Monthly Archives: November 2020

News: PayPal’s earnings don’t excite Wall Street, but bring good news for consumer fintech

PayPal’s stock is down in after-hours trading after reporting third-quarter earnings that beat expectations. It’s not immediately clear why PayPal is losing ground, although it could stem from retail investor having higher expectations than what analysts estimated for the high-flying company. Despite failing to delight the investing public, it’s possible to see continued strength for

PayPal’s stock is down in after-hours trading after reporting third-quarter earnings that beat expectations. It’s not immediately clear why PayPal is losing ground, although it could stem from retail investor having higher expectations than what analysts estimated for the high-flying company.

Despite failing to delight the investing public, it’s possible to see continued strength for the broader fintech industry in its results.

PayPal reported revenues $5.46 billion and adjusted earnings per share of $1.07 in the third quarter of 2020. Both were ahead of analyst expectations of $5.43 billion and $0.94, respectively.

Turning away from PayPal’s income statement, it detailed a wealth of fintech-specific of data to parse, including results that appear to indicate that rising consumer usage of fintech products during the pandemic is continuing. For example, the company reported what it described as the “strongest” pace of growth in its total payment volume in its history.

In numerical terms, PayPal processed $247 billion across, up 38% from the year-ago quarter, and 4 billion payments, up 30% across the same timeframe. For startups that want to facilitate consumer or business payment volume, that’s good news; their market is growing quickly.

PayPal also raised its full-year payment volume growth estimates for the year from the “high 20s” in percentage terms in its Q2 earnings to “approximately 30%” as of the end of Q3 2020, adding to the good fintech news.

Other metrics that PayPal reported were similarly bullish, including Venmo payment processing volume rising 61% compared to the year-ago period to $44 billion. That year-over-year gain was an acceleration from 52% growth in Q2, again compared to year-ago periods.

Finally, PayPal’s “payment transactions per active account on a trailing twelve month basis” grew to 40.1 from 39.2 in the second quarter. Including the Honey deal that closed earlier this year, the number jumps to 41.7.

The results imply winsome ecommerce activity and consumer fintech appetite.

It’s too soon to learn much about from PayPal’s new Venmo credit card, and its cryptocurrency efforts that bolstered the price of bitcoin recently. But core consumer affinity for fintech, viewed through the lens of PayPal’s earnings, looks strong.

Square reports later this week, giving us another look at fintech uptake, as the company processes both business payments and consumer transactions, as well as cryptocurrency purchases.

News: TikTok strikes new licensing agreement with Sony Music

TikTok announced this morning it has signed new licensing agreement with Sony Music Entertainment (SME) that will allow the short-form video app to continue to offer songs from Sony Music artists for use by creators on its platform. The agreement will also see the companies partnering on efforts to promote Sony artists, TikTok said. Deal

TikTok announced this morning it has signed new licensing agreement with Sony Music Entertainment (SME) that will allow the short-form video app to continue to offer songs from Sony Music artists for use by creators on its platform. The agreement will also see the companies partnering on efforts to promote Sony artists, TikTok said.

Deal terms were not specified. But the expanded agreement will give TikTok’s creator community access to sound clips from Sony Music’s catalog of current hits, new releases, emerging favorites, iconic classics and deep cuts, TikTok noted in its announcement.

Without going into details, the company also said it would work with Sony to support “greater levels of TikTok user personalization and creativity” and “drive new and forward-looking opportunities for fan engagement with SME’s artists and music.”

This could indicate the companies may together work on promotional efforts that extend beyond just featuring Sony’s music clips — perhaps, something like hashtag campaigns or branded effects that will enable better music discovery or fan connections.

TikTok had already struck short-term licensing deals with Universal, Sony and Warner earlier this year, reports indicated. This had allowed the labels more time to hammer out the particulars of their agreements with TikTok without having to yank their music from the platform in the interim.

According to a Billboard report, TikTok will now pay Sony a “notable increase” over its previous rights deal. TikTok has not yet announced similar expanded deals with other majors at this time.

Though TikTok ultimately had to increase its payments to labels, it’s not without negotiating power of its own. The video app brings to its side of table a proven its ability to drive tracks up the charts and even make careers for newer artists.

Nielsen last year said that no other emerging app had helped break more songs than TikTok. It then pointed to the year’s most listened to on-demand song, “Old Town Road” from Lil Nas X, as well as Ava Max’s “Sweet But Psycho” and Joji’s “Slow Dancing in the Dark,” as examples of TikTok’s marketing power.

Billboard today also noted that TikTok helped drive hits from Sony artists like Doja Cat (“Say So”) and 24kGoldn (“Mood”), and helped Sony discover new talent. Columbia, for example, signed viral TikTok artists including Lil Nas X, Powfu, StaySolidRocky, Jawsh 685, Arizona Zervas and 24kGoldn, the report said.

