DREAMTECH NEWS

VC’s largest funds make big bets on vertical B2B marketplaces

During the waning days of the first dot-com boom, some of the biggest names in venture capital invested in marketplaces and directories whose sole function was to consolidate information and foster transparency in industries that had remained opaque for decades.

The thesis was that thousands of small businesses were making specialized products consumed by larger businesses in huge industries, but the reach of smaller players was limited by their dependence on a sales structure built on conferences and personal interactions.

Companies making pharmaceuticals, chemicals, construction materials and medical supplies represented trillions in sales, but those huge aggregate numbers hide how fragmented these supply chains are — and how difficult it is for buyers to see the breadth of sellers available.

Now, similar to the way business models popularized by Kozmo.com and Webvan in decades past have since been reincarnated as Postmates and DoorDash, the B2B directory and marketplace rises from the investment graveyard.

The first sign of life for the directory model came with the success of GoodRX back in 2011. The company proved that when information about pricing in a previously opaque industry becomes available, it can unleash a torrent of new demand.


By Jonathan Shieber

Zoom consultant Alex Stamos weighs in on Keybase acquisition

When Zoom started having security issues in March, they turned to former Facebook and Yahoo! Security executive Alex Stamos, who signed on as a consultant to work directly with CEO Eric Yuan.

The goal was to build a more cohesive security strategy for the fast-growing company. One of the recommendations that came out of those meetings was building end-to-end encryption into the paid tier of the product. Those discussions led to the company buying Keybase this morning.

Stamos says in the big build versus buy debate that companies tend to go through when they are evaluating options, this fell somewhere in the middle. While they bought a company with a lot of expertise, it will still require Keybase engineers working with counterparts from Zoom and consultants like Stamos to build a final encrypted product.

“The truth is that what Zoom wants to do with end-to-end encryption, nobody’s really done, so there’s no product that you could just slap onto Zoom to turn it into key encryption. That’s going to have to be thought out from the beginning for the specific needs of an enterprise,” Stamos told TechCrunch.

But what they liked about Keybase in particular is that they have already thought through similar problems with file encryption and encrypted chat, and they want to turn the Keybase engineers loose on this problem.

“The design is going to be something that’s totally new. The great thing about Keybase is that they have already been through this process of thinking through and then crafting a design that is usable by normal people and that provides functionality while being somewhat invisible,” he said.

Because it’s a work in progress, it’s not possible to say when that final integration will happen, but Stamos did say that the company intends to publish a paper on May 22nd outlining its cryptographic plan moving forward, and then will have a period of public discussion before finalizing the design and moving into the integration phase.

He says that the first goal is to come up with a more highly secure version of Zoom meetings with end-to-end encryption enabled. At least initially, this will only be available for people using the Zoom client or Zoom-enabled hardware. You won’t be able to encrypt someone calling in, for instance.

As for folks who may be worried about Keybase being owned by Zoom, Stamos says, “The whole point of the Keybase design is that you don’t have to trust who owns their servers.”


By Ron Miller

As private investment cools, enterprise startups may try tapping corporate dollars

Founders hunting down capital in the middle of this pandemic may feel like they’re on a fool’s errand, but some investors are still offering financing, even if the terms might not be as good as they once were. One avenue that appears to remain open: corporate venture capital.

The corporate route offers its own set of unique challenges, depending on the philosophy of the organization’s investment arm. Some are looking strictly for companies that fit neatly into their platform, while others believe a solid investment is more important than a perfect fit.

Regardless of style, these firms want their investment targets to succeed on their own merits, rather than as part of the organization the funding arm represents. To get the lay of the land, we spoke to a couple of firms that take very different approaches to their investments: Dell Technologies Capital and Salesforce Ventures.

Corporate venture is a different animal

Corporate venture funds aren’t typically as large as private ones, but they have a lot to offer, such as global sales and marketing support and a depth of knowledge that offers direct benefits to a young upstart. This can help founders avoid mistakes, but there is danger in becoming too dependent on the company.

The good news is that these companies are often not leading the round, but are instead providing some cash and guidance, which leaves entrepreneurs to develop and grow on their own. While the pandemic is forcing many changes in approaches to investment, the two corporate venture capital firms we spoke to said they will continue to invest, and their theses remains pretty much the same.

If you have an enterprise focus and you can convince these firms to take a chance, they offer some interesting perks a private firm might not be able to, or at the very least provide a piece of your funding puzzle in these difficult times.


By Ron Miller

Daily Crunch: Zoom acquires security startup Keybase

Zoom acquires some encryption expertise, Uber makes a big investment in scooters and we review the new 13-inch Macbook Pro.

Here’s your Daily Crunch for May 7, 2020.

