Year: 2020

For immigrants in the United States, representation can feel complex, celebrated and oftentimes a mix of the two. And that’s exactly why sister duo Vanessa and Kim Pham launched Omsom, a seed-stage food startup that sells packaged “starters” to recreate authentic Asian dishes at home. The starter contains sauce, spices and aromatics, and the co-founders say consumers can make a dish in 30 minutes or less.

“As we were seeing Asian Americans claim their voices in media and in culture more broadly, we then would juxtapose it with walking down this ethnic aisle in the grocery store and see the way Asian flavors were being represented,” Vanessa told me.

The existence of the ethnic aisle itself has drawn criticism for “othering” cultures that have long been within the United States. It was enough to make Vanessa, who worked at Bain & Company, and Kim, who has spent time in venture at Frontline Ventures and Dorm Room Fund NYC, join forces to create Omsom.

“The ethnic aisle feels super outdated,” Vanessa said. “Flavors have been diluted, branding and design have been stereotypical in nature. How can you boil a cuisine down into one sad jar of sauce?”

The aisle, also named the international aisle, currently contains bottles of never-to-expire thai pastes. Walk a little farther and you’ll find microwavable containers of high-fat butter chicken. And there in the corner is a bottle that boils down one of the world’s most diverse cuisines simply: “curry sauce.”

While progress is pitiful in grocery store representation, the founders are optimistic that they can change that. Omsom, from the flavors to the meaning behind its name (it means rowdy in Vietnamese) to the cap table it has at the moment, is another story waiting to be told about immigrant culture. This is theirs.

Omsom launched today with an undisclosed amount of pre-seed money. The early-stage startup’s ownership group is 50% women of color, including Reshma Saujani, the founder of Girls Who Code, and Brita Rosenheim, a partner at Better Food Ventures. It also raised investment from Peter Livingston, the founder and partner at Unpopular Ventures, a fund dedicated to entrepreneurs who are aiming at unconventional niches.

Livingston said that he invested in Omsom despite not actually being a “food tech investor at all” because it covers an unconventional category.

“Venture capital as an industry is so homogeneous, is clustered in a handful of geographies, prefers to invest close to home, and tends to invest within a small number of the same themes,” Livingston said. “Historically, ethnic food essentials hasn’t really been a ‘VC category,’ which to me, smells like opportunity.”

Saujani said her investment is “betting on the team and a product designed for a vastly underserved market, and the current circumstances make consumer appetite for pantry staples even larger,” referring to COVID-19 forcing more people to cook from home since restaurants are closed.

Your mother’s dish

Recreating authentic dishes with “mom’s ingredients” is not an easy goal, so the Pham sisters focused heavily on sourcing and chef collaboration and spent over a year in research and development of the recipes.

The sisters teamed up with three chefs — Jimmy Ly of Madame Vo, Nicole Ponseca of Jeepney and Chat and Ohm Suansilphong of Fish Cheeks — to create the first line of products. The chefs will get a tiered royalty on sales depending on volume.

“We made sure our ingredients, 90% of them, are unique to Asian food products and sourced directly from Asia,” said Vanessa. “We bent over backwards to get just the right kind of chili.”

But beyond authenticity, the Pham sisters also had another misconception to overcome: the oily and processed reputation of Americanized international dishes, like your favorite Chinese orange chicken takeout or a creamy bowl of butter chicken.

These flagship dishes that are so often associated with those cultures are often multitudes unhealthier than what an immigrant family within, say, the Indian culture, might serve on a day to day basis. Omsom flips that by offering dishes that have no preservatives, no high-fructose corn syrup, and are shelf stable for up to a year. It’s “acceptable for users trying to be generally health conscious, in line with something you would find at Whole Foods.”

Now, the Pham sisters just need to see if they can deliver on the promise of providing uncompromising dishes amid a pandemic. They think it will be a welcomed change for people stuck at home and looking to experiment with cooking.