The new Sony deal, meanwhile, will wrap in artists like Vampire Weekend, Harry Styles, Michael Jackson and others.

Related to TikTok’s power, Spotify just today launched a new promotional marketing tool for artists that allows them to better capitalize on TikTok-driven trends. Its release came about shortly after a TikTok viral video unbelievably sent Fleetwood Mac’s classic hit “Dreams” back up the charts to hit No. 1 on both Spotify and Apple Music.

In addition to its hit-making ability, TikTok today alluded to its power in helping artists reach fans amid a pandemic when their ability to host in-person concerts is limited.

Sony, in a statement, praised TikTok’s ability to drive discovery, too.

“Short form video clips have developed into an exciting new part of the music ecosystem that contribute to the overall growth of music and the way fans experience it,” said Dennis Kooker, President, Global Digital Business and U.S. Sales for Sony Music Entertainment. “TikTok is a leader in this space and we are pleased to be partnering with them to drive music discovery, expand opportunities for creativity and support artist careers,” he added.

TikTok has been on roll in recent months, having also added music from Prince, George Michael, John Lennon, and others to its platform this year ahead of the Sony deal.

News: What social networks have learned since the 2016 election

On the eve on the 2020 U.S. election, tensions are running high. The good news? 2020 isn’t 2016. Social networks are way better prepared to handle a wide array of complex, dangerous or otherwise ambiguous Election Day scenarios. The bad news: 2020 is its own beast, one that’s unleashed a nightmare health scenario on a

On the eve on the 2020 U.S. election, tensions are running high.

The good news? 2020 isn’t 2016. Social networks are way better prepared to handle a wide array of complex, dangerous or otherwise ambiguous Election Day scenarios.

The bad news: 2020 is its own beast, one that’s unleashed a nightmare health scenario on a divided nation that’s even more susceptible now to misinformation, hyper-partisanship and dangerous ideas moving from the fringe to the center than it was four years ago.

The U.S. was caught off guard by foreign interference in the 2016 election, but shocking a nation that’s spent the last eight months expecting a convergence of worst-case scenarios won’t be so easy.

Social platforms have braced for the 2020 election in a way they didn’t in 2016. Here’s what they’re worried about and the critical lessons from the last four years that they’ll bring to bear.

Contested election results

President Trump has repeatedly signaled that he won’t accept the results of the election in the case that he loses — a shocking threat that could imperil American democracy, but one social platforms have been tracking closely. Trump’s erratic, often rule-bending behavior on social networks in recent months has served as a kind of stress test, allowing those platforms to game out different scenarios for the election.

Facebook and Twitter in particular have laid out detailed plans about what happens if the results of the election aren’t immediately clear or if a candidate refuses to accept official results once they’re tallied.

On election night, Facebook will pin a message to the top of both Facebook and Instagram telling users that vote counting is still underway. When authoritative results are in, Facebook will change those messages to reflect the official results. Importantly, U.S. election results might not be clear on election night or for some days afterward, a potential outcome that Facebook and other social networks are bracing for.

Facebook election message

Image via Facebook

If a candidate declared victory prematurely, Facebook doesn’t say it will remove those claims, but it will pair them with its message that there’s no official result and voting is still underway.

Twitter released its plans for handling election results two months ago, explaining that it will either remove or attach a warning label to premature claims of victory before authoritative election results are in. The company also explicitly stated that it will act against any tweets “inciting unlawful conduct to prevent a peaceful transfer of power or orderly succession,” a shocking rule to have to articulate, but a necessary one in 2020.

On Monday, Twitter elaborated on its policy, saying that it would focus on labeling misleading tweets about the presidential election and other contested races. The company released a sample image of a label it would append, showing a warning stating that “this tweet is sharing inaccurate information.”

We may label Tweets, starting on election night, that make claims about election results before they’re officially called.

We’ll be prioritizing the presidential election and other highly contested races where there may be significant issues with misleading information. pic.twitter.com/BExhZdVMnB

— Twitter Support (@TwitterSupport) November 2, 2020

 

Last week, the company also began showing users large misinformation warnings at the top of their feeds. The messages told users that they “might encounter misleading information” about mail-in voting and also cautioned them that election results may not be immediately known.

According to Twitter, users who try to share tweets with misleading election-related misinformation will see a pop-up pointing them to vetted information and forcing them to click through a warning before sharing. Twitter also says it will act on any “disputed claims” that might cast doubt on voting, including “unverified information about election rigging, ballot tampering, vote tallying, or certification of election results.”

