-private levels of planning. In 2015, the Obama Administration’s Department of Transportation launched its successful “Smart City Challenge” encouraging planning and funding in U.S. cities around advanced connectivity. More recently, the National Science Foundation (NSF) awarded New York City a $22.5 million grant through its Platforms for Advanced Wireless Research (PAWR) initiative to create and deploy the first of a series of wireless research hubs focused on 5G-related breakthroughs including high-bandwidth and low-latency data transmission, millimeter wave spectrum, next-generation mobile network architecture, and edge cloud computing integration.

While these efforts should be applauded, it’s important to remember they are merely initial steps. A recent study conducted by CTIA, a leading trade association for the wireless industry, found that the United States remains behind both China and South Korea in 5G development. If other countries beat the U.S. to the punch, which some anticipate is already happening, companies and sectors that require ubiquitous, fast, and seamless connection – like autonomous transportation for example – could migrate, develop, and evolve abroad casting lasting negative impact on U.S. innovation. 

The potential economic gains are also significant. A 2017 Accenture report predicts an additional $275 billion in infrastructure investments from the private sector, resulting in up to 3 million new jobs and a gross domestic product (GDP) increase of $500 billion. That’s just on the infrastructure side alone. On the global scale, we could see as much as $12 trillion in additional economic activity according to discussion at the World Economic Forum Annual Meeting in January.

Former President John F. Kennedy once said, “Conformity is the jailer of freedom and the enemy of growth.” When it comes to America’s technology evolution, this quote holds especially true. Our nation has led the digital revolution for decades. Now with 5G, we have the opportunity to unlock an entirely new level of innovation that will make our communities safer, more inclusive and more prosperous for all.

Boston-area startups are on pace to overtake NYC venture totals

Boston has regained its longstanding place as the second-largest U.S. startup funding hub.

After years of trailing New York City in total annual venture investment, Massachusetts is taking the lead in 2018. Venture investment in the Boston metro area hit $5.2 billion so far this year, on track to be the highest annual total in years.

The Massachusetts numbers year-to-date are about 15 percent higher than the New York City total. That puts Boston’s biotech-heavy venture haul apparently second only to Silicon Valley among domestic locales thus far this year. And for New England VCs, the latest numbers also confirm already well-ingrained opinions about the superior talents of local entrepreneurs.

“Boston often gets dismissed as a has-been startup city. But the successes are often overlooked and don’t get the same attention as less successful, but more hypey companies in San Francisco,” Blake Bartlett, a partner at Boston-based venture firm OpenView, told Crunchbase News. He points to local success stories like online prescription service PillPack, which Amazon just snapped up for $1 billion, and online auto marketplace CarGurus, which went public in October and is now valued around $4.7 billion.

Meanwhile, fresh capital is piling up in the coffers of local startups with all the intensity of a New England snowstorm. In the chart below, we look at funding totals since 2012, along with reported round counts.

In the interest of rivalry, we are also showing how the Massachusetts startup ecosystem compares to New York over the past five years.

Who’s getting funded?

So what’s the reason for Boston’s 2018 successes? It’s impossible to pinpoint a single cause. The New England city’s startup scene is broad and has deep pockets of expertise in biotech, enterprise software, AI, consumer apps and other areas.

Still, we’d be remiss not to give biotech the lion’s share of the credit. So far this year, biotech and healthcare have led the New England dealmaking surge, accounting for the majority of invested capital. Once again, local investors are not surprised.

“Boston has been the center of the biotech universe forever,” said Dylan Morris, a partner at Boston and Silicon Valley-based VC firm CRV. That makes the city well-poised to be a leading hub in the sector’s latest funding and exit boom, which is capitalizing on a long-term shift toward more computational approaches to diagnosing and curing disease.

Moreover, it goes without saying that the home city of MIT has a particularly strong reputation for so-called deep tech — using really complicated technology to solve really hard problems. That’s reflected in the big funding rounds.

