Author: azeeadmin

A prominent Republican senator weighs in on Amazon’s labor disputes, Microsoft reports a security vulnerability in Exchange and we examine ByteDance’s gaming strategy. This is your Daily Crunch for March 12, 2021.

The big story: Marco Rubio sides with Amazon workers

Senator Marco Rubio published an op-ed in USA Today declaring his support for workers in Amazon’s warehouse in Bessemer, Alabama, as they seek to unionize.

It’s surprising for a Republican senator to throw his weight behind a nascent labor union, but it seems that Rubio’s position has as much to do with his feelings about Amazon as his labor politics. In fact, his op-ed warned of the “dangers posed by the unchecked influence of labor unions,” while also arguing that Amazon is guilty of “uniquely malicious corporate behavior.”

The tech giants

Hackers are exploiting vulnerable Exchange servers to drop ransomware, Microsoft says — This puts tens of thousands of email servers at risk of destructive attacks.

How ByteDance plans to crack the gaming industry — The company’s strategy consists of a genre-spanning portfolio, a hiring spree, a proven monetization scheme, and a focus on both the domestic and overseas markets.

Elon Musk, Tesla board sued in lawsuit alleging ‘erratic’ tweets violate fiduciary duty — A Tesla investor is suing the company board and Musk for continuing to send “erratic tweets” that violate a settlement with the U.S. Securities and Exchange Commission that requires oversight of his social media activities.

Startups, funding and venture capital

Assembled, an operating system for support teams, raises $16.6M — The round was led by Emergence Capital, a VC that specializes in enterprise startups.

Eying sustainability gains for its supply chain, BMW backs Boston Metal’s CO2-free iron production tech — The Boston startup had targeted a $50 million raise earlier in the year, and BMW’s addition closes out that round.

Legl gets $7M to help law firms upgrade to digital workflows — The Legl platform offers tools to streamline core business processes such as customer onboarding, due diligence and payments.

Advice and analysis from Extra Crunch

How nontechnical talent can break into deep tech — Tactical advice for finding, reaching out to, cultivating relationships with, and working at deep tech companies.

US-listed SPACs have a new target: Latin American tech companies — There has been an unprecedented IPO boom of tech companies in the Brazilian stock exchange.

Why I’m hitting pause on ARR-focused coverage — Alex Wilhelm says that ultimately, he was getting similar notes from each company.

Everything else

Big Tech companies cannot be trusted to self-regulate: We need Congress to act — Thoughts from Color of Change’s Arisha Hatch.

Here are the new features and upgraded virtual Startup Alley experience at TC Disrupt 2021 — This year, we’re shaking things up a bit to help exhibiting founders make the most of a virtual environment.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Immune intelligence startup Serimmune hopes to better understand the relationship between antibody epitopes (the parts of antigen molecules that bind to antibodies) and the SARS-CoV-2 virus.

The company’s proprietary technology, originally developed at UC Santa Barbara, provides a new and specific way of mapping the entire array of an individual’s antibodies through a small blood sample. They do this through the use of a bacterial peptide display—a sort of screening mechanism that can isolate plasmid DNA from antibody-bound bacteria in the sample. This DNA can then be sequenced to identify epitopes, which provide information about both which antigens someone may have been exposed to, as well as how his or her immune system responded to them.

“It’s a very highly multiplexed and exquisitely specific way of looking at the epitopes found by antibodies in a specimen,” said Serimmune CEO Noah Nasser, who has a degree in molecular biology from UC San Diego and has previously worked for several diagnostics companies.

This week, Serimmune announced the launch of a new application of their core technology to help understand the disease states of and immune responses to SARS-CoV-2, or the virus that causes COVID-19.

“So what we do is we take these antibody profiles we build, and we’re able to then map those back with about a 12 amino acid specificity to the SARS-CoV-2 proteome,” said Nasser. “And what we find is that antibody expression is highly correlated to disease state, so we can distinguish mild, moderate, severe and asymptomatic disease on the basis of antibodies that are present in the specimen.”

The more patient data Serimmune can collect, the better its core technology becomes at finding patterns across different antigen exposure and disease severity. Noticing those patterns sooner won’t only help physicians and researchers to better understand how the SARS-CoV-2 virus operates, but can also inform new approaches to diagnostics, treatments, and vaccines for any antigen.