One other major change that many users probably already noticed is Twitter’s decision to disable retweets. Users can still retweet by clicking through a pop-up page, but Twitter made the change to encourage people to quote retweet instead. The effort to slow down the spread of misinformation was striking, and Twitter said it will stay in place through the end of election week, at least.

YouTube didn’t go into similar detail about its decision making, but the company previously said it will put an “informational” label on search results related to the election and below election-related videos. The label warns users that “results may not be final” and points them to the company’s election info hub.

Foreign disinformation

This is one area where social networks have made big strides. After Russian disinformation took root on social platforms four years ago, those companies now coordinate with one another and the government about the threats they’re seeing.

In the aftermath of 2016, Facebook eventually woke up to the idea that its platform could be leveraged to scale social ills like hate and misinformation. Its scorecard is uneven, but its actions against foreign disinformation have been robust, reducing that threat considerably.

A repeat of the same concerns from 2016 is unlikely. Facebook made aggressive efforts to find foreign coordinated disinformation campaigns across its platforms, and it publishes what it finds regularly and with little delay. But in 2020, the biggest concerns are coming from within the country — not without.

Most foreign information operations have been small so far, failing to gain much traction. Last month, Facebook removed a network of fake accounts connected to Iran. The operation was small and failed to generate much traction, but it shows that U.S. adversaries are still interested in trying out the tactic.

Misleading political ads

To address concerns around election misinformation in ads, Facebook opted for a temporary political ad blackout, starting at 12AM PT on November 4 and continuing until the company deems it safe to toggle them back on. Facebook hasn’t accepted any new political ads since October 27 and previously said it won’t accept any ads that delegitimize the results of the election. Google will also pause election-related ads after polls close Tuesday.

Facebook has made a number of big changes to political ads since 2016, when Russia bought Facebook ads to meddle with U.S. politics. Political ads on the platform are subject to more scrutiny and much more transparency now and Facebook’s ad library emerged as an exemplary tool that allows anyone to see what ads have been published, who bought them and how much they spent.

Unlike Facebook, Twitter’s way of dealing with political advertising was cutting it off entirely. The company announced the change a year ago and hasn’t looked back since. TikTok also opted to disallow political ads.

We’ve made the decision to stop all political advertising on Twitter globally. We believe political message reach should be earned, not bought. Why? A few reasons…🧵

— jack (@jack) October 30, 2019

Political violence

Politically-motivated violence is a big worry this week in the U.S. — a concern that shows just how tense the situation has grown under four years of Trump. Leading into Tuesday, the president has repeatedly made false claims of voter fraud and encouraged his followers to engage in voter intimidation, a threat Facebook was clued into enough that it made a policy prohibiting “militarized” language around poll watching.

Facebook made a number of other meaningful recent changes like banning the dangerous pro-Trump conspiracy theory QAnon and militias that use the platform to organize, though those efforts have come very late in the game.

Facebook was widely criticized for its inaction around a Trump post warning “when the looting starts, the shooting starts” during racial justice protests earlier this year, but its recent posture suggests similar posts might be taken more seriously now. We’ll be watching how Facebook handles emerging threats of violence this week.

Its recent decisive moves against extremism are important, but the platform has long incubated groups that use the company’s networking and event tools to come together for potential real-world violence. Even if they aren’t allowed on the platform any longer, many of those groups got organized and then moved their networks onto alternative social networks and private channels. Still, making it more difficult to organize violence on mainstream social networks is a big step in the right direction.

Twitter also addressed the potential threat of election-related violence in advance, noting that it may add warnings or require users to remove any tweets “inciting interference with the election” or encouraging violence.

Platform policy shifts in 2020

Facebook is the biggest online arena where U.S. political life plays out. While a similar number of Americans watch videos on YouTube, Facebook is where they go to duke it over candidates, share news stories (some legitimate, some not) and generally express themselves politically. And as we’ve learned the hard way, that makes it a tinderbox, especially during elections.

Still, there are reasons to be hopeful, particularly given some very recent decisions.

While Facebook acted against foreign threats quickly after 2016, the company dragged its feet on platform changes that could be perceived as politically motivated — a hesitation that backfired by incubating dangerous extremists and allowing many kinds of misinformation, particularly on the far-right, to survive and thrive.

But in the last few months, whether it was inspired by the threat of a contested election, federal antitrust action or a possible Biden presidency, Facebook has signaled a shift to more aggressive moderation with a flurry of positive policy changes. An accompanying flurry of election-focused podcast and television ads suggests Facebook is worried about public perception too — and that’s a good thing.

Twitter’s plan for the election has been well-communicated and detailed. In 2020, the company treats its policy decisions with more transparency, communicates them in real-time and isn’t afraid to admit to mistakes. The relatively small social network plays an outsized role in publishing political content that’s amplified elsewhere so the choices it makes are critical for countering misinformation and extremism.

