Year: 2020

“Never run a dual-track process.”

You’ll probably hear this advice if you ask an investor about raising money and selling a business concurrently, and it’s good advice. The two processes are so different, so all-consuming and require such different priorities that it is nearly impossible to do both well. Running a sale process, though, is much different from positioning your company for sale, and positioning for a sale is very easy to do while you are focused on execution and fundraising. In fact, thinking like a buyer often helps make your business better even if you never sell, and if you do end up exiting through a merger or acquisition (far more common than an IPO in any event), you’ll be that much farther ahead.

It’s not just about your KPIs anymore

Investors care about results far more than methods. If the business is growing and the results are strong, founders are apt to face few questions from investors about the details of how they run their businesses.

It can come as quite a shock, then, when a buyer begins questioning everything during a sale. An acquisition represents not just the purchase of a revenue stream but also the team, technology, culture and a swarm of contractual relationships. Consider that a buyer is acquiring everything you have built up to this point, and they will take a close interest in all of it, not just your results.

At times, it can feel infuriatingly unfair. When I sold my first startup, Prism, several buyers castigated us for building on .NET. The product worked beautifully, and we had strong revenue growth. The tech stack was efficient and reliable. In fact, buyers would often congratulate us for the technology we had built and in the same breath insult our method of building it. Unfair, perhaps, but entirely reasonable considering that the buyer had to consider not just our results but how to integrate our team and product into their company. I’ve heard similar stories from founders concerning issues that range from culture and hiring practices to core hours and partnerships.

While growth is always the priority, looking at the business objectively can pay handsome dividends even if no buyer ever materializes and starts asking questions. It is easy for teams to become insular and to ignore problems festering underneath the shiny performance metrics, and forcing yourself to think like a buyer can help uncover problems early. Security and accounting are the best and most obvious examples here, but are far from the only ones. Even if you decide not to make a given change (we would not have changed our tech stack, for example), you will be able to get in front of any objections. A good offense is always the best defense, and the more you address incompatibilities proactively with a buyer, the stronger your position will be.

A peek behind the curtain

So how does a sale actually happen, and how does your preparation pay off? Typically, there are two general paths: the traditional process and the “serendipitous” encounter. In a traditional process, the founder explicitly seeks to sell the company. In a large transaction, it’s common to hire an investment bank to run the process; founders tend to manage smaller transactions themselves. Either way, the founder or the banker will comb through a list of potential acquirers and pitch the business to them in a process that feels somewhat like raising money.

The “serendipitous” encounter is a much looser construction. Sometimes, it is truly happenstance, when an acquirer expresses genuinely unexpected interest. More often, those scare quotes are doing yeoman’s work, and the founder starts feeling out potential buyers by casually discussing how great their business is with those around them. Some founders are better at this dance than others, but once a buyer expresses genuine interest, the next steps look exactly like the formal process. Look, there may be environments in which having zero competition for your deal makes sense, just like there may be environments in which “Well, at this point, the best path forward definitely is to wrestle with that alligator” is a sensible thing to say. Both environments are equally likely. In almost all cases, it is imperative to get others interested in your company, even if you would prefer to sell to the first buyer. Auctions drive up prices and improve your negotiating position on literally everything, so you need to run a process just as if you’d planned one from the beginning.

So what does “interest” look like? It’s a fuzzy concept, but typically it means that someone with agency (either a C-suite executive or someone in the corporate M&A group) tells you that they want to consider acquiring your business. A lot of euphemisms get thrown around at this point to avoid scaring founders; you’ll hear “building a closer relationship” or word salads like “working together in a more structurally consistent manner” or if the person has a New York investment banking background, “Let’s get a deal done” likely delivered staccato with a finger. jabbing. the. table. for. emphasis. These phrases all mean the same thing, namely that the company that person represents wants to consider buying your company.

At this point, the conversation is pretty high level. You typically won’t be tearing into the technical wizardry, but rather demonstrating that you have what it takes to play the game: a good business model, a reliable product, strong team chemistry, and a product that fits well into the acquirer’s business. You, your co-founders and probably some senior engineers will spend some time at the acquirer’s offices, meeting with the management and product teams, trying to get a sense for how well these various groups of people gel. The CEO will spend time with the other company’s CEO (or in the case of larger acquirers, divisional leadership), hashing out employee benefit packages and transition agreements. Pro tip: “Synergies” mean firing people, and if that’s off the table for you, make that clear upfront. Even if there’s a desire to keep the whole team, it’s pretty unusual for every last person to make the transition.