“We grew up south of Boston in a predominantly white suburb and there was a bit of shame associated with our food,” said Kim Pham . “But as I went through the process of stepping into myself as a woman of color, I started to use food as the first stop in engaging with my identity.”

“I moved away from home, I don’t speak Vietnamese as I used to, but I turned to food,” she continued. “Even if it was a bowl of pho.”

SpaceX and NASA are planning a triumphant return to American human spaceflight on May 27, with the SpaceX Demo-2 mission for its Crew Dragon spacecraft. This is the final step required for Crew Dragon to become certified for human flight, after which it’ll enter into regular operational service ferrying people (and some cargo) to the International Space Station on behalf of the U.S. and some of its allies.

The animation above shows how SpaceX and NASA envision the mission going, from the astronauts stepping out of their ride to the launch pad (a Tesla Model X badged with NASA logos past and present), their trip across the bridge linking the launch tower to the Falcon 9 that will take them up, and their spacecraft’s separation from the rocket and subsequent docking procedure with the ISS.

SpaceX and NASA have done plenty of preparation to get to this point, including running a full uncrewed original demo mission that more or less followed this exact flow, just without any actual astronauts on board. That mission also included the undocking of the Crew Dragon capsule, and its return to Earth, with a parachute-assisted splashdown in the ocean.

Since then, SpaceX has improved and rigorously tested its parachute design, and flown an escape system abort test to show what its safety measures would do in the unlikely event of a problem with the launch vehicle after its taken off but before it reaches space.

The May 27 date is fast-approaching for this crucial milestone, which will mark the first time astronauts have lifted off for space from U.S. soil since the end of the Shuttle program in 2011.

Zoom was never meant to be a social network, but the enterprise video chat app has become essential software for those looking to stay in touch with friends and family during the pandemic.

Today, Facebook looks to steal back the service’s social video chat growth as it globally launches Messenger Rooms, its new group video chat service, supporting video calls with up to 50 participants with no time limits on call length. The feature capitalizes on video chat’s massive spike in usage across services and hooks it up to the growth tactics Facebook used to push Facebook and Instagram Live into everyone’s feeds.

Messenger Rooms is a drop-in video chat, so when a friend using the feature creates a room, Facebook will alert users via a new section in the news feed or push a notification to certain friends. As Facebook, detailed when it announced the feature, soon users will also be able to join and initiate calls from inside Instagram DMs, WhatsApp and on Portal, making this a company-wide social effort for the company.

For now users can kick off a call from Messenger or the Facebook app and send out invites to users, even ones that don’t have a Facebook account.

During the latest earnings call, Facebook CEO Mark Zuckerberg said time on group video chats had increased 1000% in recent weeks. Given the feature’s social grounding and lack of screen sharing, the app isn’t likely to scale heavily into enterprise use cases and infringe on Zoom’s core business. With Messenger Rooms, Facebook is looking to create a scalable free alternative and steal back some of the conversation from platforms like Zoom and TikTok which have been awfully buzzy during recent months.

 

Earlier today, DigitalOcean announced that it raised $50 million more from prior investors Access Industries and Andreessen Horowitz. The capital comes after the SMB and developer-focused cloud infrastructure company raised nine-figures worth of debt back in February.

DigitalOcean is a large private company that generated revenue at a run rate of around $250 million towards the end of 2019. The company announced today that it has reached $300 million in annual recurring revenue, or ARR. (We recently added the company to our ARR club here.) That’s growth of around 20% in less than half a year, though we don’t know precisely when the company reached the $250 million mark, making it hard to calculate its true growth pace.

Critically, DigitalOcean is walking toward profitability while expanding.

DigitalOcean’s CEO Yancey Spruill told TechCrunch earlier this year that his firm would reach free cash flow positivity in the next few years, a timeline that appears to have moved up (more on that shortly). Provided that the cloud company can keep its growth pace up over the same time period, it could be well positioned for an IPO.

The new $50 million values the company at $1.15 billion, meaning it was worth $1.1 billion pre-money. DigitalOcean is not being valued like a SaaS startup today in revenue multiple terms, then, though its new valuation is still nearly double its old Series B valuation (a company spokesperson confirmed the numbers on that page).