For instance, the largest Boston-based funding recipient of 2018, Moderna Therapeutics, is a developer of mRNA-based drugs that raised $625 million across two late-stage rounds. Besides Moderna, other big rounds for companies with a deep tech bent went to TCR2, which is focused on engineering T cells for cancer therapy, and Starry (based in both Boston and New York), which is deploying the world’s first millimeter wave band active phased array technology for consumer broadband.

Other sectors saw some jumbo-sized rounds too, including enterprise software, 3D printing and even apparel.

Boston also benefits from the rise of supergiant funding rounds. A plethora of rounds raised at $100 million or more fueled the city’s rise in the venture funding rankings. So far this year, at least 15 Massachusetts companies have raised rounds of that magnitude or more, compared to 12 in all of 2017.

Exits are happening, too

Boston companies are going public and getting acquired at a brisk pace too this year, and often for big sums.

At least seven metro-area startups have sold for $100 million or more in disclosed-price acquisitions this year, according to Crunchbase data. In the lead is online prescription drug service PillPack . The second-biggest deal was Kensho, a provider of analytics for big financial institutions that sold to S&P Global for $550 million.

IPOs are huge, too. A total of 17 Boston-area venture-backed companies have gone public so far this year, of which 15 are life science startups. The largest offering was for Rubius Therapeutics, a developer of red cell therapeutics, followed by cybersecurity provider Carbon Black.

Meanwhile, many local companies that went public in the past few years have since seen their values skyrocket. Bartlett points to examples including online retailer Wayfair (market cap of $10 billion), marketing platform HubSpot (market cap $4.8 billion) and enterprise software provider Demandware (sold to Salesforce for $2.8 billion).

New England heats up

Recollections of a frigid April sojourn in Massachusetts are too fresh for me to comfortably utter the phrase “Boston is hot.” However, speaking purely about startup funding, and putting weather aside, the Boston scene does appear to be seeing some real escalation in temperature.

Of course, it’s not just Boston. Supergiant venture funds are surging all over the place this year. Morris is even bullish on the arch-rival a few hours south: “New York and Boston love to hate each other. But New York’s doing some amazing things too,” he said, pointing to efforts to invigorate the biotech startup ecosystem.

Still, so far, it seems safe to say 2018 is shaping up as Boston’s year for startups.

Through luck and grit, Datadog is fusing the culture of developers and operations

There used to be two cultures in the enterprise around technology. On one side were software engineers, who built out the applications needed by employees to conduct the business of their companies. On the other side were sysadmins, who were territorially protective of their hardware domain — the servers, switches, and storage boxes needed to power all of that software. Many a great comedy routine has been made at the interface of those two cultures, but they remained divergent.

That is, until the cloud changed everything. Suddenly, there was increasing overlap in the skills required for software engineering and operations, as well as a greater need for collaboration between the two sides to effectively deploy applications. Yet, while these two halves eventually became one whole, the software monitoring tools used by them were often entirely separate.

New York City-based Datadog was designed to bring these two cultures together to create a more nimble and collaborative software and operations culture. Founded in 2010 by Olivier Pomel and Alexis Lê-Quôc, the product offers monitoring and analytics for cloud-based workflows, allowing ops team to track and analyze deployments and developers to instrument their applications. Pomel said that “the root of all of this collaboration is to make sure that everyone has the same understanding of the problem.”

The company has had dizzying success. Pomel declined to disclose precise numbers, but says the company had “north of $100 million” of recurring revenue in the past twelve months, and “we have been doubling that every year so far.” The company, headquartered in the New York Times Building in Times Square, employs more than 600 people across its various worldwide offices. The company has raised nearly $150 million of venture capital according to Crunchbase, and is perennially on banker’s short lists for strong IPO prospects.

The real story though is just how much luck and happenstance can help put wind in the sails of a company.