If these first couple meetings go well, you need to start formalizing the process. Your sale will be much more successful if you establish an internal champion (sometimes the CEO but ideally your head of corporate development, business unit leader or GC) who can navigate the sale. Having one key point person will streamline the process and allow the founders to focus on ensuring that the business doesn’t fall apart from all of the distraction.

At some point early in this process, you’ll want to ask for an Initial Indication of Interest, or “IOI.” Legally, it’s a worthless piece of paper, but it keeps honest people honest. In it are outlined the terms of the proposed deal, the expected timing and other major deal points. Much can and will change, but having a common and documented starting ground is essential. NDAs tend to get signed around this time as well or may already be in place if the process started more formally. At this point, you also need to communicate to your other potential buyers (you have a few, right?) that you’re “in exclusivity,” meaning you can’t negotiate with anyone else. Doing so typically heightens their interest, because they’re human beings. From then on, you’ll almost certainly be prohibited from talking to new buyers about the business at all, so your only fallback options are the others already in the process.

From then on, it’s a sprint to the finish. Technical diligence, legal diligence, security reviews, accounting reviews, etc. It all takes longer than it should and creates proliferating headaches. Anything can derail a deal, but most of this work just creates more negotiating room for the buyer. It’s like a really expensive and prolonged home inspection, and if you’ve done a good job on maintenance over the years, it’ll go smoothly (see previous section).

The sellers matter, too

Your investors, employees and customers all have a stake in this outcome as well. While you’re busy trying to think like a buyer, you also need to empathize with all of your selling stakeholders. Each situation is different, so it’s hard to give generic advice. More communication is better than less, especially to your lead investors who likely have to approve any M&A in the first place. If a transaction comes out of nowhere, it can feel desperate and leave investors wondering what was left on the table. Investors have come to associate poor communication with poor management, and it’s not an unfair assumption.

You’ll need to bring employees into the circle as the diligence process unfolds, and involving your top people is almost always the right initial step. You need your leaders on board with the deal, and it is much easier to get people excited when they have a say in the process and outcome. Unfortunately for your customers, they will have to wait for the public deal announcement, but be transparent and honest in that communication. It should come from one of the CEOs.

Finally, be sure to give people who have supported you in the past — journalists, bloggers, podcasters, advisors — a heads-up as well so they don’t feel blindsided. Doing so is especially important if an acquisition will significantly disrupt the product; if someone put their reputation on the line for you, do your best to tell them what’s happening before they wake up to the news alert.

Ultimately, think like a sales lead

Every CEO is in sales . Pitching investors, selling to customers, recruiting all-stars, courting acquirers: It’s all sales. Preparing to sell your most important asset — the company itself — should be no less a part of your DNA. Never stop selling.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest big news, chats about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here, and myself here, and don’t forget to check out last Friday’s episode.

As you probably expected, we had a lot to say about the TikTok -Microsoft tie-up that is somehow still afoot. Other things happened too, don’t worry. Here’s the rundown:

• The TikTok-Microsoft deal is back on.
• Lordstown Motors is looking to go public via a SPAC. To which we have to say that the EV boom and SPAC crush are going to fuse and lose some people a lot of money. Not this deal, necessarily, mind.
• Google is dumping money into ADT as part of a Nest deal.
• And Zoom’s latest move regarding the Chinese market feels like a harbinger of times to come.
• On the TikTok front, Microsoft never really fully abandoned consumer hardware and software, it just pruned deeply under its current CEO Satya Nadella. Windows Phone? Gone. Surface? Bigger than ever. Mixer? No. Bing? Yep. That sort of thing. And Microsoft, like any modern super-platform, doesn’t just want to own your time when you are at work. It wants to burn your eyes out around the clock.
• For a host of ByteDance backers like Yuri Milner, Sequoia Capital China, General Atlantic, SoftBank, and Goldman Sachs and Morgan Stanley, the deal could be rather lucrative, we presume.
• Rounds for Wejo (coverage here), Lezzoo (coverage here), and Feather (coverage here).
• Finally, why does Microsoft want to buy TikTok? We had a number of ideas that all sort of summed to maybe, but when we ran through the big tech companies that were possible suitors — ports in the Trump storm — maybe Microsoft makes more sense than we would have guessed?