New capital

TechCrunch wanted to know why the company raised equity capital so quickly after it had added debt to its books. The capital was surely welcome given the world’s economic condition, but the timing was worth digging into.

DigitalOcean was not “seeking additional funding,” according to Spruill, but after “reviewing our business performance and outlook with our investors at Access and a16z, they were interested in investing for our next phase of growth.” The company accepted, Spruill said.

Presumably, Digital Ocean’s quick revenue growth from a $250 million run rate to $300 million ARR played a part in the investment decision. For DigitalOcean, receiving a new, higher valuation and a monetary top-off from well-known investors may even provide a brand boost (see this article, especially in light of recent coverage the firm has attracted).

Regarding its plans for the new capital, Spruill told TechCrunch that DigitalOcean can now “better support the increase in demand we’ve seen from entrepreneurs and SMBs around the world as more businesses are transitioning to the cloud, particularly as a result of COVID.” Mark DigitalOcean down as one of the world’s companies that is seeing an uptick from the pandemic; most aren’t, but the firms that are appear to be using the moment to put more capital onto their balance sheets.

TechCrunch also wanted to know if the new capital opened new ground for the firm, or if its priorities for the new capital were similar to its preceding goals. The CEO told TechCrunch that his firm’s focus is the same, namely expanding its business.

“We remain committed to reaching $1 billion in revenue, achieving free cash flow profitability in the second half of this year and, ultimately, position DigitalOcean to be a public company,” Spruill said in an email.

That’s clear enough.

By that measure we can expect to see a DigitalOcean S-1 in the first half of 2021, if markets recover. So a16z and Access Industries (longtime investors in the company) could see a quick return for their most recent checks if current plans hold up.

The company’s release made note of “accelerating growth,” which TechCrunch wanted to know more about. How quickly is the company growing? Spruill didn’t share numbers to confirm or deny our rough math based on his firm’s public revenue milestones, but did tell TechCrunch that the company is “actively working on a number of initiatives to accelerate our revenue growth rate,” adding that these are internally dubbed “Grow Faster” initiatives.

Finally, TechCrunch was curious about the impact that COVID-19 is having on DigitalOcean. The company told us that it has “seen a modest increase in churn as a result of COVID-19,” but nothing too bad, saying that the change was “not significant” when “compared with recent trends immediately prior to the pandemic.”

On the positive side of the ledger, DigitalOcean said that its “sign up of new customers has been accelerating” and that it is seeing “increased business from some existing customers.” Adding that up for the SaaS kids: A little bit more churn, good new logo addition, and some upsell tailwinds. Overall that adds up to growth.

More when we have it, but now we’re at least set up to understand what the company does next.

Donald Trump this week signed an extension of last year’s national emergency declaration aimed at barring commercial trade with certain foreign telecom companies. The extension comes nearly a year to the day after the first order, this time extending things through May of 2021.

Per the original language, the order invokes the International Emergency Economic Powers Act to “deal with the threat posed by the unrestricted acquisition or use in the United States of information and communications technology… supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries.”

Specifically, it’s aimed at Chinese companies like Huawei and ZTE, against which the administration has levied all manner of national security complaints. Chief among them are accusations of government-tied spying and violations of sanctions against countries like North Korea and Iran.

Huawei has been especially hard hit, as the ban restricts the manufacturer’s use of Google app — a massive blow to its software ecosystem. Numbers from analyst firm Canalys earlier this month note than the company’s shipments have declined by 35% in markets outside of its native China. It’s true that the market was already on rocky ground for all manufacturers even before the COVID-19 pandemic, but Huawei’s plummet is four times that of Apple’s in non-China markets, per the firm.

The company has been working on its own in-house alternatives to key Google apps. In the meantime, however, Huawei is going to have to rely on sales of older devices, while shipping new flagships without the necessary apps.

