The GoPro-ification of the iPhone

Hello friends, and welcome back to Week in Review!

Last week, we talked about some sunglasses from a company that many people do not like very much. This week, we’re talking about Apple and the company 1,600 times smaller than it that’s facing similar product problems.

Thanks for joining in — follow my tweets @lucasmtny for more.


(Photo by Brooks Kraft/Apple Inc.)

the big thing

When you get deep enough into the tech industry, it’s harder to look at things with a consumer’s set of eyes. I’ve felt that way more and more after six years watching Apple events as a TechCrunch reporter, but sometimes memes from random Twitter accounts help me find the consumer truth I’m looking for.

As that dumb little tweet indicates, Apple is charging toward a future where it’s becoming a little harder to distinguish new from old. The off-year “S” period of old is no more for the iPhone, which has seen tweaks and new size variations since 2017’s radical iPhone X redesign. Apple is stretching the periods between major upgrades for its entire product line and it’s also taking longer to roll out those changes.

Apple debuted the current bezel-lite iPad Pro design back in late 2018 and it’s taken three years for the design to work its way down to the iPad mini while the entry-level iPad is still lying in wait. The shift from M1 Macs will likely take years as the company has already detailed. Most of Apple’s substantial updates rely on upgrades to the chipsets that they build, something that increasingly makes them look and feel like a consumer chipset company.

This isn’t a new trend, or even a new take, it’s been written lots of times, but it’s particularly interesting as the company bulks up the number of employees dedicated to future efforts like augmented reality, which will one day soon likely replace the iPhone.

It’s an evolution that’s pushing them into a similar design territory as action camera darling GoPro, which has struggled again and again with getting their core loyalists to upgrade their hardware frequently. These are on laughably different scales, with Apple now worth some $2.41 trillion and GoPro still fighting for a $1.5 billion market cap. The situations are obviously different, and yet they are both facing similar end-of-life innovation questions for categories that they both have mastered.

This week GoPro debuted its HERO10 Black camera, which brings higher frame rates and a better performing processor as it looks to push more of its user audience to subscription services. Sound familiar? This week, Apple debuted its new flagship, the iPhone 13 Pro, with a faster processor and better frame rates (for the display not the camera here, though). They also spent a healthy amount of time pushing users to embrace new services ecosystems.

Apple’s devices are getting so good that they’re starting to reach a critical feature plateau. The company has still managed to churn out device after device and expand their audience to billions while greatly expanding their average revenue per user. Things are clearly going pretty well for the most valuable company on earth, but while the stock has nearly quadrupled since the iPhone X launch, the consumer iPhone experience feels pretty consistent. That’s clearly not a bad thing, but it is — for lack of a better term — boring.

The clear difference, among 2.4 trillion others, is that GoPro doesn’t seem to have a clear escape route from its action camera vertical.

But Apple has been pushing thousands of employees toward an escape route in augmented reality, even if the technology is clearly not ready for consumers and they’re forced to lead with what has been rumored to be a several-thousand-dollar AR/VR headset with plenty of limitations. One of the questions I’m most interested in is what the iPhone device category looks likes once its unwieldy successor has reared its head. Most likely is that the AR-centric devices will be shipped as wildly expensive iPhone accessories and a way to piggy back off the accessibility of the mobile category while providing access to new — and more exciting — experiences. In short, AR is the future of the iPhone until AR doesn’t need the iPhone anymore. 


Image Credits: Tesla

other things

Here are the TechCrunch news stories that especially caught my eye this week:

Everything Apple announced this week
Was it the most exciting event Apple has ever had? Nah. Are you still going to click that link to read about their new stuff? Yah.

GoPro launches the HERO10 Black
I have a very soft spot in my heart for GoPro, which has taken a niche corner of hardware and made a device and ecosystem that’s really quite good. As I mentioned above, the company has some issues making significant updates every year, but they made a fairly sizable upgrade this year with the second-generation of their customer processor and some performance bumps across the board.

Tesla will open FSD beta to drivers with good driving record
Elon Musk is pressing ahead with expanding its “Full Self-Driving” software to more Tesla drivers, saying that users who paid for the FSD system can apply to use the beta and will be analyzed by the company’s insurance calculator bot. After 7 days of good driving behavior, Musk says users will be approved.

OpenSea exec resigns after ‘insider trading’ scandal
NFTs are a curious business; there’s an intense amount of money pulsating through these markets — and little oversight. This week OpenSea, the so-called “eBay of NFTs,” detailed that its own VP of Product had been trading on insider information. He was later pushed to resign.

