Year: 2018

As anyone from the Gizmondo to the Virtual Boy can tell you, it’s tough to launch a console. Of course, it’s helps when your device apparently comes pre-loaded with thousands of games from big name companies like Nintendo, Sony, Square and Bandai.

It was clear the moment they were launched that Soulja Boy’s SouljaGame console and handhelds were too good to be true, in spite of his insistence that he’d struck deals with game publishers. Now, around three weeks after launch, both have been pulled from his online store (which also stocks a…familiar looking wearable and headphones).

What caused the systems to be pulled from his site isn’t clear, though the rapper appears to have acknowledged as much in a tweet, stating, “I had to boss up, I didn’t have a choice.” Of course, given Nintendo’s history, it seems unlikely that a deal was struck to license titles to what appears to amount to a rebranded emulator.

As Variety notes, titles like Tekken and Tomb Raider were also features in ads for the systems, which is practically crying out for publishers to intervene. Meantime, he’s promised “big plans” soon, including his already stated intention to launch an eSports team at some point next year. For now, however, the rapper appears to be doing just fine, thank you very much:

Around this time every year, my inbox fills with the same repetitive junk.

“Would you consider putting [any random company] in your gift guide?”, “are you going to CES and if so can I pitch you [a gadget that literally won’t be around this time next year]?”, and, “do you want to cover [a company you’ve never hard of’s] predictions for next year?”

To which I always respond: “No,” “absolutely not” and “predictions are not news.”

The “predictions” emails piss me off. Most of the companies that offer predictions don’t seem to fully understand the security field outside their particular niche, or worse, have an agenda they’re trying to push. This year was no different. I trawled through my inbox, scanning literally dozens of emails pushing “predictions” for the coming year.

“Artificial intelligence will stop a data breach,” said one email. “The supply chain will face more attacks,” said another. And, my personal favorite, “bad actors will combine multiple attack types to create synergistic super threats.”

Hate to break it to you, but “super threats” are not a thing.

If you thought 2018 was a tough year for tech, 2019 is going to be so much worse. The groundwork we laid this year will roll over into the next, and that’s when things will start to hit hard, from new laws and political (in)decisions to privacy issues and how employees — not companies — will start to call the shots.

Here’s what you need to know for 2019 in security.

Expect more data leaks and exposures — but not just breaches

2018 saw a rising trend in data leaks and exposures — specifically data that’s not protected with even the most basic security, like a password.

We’ve seen a ton of sites and services exposed in the past year — from gym booking sites, anonymous social network Blind, Urban Massage, FedEx, Canadian internet provider Altima, Amazon and fitness app Polar, to name a few.

Exposed databases and user data can be easily found, yet are entirely preventable — often simply by setting a password. Breaches, where a hacker exploits a vulnerability, are more difficult and require some level of skill, making them less common. But human error, a lack of security smarts or just sheer laziness makes exposed data more discoverable, and yet there’s no sign of data exposures dying down any time soon.

California’s privacy rules will come to a head

After a long fight, California passed its consumer privacy law — set to go into effect at the end of 2019.

Think of the law as like GDPR for California, which will mandate that companies disclose how they collect user data and what they do with it. The law will allow authorities to impose fines on companies that don’t comply or which violate the rules. It’s particularly important for consumers, given most of the world’s largest tech companies have their headquarters in the state.

Tech companies opposed the law. After spending collectively billions of dollars to comply with GDPR, many didn’t want to face another hefty bill to comply with more privacy rules. Instead, many companies pushed for a federal law to overrule and upend California’s soon-to-be-enacted rules. With enough lobbying power in Washington, DC, tech companies and telcos want lawmakers to roll out weaker legislation.

With almost exactly a year to go before California’s rules are set to go into effect, expect to see Silicon Valley work together — for once — to get their own way at a federal level.

Brexit will hamper U.K. tech, startup growth

Brexit, the U.K.’s departure from the European Union, is set for March 29 — and all signs point to a “no deal” that will cause serious, if not as of yet untold problems with immigration, trade, and even intelligence sharing and security arrangements with the U.K.’s European partners.

Leaving the EU without any trade or immigration deals in place will hurt startups and the wider tech scene. Attracting good overseas talent will be difficult without knowing what the immigration rules will be. Even practical things like GPS will begin to struggle, as well as data transfers in and out of the U.K. without a deal in place once the U.K. goes over the cliff-edge. It’ll be a nightmare for companies trying to comply with what’s left of the EU data protection and privacy laws.

Certain technology industries will see more trouble than others, like the gaming industry, which contributes £2 billion ($2.5 billion) to the U.K. economy every year. And, startups won’t get off easy either.