Whatever the case, we can’t wait until Satya announces the deal by dancing and pointing at text on a screen while wearing something silly.

Equity drops every Monday at 7:00 a.m. PT and Friday at 6:00 a.m. PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

“The app that you use the most on your phone and you don’t realize it is your keyboard,” says Christophe Barre the co-founder and chief executive of OneKey.

A member of Y Combinator’s most recent cohort, OneKey has a plan to make work easier on mobile devices by turning the keyboard into a new way to serve up applications like calendars, to-do lists, and, eventually, even Salesforce functionality.

People have keyboards for emojis, other languages, and gifs, but there have been few ways to integrate business apps into the keyboard functionality, says Barre. And he’s out to change that.

Right now, the company’s first trick will be getting a Calendly-like scheduling app onto the keyboard interface. Over time, the company will look to create modules that they can sell in an app-store style marketplace for the keyboard space on smartphones.

For Barre, the inspiration behind OneKey was the time spent working in Latin America and primarily conducting business through WhatsApp. The tool was great for messaging, but enterprise functionality broke down across for scheduling or other enterprise app integrations.

“People are doing more and more stuff on mobile and it’s happening right now in business,” said Barre. “When you switch from a computer-based world to a mobile phone, a lot of the productivity features disappear.”

Barre, originally from the outskirts of Paris, traveled to Bogota with his partner. She was living there and he was working on a sales automation startup called DeepLook. Together with his DeepLook co-founder (and high school friend), Ulysses Pryjiel, Barre set out to see if he could bring some of the business tools he needed over to the mobile environment.

The big realization for Barre was the under-utilized space on the phone where the keyboard inputs reside. He thinks of OneKey as a sort of browser extension for mobile phones, centered in the keyboard real estate.

“The marketplace for apps is the longterm vision,” said Barre. “That’s how you bring more and more value to people. We started with those features like calendars and lists that brought more value quickly without being too specialized.”

The idea isn’t entirely novel. SwiftKey had a marketplace for wallpapers, Barre said, but nothing as robust as the kinds of apps and services that he envisions.

“If you can do it in a regular app, it’s very likely that you can do it through a keyboard,” Barre said.

Historically, podcasts have been focused on appealing to as many listeners as possible. But Artifact, a new YC-backed company launching today, has a different idea.

It all started when cofounder and CEO Ross Chanin lost his grandfather. He found himself wishing he’d spent more time asking him about his life. At the same time, he was mulling the audio revolution underway in the tech world after having cofounded Reputation.com and serving as COO at Euclid (acquired by WeWork).

Over a beer with his friend George Quraishi, a journalist, they decided to try out the idea of a more personal podcast for a specific, smaller audience, starting with Ross’s Aunt Cindy. They did audio interviews with three of Aunt Cindy’s closest friends, who shared intimate details about their friendships with Cindy, from how they met to their favorite memories to what they love most about her.

“When Ross’s cousin got out his phone and played the mp3 for Cindy on her birthday, she started crying,” wrote Qurashi. “And laughing. Later, she said, ‘You know, you just go through life, you don’t really think about somebody recalling what’s important to them about you, or what you mean to them.'”

This was the glimmer in the eye of Chanin and Qurashi to build out Artifact. They teamed up with Moncef Biaz (CTO) to handle the technical back end infrastructure.

Using professionally contracted interviewers, Artifact conducts short interviews with a person’s closest friends or family and turns them into a personal podcast. Some of these interviewers are journalists like Qurashi, and others are simply great listeners, such as a bartender, a few actors, and even a comedian.

Interviewees either call a phone number for their interview, or the more tech-savvy among them can dial in via their computer for a higher fidelity audio quality.

After the interview, Artifact handles the editing and polish to offer a higher-quality final product that is delivered to the recipient via the web.

“On the one hand you have your purely user generated content and then you have this high-production content,” said Chanin. “Our general sense is that there is a pretty large missing middle. We’re getting to 80 or 90 percent of what a studio-produced podcast would sound like. And no one cares about that extra 10 or 20 percent.”

One of the things that is most special about Artifact also happens to be a big challenge for the product: It can be used in almost any way. This can make it difficult to define and leave the ball in the court of the user to dream up what they want their Artifact to be.