Apple and Google bow to the Kremlin
Apple and Google are trying to keep happy the governments of most every market in which they operate. That leads to some uncomfortable situations in markets like Russia, where both tech giants were forced by the Kremlin to remove a political app from the country’s major opposition party.


Gitlab logo

Image Credits: Gitlab

extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

What could stop the startup boom?
“…We’ve seen record results from citiescountries and regions. There’s so much money sloshing around the venture capital and startup worlds that it’s hard to recall what they were like in leaner times. We’ve been in a bull market for tech upstarts for so long that it feels like the only possible state of affairs. It’s not…”

The value of software revenue may have finally stopped rising
“…I’ve held back from covering the value of software (SaaS, largely) revenues for a few months after spending a bit too much time on it in preceding quarters — when VCs begin to point out that you could just swap out numbers quarter to quarter and write the same post, it’s time for a break. But the value of software revenues posted a simply incredible run, and I can’t say “no” to a chart…

Inside GitLab’s IPO filing
“…The company’s IPO has therefore been long expected. In its last primary transaction, GitLab raised $286 million at a post-money valuation of $2.75 billion, per PitchbBook data. The same information source also notes that GitLab executed a secondary transaction earlier this year worth $195 million, which gave the company a $6 billion valuation…”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

Apple and Google bow to pressure in Russia to remove Kremlin critic’s tactical voting app

Apple and Google have removed a tactical voting app created by the organization of jailed Kremlin critic, Alexei Navalny, from their respective mobile app stores in Russia.

Earlier this week Reuters reported that the Russian state had been amping up the pressure on foreign tech giants ahead of federal elections — appropriating the language of “election interference” to push US companies to censor the high profile political opponent to president Putin.

On Twitter today, a key Navalny ally, Ivan Zhdanov, tweeted that his organization is considering suing Apple and Google over removal of the apps — dubbing the act of censorship a “huge mistake”.

Zhdanov has also published what he says is Apple’s response to Team Navalny — in which the tech giant cites the Kremlin’s classification of a number of pro-Navalny organizations as “extremist” groups to justify its removal of the software.

(Image credit: Screengrab of detail from Apple’s notification to the developer, via Zhdanov’s tweet)

Apple and Google routinely say they comply with ‘all local laws’ in the countries where they operate.

However in Russia that stance means they have become complicit in acts of political censorship.

“We note that the Prosecutor’s Office of the Russian Federation and the Prosecutor’s Office of the City of Moscow have also determined that the app violates the legislation of the Russian Federation by enabling interference in elections,” Apple writes in the notification of takedown it sent to the developer of the tactical voting app.

“While your app has been removed from the Russia App Store, it is still available in the App Stores for the other territories you selected in App Store Connect,” Apple adds.

Apple and Google have been contacted for comment on the removal of Navalny’s app.

 

Also via Twitter, Zhdanov urged supporters to focus on the tactical voting mission — tweeting a link to a video hosted on Google-owned YouTube which contains recommendations to Russians on how to cast an anti-Putin vote in the parliamentary elections taking place today until Sunday.

Navalny’s supporters are hoping to mobilize voters across Russia to cast tactical ballots in a bid to unseat Putin by voting for whatever candidate has the best chance of defeating the ruling United Russia party.

Their tactical voting strategy has faced some criticism — given that many of the suggested alternatives are, at best, only very weakly opposed to Putin’s regime.

However Navalny’s supporters would surely point out they are having to operate within a flawed system.

After Apple and Google initially refused to remove Navalny’s ‘Smart Voting’ app, last month, the Russian state has been attempting to block access to his organization’s website.

It has even reportedly targeted Google docs — which supporters of Navalny have also been using to organize tactical voting efforts.

Screengrab of the Smart Voting app on the UK iOS app store (Image credits: Natasha Lomas/TechCrunch)

Earlier this month Reuters reported that Russia’s communications regulator, Roskomnadzor, had threatened Apple and Google with fines if they did not remove the Smart Voting app — warning that failure to comply could be interpreted as election meddling.

Russian press has also reported that Apple and Google were summoned to a meeting at the Federation Council on the eve of the election — as Putin’s regime sought to force them to do his anti-democratic bidding.

According to a report by Kommersant, the tech giants were warned the Russian Federation was preparing to tighten regulations on their businesses — and told to “come to their senses”, facing another warning that they were at a “red line”.

The last ditch effort to force the platforms to remove Navalny’s app did then pay off.

In recent weeks, Roskomnadzor has also been targeting VPN apps in the country for removal — making it hard for Russians to circumvent the local ban on Navalny’s app by accessing the software through the stores of other countries.

Local search giant, Yandex, has also reportedly been ordered not to display search results for the Smart Voting app.