Among the many problems with the prison system are enormous fees for things like video calls, which a handful of companies provide at grossly inflated rates. Ameelio hopes to step in and provide free communication options to inmates; Its first product, sending paper letters, is being welcomed with open arms by those with incarcerated loved ones.

Born from the minds of Yale Law students, Ameelio is their attempt to make a difference in the short term while pushing for reform in the long term, said co-founder and CEO Uzoma Orchingwa.

“I was studying mass incarceration, and the policy solutions I was writing about were going to take a long time to happen,” Orchingwa said. “It’s going to be a long battle before we can make even little inroads. So I was thinking, what can I do in the interim while I work on the longer term project of prison reform?”

He saw reports that inmates with regular communication with loved ones have better outcomes when released, but also that in many prisons, that communication was increasingly expensive and restricted. Some prisons have banned in-person meetings altogether — not surprising during a pandemic — leaving video calling at extortionate rates the only option for speaking face to face with a loved one.

Sometimes costing a dollar a minute, these fees add up quickly and, naturally, this impacts already vulnerable populations the most. Former FCC Commissioner Mignon Clyburn, for whom this was an issue of particular interest during her term, called the prison communication system “the clearest, most glaring type of market failure I’ve ever seen as a regulator.”

It’s worth noting that these private, expensive calling services weren’t always the norm, but were born fairly recently as the private prison industry has expanded and multiplied the ways it makes money off inmates. Some states ban the practice, but others have established relationships with the companies that provide these services — and a healthy kickback to the state and prison, of course.

This billion-dollar industry is dominated by two companies: Securus and Global Tel Link. The service they provide is fairly rudimentary compared with those we on the outside take for granted. Video and audio calls are scheduled, recorded, skimmed for keywords, and kept available to authorities for a few months in case they’re needed.

At a time when video calls are being provided for free to billions around the world who have also been temporarily restricted from meeting in person, charging at all for it seems wrong — and charging a dollar a minute seems monstrous.

Ameelio’s crew of do-gooder law students and developers doesn’t think they can budge the private prison system overnight, so they’re starting with a different product, but one that also presents difficulties to families trying to communicate with inmates: letters.

Written mail is a common way to keep in contact with someone in prison, but there are a few obstacles that may prevent the less savvy from doing so. Ameelio facilitates this by providing an up-to-date list of correct addresses and conventions for writing to any of the thousands of criminal justice facilities around the country, as well as the correct way to look up and identify the inmate you’re trying to contact — rarely as simple as just putting their name at the top.

“The way prison addresses work, the inmate address is different from the physical address. So we scraped addresses and built a database for that, and built a way to find the different idiosyncrasies, like how many lines are necessary, what to put on each line, etc,” said co-founder Gabe Saruhashi.

Once that’s sorted, you write your letter, attach a photo if you want, and it’s printed out and sent (via direct-mail-as-a-service startup Lob). It’s easy to see how removing the friction and cost of printing, addressing and so on would lead to more frequent communication.

Since starting a couple months ago and spreading word of the service on Facebook groups and other informal means, they’ve already sent more than 4,000 letters. But while it’s nice for people to be able to send letters, Ameelio plans to cater to larger organizations that use mail at larger scales.

“The communications challenges that families have are the same challenges that criminal justice organizations and lawyers have when communicating with their clients,” explained Orchingwa. They have to manage the addresses, letter-writing and sending, and a network of people to check on recipients and other follow-up actions. “We’re talking to them, and a lot were very interested in the service we’re offering, so we’re going to roll out a version for organizations. We’re creating a business model in which these organizations, and some of them are well funded, can pay us back but also pay it forward and help keep it free for others.”

Sending letters is just the opening play for Ameelio, though, but it’s also a way to make the contacts they need and research the market. Outcry against the private calling systems has been constant but the heterogeneous nature of prisons run under state policies means “we don’t have one system, we have 51 separate systems,” as Orchingwa put it. That and the fact that it makes a fair amount of money.

“There’s a lot of movement around getting Securus and Global Tel out,” he said, “But it would shift from families to the state paying, so they need to make back the money they were making from kickbacks.”