The Portrait, which focuses on stories from friends and family about a single person, is an obvious use case. But Artifact is also used by couples for their wedding, with annual podcasts for each year of their marriage. Folks can use the service to reflect on huge milestones in their lives, or to catalogue the growth of their child from the kid’s point of view. Businesses are even starting to use Artifact in this COVID-19 world to get to know their colleagues better during remote work.

“Our customers are not the product,” said Chanin. “They are buying a product. We think that Artifact loses a lot if the default assumption is that millions of people are going to hear this. Certainly, Artifacts can be used in that way, but the primary sharing is to close friends and family.”

Chanin added that the average Artifact episode is listened to by about 30 people.

Artifact generates revenue by charging users per episode, with each episode allowing up to two interviewees. One episode costs $175, two episodes costs $325, and four episodes costs $625.

The team is comprised of four full time workers, with 12 interviewers contracted on the project. The full time team is 100 percent male and 50 percent of employees are people of color. Fifty-five percent of contractors are people of color and 35 percent are women.

The company has raised a total of $500,000, which includes $150,000 from Y Combinator, as well as funding from David Lieb (Founder of Bump and Director, Google Photos), Sander Daniels (cofounder of Thumbtack), Eric Kinariwala (founder and CEO of Capsule), and Sean Bratches (Fmr. Managing Director, Formula 1. Fmr. EVP, ESPN).

Companies like Impossible Foods and Beyond Meat that are making vegetable-based meat substitutes have captured the imagination and wallets of consumers, but so far, there’s been no real corollary for the seafood industry.

Now, a startup coming from Y Combinator’s summer cohort, Kuleana, is hoping it can swim in those waters.

While new businesses like Wild Type, Finless Foods, and Shiok Meats are all developing cell-based alternatives to using live tuna, salmon, and shrimp and Good Catch and Ocean Hugger are proposing their own tuna replacements, but Kuleana hopes to differentiate itself by replicating sushi-grade raw tuna.

And that’s only the beginning, according to Kuleana co-founder and chief executive, Jacek Prus. Eventually, the company hopes to be making vegetarian alternatives to tuna, salmon, and more fish and shellfish.

“Nobody has really done raw tuna very well yet,” says Jacek Prus. “We’re going to do raw tuna and then probably salmon.”

Prus became interested in the food industry after taking an animal ethics class at the University of Texas at Austin. After five years in the city, Prus moved to Europe and helped set up the ProVeg International incubator.

It was there that Prus got in touch with Ron Shigeta, a longtime researcher, technologist and entrepreneur in the food science space who previously worked as the Chief Science Officer at IndieBio. Shigeta put Prus in touch with the Barcelona-based food science researcher Sonia Hurtado and the three launched Kuleana (Shigeta has since left the company).

The food accelerator experience gave Prus, a lifelong meat eater before college, a grounding in alternative proteins and led to the thinking around how to develop a more flavorful fish alternative.

Sample product from Kuleana. Image Credit: Kuleana

Kuleana’s tuna is made using iron and algae oil and a mix of different proteins, and forming them in a proprietary way, Prus said. Using an initial EUR50,000 in seed funding from Good Seed Ventures, Kuleana is developing a scaffolding that will enable the company to recreate the taste and texture of raw fish, without using 3D printing techniques (which Prus said could make the product look and taste “cooked”).

To get to market Kuleana is reaching out to a number of sushi chefs at restaurants around the country, because the first target is, in fact, restaurants.

“What we found is that 60 percent [of seafood] is eaten out of the home, and with raw seafood that’s significantly higher,” said Prus. “We’re doing it heavier on the food service route.”

Within the year, Kuleana may be appearing in some stores as a tuna alternative in sushi rolls and poke bowls at a price that Prus said is already competitive with higher grade tuna loin.

Kuleana already held two successful taste tests in Barcelona and San Francisco and the company boasted in a recent note to investors that there were letters of intent for orders of over 50,000 pounds of the company’s vegetarian tuna substitute.

“The taste of tuna isn’t the hardest part… It’s the texture,” says Prus. “[Competitors] are formatting their process through extrusion and it will not work. I’m confident that what we’re doing with the biotech might be one of the best approaches out there.”

Facebook has branded a legal order to globally block a number of Brazilian accounts linked to the spread of political disinformation targeting the country’s 2018 election as “extreme”, claiming it poses a threat to freedom of expression outside the country.