Australia’s draconian encryption laws will begin to hurt

Following in the footsteps of the U.K., Australia passed an anti-encryption law that compels companies operating in the country to turn over encrypted data on request from several government departments.

Many U.S. tech companies, including Apple and Cisco, called on the Australian parliament to ditch the proposals for fear that the law could be abused or harm its customers’ privacy. That didn’t stop a bipartisan effort to pass the bill in time for the Christmas break.

Some companies have already said they can’t — and therefore won’t comply. Signal, the encrypted messaging app, said in a blog post that it “can’t include a backdoor in Signal,” despite the mandate from the country’s capitol. Other companies will find themselves facing the same dilemma. It might force companies to think about their presence in the country altogether.

Facebook’s privacy woes will spread to other Silicon Valley giants

Silicon Valley is split largely into two camps: your data for money, or your data doesn’t make money. You have Facebook, Google and to a lesser degree Twitter and Snap in the first bucket — then you have mostly hardware makers, like Apple, chip manufacturers like AMD and Intel and computer makers like HP and Dell in the other.

Facebook had scandal after scandal this year, after years of playing fast and loose with users’ data. Facebook claims it doesn’t sell your data, but it made money from it at every opportunity. And when it wasn’t actually selling access to your data, it was giving it away.

Many have wondered why other data-hungry, ad-focused companies haven’t had their reckoning yet — and many are asking the same questions. Facebook may be one of the biggest consumers of user data going, but it’s not the only one in the game. In making some of the world’s largest social networks and ad platforms, these companies have inadvertently become mass surveillance tools — either for governments with access already, or hackers and nation states that punch their way through the company’s defenses.

Their time will come — and hot on the heels of Facebook’s slew of scandals, expect it to be sooner rather than later.

Employees, not companies, will dictate how the technology they build is used

This year saw a resurgence of tech employees rising up against their employers for — in their eyes — misusing the products, services and technologies they made for uses outside their moral parameters.

Amazon employees complained that the company’s facial “Rekognition” shouldn’t be sold to law enforcement after the technology was found to racially discriminate against African-Americans. Microsoft staff complained that the company had a $19 million contract to serve U.S. Immigration and Customs Enforcement, during a time where the agency was separating children from their asylum-seeking parents at the border. And Google employees complained when they found that the technology they helped to build would go on to serve Chinese users that enables state surveillance.

Now it’s employees who are trying to call the shots. So far, they’ve had mixed success. Amazon executives didn’t care; neither did Microsoft’s — but Google buckled. Given it’s the talented folk at the companies that make the products, they believe they have a right to say how their products are used and who gets them.

This isn’t something likely to change in the new year, as the government continues to rely on tech companies for enforcement and surveillance. Whether they will be successful, however, will be something to watch.

One incident away from sparking another Apple v. FBI crypto-war

Two years ago, the Apple v. FBI dispute could have taken a completely different path. The FBI was pushing a legal challenge that would forever undermine encryption protections — making it easier for the government to compel companies into complying with orders to undermine their own software security. This year, we saw the government approach Facebook to force the company to rewrite its Messenger app to allow federal agents to wiretap calls. It was all in secret — and only became public thanks to leaks.

We’re still dangerously close to another “crypto-war” (that’s “crypto” for cryptography) that could result in heavy-handed legislation or a legal precedent.

Nobody wants a mass casualty event. But as with San Bernardino and the apparent threat from MS-13 — whether inflated or not, lawmakers and prosecutors use bodies as a bargaining chip to push for more access to our data under the guise of preventing another national crisis.

Gloves are off for U.S. and China in cyberspace — again

The 2015 pact between the U.S. and China that promised to curb each others’ cyberespionage efforts amid rising tensions and escalating attacks between the two nations was delicate and frail, but it was almost inevitable that it would fall apart someday.

In December, when the Justice Department accused two Chinese spies of conducting state-backed hacking on dozens of U.S. companies and government departments, including the Navy, the gloves were off, and the pact was over. The writing was on the wall for a while. Security firm FireEye said in its look-ahead at 2019 that China’s reorganization of its offensive cyber operations units “will inform the growth and geographic expansion of Chinese cyber espionage activity through 2020 and beyond.”

In other words, expect the U.S. and China to begin sparring in cyberspace again.

Amazon is planning a Whole Foods expansion in the U.S., according to a report by The Wall Street Journal published this weekend. The goal is to put more customers within the range of Amazon’s two-hour Prime Now delivery service, including those in suburban areas outside cities, as well as those in regions where the grocer has yet to establish a presence.

Currently, Amazon’s Prime Now delivery service offers two-hour delivery in over 60 U.S. cities, and thirty minute-plus grocery pickup in nearly 30 cities. Amazon is planning to expand those services to almost all its 475 Whole Foods stores, the report said, citing sources.