The companies that direct the flow of online information learned major lessons from 2016.  There’s no way to know which of those lessons will serve us on Election Day and in the days and weeks to follow, but we can hope these were the right ones.

News: Alphabet’s X details Project Amber, a quest for a single biomarker for depression that fell short of its goal

Alphabet’s X (the Google-owner’s so-called ‘Moonshot Factory’) published a new blog post today about Project Amber, a project it’s been working on over the past three years – the results of which it’s now making available open source for the rest of the mental health research community to learn from, and hopefully build upon. The

Alphabet’s X (the Google-owner’s so-called ‘Moonshot Factory’) published a new blog post today about Project Amber, a project it’s been working on over the past three years – the results of which it’s now making available open source for the rest of the mental health research community to learn from, and hopefully build upon. The X project sought to identify a specific biomarker for depression – it did not accomplish that (and the researchers now believe that a single biomarker for depression and anxiety likely didn’t exist), but X is still hoping that its work on using electroencephalography (EEG) combined with machine learning to try to find one will be of benefit to others.

X’s researchers were hoping that depression, like other ailments and disorders, might have a clear biomarker that would help healthcare professionals more easily and objectively diagnose depression, which would also then hopefully make it more easily and consistency treatable. With EEG, there was some precedent, via studies done in labs using games designed specifically for the purpose, in which people with depression seemed to consistently demonstrate a lower measure of EEG activity in response to effectively ‘winning’ the games.

These studies seemed to offer a path to a potential biomarker, but in order to make them actually useful in real-world diagnostic settings, like a clinic or a public health lab, the team at X set about improving the process of EEG collection and interpretation to make it more accessible, both to users and to technicians.

What is perhaps most notable about this pursuit, and the post today that Alphabet released detailing its efforts, is that it’s essentially a story of a years-long investigation that didn’t work out – not the side of the moonshot story you typically hear from big tech companies.

In fact, this is perhaps one of the best examples yet of what critics of many of the approaches of large tech companies fail to understand – that some problems are not solvable by solutions with analogs in the world of software and engineering. The team at X sums its learning’s from the years-long research project up in three main bullet point about its user research, and each of them touch in some way on the insufficiency of a pure objective biomarker detection method (even if it had worked) particularly when it comes to mental illness. From the researchers:

  1. Mental health measurement remains an unsolved problem. Despite the availability of many mental health surveys and scales, they are not widely used, especially in primary care and counseling settings. Reasons range from burden (“I don’t have time for this”) to skepticism (“Using a scale is no better than using my clinical judgement”) to lack of trust (“I don’t think my client is filling this in truthfully” and ”I don’t want to reveal this much to my counsellor”). These findings were in line with the literature on measurement-based mental health care. Any new measurement tool would have to overcome these barriers by creating clear value for both the person with lived experience and the clinician.
  2. There is value in combining subjective and objective data. People with lived experience and clinicians both welcomed the introduction of objective metrics, but not as a replacement for subjective assessment and asking people about their experience and feelings. The combination of subjective and objective metrics was seen as especially powerful. Objective metrics might validate the subjective experience; or if the two diverge, that in itself is an interesting insight which provides the starting point for a conversation.
  3. There are multiple use cases for new measurement technology. Our initial hypothesis was that clinicians might use a “brainwave test” as a diagnostic aid. However, this concept got a lukewarm reception. Mental health experts such as psychiatrists and clinical psychologists felt confident in their ability to diagnose via clinical interview. Primary care physicians thought an EEG test could be useful, but only if it was conducted by a medical assistant before their consultation with the patient, similar to a blood pressure test. Counsellors and social workers don’t do diagnosis in their practice, so it was irrelevant to them. Some people with lived experience did not like the idea of being labelled as depressed by a machine. By contrast, there was a notably strong interest in using technology as a tool for ongoing monitoring — capturing changes in mental health state over time — to learn what happens between visits. Many clinicians asked if they could send the EEG system home so their patients and clients could repeat the test on their own. They were also very interested in EEG’s potential predictive qualities, e.g. predicting who is likely to get more depressed in future. More research is needed to determine how a tool such as EEG would be best deployed in clinical and counseling settings, including how it could be combined with other measurement technologies such as digital phenotyping.

X is making Amber’ hardware and software open-source on Github, and also issuing a ‘patent pledge’ that ensures X will not bring any legal action against users of the EEG Patents related to Amber through use of the open-sourced material. It’s unclear (though unlikely) that this would’ve been the result had Amber succeeded at finding a single biomarker for depression, but perhaps in the hands of the broader community the work the team did on rendering EEG more accessible beyond specialized testing facilities will lead to other interesting discoveries.