Serimmune’s launch of its new COVID antibody epitope mapping service is a way of making this data more accessible to customers like vaccine companies, government agencies, and academic labs that have shown interest in better understanding the immune response to SARS-CoV-2.

“The key was to zero in on the information that researchers wanted to know and standardize that,” said Nasser. “We can actually now provide these results back in as few as two days from sample receipt.”

Beyond this new service, Serimmune also has plans to launch a longitudinal clinical study on immunity to SARS-CoV-2. Using a painless at-home collection kit, study participants send in small blood samples to Serimmune, which then uses its core technology to outline an individual immunity map.

“We provide their results back to them in the form of a personal immune landscape to COVID,” said Nasser. “And what we’re trying to do is to understand over time how that immune response changes, and what happens to that immune response on repeated exposure to COVID.”

The mapping technology is now so specific that it can tell whether or not a patient has antibodies from natural exposure to the SARS-CoV-2 virus or from a vaccine, he added.

While the primary focus for Serimmune remains these applications to the COVID-19 pandemic for now, Nasser also mentioned that the company has plans to move into personalized medicine, potentially offering their mapping service directly to interested patients.

“We believe that this has value to individual patients in understanding their immune status and what antigens they’ve been exposed to,” he said. Until then, Serimmune plans to continue growing its database with more patient samples.

Tesla CEO Elon Musk’s tweets are the subject of another lawsuit.

A Tesla investor is suing the company board and Musk for continuing to send ‘erratic tweets’ that violate a settlement with the U.S. Securities and Exchange Commission that requires oversight of his social media activities. The lawsuit, which was first reported by Bloomberg, claims Musk is exposing the company to potential fines and penalties from regulators and could drive down its share price. The lawsuit names the board for failing to control Musk’s behavior, which puts the company at risk.

The lawsuit by investor Chase Gharrity, which was filed in Delaware Chancery Court, was unsealed Friday. It was originally filed March 8. Tesla did not respond to a request for comment. 

Tesla, Musk and the SEC reached an agreement in April 2019 that gave the CEO freedom to use Twitter –within certain limitations — without fear of being held in contempt for violating an earlier court order. The agreement allows Musk to tweet as he wishes except when it’s about certain events or financial milestones. In those cases, Musk must seek pre-approval from a securities lawyer, according to the agreement filed with Manhattan federal court.

The April 2019 agreement was the product of a years-long fight between Musk and the SEC that began after his infamous August 7, 2018 tweet in which he stated the company had “funding secured” for a private takeover at $420 per share. The SEC filed a complaint alleging that Musk had committed securities fraud.

Musk and Tesla settled with the SEC without admitting wrongdoing. Tesla agreed to pay a $20 million fine; Musk had to agree to step down as Tesla chairman for a period of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to put in place a way to monitor Musk’s statements to the public about the company, including via Twitter.

The fight was re-ignited after Musk sent a tweet on February 19, 2019 that Tesla would produce “around” 500,000 cars that year, correcting himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by years end.

This latest lawsuit alleges that Musk’s tweeting violates the April 2019 judgment and betrays his, and the board’s, fiduciary duty.  The 105-page suit cites several tweets sent from Musk’s account, including a tweet on May 1, 2020 – over a year after the SEC judgment – which stated: “Tesla stock is too high IMO.”

The tweet sent shares into a free fall — nearly 12% in the half hour following his stock price tweets. The tweet was one of many sent out in rapid fire that day, covering a variety of topics and demands “give people back their freedom” and lines from the U.S. National Anthem to quotes from poet Dylan Thomas and a claim that he will sell all of his possessions. Musk later told the Wall Street Journal in an email that he was not joking and that his tweets were not vetted in advance.

The lawsuit revealed Friday alleges that the Tesla board has also failed to secure a General Counsel “who can provide advice untainted by Musk,” the lawsuit. Three General Counsels departed from the company in 2019, which the lawsuit points to as evidence that none were able to exercise independent advice that differed from Musk’s “desired outcome.”

Musk’s “erratic” actions have caused the company “substantial damage” to Tesla, including billions of dollars in lost market capitalization, the lawsuit says. 

The case is Gharrity v. Musk, Del. Ch., No. 2021-0199.

In a recent article, I shared more about how deep tech companies can hire growth talent. Here, I explore the other side: how nontechnical talent can build relationships with deep tech companies.

Startup hiring processes can be opaque, and breaking into the deep tech world as a nontechnical person seems daunting. As someone with no initial research background wanting to work in biotech, I felt this challenge personally. In the past year, I landed several opportunities working for and with deep tech companies.