The retailer will also continue to use perks for Prime members to acquire and retain customers, much as it does today.

Because of its lack of a brick-and-mortar footprint, many U.S. consumers living in the outskirts of cities or in more rural areas don’t have access to Amazon’s Prime Now two-hour delivery service. However, they do have access to Walmart stores, which today offering their own online grocery shopping service with pickup and delivery options in a number of markets.

Walmart says that 140 million customers shop its stores weekly, and 90 percent of Americans today live within 10 miles of one of its locations. That makes it a significant challenger to Amazon in terms of offering fast delivery and pickup options. It also doesn’t require an annual membership.

Other companies are competing with Amazon on same-day delivery, too, including Instacart and Target’s Shipt. Target is also rolling out a curbside pickup service called Drive Up, and is planning to expand Shipt’s assortment and reach in 2019.

The WSJ report didn’t confirm store locations, but did note Amazon was scouting retail spaces in parts of Idaho, southern Utah and Wyoming. Some of these were slightly larger than average Whole Foods stores, at 45,000 sq ft. – which hints at their ability to operate as a hub for delivery and pickup, in addition to being a traditional grocery store.

I thought the worst thing about Popsugar’s Twinning tool was that it matched me with James Corden.

Turns out, the hundreds of thousands of selfies uploaded to the tool can be downloaded by anyone who knows where to look.

The popular photo matching tool taking the web by storm is fairly simple. “It analyzes a selfie or uploaded photo, compares it to a massive database of celebrity photos to find matches, and finally gives you a ‘twinning percentage’ for your top five look-alikes,” according to Popsugar, which developed the tool. Then, you share those matched photos on Facebook and Twitter so everyone knows that you don’t look at all like one of the many Kardashians.

All of the uploaded photos are stored in a storage bucket hosted on Amazon Web Services. We know because the web address of the bucket is in the code on the Twinning tool’s website. Open that in your web browser, and you’re looking at a real-time stream of uploaded photos.

We verified the findings by uploading a dummy photo of a certain file size at a specific time. Then, we scraped a list of filenames uploaded during that time period from the bucket’s web address, downloaded them, and found our uploaded image by searching for that photo of a certain file size. (We didn’t download any more than necessary to preserve people’s privacy.)

TechCrunch reached out to Popsugar president Lisa Sugar and vice-president of engineering Mike Patnode, but did not hear back.

As data leaks go, this is definitely on the low-end. You might not care that their selfies were exposed and easily downloadable. (Many photos were already leaking out of Google’s search results — even before people shared their selfie matches on Twitter!) It’s not as if the site was leaking your passwords or your Social Security number. Most probably didn’t go in expecting any reasonable level of security or privacy to begin with.

But like any free app, quiz or some viral web tool, it’s worth reminding that you’re still putting your information out there — and you can’t always get it back. Worse, you almost never know how secure your data will be, or how it might end up being used — and abused — in the future.

This is Captain Buzzkill, signing off.

This time last year, the crypto bull market stole the spotlight. In the midst of bitcoin’s wild run, we announced the Matrix FinTech Index in recognition of the top 10 publicly traded U.S. fintechs quietly surpassing $100 billion in total market capitalization. We predicted that in 2018, the fintechs would prove to be the more relevant disruptors and their equity value would continue to outpace the incumbents.

As we look back, this prediction proved to be true. The market cap of the Matrix FinTech Index grew 50 percentage points in 2018, far outpacing the incumbent financial service giants and the S&P 500. Looking ahead to 2019, we predict that the fintechs will continue to steal the show—creating innovative tech-enabled products, providing access to underserved demographics, and putting consumers first.

The FinTech Index continues to outperform in 2018, though volatility has increased

In this 2018 year-end edition of the Matrix FinTech Index[1] , we are excited to provide a refreshed view of last year’s index. As a quick reminder, the index is a market-cap weighted index that tracks the progress of a portfolio of 10 leading public fintech companies. For comparison, we also included another portfolio of 10 large financial services incumbents (companies like JP Morgan and Visa), as well as the S&P 500. In 2018, the total market cap of the top 10 publicly traded U.S. fintechs grew to nearly $170B and the 2-year returns of the fintechs are now at 133%–100 percentage points higher than the 2-year returns for the incumbents.

Definition: Matrix Partners considers “fintechs” to be venture-backed organizations that are (a) technology-first companies that leverage software to compete with traditional financial services institutions (e.g. banks, credit card networks, insurers, etc.) in the delivery of traditional financial services (e.g. lending, payments, investing, etc.) or (b) software tools that better enable traditional finance functions (e.g. accounting, point-of-sales systems, etc.)