Pomel first met Lê-Quôc while an undergraduate in France. He was working on running the campus network, and helped to discover that Lê-Quôc had hacked the network. Lê-Quôc was eventually disconnected, and Pomel would migrate to IBM’s upstate New York offices after graduation. After IBM, he led technology at Wireless Generation, a K-12 startup, where he ran into Lê-Quôc again, who was heading up ops for the company. The two cultures of develops and ops was glaring at the startup, where “we had developers who hated operations” and there was much “finger-pointing.”

Putting aside any lingering grievances from their undergrad days, the two began to explore how they could ameliorate the cultural differences they witnessed between their respective teams. “Bringing dev and ops together is not a feature, it is core,” Pomel explained. At the same time, they noticed that companies were increasingly talking about building on Amazon Web Services, which in 2009, was still a relatively new concept. They incorporated Datadog in 2010 as a cloud-first monitoring solution, and launched general availability for the product in 2012.

Luck didn’t just bring the founders together twice, it also defined the currents of their market. Datadog was among the first cloud-native monitoring solutions, and the superlative success of cloud infrastructure in penetrating the enterprise the past few years has benefitted the company enormously. We had “exactly the right product at the right time,” Pomel said, and “a lot of it was luck.” He continued, “It’s healthy to recognize that not everything comes from your genius, because what works once doesn’t always work a second time.”

While startups have been a feature in New York for decades, enterprise infrastructure was in many ways in a dark age when the company launched, which made early fundraising difficult. “None of the West Coast investors were listening,” Pomel said, and “East Coast investors didn’t understand the infrastructure space well enough to take risks.” Even when he could get a West Coast VC to chat with him, they “thought it was a form of mental impairment to start an infrastructure startup in New York.”

Those fundraising difficulties ended up proving a boon for Datadog, because it forced the company to connect with customers much earlier and more often than it might have otherwise. Pomel said, “it forced us to spend all of our time with customers and people who were related to the problem” and ultimately, “it grounded us in the customer problem.” Pomel believes that the company’s early DNA of deeply listening to customers has allowed it to continue to outcompete its rivals on the West Coast.

More success is likely to come as companies continue to move their infrastructure onto the cloud. Datadog used to have a roughly even mix of private and public cloud business, and now the balance is moving increasingly toward the public side. Even large financial institutions, which have been reticent in transitioning their infrastructures, have now started to aggressively embrace cloud as the future of computing in the industry, according to Pomel.

Datadog intends to continue to add new modules to its core monitoring toolkit and expand its team. As the company has grown, so has the need to put in place more processes as parts of the company break. Quoting his co-founder, Pomel said the message to employees is “don’t mind the rattling sound — it is a spaceship, not an airliner” and “things are going to break and change, and it is normal.”

Much as Datadog has bridged the gap between developers and ops, Pomel hopes to continue to give back to the New York startup ecosystem by bridging the gap between technical startups and venture capital. He has made a series of angel investments into local emerging enterprise and data startups, including Generable, Seva, and Windmill. Hard work and a lot of luck is propelling Datadog into the top echelon of enterprise startups, pulling New York along with it.

Full-Metal Packet is hosting the future of cloud infrastructure

Cloud computing has been a revolution for the data center. Rather than investing in expensive hardware and managing a data center directly, companies are relying on public cloud providers like AWS, Google Cloud, and Microsoft Azure to provide general-purpose and high-availability compute, storage, and networking resources in a highly flexible way.

Yet as workflows have moved to the cloud, companies are increasingly realizing that those abstracted resources can be enormously expensive compared to the hardware they used to own. Few companies want to go back to managing hardware directly themselves, but they also yearn to have the price-to-performance level they used to enjoy. Plus, they want to take advantage of a whole new ecosystem of customized and specialized hardware to process unique workflows — think Tensor Processing Units for machine learning applications.

That’s where Packet comes in. The New York City-based startup’s platform offers a highly-customizable infrastructure for running bare metal in the cloud. Rather than sharing an instance with other users, Packet’s customers “own” the hardware they select, so they can use all the resources of that hardware.