News: NerdWallet acquires small business loan marketplace Fundera

Financial guidance company NerdWallet announced at the end of last week that it has acquired Fundera. New York City-based Fundera was co-founded in 2013 by Jared Hecht, who previously co-founded GroupMe. It created a marketplace where small businesses could find loans, subsequently expanding into other areas like legal services, while also (like NerdWallet) offering free

Financial guidance company NerdWallet announced at the end of last week that it has acquired Fundera. New York City-based Fundera was co-founded in 2013 by Jared Hecht, who previously co-founded GroupMe. It created a marketplace where small businesses could find loans, subsequently expanding into other areas like legal services, while also (like NerdWallet) offering free financial content.

“It can be the wild wild west out there for small business owners,” Hecht said in a statement. “Finding the financial products and the guidance needed to start, grow and fund their businesses can be very challenging, and most small business owners don’t have a resource or partner to support them along their journey. Bringing transparency to this process and educating, empowering and advocating for business owners is so similar to what we see NerdWallet doing in the consumer space.”

And of course, small businesses may be in particularly dire need of assistance now, given the impact of the pandemic.

According to the announcement, Fundera will operate as a subsidiary of NerdWallet, with the entire team making the transition. The goal is to help NerdWallet expand into the small- and medium-business market with both content and actual financing.

“Although we offer free tools and content, we’ve never been able to fully support small business owners — that changes today,” said NerdWallet co-founder and CEO Tim Chen. “Fundera has been one of our partners for several years and their deep understanding of the SMB market, the long-standing, trusted relationships they’ve built with both lenders and business owners, and their commitment to putting the needs of small business owners first is really unique and impressive.”

The financial terms of the acquisition were not disclosed. Fundera had raised $18.9 million in funding from investors including QED Investors, Khosla Ventures, First Round Capital and Susquehanna Growth Equity, according to Crunchbase.

This is NerdWallet’s second acquisition of 2020, having previously acquired U.K.-based Know Your Money. The company says it’s been growing and profitable for the past several years.

News: Rocket Lab’s next launch will deliver 30 satellites to orbit – and a 3D-printed gnome from Gabe Newell

Rocket Lab’s next mission will put dozens of satellites into orbit using the launch company’s Kick Stage “space tug,” as well as a 3D-printed garden gnome from Valve Software’s Gabe Newell. The latter is a test of a new manufacturing technique, but also a philanthropic endeavor from the gaming industry legend. Scheduled for no earlier

Rocket Lab’s next mission will put dozens of satellites into orbit using the launch company’s Kick Stage “space tug,” as well as a 3D-printed garden gnome from Valve Software’s Gabe Newell. The latter is a test of a new manufacturing technique, but also a philanthropic endeavor from the gaming industry legend.

Scheduled for no earlier than November 15 (or 16 at the New Zealand launch site), the as-yet-unnamed launch — Rocket Lab gives all of their missions cheeky names — will be the company’s “most diverse ever,” it said in a press release.

A total of 30 satellites will be deployed using Rocket Lab’s own Kick Stage deployment platform, which like other “space tugs” detaches from the second stage once a certain preliminary orbit is reached and then delivers its payloads each at their own unique trajectory. That’s the most individual satellites every taken up at once by Rocket Lab.

24 of them are Swarm Technologies’ tiny SpaceBEEs, the sandwich-sized communications satellites it will be using to power a low-cost, low-bandwidth global network for Internet of Things devices.

The most unusual payload, however, is certainly “Gnome Chompski,” whose passage was paid by Valve president Newell: a 3D-printed figure that will remain attached to the Kick Stage until it burns up on reentry. The figure, a replica of an item from the popular Half-Life series of PC games, was made by Weta Workshop, the effects studio behind Lord of the Rings and many other films. It’s both a test of a potentially useful new component printing technique and “an homage to the innovation and creativity of gamers worldwide.”

More importantly, Newell will donate a dollar to Starship Children’s Hospital for every viewer of the launch, so you’ll definitely want to tune in for this one. (I’m waiting to find out more from Newell, if possible.)

The launch will also deliver satellites for TriSept, Unseenlabs, and the Auckland Space Institute — the last will be New Zealand’s first student-built spacecraft.

Rocket Lab has worked hard to make its launch platform all-in-one, so prospective customers don’t have to shop around for various services or components. Ideally, the company’s CEO has said, anyone should be able to come to the company with the barebones payload and the rest is taken care of.