Compared to 2017, volatility increased in 2018. While part of this is the broader state of the equity markets in 2018, it’s worth noting a few specific headwinds (e.g. the TIO security breach that impacted PayPal, Amazon launching Amazon Pay) as well as a few general macro concerns like rising interest rates. But looking ahead to 2019, all 10 of the publicly traded fintechs are expected to continue to have double-digit growth. The only incumbents expected to squeak into double-digit territory in 2019 are card issuers like Visa (11%) and Mastercard (13%) –enabled, in part, by the growth of fintech payment companies like Square and PayPal.

2019 Prediction: The Matrix FinTech Index will deliver 200% returns over the three years ending in December of 2019, outperforming the incumbents and S&P 500 by at least 150 percentage points.

Liquidity is starting to trickle in for private fintech companies

While the FinTech Index performed well on the public markets in 2018, we also saw some very promising liquidity events for privately held companies. In 2017, there were only 3 fintech exits in the U.S. over $100M, totaling just over $700M in value. In 2018 that number grew by a factor of 10 to over $7B in value. More than half of that value came from the GreenSky IPO, but there were also a number of significant M&A events. We expect M&A activity to increase as financial services incumbents acquire fintech companies in an effort to stay competitive. And we continue to believe that the fintech sector will prove to be one of the most fruitful sectors for venture returns in the 15 years following the 2008 financial crisis.

2019 Prediction: Total aggregate value for fintech liquidity events will exceed $10B in one year for the first time ever.

The fintech unicorn pipeline is primed for some big outcomes

What’s even more exciting than 2018’s liquidity is the backlog of privately held fintechs, led by Stripe, that are valued at over $1B. There are now 20 fintech unicorns. In fact, there are more fintech unicorns than any other industry vertical in the Unicorn Club. More than 50% of these raised big growth rounds in 2018 and five of them (Circle, Plaid, Brex, Root and LendingHome) made their debut on the U.S. fintech unicorn list for the first time. The expansion of this list shows that there is no shortage of high-potential areas to disrupt in financial services.

2019 Prediction: Total aggregate value for fintech unicorns will cross $90B and the total number of fintech unicorns will begin to close in on 30.

The next wave of value creation from younger fintechs will be even bigger than the first

Despite these successes on the public markets, in liquidity events and among the unicorn ranks, we are still in the very early innings of the fintech revolution. 2019 will be even more impressive than 2018 as there are an additional 40 U.S. fintechs that have raised more than $100M in equity funding and are on the brink of entering the unicorn club. As many of these companies make that transition, they will sprout another wave of more interesting fintech companies as early employees go on to start their own companies in a virtuous wave of value creation.

We expect these newcomers, and others aspiring to follow in their footsteps, will threaten to end the rule of the financial establishment. They will continue to offer better financial products to consumers, empower more efficient payment channels, and create a more open financial system. At the same time, the incumbents will continue to struggle with innovation, hamstrung by their scale, regulatory burdens, and decades of accumulated technical debt.

Make no mistake. What new fintech companies are attempting is very ambitious and incredibly difficult to achieve. The existing ecosystem of incumbent providers dates back 150 years and represents some of the largest global financial institutions. That said, digital transformation is afoot and the financial service industry will not be spared.

While the thought of a machine that can squirt out endless ropes of molten glass is a bit frightening, the folks at MIT have just about perfected the process. In a paper published in 3D Printing and Additive Manufacturing, researchers Chikara Inamura, Michael Stern, Daniel Lizardo, Peter Houk, and Neri Oxman describe a system for 3D printing glass that offers far more control over the hot material and the final product.

Their system, called G3DP2, “is a new AM platform for molten glass that combines digitally integrated three-zone thermal control system with four-axis motion control system, introducing industrial-scale production capabilities with enhanced production rate and reliability while ensuring product accuracy and repeatability, all previously unattainable for glass.”

The system uses a closed, heated box that holds the melted glass and another thermally controlled box where it prints the object. A moveable plate drops the object lower and lower as it is being printed and the print head moves above it. The system is interesting because it actually produces clear glass structures that can be used for decoration or building. The researchers take special care to control the glass extrusion system to ensure that it cools down and crystallizes without injecting impurities or structural problems.

“In the future, combining the advantages of this AM technology with the multitude of unique material properties of glass such as transparency, strength, and chemical stability, we may start to see new archetypes of multifunctional building blocks,” wrote the creators.

One of the tallest buildings in the world, Taipei 101’s New Year’s Eve fireworks have become an iconic celebration since the first show at the end of 2004. But despite being a major tourism draw, the fireworks haven’t been immune from criticism.