Some states have banned paid calls or never allowed them, but others are only changing their policies now in response to external pressure. It’s with these that Ameelio hopes to succeed first.

“We can start in states where there’s no strong relationship to these companies,” said Orchingwa. “You’re going to have state and county officials being asked by their constituents, ‘why are we using them when there’s a free alternative?’ ”

You may wonder whether it’s possible for a fresh young startup to build a video calling platform ready for deployment in such a short time. The team was quick to explain that the actual video call part of the product is something that, like sending letters, can be accomplished through a third party.

“The barrier right now is not at all the video infrastructure – enterprise and APIs will provide that. We already have an MVP of how that will look,” said Saruhashi. Even the hardware is pretty standard — just regular Android tablets stuck to the wall.

“The hard part is the dashboard for the [Department of Corrections],” Saruhashi continued. “They need a way to manage connections that are coming in, schedule conversations, get logs and review them when they’re done.”

But they’re also well into the development of that part, which ultimately is also only a medium-grade engineering challenge, already solved in many other contexts.

Currently the team is evaluating participation in a number of accelerators, and is already part of Mozilla’s Spring MVP Lab, the precursor to a larger incubator effort announced earlier today. “We love them,” said Mozilla’s Bart Decrem.

Right now the company is definitely early stage, with more plans than accomplishments, and they’re well aware that this is just the start — just as establishing better communications options is just the start for more comprehensive reform of the prison and justice system.

After testing the waters this spring with its incubator-esque MVP Lab, Mozilla is doubling down on the effort with a formal program dangling $75,000 investments in front of early stage companies. The focus on “a better society” and the company’s open-source clout should help differentiate it from the other options out there.

Spurred on by the success of a college hackathon using a whole four Apple Watches in February, Mozilla decided to try a more structured program in the spring. The first test batch of companies is underway, having started in April an 8-week program offering $2,500 per team member and $40,000 in prizes to give away at the end. Developers in a variety of domains were invited to apply, as long as they fit the themes of empowerment, privacy, decentralization, community, and so on.

It drew the interest of some 1,500 people in 520 projects, and 25 were chosen to receive the full package and stipend during the development of their MVP. The rest were invited to an “Open Lab” with access to some of Mozilla’s resources.

One example of what they were looking for is Ameelio, a startup whose members are hoping to render paid video calls in prisons obsolete with a free system, and provide free letter delivery to inmates as well. I wrote about the company here.

“The mission of this incubator is to catalyze a new generation of internet products and services where the people are in control of how the internet is used to shape society,” said Bart Decrem, a Mozilla veteran (think Firefox 1.0) and one of the principals at the Builders Studio. “And where business models should be sustainable and valuable, but do not need to squeeze every last dollar (or ounce of attention) from the user.”

“We think we are tapping into the energy in the student and professional ‘builder communities’ around wanting to work on ideas that matter. That clarion call really resonates,” he said. Not only that, but students with canceled internships are showing up in droves, it seems — mostly computer science, but design and other disciplines as well. There are no restrictions on applicants, like country of origin, previous funding, or anything like that.

The new incubator will be divided into three tiers.

First is the “Startup Studio,” which involves a $75,000 investment, “a post-money SAFE for 3.5% of the company when the SAFE converts (or we will participate in an already active funding round),” Decrem clarified.

Below that, as far as pecuniary commitment goes, is the “MVP Lab,” similar to the spring program but offering a total of $16,000 per team. And below that is the Open Lab again, but with ten $10,000 prizes rather than a top 3.

There are no hard numbers on how many teams will make up the two subsidized tiers, but think 20-30 total as opposed to 50 or 100. Meanwhile, collaboration, cross-pollination, and open source code is encouraged, as you might expect in a Mozilla project. And the social good aspect is strong as well, as a sampling of the companies in the spring batch shows.