Earlier this year, Putin’s regime also targeted Twitter — throttling the service for failing to remove content it wanted banned, although Roskomnadzor claimed the action was related to non-political content such as minors committing suicide, child sexual exploitation and drug use.

Jolla hits profitability ahead of turning ten, eyes growth beyond mobile

A milestone for Jolla, the Finnish startup behind the Sailfish OS — which formed, almost a decade ago, when a band of Nokia staffers left to keep the torch burning for a mobile linux-based alternative to Google’s Android — today it’s announcing hitting profitability.

The mobile OS licensing startup describes 2020 as a “turning point” for the business — reporting revenues that grew 53% YoY, and EBITDA (which provides a snapshot of operational efficiency) standing at 34%.

It has a new iron in the fire too now — having recently started offering a new licensing product (called AppSupport for Linux Platforms) which, as the name suggests, can provide linux platforms with standalone compatibility with general Android applications — without a customer needing to licence the full Sailfish OS (the latter has of course baked in Android app compatibility since 2013).

Jolla says AppSupport has had some “strong” early interest from automotive companies looking for solutions to develop their in-case infotainment systems — as it offers a way for embedded Linux-compatible platform the capability to run Android apps without needing to opt for Google’s automotive offerings. And while plenty of car makers have opted for Android, there are still players Jolla could net for its ‘Google-free’ alternative.

Embedded linux systems also run in plenty of other places, too, so it’s hopeful of wider demand. The software could be used to enable an IoT device to run a particularly popular app, for example, as a value add for customers.

“Jolla is doing fine,” says CEO and co-founder Sami Pienimäki. “I’m happy to see the company turning profitable last year officially.

“In general it’s the overall maturity of the asset and the company that we start to have customers here and there — and it’s been honestly a while that we’ve been pushing this,” he goes, fleshing out the reasons behind the positive numbers with trademark understatement. “The company is turning ten years in October so it’s been a long journey. And because of that we’ve been steadily improving our efficiency and our revenue.

“Our revenue grew over 50% since 2019 to 2020 and we made €5.4M revenue. At the same time the cost base of the operation has stablized quite well so the sum of those resulted to nice profitability.”

While the consumer mobile OS market has — for years — been almost entirely sewn up by Google’s Android and Apple’s iOS, Jolla licenses its open source Sailfish OS to governments and business as an alternative platform they can shape to their needs — without requiring any involvement of Google.

Perhaps unsurprisingly, Russia was one of the early markets that tapped in.

The case for digital sovereignty in general — and an independent (non-US-based) mobile OS platform provider, specifically — has been strengthened in recent years as geopolitical tensions have played out via the medium of tech platforms; leading to, in some cases, infamous bans on foreign companies being able to access US-based technologies.

In a related development this summer, China’s Huawei launched its own Android alternative for smartphones, which it’s called HarmonyOS.

Pienimäki is welcoming of that specific development — couching it as a validation of the market in which Sailfish plays.

“I wouldn’t necessarily see Huawei coming out with the HarmonyOS value proposition and the technology as a competitor to us — I think it’s more proving the point that there is appetite in the market for something else than Android itself,” he says when we ask whether HarmonyOS risks eating Sailfish’s lunch.

“They are tapping into that market and we are tapping into that market. And I think both of our strategies and messages support each other very firmly.”

Jolla has been working on selling Sailfish into the Chinese market for several years — and that sought for business remains a work in progress at this stage. But, again, Pienimäki says Jolla doesn’t see Huawei’s move as any kind of blocker to its ambitions of licensing its Android alternative in the Far East.

“The way we see the Chinese market in general is that it’s been always open to healthy competition and there is always competing solutions — actually heavily competing solutions — in the Chinese market. And Huawei’s offering one and we are happy to offer Sailfish OS for this very big, challenging market as well.”

“We do have good relationships there and we are building a case together with our local partners also to access the China market,” he adds. “I think in general it’s also very good that big corporations like Huawei really recognize this opportunity in general — and this shapes the overall industry so that you don’t need to, by default, opt into Android always. There are other alternatives around.”

On AppSupport, Jolla says the automative sector is “actively looking for such solutions”, noting that the “digital cockpit is a key differentiator for car markers — and arguing that makes it a strategically important piece for them to own and control.

“There’s been a lot of, let’s say, positive vibes in that sector in the past few years — new comers on the block like Tesla have really shaken the industry so that the traditional vendors need to think differently about how and what kind of user experience they provide in the cockpit,” he suggests.