Over the past couple of years, as poor air quality becomes an increasingly serious issue throughout the country, the show has been targeted by Taiwanese environmental groups. The major of Taipei City, Ko Wen-je, said at the beginning of this year that the fireworks show should continue and other, more permanent measures against air pollution should be taken. “There are 365 days in a year,” he told reporters. “But the firework display was only 300 seconds, so we need a long-term plan to solve this problem.”

As one of the tallest LEED-certified buildings, however, Taipei 101 often serves as a case study for how landmark skyscrapers can reduce their carbon footprint, and it has been taking steps to reduce pollution from the show while keeping it a spectacle. A couple weeks ago, a group of bloggers and reporters was invited to take a look at this year’s preparations. (All photos in this story, with the exception of the one at the bottom featuring last year’s show, are by Garret Clarke.)

A technician with some of the fireworks that will be part of Taipei 101’s show.

16,000 fireworks will be used in this year’s show and preparations are usually finished by Dec. 28.

Over the past couple of years, the organizers of Taipei 101’s fireworks show have taken several measures to reduce pollution. Starting with last year’s show, the number of fireworks was reduced from 30,000 to 16,000. To add oomph to the reduced pyrotechnics, a 55-story-tall mesh screen made up of 140,000 LEDs, called a T-Pad, was installed by Taipei 101 fireworks contractor Giant Show on the north side of the skyscraper. The LED screen overlooks the plaza outside of Taipei City Hall where a New Year’s Eve concert is held every year and showcases animations that coordinate with the music and fireworks.

The LED screen is used during the rest of the year for promotions, advertisements and holiday messages

Andy Yang, head of corporate branding and communications for the Taipei Financial Center Corp., Taipei 101’s owner, told TechCrunch that this year’s show cost a total of about NTD $60 million (about USD $1.96 million). It will also include 16,000 fireworks, installed from the 34th to 91st floors of Taipei 101, and animations on the T-Pad. The team that plans the show includes 10 to 15 designers and about 50 pyrotechnicians who install the fireworks on the exterior of the building. Preparations are typically completed by Dec. 28.

Andy Yang stands in front of the scaffolding that leads up to Taipei 101’s 55-story-tall LED mesh screen

Yang says Taipei 101 has been decreasing the number of fireworks used year by year. The LED screen is currently only on one side of Taipei 101, but Taipei 101’s management is exploring the possibility of extending it to other sides of the building.

Taipei 101’s fireworks show at the end of 2017, with the LED screen in view. (kecl/Getty Images)

Taipei 101 also instates an “all lights off” policy, turning off all exterior lights before and after the show in order to reduce carbon emissions. The LED screen not only enables Taipei 101 to reduce the number of fireworks used, but also enables the integration of pyrotechnics, animations, music, and lights into one show, “which brings more design and content opportunities and possibilities for Taipei 101 and Taiwan,” he says.

If you’ve gone down the rabbit hole with Netflix’s latest Black Mirror release, there’s (at least) one more easter egg out there. As some intrepid Reddit users discovered, you can actually visit two different versions of fictional software company Tuckersoft’s website and… spoilers ahead.

On the regular Tuckersoft site, discovered through a QR code embedded in the show itself, Tuckersoft advertises its game lineup including Bandersnatch, a “revolutionary game from Stefan Butler.” In this timeline, Tuckersoft released both Nohzdyve and Bandersnatch and Stefan eventually eclipsed his gaming idol Colin’s own fame, driving the company forward. As the site notes:

“While Colin Ritman was Tuckersoft’s leading man, it was Stefan Butler’s 1984 release, Bandersnatch, that catapulted the company to new heights. The innovative narrative and gameplay transformed interactive entertainment forever.”

If you visit the Tuckersoft site but strip out the www., the company never released Colin’s game due to a tragic incident. If you’ve seen the episode, you can probably guess what that was. This version of the site includes the following text:

“A bleak turn of events would lead to the abrupt cancellation of Colin Ritman’s highly-anticipated game, Nohzdyve, and the end of Stefan Butler’s promising career.

“Metl Hedd remains a classic, but the world will have to wonder what Nohzdyve was like. Rumour has it, an early version of the game is somewhere out there, waiting to be played for the first time.”

Black Mirror fans will note that the fictionalized site for Colin’s other major title, Metl Hedd, depicts the BigDog-like robots that terrorized humans in season four’s particularly harrowing episode “Metalhead.” Tuckersoft’s other games contain plenty of references to Black Mirror episodes too.