Here, I’ll share what I’ve learned and offer tactical advice for finding, reaching out to, cultivating relationships with and working at deep tech companies as a nontechnical candidate.

Find companies by tracking fundraising

After startups raise capital, they are ready to spend the new funds on hiring. These companies are more likely to be posting new roles and actively hiring for a wide range of different teams, including nontechnical groups.

Hackers are exploiting recently discovered vulnerabilities in Exchange email servers to drop ransomware, Microsoft has warned, a move that puts tens of thousands of email servers at risk of destructive attacks.

In a tweet late Thursday, the tech giant said it had detected the new kind of file-encrypting malware called DoejoCrypt — or DearCry — which uses the same four vulnerabilities that Microsoft linked to a new China-backed hacking group called Hafnium.

When chained together, the vulnerabilities allow a hacker to take full control of a vulnerable system.

Microsoft said Hafnium was the “primary” group exploiting these flaws, likely for espionage and intelligence gathering. But other security firms say they’ve seen other hacking groups exploit the same flaws. ESET said at least 10 groups are actively compromising Exchange servers.

Michael Gillespie, a ransomware expert who develops ransomware decryption tools, said many vulnerable Exchange servers in the U.S., Canada, and Australia had been infected with DearCry.

The new ransomware comes less than a day after a security researcher published proof-of-concept exploit code for the vulnerabilities to Microsoft-owned GitHub. The code was swiftly removed a short time later for violating the company’s policies.

Marcus Hutchins, a security researcher at Kryptos Logic, said in a tweet that the code worked, albeit with some fixes.

Threat intelligence company RiskIQ says it has detected over 82,000 vulnerable servers as of Thursday, but that the number is declining. The company said hundreds of servers belonging to banks and healthcare companies are still affected, as well as more than 150 servers in the U.S. federal government.

That’s a rapid drop compared to close to 400,000 vulnerable servers when Microsoft first disclosed the vulnerabilities on March 2, the company said.

Microsoft published security fixes last week, but the patches do not expel the hackers from already-breached servers. Both the FBI and CISA, the federal government’s cybersecurity advisory unit, have warned that the vulnerabilities present a major risk to businesses across the United States.

John Hultquist, vice president of analysis at FireEye’s Mandiant threat intelligence unit, said he anticipates more ransomware groups trying to cash in.

“Though many of the still unpatched organizations may have been exploited by cyber espionage actors, criminal ransomware operations may pose a greater risk as they disrupt organizations and even extort victims by releasing stolen emails,” said Hultquist.

There has been an unprecedented IPO boom of tech companies in the Brazilian stock exchange, which is transformative for a market that was traditionally dominated by utilities, mining, oil and financial companies.

The trend continues to be strong; in February alone, growth companies like Bemobi, Westwing, Mobly and Mosaico went public. Mosaico, for example, was 20x oversubscribed and went up 70% on its first trading day. The same is true for other companies like Meliuz, Enjoei and Neogrid, up 173%, 53% and 74%, respectively, since their listing just a few months ago.

But what is even more surprising is that now, new special-purpose acquisition companies (SPACs) are raising money in Nasdaq with a mandate to buy Latin American private growth companies, which would be completely unthinkable just a year ago.

The opportunity for SPAC mergers in the U.S. has become quite competitive, as almost 300 SPACs, which raised over $90 billion, are now competing to find deals before the deadline. As a result, it has become more common to see SPACs with global mandates seeking to acquire foreign growth companies and list them in the U.S. to benefit from better multiples.

Just in 2021, eight Asian-sponsored SPACs raised over $2.3 billion in the Nasdaq/New York Stock Exchange, already surpassing the entire volume of 2020. More recently, it looks like the activity level may pick up in Brazil, and, potentially, in other Latin American countries, with $1.1 billion of Brazil-focused SPACs coming into fruition.

BMW has joined the cohort of investors that are backing Boston Metal’s carbon dioxide-free production technology for steel.

The Boston-based startup had targeted a $50 million raise earlier in the year, as TechCrunch reported, and BMW’s addition closes out that round, according to a person familiar with the company.

Through a commitment from BMW iVentures, the automaker’s investment arm, Boston Metal will have an in to a company with massive demands for more sustainably manufactured metal. For instance, BMW Group press plants in Europe process more than half a million tonnes of steel per year, the company said.