“That’s been heavily invested and rapidly developing in the past years but I’m going to emphasize that at the same time, with our limited resources, we’re just learning where the opportunities for this technology are. Automative seems to have a lot of appetite but then [we also see potential in] other sectors — IoT… heavy industry as well… we are openly exploring opportunities… but as we know automotive is very hot at the moment.”

“There is plenty of general linux OS base in the world for which we are offering a good additional piece of technology so that those operating solutions can actually also tap into — for example — selected applications. You can think of like running the likes of Spotify or Netflix or some communications solutions specific for a certain sector,” he goes on.

“Most of those applications are naturally available both for iOS and Android platforms. And those applications as they simply exist the capability to run those applications independently on top of a linux platform — that creates a lot of interest.”

In another development, Jolla is in the process of raising a new growth financing round — it’s targeting €20M — to support its push to market AppSupport and also to put towards further growing its Sailfish licensing business.

It sees growth potential for Sailfish in Europe, which remains the biggest market for licensing the mobile OS. Pienimäki also says it’s seeing “good development” in certain parts of Africa. Nor has it given up on its ambitions to crack into China.

The growth round was opened to investors in the summer and hasn’t yet closed — but Jolla is confident of nailing the raise.

“We are really turning a next chapter in the Jolla story so exploring to new emerging opportunities — that requires capital and that’s what are looking for. There’s plenty of money available these days, in the investor front, and we are seeing good traction there together with the investment bank with whom we are working,” says Pienimäki.

“There’s definitely an appetite for this and that will definitely put us in a better position to invest further — both to Sailfish OS and the AppSupport technology. And in particular to the go-to market operation — to make this technology available for more people out there in the market.”

 

Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

US blames China for Exchange server hacks and ransomware attacks

The Biden administration and its allies has formally accused China of the mass-hacking of Microsoft Exchange servers earlier this year, which prompted the FBI to intervene as concerns rose that the hacks could lead to widespread destruction.

The mass-hacking campaign targeted Microsoft Exchange email servers with four previously undiscovered vulnerabilities that allowed the hackers — which Microsoft already attributed to a China-backed group of hackers called Hafnium — to steal email mailboxes and address books from tens of thousands of organizations around the United States.

Microsoft released patches to fix the vulnerabilities, but the patches did not remove any backdoor code left behind by the hackers that might be used again for easy access to a hacked server. That prompted the FBI to secure a first-of-its-kind court order to effectively hack into the remaining hundreds of U.S.-based Exchange servers to remove the backdoor code. Computer incident response teams in countries around the world responded similarly by trying to notify organizations in their countries that were also affected by the attack.

In a statement out Monday, the Biden administration said the attack, launched by hackers backed by China’s Ministry of State Security, resulted in “significant remediation costs for its mostly private sector victims.”

“We have raised our concerns about both this incident and the [People’s Republic of China’s] broader malicious cyber activity with senior PRC Government officials, making clear that the PRC’s actions threaten security, confidence, and stability in cyberspace,” the statement read.

The National Security Agency also released details of the attacks to help network defenders identify potential routes of compromise.

Several allies, including the U.K. and the members of NATO, also backed the Biden administration in its findings. In a statement, the U.K. government found Beijing responsible for a “pervasive pattern” of hacking. The Chinese government has repeatedly denied claims of state-backed or sponsored hacking.

The Biden administration also blamed China’s Ministry of State Security for contracting with criminal hackers to conduct unsanctioned operations, like ransomware attacks, “for their own personal profit.” The government said it was aware that China-backed hackers have demanded millions of dollars in ransom demands against hacked companies. Last year, the Justice Department charged two Chinese spies for their role in a global hacking campaign that saw prosecutors accuse the hackers of operating for personal gain.

Although the U.S. has publicly engaged the Kremlin to try to stop giving ransomware gangs safe harbor from operating from within Russia’s borders, the U.S. has not previously accused Beijing of launching or being involved with ransomware attacks.

“The PRC’s unwillingness to address criminal activity by contract hackers harms governments, businesses, and critical infrastructure operators through billions of dollars in lost intellectual property, proprietary information, ransom payments, and mitigation efforts,” said Monday’s statement.

The statement also said that the China-backed hackers engaged in extortion and cryptojacking, a way of forcing a computer to run code that uses its computing resources to mine cryptocurrency, for financial gain.

The Justice Department also announced fresh charges against four China-backed hackers working for the Ministry of State Security, which U.S. prosecutors said were engaged in efforts to steal intellectual property and infectious disease research into Ebola, HIV and AIDS, and MERS against victims based in the U.S., Norway, Switzerland and the United Kingdom by using a front company to hide their operations.