In the timeline in which Colin was able to finish Nohzdyve, the game’s sub-page has a download link for a file called nohzdyve.tap and the instructions to “Play Nohzdyve on your ZX Spectrum emulator.” Apparently, the file works and if you run Windows and you’re willing to install an emulator (like Speccy) for the obscure British 8-bit console, you can actually play Colin’s rather prescient release. We’re told it might work on a Commodore 64 emulator too, but haven’t tested that out (yet).

So far it doesn’t look like Bandersnatch is playable anywhere, but given that the episode itself is a game and the game itself results in certain horror, that’s probably for the best.

Colin Kroll, was the co-founder of Vine and HQ Trivia, both consumer sensations that brought joy to millions; Anthony Bourdain, had been a chef, journalist and philosopher, who brought understanding and connectedness to millions of lives; while Robin Williams built a career as a brilliant comedian and actor.

What these three share in common is that they were all people at the pinnacle of their industry and they all died too soon. Their premature loss is a tragedy.

The most brilliant and creative amongst us are sometimes the most troubled and nowhere is that clearer than in the entrepreneurial ecosystem. With each passing unnecessary death the importance of mental health comes briefly into focus… but that focus lasts no longer than a news cycle and nothing changes. The time for lip service came and went long ago. We must take these issues seriously and we need to act.

The mental health epidemic is real. There are 18.5% Americans that will suffer from mental illness this year, 4% of them will suffer so acutely that it will substantially limit their ability to live their lives.

That means it is extremely likely you or someone you know is suffering right now and could use support. Moreover, unlike many of the challenges we face today, the most common expressions of mental health disorder (anxiety, depression, substance abuse and imposter syndrome) are largely addressable through individual action. Not only should we all take action, we all cantake action.

While national mental health statistics are troubling, they are downright terrifying for entrepreneurs. According to a study by Michael Freeman, entrepreneurs are 50% more likely to report having a mental health condition with some specific conditions being incredibly prevalent amongst founders.

Founders are:

• 2X more likely to suffer from depression
• 6X more likely to suffer from ADHD
• 3X more likely to suffer from substance abuse
• 10X more likely to suffer from bi-polar disorder
• 2X more likely to have psychiatric hospitalization;
•  and 2X more likely to have suicidal thoughts

Photo courtesy of Flickr/Thomas Shahan

Addressing the ongoing mental health catastrophe in entrepreneurship is a moral imperative, and for wise investors, it should be a function of doing business.

Venture capitalists make their living off of the blood, sweat, and tears of founders. It is through their passion and efforts that we succeed or fail. We can either choose to see founders purely as a means to an end (generating returns) or we can see them as the whole people they are.

When I make an effort to get to know our founders beyond the most superficial level then I cannot help but be moved by their personal struggles. Seeing founders in our portfolio succeed on a personal level is just as rewarding for me as sharing in their professional success. Luckily, I believe the two are intrinsically linked, which means we don’t have to choose.

 As Michael Freeman writes:

“Mental health is as essential for knowledge work in the 21st century as physical health was for physical labor in the past. Creativity, ingenuity, insight, brilliance, planning, analysis, and other executive functions are often the cognitive cornerstones of breakthrough value creation by entrepreneurs.”

Depression, anxiety and mood disorders all actively work to undermine founder performance. They often contribute to burnout, co-founder conflict, toxic company culture, increased employee turnover, an inability to hire top talent, an inability to “show up” for important meetings and pitches and poor decision making in general. According to Noam Wasserman at HBS, 65% of failed startups fail for avoidable reasons like co-founder conflict. All of these experiences are exacerbated when founders are in a time of high mental and emotional strain.

Let’s assume that in a portfolio of 20 companies 15 of them fail or underperform and that Noam Wasserman’s 65% statistic holds true. That would mean that 10 of the 15 companies (65%) failed for avoidable “human centric” reasons. If a firm were able to help even half of those companies avoid failure caused by burnout and mental strain that would mean an additional five companies would be successful, doubling the number of successful outcomes in the portfolio.

Even if you’re a huge pessimist, to help change the trajectory for one out of ten companies, changes the portfolio from five winners to six. In other words, supporting founders before their “people problems” become business problems yields a 20% improvement in performance. Even if one were indifferent to the personal lives of the portfolio founders, they should care about founder health if they care about portfolio returns.

It’s great that investors profess to care about founders’ mental health, but words are not enough. We must act to reduce founders’ mental and emotional suffering. It’s the right thing to do and it’s good for business.

Photo courtesy of Flickr/Thomas Shahan

Why do entrepreneurs suffer so much more acutely? 

Mental health problems permeate every industry not just the tech industry, but the statistics above would seem to indicate that we have a particular problem. What causes entrepreneurs to suffer at substantially higher than average rates? It’s a hard question to answer, and soon research from progressive labs like that of the Founder Central Initiative will help us to identify these drivers. For now, based on our own observations of founders, we believe there are several explanations which may contribute.