“We systematically identify the raw materials and components in our supplier network with the highest CO₂ emissions from production,” said Dr Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network, in a statement. “Steel is one of them, but it is vital to car production. For this reason, we have set ourselves the goal of continuously reducing CO₂ emissions in the steel supply chain. By 2030, CO₂ emissions should be about two million tonnes lower than today’s figure.”

Conventional steel production requires blast furnaces that generate carbon dioxide emissions, but using Boston Metal’s process, an electrolysis cell produces the pig iron that gets processed into steel, the company said.

The addition of BMW to its investor group, which already includes Bill Gates’ Breakthrough Energy Ventures and other strategic and financial investors, caps the fundraising process with another corporate partner wielding incredible industry influence.

“Our investors span across the steel value chain, from the upstream mining and iron ore companies to the downstream end customer, and validate Boston Metal’s innovative process to produce high-quality steel, cost-competitively, and at scale,” said chief executive officer and founder, Tadeu Carneiro.

Spring may be just around the corner (in the U.S., anyway), but it’s never too early to start planning for TechCrunch Disrupt 2021, which takes place on September 21-23. This all-virtual conference allows makers, innovators, entrepreneurs and investors from around the world to connect, collaborate and grow.

Startup Alley is a huge part of every Disrupt — it’s where hundreds of innovative, ground-breaking early-stage startups showcase their tech talent, products, platforms and services. This year, we’re shaking things up a bit to help exhibiting founders make the most of a virtual environment.

What’s new and different about exhibiting in Startup Alley at Disrupt 2021? Plenty. When you apply for a Startup Alley Pass, you stand in a giant spotlight of opportunity:

• Pitch it. Pitch it real good. Bring the heat, because every exhibiting startup gets a guaranteed spot to deliver a 60-second elevator pitch during a breakout feedback session. Your audience? TechCrunch staff and thousands of Disrupt attendees around the world.
• The Startup Alley Crawl. Every startup category will have an hour-long crawl in the agenda, where we’ll go live from the Disrupt Stage to interview a select number of founders in Startup Alley from that category.
• Startup Battlefield Wild Card. The Startup Battlefield is the stuff of legend. Past winners include the likes of Vurb, Dropbox, Mint and Yammer. Two Startup Alley exhibitors — chosen by the TechCrunch Editorial team — will compete in this year’s Battlefield and have a shot at the $100,000 (equity-free) cash.
• Startup Alley+. Every Startup Alley exhibitor is eligible, but only up to 50 companies will make the final cut to participate in Startup Alley+. These founders receive, at no additional cost, a curated experience to set them up for additional opportunities, learnings, exposure and success before Disrupt even starts. They’ll receive access to a series of founder masterclasses, take part in a pitch-off at Extra Crunch Live, and get introductions to elite investors in the TechCrunch community. Get your Startup Alley Pass soon because StartupAlley+ shifts into high gear at TC Early Stage: Marketing and Fundraising in July, where all Startup Alley+ companies get to attend this virtual event for free.

Pro Tip: Early-bird pricing to apply for Startup Alley ($199) ends May 13 at 11:59 pm (PST). The sooner you apply, the more you save.

TechCrunch Disrupt 2021 takes place on September 21-23. Don’t miss an opportunity to exhibit in all-new Startup Alley and apply now! Snag extra exposure, build your network and make connections that can alter the trajectory of your startup in the best possible way.

Is your company interested in sponsoring or exhibiting at Disrupt 2021? Contact our sponsorship sales team by filling out this form.

Investors often say they don’t just invest in products, but in the right teams to solve a particular problem. With Steady, Adam Roseman built the platform based on his own personal experience. His father hadn’t saved enough for retirement and needed to work part-time. Steady is a platform that helps people find flexible jobs quickly, get financial advice and save money through deals on things like healthcare plans and tax help.

Today, Steady has more than 2 million registered users.

So it’s no surprise that Emmalyn Shaw, co-manager of the $500 million Flourish Ventures fund, was eager to invest. She led the company’s Series A back in 2018.

We’re thrilled to have Roseman and Shaw join us on an episode of Extra Crunch Live on Wednesday at 3 p.m. ET/noon PT.

We’ll interview Shaw and Roseman about what made them want to work with one another, advice on how to make the most out of pitch meetings and what it takes to secure capital and be successful in the fintech space.