The tech giant is simultaneously complying with the block order — beginning Saturday after it was fined by a Supreme Court judge for non-compliance — citing the risk of criminal liability for a local employee were it not to do so.

However it is appealing to the Supreme Court to try to overturn the order.

A spokesperson for the tech giant sent us this statement on the matter:

Facebook complied with the order of blocking these accounts in Brazil by restricting the ability for the target Pages and Profiles to be seen from IP locations in Brazil. People from IP locations in Brazil were not capable of seeing these Pages and Profiles even if the targets had changed their IP location. This new legal order is extreme, posing a threat to freedom of expression outside of Brazil’s jurisdiction and conflicting with laws and jurisdictions worldwide. Given the threat of criminal liability to a local employee, at this point we see no other alternative than complying with the decision by blocking the accounts globally, while we appeal to the Supreme Court.

On Friday a judge ordered Facebook to pay a 1.92 million reais (~$367k) fine for non compliance, per Reuters, which says the company had been facing further daily fines of 100,000 reais (~$19k) had it not applied a global block.

Before the fine was announced Facebook had said it would appeal the global block order, adding that while it respects the laws of countries where it operates “Brazilian law recognizes the limits of its jurisdiction”.

Reuters reports that the accounts in question were controlled by supporters of the Brazilian president, Jair Bolsonaro, and had been implicated in the spread of political disinformation during the country’s 2018 election with the aim of boosting support for the right wing populist.

Last month the news agency reported Facebook had suspended a network of social media accounts used to spread divisive political messages online which the company had linked to employees of Bolsonaro and two of his sons.

In a blog post at the time, Facebook’s head of security policy, Nathaniel Gleicher, wrote: “Although the people behind this activity attempted to conceal their identities and coordination, our investigation found links to individuals associated with the Social Liberal Party and some of the employees of the offices of Anderson Moraes, Alana Passos, Eduardo Bolsonaro, Flavio Bolsonaro and Jair Bolsonaro.”

In all Facebook said it removed 33 Facebook accounts, 14 Pages, 1 Group and 37 Instagram accounts that it identified as involved in the “coordinated inauthentic behavior”.

It also disclosed that around 883,000 accounts followed one or more of the offending Pages; while the Group had around 350 accounts signed up; and 918,000 people followed one or more of the Instagram accounts.

The political disops effort had spent around $1,500 on Facebook ads, paid for in Brazilian reais, per its account of the investigation.

Facebook said it had identified a network of “clusters” of “connected activity”, with those involved using duplicate and fake accounts to “evade enforcement, create fictitious personas posing as reporters, post content, and manage Pages masquerading as news outlets”.

An example of removed content that was being spread by the disops network identified by Facebook (Image credit: Facebook)

The network posted about “local news and events including domestic politics and elections, political memes, criticism of the political opposition, media organizations and journalists”; and, more recently, about the coronavirus pandemic, it added.

In May a judge in Brazil had ordered Facebook to a block a number of accounts belonging to Bolsonaro supporters who had been implicated in the election meddling. But Facebook only applied the block in Brazil — hence the court order for a global block.

While the tech giant was willing to remove access to the inauthentic content locally, after it had identified a laundry list of policy contraventions, it’s taking a ‘speech’ stance over purging the fake content and associated accounts internationally — arguing such an order risks overreach that could damage freedom of expression online.

The unstated implication is authoritarian states or less progressive regimes could seek to use similar orders to force platforms to apply national laws which prohibit content that’s legal and freely available elsewhere to force it to be taken down in another jurisdiction.

That said, it’s not entirely clear in this specific case why Facebook would not simply bring down its own banhammer on accounts that it has found to have so flagrantly violated its own policies on coordinated authentic behavior. But the company has at times treated political ‘speech’ as somehow exempt from its usual content standards — leading to operating policies that tie themselves in contradictory nots.

Its blog post further notes that some of the content posted by the Brazilian election interference operation had previously been taken down for violating its Community Standards, including hate speech.

The case doesn’t just affect Facebook. In May, Twitter was also ordered to block a number of accounts linked to the probe into political disops. It’s not clear what action Twitter is taking.

We’ve reached out to the company for comment.