Image Credits: Rocket Lab

“Small satellite operators shouldn’t have to compromise on orbits when flying on a rideshare mission, and we’re excited to provide tailored access to space for 30 satellites on this mission. It’s why we created the Kick Stage to enable custom orbits on every mission, and eliminate the added complexity, time, and cost of having to develop your own spacecraft propulsion or using a third-party space tug,” Beck said in the press release.

Rocket Lab recently launched its own home-grown satellite, First Light, to show that getting to orbit doesn’t have be such a “pain in the butt,” as Beck put it then.

News: Scaleway launches cloud instances that cost $2.10 per month

French cloud hosting company Scaleway originally started with very cheap cloud instances. Over the years, the company has expanded its offering and added more premium services, such as managed Kubernetes, object storage, block storage, managed databases, load balancers and GPU instances. But Scaleway is now launching another cheap cloud instance that costs €0.0025 per hour

French cloud hosting company Scaleway originally started with very cheap cloud instances. Over the years, the company has expanded its offering and added more premium services, such as managed Kubernetes, object storage, block storage, managed databases, load balancers and GPU instances. But Scaleway is now launching another cheap cloud instance that costs €0.0025 per hour — around $0.0039 per hour.

Obviously, you’re not getting incredible performance for that price. But it’s a good way to try out new things and build an application just for you. If you’re the only user, those specifications might be enough.

Called Stardust, the virtual compute instance comes with 1 vCPU, 1GB of RAM, an IP address (IPv4), 10GB of local storage and up to 100Mbps of bandwidth. There’s no restriction on bandwidth usage.

Billed by the hour, you end up paying €1.80 per month ($2.10). The company isn’t going to generate a ton of revenue from such a cheap product. That’s why supply is limited. Scaleway will release a limited batch of cloud instances every month — first come, first served.

There are also some limits as you can’t spin up a ton of Stardust and build your own infrastructure. Each account can have up to one Stardust instance in Paris and another one in Amsterdam.

Scaleway lists some potential use cases for its new product, such as an internal wiki, a code repository backup, an always-on instance to set up daemons, triggers and workers, a VPN server, etc. The instance supports Ubuntu, Debian, CentOS and Fedora.

News: YC-backed nonprofit VotingWorks wants to rebuild trust in election systems through open source

I know it will come as a shock to you as a reader of the news, but there is an election this week. Well, tomorrow actually. It’s the rare election where the logistics of the election itself seem to be increasingly dominating the discussion. Not since the Florida recount of 2000 have pollsters, analysts and

I know it will come as a shock to you as a reader of the news, but there is an election this week. Well, tomorrow actually.

It’s the rare election where the logistics of the election itself seem to be increasingly dominating the discussion. Not since the Florida recount of 2000 have pollsters, analysts and party lawyers been so fixated on the mechanics of ballots. What ballots will be counted? Will the Post Office deliver mail in time? How many drop-off boxes are authorized by county? Will the voting machines leave an auditable paper trail?

Voting in America is a complex affair — while presidential elections are national in scope, the actual logistics of ballots and votes are decided locally: not just state by state, but often also county by county. That can create huge variation in the systems at play — but it also means that a small county in rural Mississippi can be a test case for the rest of the nation in how to get voting done right.

That’s at least what VotingWorks is banking on.

VotingWorks is a non-partisan, nonprofit startup that graduated from YC in its winter batch last year with the twin goals of improving the technology that underpins elections through more affordable and secure voting systems as well as using modern statistical science to improve the quality and efficiency of voter audits. The nonprofit scoured the country looking for a testbed, and eventually found Choctaw County in Mississippi, a rural jurisdiction just shy of 10,000 residents who were willing to try VotingWorks’ system out in their election.

Matt Pasternack, who along with Ben Adida co-founded the organization, said that the existing voting machines there were “ancient” and didn’t have a paper audit trail. “We found one county that was so eager to get rid of these ancient machines that they said, ‘Yes, we want to, we want to use this new thing you guys are building,’” Pasternack said.

What VotingWorks built is quite competitive. First, the company used existing hardware like iPads rather than designing custom-built hardware that can be extraordinarily costly given that the machines are rarely used in the U.S., which has quadrennial elections for many offices. Second, the organization’s software is posted as open source on GitHub. That made the machines more open and verifiable than competitors, and also available at a lower price point.

Pasternack and Adida first met while working together at Clever, the API middleware platform that today could be dubbed the “Plaid of education,” designed to help app developers connect to the data stored in hundreds of student information systems. Pasternack noted that he was employee number one, and the two talked about politics and elections over the years and eventually saw an opportunity to enter the market with the 2018 midterms.

The team went through YC in early 2019. With Choctaw County’s push to replace their machines, VotingWorks managed to get its machines in their hands by August for the upcoming November 2019 election, when statewide offices including the governor and attorney general were up for election. The machines were used in 13 precincts.