“The breadth and duration of China’s hacking campaigns, including these efforts targeting a dozen countries across sectors ranging from healthcare and biomedical research to aviation and defense, remind us that no country or industry is safe. Today’s international condemnation shows that the world wants fair rules, where countries invest in innovation, not theft,” said deputy attorney general Lisa Monaco.

To end cyberterrorism, the government should extend a hand to the private sector

It is said that the best way to lose the next war is to keep fighting the last one. The citadels of the medieval ages were an effective defense until gunpowder and cannons changed siege warfare forever. Battlefield superiority based on raw troop numbers ceded to the power of artillery and the machine gun.

During World War I, tanks were the innovation that literally rolled over fortifications built using 19th-century technology. Throughout military history, innovators enjoyed the spoils of war while those who took too long to adapt were left crushed and defeated.

Cyberwarfare is no different, with conventional weapons yielding to technologies that are just as deadly to our economic and national security. Despite our military superiority and advances on the cyber front, America is still fighting a digital enemy using analog ways of thinking.

Despite our military superiority and advances on the cyber front, America is still fighting a digital enemy using analog ways of thinking.

This must change, and it begins with the government making some difficult choices about how to wield its offensive powers against an enemy hidden in the shadows, how to partner with the private sector and what it will take to protect the nation against hostile actors that threaten our very way of life.

Colonial Pipeline was one step forward, two steps back

In the aftermath of the ransomware attack against Colonial Pipeline, the Russia-linked hacking group known as DarkSide reportedly shuttered and the Federal Bureau of Investigation recovered part of the $4.4 million ransom that was paid. These are positive developments and an indicator that our government is taking these types of attacks seriously. But it does not change the fact that cyberterrorists, acting with impunity in a hostile foreign country using a technique that has been known for years, managed to shut down the country’s largest oil pipeline and walk away with millions of dollars in ransom payments. They will likely never face justice, Russia will not face any real consequences and these attacks will no doubt continue.

The reality is that while companies can get smarter about cyber defenses and users can get more vigilant in their cyber hygiene practices, only the government has the power to bring this behavior to a halt.

Countries that permit cybercriminals to operate within their borders should be made to hand them over or be subject to crippling economic sanctions. Those found providing sanctuary or other assistance to such individuals or groups should face material support charges like anyone who assists a designated terrorist organization.

Regulators should insist that cryptocurrency exchanges and wallets help track down illicit transactions and parties or be cut off from the U.S. financial system. Law enforcement, the military and the intelligence community should be aggressively working to make it so difficult, so unsafe and so unprofitable for cyberterrorists to operate that they would not dare attempt another attack against American industry or critical infrastructure.

Government must facilitate cooperation with private actors

Our biggest vulnerability and missed opportunity is the inability of public and private entities to form a unified front against cyberwar. It is essential from both a defensive and offensive perspective that the government and private sectors share cyber risk and incident information in real time. This is not currently happening.

Companies are too scared that in revealing vulnerabilities they will be sued, investigated and further victimized by the very government that is supposed to help them defend against attack. The federal government still has no answer for the problems of overclassification of information, overlapping bureaucracies and cultural barriers that provide no incentive to proactively engage with private industry to share information and technologies.

The answer is not to strong-arm companies into coming to the table and expect one-way information flow. Private actors should be able to come forward voluntarily and share information without having to fear plaintiff litigation and regulatory action. Self-disclosed cyber data made in real time should be kept confidential and used to defend and fight back, not to further punish the victim. That is no basis for a mutual partnership.

And if federal agencies, the military or the intelligence community have intelligence about future attacks and how to prevent them, they should not sit on it until long after it will do any good. There are ways to share information with private industry that are safe, timely and mutually beneficial.

Cooperation should also go beyond the exchange of cyber event information. The private sector and academia account for a massive amount of advancement in the cyber space, with total research and development spending split roughly 90%-10% between the private and public sector over the past two decades.

Our private sector — with technology companies employing the best and brightest spanning from Silicon Valley to Austin, Texas, to the technology corridor of Northern Virginia — has a tremendous amount to offer to the government yet remains a largely untapped resource. The same innovations driving private-sector profit should be used to strengthen national security.

China has already figured this out, and if we cannot find a way to leverage private-sector innovation and young talent in the United States, we will fall behind. If there has ever been a call to action where the Biden administration, Democrats and Republicans in Congress can set politics aside and embrace bipartisan solutions, this is it.

Look to the military-defense industry model

Thankfully, there is a model public-private dynamic that in many ways is working. Weapons systems today are almost exclusively manufactured by the Defense Industrial Base, and when deployed to the battlefield there is constant two-way communication with warfighters about vulnerabilities, threats and opportunities to improve effectiveness. This relationship was not forged overnight and is far from perfect. But after decades of efforts, secure collaboration platforms were developed, security clearance standards were established and trust was formed.