Neutral is a browser plugin that shows the carbon footprint of your Amazon purchases, adding some crucial guilt to transactions we forget are powered by footsore humans and gas-guzzling long-distance goods transport. Meething, Cabal, and Oasis are taking on video conferencing, team chat, and social feeds from a decentralized standpoint, using the miracles of modern internet architecture to accomplish with distributed systems what once took centralized servers.

This summer will see the program inaugurated, but it’s only “the beginning of a multiyear effort,” Decrem said.

France’s lower chamber of the parliament has voted in favor of a controversial law against hate speech on social networks and online platforms. As I described last year, online platforms will have to remove illicit content that has been flagged within 24 hours. Otherwise, companies will have to pay hefty fines every time they infringe the law.

What do they mean by illicit content? Essentially, anything that would be considered as an offense or a crime in the offline world is now considered as illicit content when it’s an online platform. Among other things, you could think about death threats, discrimination, Holocaust denial…

For the most extreme categories, terrorist content and child pornography, online platforms have to react within an hour.

While online hate speech has been getting out of control, many fear that online platforms will censor content a bit too quickly. Companies don’t want to risk a fine so they might delete content that doesn’t infringe the law just because they’re not sure.

Essentially, online platforms have to regulate themselves. The government then checks whether they’re doing a good job or not. “It’s just like banking regulators. They check that banks have implemented systems that are efficient, and they audit those systems. I think that’s how we should think about it,” France’s digital minister Cédric O told me in an interview last year.

There are multiple levels of fines. It starts at hundreds of thousand of euros but it can reach up to 4% of the global annual revenue of the company with severe cases. The Superior Council of the Audiovisual (CSA) is the regulator in charge of those cases.

Germany has already passed similar regulation and there are ongoing discussions at the European Union level.

Parenting benefits company Cleo is partnering with on-demand childcare service UrbanSitter to address a problem facing many parents today amid the pandemic: a lack of childcare, even as they’re required to return to work. With summer camps, daycares and schools shut down for months ahead, parents who need to work outside the home (or even inside, but without distraction) no longer have options. Cleo’s new solution, Cleo Care, powered by Urban Sitter, aims to address this problem. The company is offering a package to employers that will help connect families with vetted caregivers via concierge support or, as an alternative, with family co-op options, depending on the parents’ preference.

The program will additionally include access to other Cleo support programs, like one-on-one coaching and age-appropriate programs focused on developmental milestones, delivered weekly.

The launch of the new product arrives at a time when the coronavirus outbreak has caused a child care crisis in the U.S. Working parents have become homeschool teachers, on top of their already overwhelming number of duties. Parents fortunate enough to work from home, however, are continually interrupted by children’s needs, leading to longer working hours to accomplish tasks, and often mental and physical exhaustion.

Cleo surveyed its member base in April 2020, roughly 80% of whom are in the U.S., and found that over 50% of respondents didn’t have any childcare options due to the pandemic’s impact. It also learned that 1 in 5 families (with two parents) were considering having one partner leave the workforce in order to manage the care of the children. Meanwhile, 37% were considering having family move in.

Among those who were working, over half felt their productivity was 75% or less than usual. And 1 in 4 felt their productivity was less than 50% of baseline.

The problem is massive. In the U.S. alone, there are 30.5 million working families, based on Bureau of Labor Statistics.

The Cleo Care solution will be made available to U.S. employers this month to give parents more options, as well as help employers to bring their staff back to work, when the time comes.

Of course, there’s a variety of opinions about how and when the U.S. should re-open its economy. But the reality is that some parents will need to return to their jobs ahead of the re-opening of child care centers or summer camp programs, many of which have been canceled. In Facebook groups, parents are already trying to solve the problem for themselves by organizing with neighbors for childcare co-ops or by hiring teens or college students for daytime babysitting jobs.

But not everyone has these options. And employers can’t just direct staff to Facebook to find a caregiver.

Instead, the Cleo Care program will provide member parents with concierge support for finding vetted care providers from the UrbanSitter network. Or if the families would prefer to work with neighbors, the solution can also offer to match network members interested in co-op solutions.