Adobe’s work on technical solution to combat online misinformation at scale, still in its early stages, is taking some big steps toward its lofty goal of becoming an industry standard.

The project was first announced last November, and now the team is out with a whitepaper going into the nuts and bolts about how its system, known as the Content Authenticity Initiative (CAI), would work. Beyond the new whitepaper, the next step in the system’s development will be to implement a proof-of-concept, which Adobe plans to have ready later this year for Photoshop.

TechCrunch spoke to Adobe’s Director of CAI Andy Parsons about the project, which aims to craft a “robust content attribution” system that embeds data into images and other media, from its inception point in Adobe’s own industry-standard image editing software.

“We think we can deliver like a really compelling sort of digestible history for fact checkers consumers anybody interested in the veracity of the media they’re looking at,” Parsons said.

Adobe highlights the systems appeal in two ways. First, it will provide a more robust way for content creators to keep their names attached to the work they make. But even more compelling is the idea that the project could provide a technical solution to image-based misinformation. As we’ve written before, manipulated and even out-of-context images play a big role in misleading information online. A way to track the origins — or “provenance,” as it’s known — of the pictures and videos we encounter online could create a chain of custody that we lack now.

“… Eventually you might imagine a social feed be or a news site that would allow you to filter out things that are likely to be inauthentic,” Parsons said. “But the CAI steers well clear of making judgment calls — we’re just about providing that layer of transparency and verifiable data.”

Of course, plenty of the misleading stuff internet users encounter on a daily basis isn’t visual content at all. Even if you know where a piece of media comes from, the claims it makes or the scene it captures are often still misleading without editorial context.

The CAI was first announced in partnership with Twitter and the New York Times, and Adobe is now working to build up partnerships broadly, including with other social platforms. Generating interest isn’t hard, and Parsons describes a “widespread enthusiasm” for solutions that could trace where images and videos come from.

Beyond EXIF

While Adobe’s involvement makes CAI sound like a twist on EXIF data — the stored metadata that allows photographer to embed information like what lens they used and GPS info about where a photo was shot — the plan is for CAI to be much more robust.

“Adobe’s own XMP standard, in wide use across all tools and hardware, is editable, not verifiable and in that way relatively brittle to what we’re talking about,” Parsons said.

“When we talk about trust we think about ‘is the data that has been asserted by the person capturing an image or creating an image is that data verifiable?’ And in the case of traditional metadata, including EXIF, it is not because any number of tools can change the bytes and the text of the EXIF claims. You can change the lens if you wish to… but when we’re talking about, you know, verifiable things like identity and provenance and asset history, [they] basically have to be cryptographically verifiable.”

The idea is, that over time such a system would become totally ubiquitous — a reality that Adobe is likely uniquely positioned to achieve. In that future, an app like Instagram would have its own “CAI implementation,” allowing the platform to extract data about where an image originated and display that to users.

The end solution will use techniques like hashing, a kind of pixel-level cross-checking system likened to a digital fingerprint. That kind of technique is already widely in use by AI systems to identify online child exploitation and other kinds of illegal content on the internet.

As Adobe works on bringing partners on board to support the CAI standard, it’s also building a website that would read an image’s CAI data to bridge the gap until its solution finds widespread adoption.

“… You could grab any asset drag it into this tool and see the data revealed in a very transparent way and that sort of divorces us in the near term from any dependency on any particular platform,” Parsons explained.

For the photographer, embedding this kind of data is opt-in to begin with, and somewhat modular. A photographer can embed data about their editing process while declining to attach their identify in situations where doing so might put them at risk, for example.

Thoughtful implementation is key

While the main applications of the project stand to make the internet a better place, the idea of an embedded data layer that could track an image’s origins does invoke digital rights management (DRM), an access control technology best known for its use in the entertainment industry. DRM has plenty of industry-friendly upsides, but it’s a user-hostile system that’s seen countless individuals hounded by the Digital Millennium Copyright Act in the U.S. and all kinds of other cascading effects that stifle innovation and threaten individuals with disproportionate legal consequences for benign actions.

Because photographers and videographers are often individual content creators, ideally the CAI proposals would benefit them and not some kind of corporate gatekeeper — but nonetheless these kinds of concerns that arise in talk of systems like this, no matter how nascent. Adobe emphasizes the benefit to individual creatives, but it’s worth noting that sometimes these systems can be abused by corporate interests in unforeseen ways.