We must do the same between cyber authorities in the federal government and actors throughout the private sector. Financial institutions, energy companies, retailers, manufacturers and pharmaceuticals must be able to engage the government to share real-time cyber data in both directions. If the federal government learns of a threat group or technique, it should not only take the offensive to shut it down but also push that information securely and quickly to the private sector.

It is not practical for the FBI, the Department of Homeland Security or the military to assume the burden of defending private networks against cyberattacks, but the government can and should be a shoulder-to-shoulder partner in the effort. We must adopt a relationship that recognizes this is both a joint battle and burden, and we do not have years to get it right.

Call to action

When you look at the history of war, the advantage has always gone to those who innovate first. With respect to cyberwarfare, the solution does not lie solely in advanced technologies like artificial intelligence, quantum computing or blockchain. The most powerful development in today’s war against cyberterrorism might be as simple as what we all learned in preschool: the value of sharing and cooperation.

The government, the technology industry and the broader private sector must come together not only to maintain our competitive edge and embrace advances like cloud computing, autonomous vehicles and 5G, but to ensure that we defend and preserve our way of life. We have been successful in building public and private partnerships in the past and can evolve from an analog relationship to a digital one. But the government must take the reins and lead the way.

AdTech startup Tomi raises Seed funding to make real estate ads perform as well as ecommerce

Industries like real estate, automotive, and financial services have long and offline sales cycles and digital advertising tends not to perform well in these areas. The conversion rates are low and because the real-world assets are offline the temptation of advertisers is to buy leads and clicks, which can inflate customer acquisition costs. People are browsing but they end up buying offline, basically.

A new startup, Tomi plans to address this issue by processing a user’s behavior on a company’s website (using a tracking pixel, combined with ad APIs and CRMs) to help companies reach customers more in the way an ecommerce business would.

It’s now raised a $1M seed round from investors including Begin Capital and Phystech Leadership Fund.

Founded by Konstantin Bayandin — a former senior director of digital marketing and technology at Compass and chief marketing officer at Ozon, ‘Russia’s Amazon’ — Tomi competes against similar AdTech companies such as Anytrack, Sociaro, Meetotis, Alytics and Postclick.

However, the difference, Bayandin says, is that Tomi “focuses on offline conversions and works with multiple ad channels, such as Facebook, Instagram and Google.”

Bayandin says: “Real-estate companies would love to leverage online ads in order to sell their inventory but it turns out to be too expensive and difficult. People like to browse but rarely convert and most of these transactions happen offline. So real-estate clients don’t know how to optimize for their real buyers. Tomi uses machine learning to analyze the way real buyers browse the website and optimize ad campaigns towards conversions.”

The background to all this is that with Apple closing down IDFA, Google planning to remove third-party cookies from its Chrome browser, and the latest iOS 14.5 update allowing users opt out of “personalized ads”, the entire ad business is in flux, so new tools are going to be required. Bayandin says Tomi is part of this new wave of AdTech.

$100 million… Leta Capital wants to be a friend to Russia-speaking founders everywhere

It’s become increasingly obvious over the last few years, as Vladimir Putin has tightened his grip on his country, that Russian entrepreneurs who want to engage properly with the rest of the world have had to leave their mother country. Gone are the days when a startup in Russia might attract attention from many Western investors. The same, alas, is true of Russian-speaking Belorussians, many of whom have left the country after brutal crackdowns there. Ukraine’s economy also remains sub-par due to the ongoing Russian aggression in the East of the country. So it’s fallen to enterprising Russian-speaking investors in and outside Russia to work out the best ways to harness the obvious talent out there.

Leta Capital makes a play of investing in Russian-speaking entrepreneurs based just about anywhere. It’s now launching its third and largest fund to date and says it will invest over $100 million in UK, European, and US-based growth-stage tech companies over the next three years. Its focus will be Seed/ Round A / Round B investments. It intends to invest in the range of $2-5 million and will be focused on software, IT, and internet technologies

The new fund will to hone in on East European and Russian-speaking entrepreneurs. Particularly those operating out of international hubs such as London and New York.

Leta’s founder and former tech entrepreneur Alexander Chachava says Russian-speaking startups based abroad are often – these days – over-looked and under-valued by Western VCs and investors, and I dare say he’s right. Prejudice isn’t just about skin color, as we all know.

Chachava says his fund has invested over $45 million to date since 2012, going into 30 technology companies including Synthesis AI, Unigine, InDriver, NovaKid (which I covered last year) and 365Scores.