This episode of Extra Crunch Live will also feature the Pitch Deck Teardown. Decks sent in by audience members will be featured on the show, and Shaw and Roseman will give their live feedback on those decks about what works and what doesn’t.

Audience members are welcome to ask questions.

Extra Crunch members have always had free access to Extra Crunch Live (and always will), both live and on demand. But, we’ll also be selling tickets à la carte to the show. That’s right! Anyone can come hang out, ask their own questions to Shaw and Roseman, and learn a thing or two from the seasoned experts.

You can hit up this link to either register (if you’re logged into Extra Crunch, the ticket is free) or purchase a ticket.

A full library of past episodes can be found here, and folks interested in checking out our future slate can find everything they need right here.

See you there!

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion. Use code “TCARTICLE at checkout to get 20% off tickets right here.

Hindenburg Research, the short-seller firm whose report on Nikola Motor led to an SEC investigation and the resignation of its founder, is targeting another electric vehicle company. This time it’s Lordstown Motors, the Ohio electric automaker that went public after merging with special-purpose acquisition company DiamondPeak Holdings Corp., with a market value of $1.6 billion.

Hindenburg said in a report Friday that it has taken a short position on Lordstown Motors, causing shares to plummet 21%. Shares have recovered slightly and are now down about 15% from the previous day’s trade. Hindenburg’s short position is based on a company that it says has “no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.”

In a report issued Friday, Hindenburg disputes that the company has booked 100,000 pre-orders for its electric pickup truck, a stat shared by Lordstown Motors in January. The short seller says that “extensive research reveals that the company’s orders appear largely fictitious and used as a prop to raise capital and confer legitimacy.” The firm goes further and alleges that Lordstown founder and CEO Steve Burns paid consultants for every truck pre-order as early as 2016 while he was leading Workhorse.

The report also provides photos and a 911 call of an incident in January when a Lordstown prototype vehicle burst into flames during a test drive.

Lordstown Motors could not be reached for comment. TechCrunch will update the article if the company responds.

Lordstown has an interesting history for company that is less than two years old. Lordstown Motors is an offshoot of Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also publicly traded. Workhorse holds a 10% stake in Lordstown Motors.

Workhorse is a small company that was founded in 1998 and has struggled financially at various points in its lifetime. Most recently, Workhorse lost a bid to become the supplier of electric vehicles to the U.S. Postal Service, which caused shares to fall nearly 15% in the days following the news. Workhorse shares are now hovering around $16.58, down 60% from its record price of $42.96 reached February 4.

Lordstown Motors acquired a 6.2 million-square-foot factory from GM in 2019. The company has said it plans to produce 20,000 electric commercial trucks annually, starting in 2021, at the former GM Assembly Plant in Lordstown, Ohio.

Lordstown revealed its Endurance electric pickup in a splashy and political-leaning ceremony in June 2020. At the time, the company didn’t provide details on the interior, performance or battery of its planned electric pickup truck. The entire second half of the event took a 90-degree turn away from the truck and centered on its special guest, former Vice President Mike Pence, who spoke for 25 minutes about former President Trump’s policies on jobs and manufacturing, China and the COVID-19 response.

Despite those lack of details, Burns told the crowd in June that it had received 20,000 pre-orders. That would mean the entire first year of production would be locked in if every customer who pre-ordered the truck followed through and bought the vehicle. Lordstown Motors said, at the time, that a number of potential customers had sent letters of intent, including AutoFlexFleet, Clean Fuels Ohio, Duke Energy, FirstEnergy, GridX, Holman Enterprises and ARI, Summit Petroleum, Turner Mining Group and Valor Holdings, as well as several Ohio municipalities.

Burns later said pre-orders had reached 100,000. Hindenburg disputes those claims.

From the Hindenburg report:

Our research has revealed that Lordstown’s order book consists of fake or entirely non-binding orders, from customers that generally do not even have fleets of vehicles. According to former employees and business partners, CEO Steve Burns sought to book orders, regardless of quality, purely as a tool to raise capital and confer legitimacy. In addition, we show how, in desperation to claim there was demand for the proposed vehicle, he paid for customers to book valueless, non-binding pre-orders.

We detail conversations with Lordstown “customers” who were eager to explain that the letters of intent (“LOI”s) with the company were “promotional”. Others assured us they were “not committed to anything” and that the pre-order commitment size recorded by Lordstown was “totally impossible”. One CEO at a ‘key’ customer told us our outreach was the first he had heard of any arrangement with Lordstown.