Self-Selection: Most founders are smart, driven and skilled people whose resume could almost certainly land them a job with a higher lifetime expected value (the median salary at Facebook is now $240,000) but they still choose the grueling, uncertain and more creative founder journey. Founders are almost certainly pre-disposed towards certain conditions (like ADHD) for example, Garret Loporto, in his book, “The Davinci Method” cites Fortune Magazine as claiming that people with ADHD are 300% more likely to start their own company than others.

Poisonous industry tropes: The narratives our industry tells are less real than pictures that grace the front of fashion magazines and are just as destructive. Photoshopped pictures of “perfect people” create an unattainable standard of beauty, the constant stream of stories about “overnight success” and “crushing it” create an unattainable standard for founders.

Startups are hard: The magic of a great team is in building a group with complementary skills. When just starting out founders don’t have a complete team and are required to do things they are not well suited to do. Working on projects that do not fit within a leader’s innate skills tends to be emotionally draining. It’s not uncommon in an early startup for introverts in the company to have to pitch and make sales calls while extroverts are forced to sit at a desk and grind away in a CRM.

Startups are alienating: The all-encompassing nature of a startup often causes founders to spend less time with family, friends and significant others and many are required to re-locate away from these support networks for funding or strategic reasons. As stress at a company builds, founders are more inclined to double down at work (a natural response to an emergency).  This tendency only further burdens the founder by muting their supportive relationships and reduces their ability to cope with company pressures.

A founder must be a rock: There’s a lot of pressure put on founders to stay steady in times of company turmoil.  As a result, they are often alone when they need others the most.  Founders report that they feel that they cannot talk with their co-founders, especially when the problem is with the co-founder, they cannot pass the burden of their worry on to their employees, and feel that their friends and family do not understand or are tired of hearing about the company.

The “I am my company” syndrome: Founders blur the line between themselves and their companies in such a way that company failures often are felt as personal failures. Losing a customer contract or receiving a “no” from an investor can feel like a deeply personal rejection.

Founders eat last: I have yet to meet a founder who has a budgeted line item for self-care or who takes guilt free vacations. In almost every other skilled industry there is recognition that people have a right to take care of themselves and that a little bit of self-care actually leads to a more productive workforce. Investors, founders and poorly trained middle managers all perpetuate a myth in the startup ecosystem that the only way to be successful is to grind yourself inexorably to the bone.

Financial risk: In addition to opportunity cost, founders often go without a pay check and pour a significant portion of their personal capital into their businesses. This creates enormous financial stress and anxiety that sets up a scenario in which a business failure also creates personal financial ruin. A certain amount of “skin in the game” can be positive but founders are often already all-in emotionally with their businesses. A founder with too much skin in the game may live under a Sword of Damocles and be unable to focus on the key tasks, ironically bringing about their own worst fears.

Imposter Syndrome: Founders often suffer from the sense that they don’t belong where they are and that eventually they will be exposed as frauds. This leads founders to chalk success up to luck but to take all the blame for any failures. 58% of tech workers suffer from Imposter Syndromeand I suspect the number is substantially higher among founders.

Moving the goalposts: Founders find it difficult to celebrate the small wins, each victory brings on the next, greater challenge. The second most stressful time for founders is right before they are able to secure a major fundraise, the most stressful time is right afterwards.

Substance Abuse: Our industry is awash in alcohol and other substances that founders and tech workers are encouraged to consumer freely for bonding, as a social crutch, and for performance optimization. These substances are both a cause and a symptom of broader problems in the ecosystem.

I wager that simply reading the above list left you stressed out and self-identifying with a number of the factors that cause founders stress. Luckily there are some things we can all do to combat mental health strain.

Photo courtesy of Flickr/Thomas Shahan

What can investors and founders do about founder mental health?

Each of us who participates in the startup ecosystem contributes to the problem of poor founder health.  This puts each of us in a position to positively impact this experience by acting. Here are a few things we can do:

Destigmatize

o  Investors should make sure that the founders they work with know that they take mental health issues seriously. One way to do this is to take the Investors Pledge developed by Erin Frey and Ti Zhao at Kip. Just taking the pledge sends a powerful signal to founders that it’s OK for them to seek help. Better yet, investors, in their onboarding process with founders should explicitly touch on their support for the founders’ seeking mental health services when they feel compelled to do so.

o  Drop the act. Being an investor is different from being a founder but it isn’t easy and investors suffer in many of the same ways. If investors want to support their founders, they need to be authentic and vulnerable in front of them. Investors need to show founders its ok to open up and that it’s ok to have doubts or to struggle with mental health.

o  For founders, don’t spread or buy into the myths. When you’ve been grinding away on your business for years in anonymity and then have a major breakthrough, make sure your PR campaign accurately reflects the journey. You suffered to bring your company to the pinnacle of success and you had to invest heavily in yourself to survive the trip. Make sure when other founders read about your success they understand how you really got there.