Exits include the sale of Bright Box HK to Zurich Insurance Group in 2017, and WeWork’s acquisition of sales and marketing platform Unomy.

Chachava said: “While we are significantly broadening our geographic focus towards key global hubs, our strategy effectively remains the same: to identify exciting, high-potential technology start-ups and entrepreneurs, and support them in realizing their international ambitions.”

Chachava says his own research suggests there are in excess of 17,000 Russian-speaking and East European tech entrepreneurs and start-ups active in the UK, Europe, and US.

“Our analysis shows they continue to be undervalued and overlooked for funding, despite often generating significant cash when it comes to ARR. These entrepreneurs are some of the most dynamic and technically skilled in the world, and for investors, they represent a massive untapped opportunity.”

He has a point. Significant businesses such as Telegram, Revolut, TradingView, PandaDoc, and Preply were all started by Russian speakers who are emigres from their respective Russian-influenced countries.

Leta says its first “evergreen” fund of $15 million was fully deployed in early 2020, delivering a gross IRR of 27% per annum to investors. Its second $50 million fund had its first closing in September 2018 and has committed about 60% of its capital, says the company.

Leta will invest out of an entity in the Cayman Islands, but doesn’t plan to have an office right now, and nor will it need it to invest.

As Chachava told me over a Zoom call: “The last two years, we have not been not traveling too much, our work has been downgraded to Zoom calls. But before that, we spent a couple of months in the US, a couple of months in Western Europe. I was a frequent visitor to London but I don’t think we need space anymore in our modern world.”

Biden’s executive order on cybersecurity should include behavior transparency

The Biden administration this spring announced an executive order designed to strengthen government cybersecurity defenses in the wake of several major recent hacks, including the SolarWinds, Microsoft Exchange Server and Pulse Secure incidents, which impacted numerous federal agencies and private companies. The order’s importance was underscored by the DarkSide ransomware attack on Colonial Pipeline just a few weeks later.

One key element of the cyber executive order is a “software bill of materials” (SBOM) that vendors would be required to provide as part of the federal procurement process. The SBOM would detail the exact software components utilized in a given product, including any open-source components, making it much easier and faster for federal agencies to determine whether they are subject to a vulnerability uncovered in one of these components.

The SBOM is an important step in shoring up federal cybersecurity, but it’s not enough. Understanding the software components included in various products will help agency security teams react more quickly when vulnerabilities come to light, but in other scenarios, like SolarWinds-style supply-chain attacks that surreptitiously insert software components, its impact is limited.

Establishing standards at the federal level for disclosures about software products will benefit cybersecurity in the private sector, as well as improve the overall security of the software supply chain.

That’s why the Biden administration should extend the cyber executive order to include not only an SBOM, but also “behavior transparency.”

Transparency requirements are not a new concept in technology. Certificate transparency (CT) is a public ledger of all certificates issued by any public certificate authority (CA) that provides a framework for monitoring and auditing CA activity, while Apple’s recently announced App Tracking Transparency allows users to see what activity apps are tracking and opt out. Behavior transparency is a proposed application of this concept to known software behaviors.

The purpose of a behavior transparency framework is to enumerate the expected actions of interest that a given piece of software will take on a device or on the network. This helps security analysts distinguish between expected noise and indications of compromise. This, in turn, can give security teams an advantage in identifying the exploitation of unknown vulnerabilities in any proprietary or open-source software.

The good news is that the enumeration of common software behaviors is already a standard industry practice for external network activity. Most major software vendors, including Meraki, McAfee, Tenable, LogMeIn/GoToMeeting, and my own company, ExtraHop, already publish lists of common product behaviors. Even SolarWinds has documentation describing its network behaviors.

But the Biden administration can help effect critical changes that improve upon this industry practice and improve the overall security posture for public and private organizations alike.

Establish standards for behavior transparency

First, the cyber executive order should form a working group in partnership with representative software and security software vendors, as well as organizations such as MITRE, to create standards for the types of network activity that must be included for full behavior transparency.

At a minimum, this should include things like external network destinations, internal network connection behavior with other software components, and, where applicable, a list of associated network ports and the purposes for which those ports are used. The behavior transparency framework should also include other network behavior, especially (but not limited to) anything that looks like scanning or reconnaissance behavior.

Make behavioral data available to common security tools

Second, the cyber executive order should mandate that known software behaviors be published in a machine-readable format such as JSON or CSV that could be ingested into common security products like security information and event management (SIEM), firewalls, endpoint protection platforms, network detection and response, and change management tools.