These features are new to UrbanSitter, which has never before offered co-op matching and is making the new concierge service exclusive to Cleo Care.

“As working moms desperate for a solution to the crisis facing parents today, we were focused on developing a solution that didn’t just work for our members and enterprise clients, but also one that we’d use ourselves. After experimenting and trying everything from virtual care to scheduling shifts to looking for new caregivers ourselves, we realized the only solution that would work for families would require a new model of childcare designed for the unique issues COVID-19 has created,” said Cleo CEO Sarahjane Sacchetti.

Sacchetti, the former chief marketing officer of Collective Health, stepped in to lead Cleo after its original co-founder Shannon Spanhake was ousted following issues around company culture and a falsified resumé. Since then, Cleo has been expanding its business in the form of numerous partnerships, including those with Natalist, Milk Stork, Playfully, Dadi and others.

The solution will roll out in pilot testing with large U.S. employers to start, the company says. International employers will have access to its Cleo Kids coaching solution, while Cleo looks for partnerships with care provider networks outside the U.S.

The employers will pay a combined monthly membership fee for access to Cleo Kids and UrbanSitter as well as one-time matching fees for co-op matching or care provider matching and placement, when used by a family. Cleo says it’s working with employers to explore models to cover some of the matching costs, which can be supported if an employer offers a dependent care FSA.

A sign-up form is here.

Image credits: Cleo

Just weeks after announcing a deal to acquire 5G specialist Affirmed Networks, Microsoft is making another acquisition to strengthen its cloud-based telecoms offering. It’s acquiring Metaswitch Networks, a UK-based provider of cloud-based communications products used by carriers and network providers (customers include the likes of BT in the UK, Sprint, and virtual network consortium RINA.

Terms of the deal were not disclosed in today’s announcement. Metaswitch’s investors included the PE firms Northgate and WRV, Francisco Partners and Sequoia, but it’s unclear how much it had raised nor its last valuation. (The company has been around since 1981.)

The deal speaks to a growing focus from tech companies leveraging cloud architectures and the adoption of new networking technologies — specifically 5G — to capitalise on a bigger role in becoming service providers both to carriers and to those who would like to build carrier-like services (potentially bypassing telcos in the process), through the offering of virtualised products delivered from its cloud.

It comes just one day after Rakuten, the Japanese e-commerce and streaming services giant, announced that it would be acquiring Innoeye, another specialist in cloud-based communications services. Others like Amazon have also been building up their offerings in AWS serving the same market.

Microsoft describes Metaswitch portfolio of cloud-native services — which include 5G data, voice and unified communications (contact center) products — as “complementary” to Affirmed.

“Microsoft intends to leverage the talent and technology of these two organizations, extending the Azure platform to both deploy and grow these capabilities at scale in a way that is secure, efficient and creates a sustainable ecosystem,” the company said. 

The migration to 5G represents a window of opportunity to companies that provide services to carriers. The latter have long been saddled with expensive, ageing equipment and now have the potential to replace some or all of that with software-based services, delivered via the cloud, that can be more easily updated and modified with market demand. That is the hope, at least. The reality may be that many carriers sweat out their assets and upgrade in small increments, as operational expenditure still represents a big investment and cost.

Microsoft is all too aware of that reality and also of the prospect of appearing like a threat, not a saviour.

“We will continue to support hybrid and multi-cloud models to create a more diverse telecom ecosystem and spur faster innovation, an expanded set of unique offerings and greater opportunities for differentiation,” it notes. “We will continue to partner with existing suppliers, emerging innovators and network equipment partners to share roadmaps and explore expanded opportunities to work together, including in the areas of radio access networks (RAN), next-generation core, virtualized services, orchestration and operations support system/business support system (OSS/BSS) modernization. A future that is interoperable has never been more important to ensure the success of customers and partners.”

Indeed, Microsoft’s been providing services to, and selling its own IT through, carriers for years before this. These latest acquisitions, however, represent a growing focus on what role it can play in that enterprise vertical in the years to come.