Due diligence aside, the misinformation boom makes it clear that the way we share information online right now is deeply broken. With content often divorced from its true origins and rocketed to virality on social media, platforms and journalists are too often left scrambling to clean up the mess after the fact. Technical solutions, if thoughtfully implemented, could at least scale to meet the scope of the problem.

ByteDance is not backing down from its ambitions to become a global technology powerhouse, even as TikTok loses its largest market India and faces insurmountable challenges in the US. But some in China are blasting the Beijing-based company as too accommodating and yielding to US demands.

ByteDance said it will “remain committed to our vision to become a globalized company” despite the flurry of challenges thrown at it, it said in a statement posted late Sunday.

Following months of efforts to sway US regulators and the public, TikTok reluctantly arrived at two concessions: “We faced the real possibility of a forced sale of TikTok’s US business by CFIUS or an executive order banning on the TikTok app in the US,” ByteDance founder and CEO Zhang Yiming wrote to employees in a letter on Monday.

The TikTok saga is evolving on an hourly basis. As of writing, Microsoft has confirmed it’s in talks with US officials to pursue a TikTok purchase. Trump previously said he would not support the purchase of the Chinese-owned app by an American company.

On the China end, Zhang told his staff that the company has “initiated preliminary discussions with a tech company to help clear the way for us to continue offering the TikTok app in the U.S.” The message corroborates reassurance from the app’s US general manager Vanessa Pappas that TikTok is “not planning on going anywhere.”

Zhang is unabashed about his frustration in the letter: “We disagree with CFIUS’s conclusion because we have always been committed to user safety, platform neutrality, and transparency. However, we understand their decision in the current macro environment.”

Angry netizens

But ByteDance’s responses clearly have not won favor with some people in China. On Weibo, a popular microblogging platform in China, hundreds of anonymous users joined in under a post about Zhang’s letter, cursing him as a traitor of China, an American apologist, a coward, among many other labels.

“Zhang Yiming used to praise the US for allowing debate, unlike in China, where opinions are one-sided. Now he got a slap in the face, why doesn’t he go argue with the US?” Chastised one of the most popular comments with over 3,600 likes.

The commentator appears to be referring to some of Zhang’s Weibo posts from the early 2010s, which can be seen by some as liberal-leaning, putting the entrepreneur in the rank of “public intellectuals.” The term has in recent years been thought of as derogatory, as internet patriots see the group as ignorant and worshippers of Western values.

“The general view among Chinese social media users is that this is a tit-for-tat measure as part of the ongoing US-China trade war. They also believe that these steps are being taken due to TikTok’s success and because it has now become a threat to US platforms such as Facebook and Twitter,” said Rich Bishop, CEO of AppInChina, which helps international apps and games publish in China.

Zhang’s Weibo account is currently suspended, presumably to prevent armies of angry patriots from flooding his posts.

It’s hard to gauge how representative the online sentiment is of the Chinese public, or whether the discourse is orchestrated by government-paid commentators. Compared to the internet fury, though, Beijing appeared relatively resigned, with a Foreign Ministry spokesperson merely denying US allegations against TikTok as fabricated “out of nothing” during a regular presser. (There’s no concrete evidence publicly presented by the US government yet to support its claims that TikTok is a national security threat.)

After all, the Chinese government can’t do much to retaliate, given there are scant examples of American internet giants with a considerable business in China.

Sympathy from peers

Startups and investors in China are more sympathetic toward ByteDance. Many agree that if the Microsoft deal goes through, it could be the least bad outcome for TikTok.

“They are stuck between a rock and a hard place,” said William Bao Bean, general partner at Chinaccelerator, a cross-border accelerator backed by SOSV. “We are in a fast-changing regulatory environment. I think the consumers would probably want to continue using the service, and this is one potential way to make that happen. Obviously, I don’t think it’s what ByteDance really wants.”

AppInChina’s Bishop reminded us of Microsoft’s non-confrontational attitude towards Beijing. “I think it’s a good outcome for all sides. Microsoft of course benefits hugely from getting into social media. Bytedance gets a good payout, and Bytedance and the Chinese government are relatively friendly towards Microsoft.”

The tech community is well aware that TikTok is a rarity. Although the backlash will have a chilling effect on Chinese companies expanding to the US, and potentially other Western markets, there simply aren’t many internet companies going from China to the West in the first place.