This is a crucial distinction from the current model, in which most behaviors are listed on a webpage or in a PDF that isn’t machine-readable. With this change, common security tools could use that machine-readable behavioral data to help build baselines for activity within an organization to more quickly and accurately detect deviations that indicate compromise. Meraki is already doing this by providing its list in CSV format.

Centralize access to behavioral information

Third, the cyber executive order should establish a clearinghouse for behavior transparency data, administered by the Cybersecurity and Infrastructure Security Agency or another appropriate federal agency. The status quo is to hunt around on a vendor’s website, consult their in-product documentation or open a support case to find out about network behavior. If the information provided is incorrect, that’s also a support case.

The current decentralized approach is deeply problematic. Unfettered network access for enterprise software products introduces substantial security risk — Zero Trust frameworks have been established to prevent precisely this — but typical practitioners do not have the time or expertise to individually track down the expected behaviors of each piece of enterprise software they have in the environment. Without centralized access to behavior transparency data, even the best Zero Trust implementations will have major gaps surrounding enterprise software.

A clearinghouse would provide a centralized repository for behavior transparency data, organized by company, product and product version. A forum like GitHub is an ideal mechanism for such a clearinghouse, providing a widely used, centralized repository for this information.

Streamline feedback between users and vendors

Fourth, the clearinghouse should include a mechanism by which product users can easily provide feedback to software vendors. Feedback can be in the form of issues or even pull requests, though the companies should be involved in approving changes. This way, deficiencies in the behaviors can be pointed out in a public forum. Most deficiencies will be for reasons like a product update that wasn’t reflected in the behavior transparency data, though as time goes on, companies will ideally make it a practice to make sure these are kept up to date. But there will also be true positives found.

Protecting the software supply chain with behavior transparency

The SolarWinds software supply chain attack, first disclosed in December 2020, illustrates and underscores the importance of behavior transparency. Prior to December 11, when FireEye first identified the vulnerability in the SolarWinds Orion software, at least two other cybersecurity companies, Palo Alto and Fidelis, identified that their SolarWinds installations communicating with the attacker-controlled “stage 1” avsvmcloud[.]com domain. Palo Alto observed and blocked additional malicious behavior, but at the time neither company determined that the communication with avsvmcloud[.]com itself was suspect. That’s due in large part to the notorious amount of “noise” involved in looking at network data.

But if more organizations had ready access to SolarWinds’ behavior transparency data, as well as a forum in which to compare deviations from the baseline, things might have played out differently.

SolarWinds Orion doesn’t reach out to a lot of external destinations, so when the first stage of the supply chain attack started hitting subdomains off of “appsync-api.eu-west-1.avsvmcloud[.]com,” an analyst on a threat hunt running a SIEM query, or a machine-learning-based EDR or NDR product armed with that information, might have more quickly determined that something was amiss.

Likewise, a low-friction public feedback mechanism could have tipped off SolarWinds and the industry that what seemed like noise in isolation (“appsync-api, seems legit?”) was actually something far more nefarious.

The cyber executive order, alongside the sanctions on Russia, are strong early indications that the Biden administration intends to take a far more proactive approach to cybersecurity. Critical to the success of these efforts will be the partnership the administration forges with private-sector technology providers. Establishing standards at the federal level for disclosures about software products will benefit cybersecurity in the private sector, as well as improve the overall security of the software supply chain.

On-demand grocery startup Food Rocket launches in the Bay Area, goes up against delivery giants

On-demand grocery startups like Gorillas are invading Europe right now, but although on-demand-everything is kinda old-hat in the Bay Area, a new startup thinks it might just be able to do something new.

Food Rocket says it has raised a $2 million investment round from AltaIR Capital, Baring Vostok fund, and the AngelsDeck group of business angels, including Philipp Bashyan, of Russia’s Yonder, who has joined as an investor and advisor.

Yes, admittedly ok this tiny startup is competing with DoorDash, GoPuff, InstaCart and Amazon Fresh. Maybe let’s not into that…

Using the company’s mobile app, users can order fresh groceries, ready-to-eat meals, and household goods that will be delivered within 10-15 minutes, says the startup, which will be servicing SoMa, South Park, Mission Bay, Japantown, Hayes Valley, and others. The company hopes to open 150 ‘dark stores’ on the West Coast as part of its infrastructure.

Vitaly Aleksandrov, CEO, and co-founder of Food Rocket said: “The level of competition in this market in the U.S. is still manageable, which is why we have the opportunity to become leaders in the sphere of fast delivery of basic products and household goods. We aim to replace brick-and-mortar supermarkets and to change consumers’ current habits in regards to grocery shopping.”

What can we say? Good luck?