Even more interesting is that Packet will also deploy custom hardware to its data centers, which currently number eighteen around the world. So, for instance, if you want to deploy a quantum computing box redundantly in half of those centers, Packet will handle the logistics of installing those boxes, setting them up, and managing that infrastructure for you.

The company was founded in 2014 by Zac Smith, Jacob Smith, and Aaron Welch, and it has raised a total of $12 million in venture capital financing according to Crunchbase, with its last round led by Softbank. “I took the usual path, I went to Juilliard,” Zac Smith, who is CEO, said to me at his office, which overlooks the World Trade Center in downtown Manhattan. Double bass was a first love, but he found his way eventually into internet hosting, working as COO of New York-based Voxel.

At Voxel, Smith said that he grew up in hosting just as the cloud started taking off. “We saw this change in the user from essentially a sysadmin who cared about Tom’s Hardware, to a developer who had never opened a computer but who was suddenly orchestrating infrastructure,” he said.

Innovation is the lifeblood of developers, yet, public clouds were increasingly abstracting away any details of the underlying infrastructure from developers. Smith explained that “infrastructure was becoming increasingly proprietary, the land of few companies.” While he once thought about leaving the hosting world post-Voxel, he and his co-founders saw an opportunity to rethink cloud infrastructure from the metal up.

“Our customer is a millennial developer, 32 years old, and they have never opened an ATX case, and how could you possibly give them IT in the same way,” Smith asked. The idea of Packet was to bring back choice in infrastructure to these developers, while abstracting away the actual data center logistics that none of them wanted to work on. “You can choose your own opinion — we are hardware independent,” he said.

Giving developers more bare metal options is an interesting proposition, but it is Packet’s long-term vision that I think is most striking. In short, the company wants to completely change the model of hardware development worldwide.

VCs are increasingly investing in specialized chips and memory to handle unique processing loads, from machine learning to quantum computing applications. In some cases, these chips can process their workloads exponentially faster compared to general purpose chips, which at scale can save companies millions of dollars.

Packet’s mission is to encourage that ecosystem by essentially becoming a marketplace, connecting original equipment manufacturers with end-user developers. “We use the WeWork model a lot,” Smith said. What he means is that Packet allows you to rent space in its global network of data centers and handle all the logistics of installing and monitoring hardware boxes, much as WeWork allows companies to rent real estate while it handles the minutia like resetting the coffee filter.

In this vision, Packet would create more discerning and diverse buyers, allowing manufacturers to start targeting more specialized niches. Gone are the generic x86 processors from Intel driving nearly all cloud purchases, and in their place could be dozens of new hardware vendors who can build up their brands among developers and own segments of the compute and storage workload.

In this way, developers can hack their infrastructure much as an earlier generation may have tricked out their personal computer. They can now test new hardware more easily, and when they find a particular piece of hardware they like, they can get it running in the cloud in short order. Packet becomes not just the infrastructure operator — but the channel connecting buyers and sellers.

That’s Packet’s big vision. Realizing it will require that hardware manufacturers increasingly build differentiated chips. More importantly, companies will have to have unique workflows, be at a scale where optimizing those workflows is imperative, and realize that they can match those workflows to specific hardware to maximize their cost performance.

That may sound like a tall order, but Packet’s dream is to create exactly that kind of marketplace. If successful, it could transform how hardware and cloud vendors work together and ultimately, the innovation of any 32-year-old millennial developer who doesn’t like plugging a box in, but wants to plug in to innovation.

New York City moves to establish algorithm-monitoring task force

 New York City may soon gain a task force dedicated to monitoring the fairness of algorithms used by municipal agencies. Formed from experts in automated systems and representatives of groups affected by those systems, it would be responsible for closely examining algorithms in use by the city and making recommendations on how to improve accountability and avoid bias. Read More