Adida said that the company moved very fast, but the in-field experience was crucial for improving their machines. He noted that one thing the crew learned is that on election day, poll workers have to setup each machine in the morning before the first rush of voters. The speed of setup is crucial for getting poll places ready, and so VotingWorks optimized how many steps were involved in setting up each ballot machine. “With our machines, you put it on a table, you pop open the case, and you run the checklist. It takes about two-to-three minutes, compared to 30 [minutes] … and so the poll workers were raving about it,” he said.

Pasternack also added that in a rural county like Choctaw, power constraints added their own complexity. Precincts could be remarkably underpowered, and too many voting machines on one electrical circuit could blow out the entire precinct — preventing anyone from voting.

Since then, the organization’s technology has expanded to about 10% of Mississippi counties, partly driven by the need this year for color printing technology. The state is voting on changing its state flag to remove the imprint of the Confederate Flag, and voters have to see the new flags in color on the ballot. Pasternack said that their on-demand printing technology is both efficient and much more affordable per ballot.

Mississippi’s Existing Flag and proposed new flag that will be on the state’s ballot tomorrow. Images via Wikipedia. New flag credited on Wikipedia to Rocky Vaughn, Sue Anna Joe, and Kara Giles.

Outside of the machines itself, the organization is building up its audit software to make audits more statistically accurate and cheaper to conduct, and also developing systems for processing absentee ballots better. Each of these technologies work independently of one another — Adida stressed that “An important trait of a modern voting system is that it’s modular. You can use our auditing system with any standard tabulator. You absolutely don’t need to be using VotingWorks.” Its tech is now used in several additional states in addition to Mississippi, including crucial swing states Michigan and Pennsylvania.

The non-profit has a critical day tomorrow, but then the future beckons. With so much focus on election logistics this year, the hope is that more counties and states will begin to think through better, more robust systems to operate their elections. “We want a world where the foundation of democracy is publicly owned, so having open source software shepherded by a nonprofit organization — it feels like a better democracy to me,” Adida said.

News: Maze, a notorious ransomware group, says it’s shutting down

One of the most active and notorious data-stealing ransomware groups, Maze, says it is “officially closed.” The announcement came as a waffling statement, riddled with spelling mistakes, and published on its website on the dark web, which for the past year has published vast troves of stolen internal documents and files from the companies it

One of the most active and notorious data-stealing ransomware groups, Maze, says it is “officially closed.”

The announcement came as a waffling statement, riddled with spelling mistakes, and published on its website on the dark web, which for the past year has published vast troves of stolen internal documents and files from the companies it targeted, including Cognizant, cybersecurity insurance firm Chubb, pharmaceutical giant ExecuPharm, Tesla and SpaceX parts supplier Visser, and defense contractor Kimchuk.

Where typical ransomware groups would infect a victim with file-encrypting malware and hold the files for a ransom, Maze gained its notoriety for first exfiltrating a victim’s data and threatening to publish the stolen files unless the ransom was paid.

It quickly became the preferred tactic of ransomware groups, which set up websites — often on the dark web — to leak the files it stole if the victim refused to pay up.

Maze initially used exploit kits and spam campaigns to infect its victims, but later began using known security vulnerabilities to specifically target big name companies. Maze was known to use vulnerable virtual private network (VPN) and remote desktop (RDP) servers to launch targeted attacks against its victim’s network.

Some of the demanded ransoms reached into the millions of dollars. Maze reportedly demanded $6 million from one Georgia-based wire and cable manufacturer, and $15 million from one unnamed organization after the group encrypted its network. But after COVID-19 was declared a pandemic in March, Maze — as well as other ransomware groups — promised to not target hospitals and medical facilities.

But security experts aren’t celebrating just yet. After all, ransomware gangs are still criminal enterprises, many of which are driven by profits.

A statement by the Maze ransomware group, claiming it has shut down. Screenshot: TechCrunch

“Obviously, Maze’s claims should be taken with a very, very small pinch of salt,” said Brett Callow, a ransomware expert and threat analyst at security firm Emsisoft . “It’s certainly possible that the group feels they have made enough money to be able to close shop and sail off into the sunset. However, it’s also possible — and probably more likely — that they’ve decided to rebrand.”

Callow said the group’s apparent disbanding leaves open questions about the Maze group’s connections and involvement with other groups. “As Maze was an affiliate operation, their partners in crime are unlikely to retire and will instead simply align themselves with another group,” he said.

Maze denied that it was a “cartel” of ransomware groups in its statement, but experts disagree. Steve Ragan, a security researcher at Akamai, said Maze was known to post data from other ransomware, like Ragnar Locker and the LockBit ransomware-for-hire, on its website.