“Most solutions that are built for China don’t solve problems that people have in the West,” observed Bao Bean.

Chinese games probably have the best shot in conquering the West, as WeChat parent Tencent, through aggressive acquisitions and numerous smash-hits, has demonstrated. Smaller developers resort to the strategy of “laying low” about their Chinese origin.

“We simply don’t take media interviews,” said CEO of a US-listed Chinese internet firm on condition of anonymity.

“It’s not about the chilling effect. The problem is there won’t be opportunities in the US, Canada, Australia, or India anymore. The chance of succeeding in Europe is also becoming smaller, and the risks are increasing a lot,” a former executive overseeing an American giant’s Chinese business lamented, asking not to be named.

“From now on, Chinese companies going global can only look to Southeast Asia, Africa, and South America.”

Virgin Galactic is making strides towards its goal of creating high-speed commercial aircraft that operates a little closer to Earth than its existing passenger spacecraft. The company revealed the initial design of the commercial passenger airplane it’s creating that’s designed to fly at speeds in excess of Mach 3 – faster than the average cruising speed of around Mach 2 that the original Concorde achieved.

This concept design comes alongside a new partnership for Virgin Galactic, by way of a memorandum of understanding that the company signed with Rolls-Royce, one of the world’s leading aircraft engine makers. Rolls-Royce is also responsible for the engine of the Concorde, the only supersonic commercial aircraft ever used for passenger travel.

Virgin Galactic announced in May that it would be partnering with NASA to work towards high-speed, high altitude point-to-point travel for commercial airline passengers. The plan is to eventually create an aircraft that can fly above 60,000 feet (the cruising altitude of the Concorde) and carry between 9 and 19 people per fly, with a cabin essentially set up to provide each of those passengers with either Business or First Class-style seating and service. One other key element of the design is that it be powered by next-gen sustainable fuel for more ecological operation.

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In some ways, this project has many of the same goals that NASA has with its X-59 Quiet Supersonic research aircraft. Both aim to inspire the industry at large to do more to pursue the development of high-Mach point-to-point travel, and Virgin says that one of its aims is to “act as a catalyst to adoption in the rest of the aviation community” by coming up with baseline “sustainable technologies and techniques.”

Virgin Galactic’s manufacturing subsidiary, The Spaceship Company, also has a partnership in place with startup Boom Supersonic to help develop their supersonic civil passenger aircraft. Boom is set to unveil and begin testing its XB-1 prototype at an event in October, and also recently announced a new partnership with Rolls-Royce to assist with the design and manufacture of the engines for its eventual Overture commercial plane.

Incumbent banks acquiring fintechs is nothing new, and amidst the coronavirus crisis, we can likely expect to see that trend continue. The latest such move comes from publicly-listed Metro Bank which today has announced its intention to purchase peer-to-peer lender RateSetter for up to £12 million.

Pending approval by U.K. regulators, Metro Bank is acquiring RateSetter for an initial price of £2.5 million, with “additional consideration” of up to £0.5 million payable 12 months after completion. Upon the satisfaction of various performance criteria, the bank will then pay an additional £9 million on the acquisition’s third anniversary.

That the deal is split into three tranches and conditional isn’t necessarily unusual within M&A activity but it also likely reflects the risky nature of peer-to-peer loan books. Notably, the acquisition does not include RateSetter’s holding in RateSetter Australia which is being retained by RateSetter shareholders.

Founded in 2010, RateSetter says over 750,000 people have invested or borrowed through the platform, which has originated £4 billion of lending. In its financial year ending 31 March 2019, the company reported revenue of £33 million, a pre-tax loss of £8 million and gross assets of £42 million.

Metro Bank’s acquisition of RateSetter is part of its strategy to grow unsecured lending and in turn increase profits. Interestingly, it will continue to operate RateSetter as an independent platform and offer loans under both the RateSetter and Metro Bank brands.

However, there is one significant change to RateSetter: Metro Bank says it will use its deposit base to fund all new unsecured personal loans originated via the RateSetter platform i.e. future RateSetter lending will on appear Metro Bank’s balance sheet. With that said, RateSetter will continue to manage the existing RateSetter loan portfolio and “Provision Fund” on behalf of its existing peer-to-peer investors, “with Metro Bank assuming no credit risk for these existing loans”.