Provide Resources

o  It’s easy for people to forget how financially constrained most founders are. Just because they’ve raised $5 million in a recent financing doesn’t mean they necessarily have the personal capital to seek help and support. A portion of financing rounds should be earmarked for the founders themselves and investors should hold founders accountable for investing in their wellbeing and development.

o  Founders need to include a line item in their P&L for wellness or self-care. Budgets are moral documents and they set the priorities of a company. If there is no line item for supporting the mental/physical/emotional well-being of the founders and employees, then the company will be devoid of the resources to offer this type of support. We, the participants in this ecosystem, need to put our money where our mouths are when we say that we are “founder friendly” and “invest in founders first”.

Don’t forget the mind body connection 

o  Mental, emotional and physical wellbeing are all deeply linked to one another. Just as mental health issues often lead to substance abuse, a lack of physical exercise or nutrition can also lead to depressive mood states and a lack of focus. The founder fifteen is as real as the freshman fifteen but it’s much more destructive.

Founders need to make sure to incorporate their physical activity of choice into their life, need to watch their nutritional intake and should consider activities such as yoga, meditation and intentional breathing that research shows help boost mood, sharpen focus and enhance emotional resilience. (Short plug, at Atlaswe work on addressing the whole person because we believe effective leaders are those who are both physically and emotionally fit.)

Connect, connect, connect 

o  Founders need to remain anchored in a support network. They should join a peer group, engage with old friends, go out on date nights with their significant other and make new friends. Not only is it a fun way to unload some of the pressure they’re under, but it’s a great reminder to founders that they have a separate existence from their company.

o  Founders should take an intentional vacation away from work, tech, and business. If, like me, a founder can’t voluntarily disconnect even while on vacation, they should consider joining a community like Soulscapeor traveling off the grid so that they are forced to disconnect and recharge. Burnout rarely appears as the primary track in startup postmortems, but a trained ear can usually find its influence.

o  Set a culture that is supportive of self-care. If everyone from the receptionist to the CEO is willing to seek help and take care of themselves, it creates a company-wide habit that enables everyone to thrive. A healthy culture will pay for itself a thousand times over in recruitment, lower turnover and happier, more productive people who are willing to sacrifice for the company when sacrifice is called for.

Set priorities not tasks

o  Founders and A-type personalities tend to live and die by their calendar and their task lists. Unfortunately, task lists are just reminders that there are countless things to be done. For most of us our task lists are quite literally infinite. This is a recipe for unbearable mental strain and unmanageable cognitive load. The definition of anxiety is when we perceive that our ability to achieve is overwhelmed by the tasks at hand, which is inevitable when our tasks are ill defined, too large or seemingly unending.  Instead of a task list, switch to a daily priorities list where only the urgent AND important items are listed. Completing these items may be more difficult but getting them off your plate is infinitely more satisfying.

 Be vigilant 

o  Learn the warning signs of depression and burnout. People who are drowning don’t wave their hands in the air and shout for help, they slip silently beneath the waves and only trained life guards tend to spot people in trouble. It’s the same way with depression. Depressed people don’t mope around and they aren’t necessarily sad so much as numb. Here are things to look out for:

• Persistent feelings of pessimism
• Sad, anxious or empty mood
• Change in behavior and loss of interest in previously enjoyed activities
• Change in diet or eating schedule
• Change in sleep schedule
• Irritability
• Inability to make decisions or concentrate
• You can also use this validated self-assessment for depression

Building companies is inherently hard mentally, physically and emotionally but our ecosystem is a toxic one with dozens of factors all contributing to make it even more so. We are quite literally killing ourselves and thereby sabotaging our long-term competitiveness. There are tangible actions each one of us can take to start fixing this toxicity but at the end of the day but I believe most of those actions boil down to treating each other and ourselves as human beings. If we recognize and embrace our weaknesses and support one another in our imperfections, we will start seeing a healthier more sustainable entrepreneurial ecosystem.

Resources:

National Suicide Prevention Hotline: 1-800-273-8255

Depression resources: https://www.everydayhealth.com/depression/guide/resources/

Free/Cheap Peer Groups: https://www.evryman.co; https://www.chairmanmom.com; Atlas Events and Peer Groups

(if anyone knows of similar free resources, please share them in the comments)

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