“For them to pretend now that there was no team-up or cartel is just plain backwards. Clearly these groups were working together on many levels,” said Ragan.

“The downside to this, and the other significant element, is that nothing will change, Ransomware is still going to be out there,” said Ragan. “Criminals are still targeting open access, exposed RDP [remote desktop protocol] and VPN portals, and still sending malicious emails with malicious attachments in the hope of infecting unsuspecting victims on the internet,” he said.

Jeremy Kennelly at FireEye’s Mandiant threat intelligence unit said that while the Maze brand may be dead, its operators are likely not gone for good.

“We assess with high confidence that many of the individuals and groups that collaborated to enable the Maze ransomware service will likely to continue to engage in similar operations — either working to support existing ransomware services or supporting novel operations in the future,” said Kennelly.

News: Booming edtech M&A activity brings consolidation to a fragmented sector

As the COVID-19 pandemic continues to force teachers, students and parents to adopt new technologies, edtech’s total addressable market has massively grown in the last several months. The shift has urged venture capitalists to pour money into the sector accordingly, ushering a number of startups into the unicorn club. But maturation doesn’t just mean bigger

As the COVID-19 pandemic continues to force teachers, students and parents to adopt new technologies, edtech’s total addressable market has massively grown in the last several months. The shift has urged venture capitalists to pour money into the sector accordingly, ushering a number of startups into the unicorn club.

But maturation doesn’t just mean bigger checks and high-flying unicorns — it also brings exits.

Edtech M&A activity is buzzier than usual: In the last week, Course Hero, a startup that sells Netflix-like subscriptions to students looking for learning and teaching content, bought Symbolab, an artificial intelligence-powered calculator. Saga Education, a tutoring nonprofit backed by Comcast, the Bill & Melinda Gates Foundation and others, acquired math software platform Woot Math. We also saw PowerSchool, which sells a suite of software services to manage schools, scoop up Hoonuit, a data management and analytics tool for educators. Finally, K-12 curriculum company Discovery Education bought K-5 science and stem curriculum upstart Mystery Science.

It’s a lot of news in a short period of time. Luckily, these consolidations offer some directional guidance regarding where some edtech businesses think the future of their industry is headed.

Smart content as a competitive advantage

Content, to an extent, is commoditized. If you can find a free tutorial on Youtube or Khan Academy, buy a subscription to an edtech platform that offers the same solution? The commodification of education is good for end-users and is often why startups have a freemium model as a customer acquisition strategy. To convert free users into paying subscribers, edtech startups need to offer differentiated and targeted content.

The Course Hero and Mystery Science deals show us that edtech businesses are hungry for personalized, targeted content. Course Hero’s acquisition of Symbolab was essentially a deal for more than a decade’s worth of data that captured which math questions students found hardest.

Symbolab is a math calculator that is set to answer over 1 billion questions this year. With each answer, Symbolab adds information to its algorithm regarding students’ most common pain points and confusion. Course Hero, in contrast, is a broader service that focuses on Q&A from a variety of subjects. CEO Andrew Grauer says Symbolab’s algorithm isn’t something that Course Hero, which has been operating since 2006, can drum up overnight. That’s precisely why he “decided to buy, instead of build.”

“It made a lot of sense to move fast enough so it wouldn’t take up multiple years to get this technology,” Grauer said. The deal was made as big companies get in the Q&A game too, he noted. Google acquired homework helper app Socratic in 2019 and Microsoft built Microsoft Solver in the same year.

Discovery Education, a curriculum provider for K-12 classrooms, acquired San Francisco-based K-5 STEM curriculum provider, Mystery Science. Discovery Education has launched a series of other products focused on science education, including Discovery Education Experience, the Science Techbook series and STEM Connect.  However, Mystery Science is largely focused on offering a creative digital solution to science education. The programming, a mix of videos, prompts and projects, cover a range of questions such as, “Where do rivers flow?” and “Could a volcano pop up where you live?” for young students.

Mystery Science CEO and founder Keith Schact explained how his product focuses on kids and educators, while Discovery Education focuses on educators and districts, making the deal feel like a “natural marriage.” Even as edtech goes directly to consumers, Schact remains bullish on the role that institutions play in true adoption of technology.

“You can go straight to teachers and get a certain market share,” he said. “But the institutions still do have a big role.” The founder likened the dynamic to the state of media: With the rise of blogs, you can publish directly and reach an engaged audience, but writers who want a bigger positioning tend to join larger platforms to grow their overall reach. Edtech is the same, in that some startups need an official sign-off from schools before they can reach venture-scale returns.

According to a source familiar with the transaction, Mystery Science was sold for $175 million after only raising $4 million in venture financing.

Using data management and analytics to improve student outcomes

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