1. Zoom acquires Keybase to get end-to-end encryption expertise

Keybase, whose encryption products include secure file sharing and collaboration tools, should give Zoom some security credibility as it goes through pandemic demand growing pains. A number of Zoom security issues have come to light the last couple of months as demand as soared and exposed security weaknesses in the platform.

Under the terms of the deal, Keybase will become a subsidiary of Zoom and co-founder and Max Krohn will lead the Zoom security engineering team, reporting directly to Yuan to help build the security product.

2. Uber leads $170 million Lime investment, offloads Jump to Lime

As part of the deal (which was reported earlier this week but is now official), Lime is also acquiring Uber’s micro-mobility subsidiary Jump. There will be more integrations between Uber and Jump in the future, but both apps will remain active for now.

3. Apple MacBook Pro 13-inch review

With this week’s news, the 13-inch becomes the third and final member of the MacBook family to get the new keyboard. It’s not “Magic” as the name implies (Apple really does love the M-word), but Brian Heater says improvements are immediate and vast.

4. Nintendo sells a lot more Switches, as people stay and home playing Animal Crossing

The company says it has sold 21 million Switch units in the past year, handily beating a 19.5 million forecast. 6.2 million of those systems were the newer, cheaper Switch Lite, which hit the market in September. All of this comes as Nintendo has run up against shortage through a combination of increased popularity and a a global supply chain knocked off balance from COVID-19.

5. How will digital media survive the ad crash?

Bustle Digital Group’s Jason Wagenheim told us that he’s anticipating a 35% decline in ad revenue for this quarter. And where he’d once hoped BDG would reach $120 or $125 million in ad revenue this year, he’s now trying to figure out “what does our company look like at $75 or $90 million?” (Extra Crunch membership required.)

6. Apple awards $10 million to rapidly scale COVID-19 sample collection kit production

Apple has awarded $10 million from its Advanced Manufacturing Fund to COPAN Diagnostics, a company focused on producing sample collection kits for testing COVID-19 to hospitals in the U.S. The money comes from the fund that Apple established to support the development and growth of U.S.-based manufacturing — to date, the fund has been used to support companies tied more directly to Apple’s own supply chain.

7. Sonos debuts new Arc soundbar, next-generation Sonos Sub, and Sonos Five speaker

Sonos has introduced a trio of new hardware today, adding three new smart speakers to its lineup, including the Sonos Arc soundbar that includes Dolby Atmos support, as well as Sonos Five, the next version of its Sonos Play:5 speaker, and a third-generation Sonos Sub.

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 9am Pacific, you can subscribe here.


By Anthony Ha

Harbr emerges from stealth to help build online data marketplaces

Harbr co-founder Anthony Cosgrove has been working with data for over 15 years, so he has an inkling of some of the problems associated with pulling data together in a way that makes it easy for others to consume, whether internally or externally. Like many entrepreneurs before him, he decided to start a company to solve that problem, and today it came out of stealth.

Cosgrove explained that in his experience, data platforms of the past had several problems. “They were too slow. They were too expensive and too risky, and when you got the data you then ended up working in a silo with really no repeatability of anything that you did for anybody else in your organization,” he explained.

Cosgrove started Harbr because he saw a dearth of tools to help with these issues. “We wanted to create an environment where organizations could share their data, collaborate on that data and create new versions of that data that were really optimized for very specific use cases,” he said.

For now, the company is concentrating on large data vendors, helping them package and monetize the data they produce as a business more efficiently, but Cosgrove sees a time where he could be helping other firms that produce data as a byproduct of conducting business to monetize that data more easily.

He says these big data businesses generally lack the agility to package data in ways that make sense for each customer, and his company’s product should help solve that. “They’re able to start working directly with their customers to move away from kind of sending data to actually selling services, models or insights, which is what customers really want,” he said.

One other unique aspect of the tool is that it is a true platform, meaning that you are not just restricted to the data in your system. You can pull together other data sources as well, and that could make for even more interesting ways to package the data for customers.

The company launched in London in 2017 and spent some time building the product. It recently opened offices in the United States and currently has 30 employees divided between the two locations. It has raised $6.5 million in seed capital led by Boldstart Ventures .


By Ron Miller

Zoom acquires Keybase to get end-to-end encryption expertise

Zoom announced this morning that it has acquired Keybase, a startup with encryption expertise. It did not reveal the purchase price.

Keybase, which has been building encryption products for several years including secure file sharing and collaboration tools, should give Zoom some security credibility as it goes through pandemic demand growing pains.

The company has faced a number of security issues in the last couple of months as demand as soared and exposed some security weaknesses in the platform. As the company has moved to address these issues, having a team of encryption experts on staff should help the company build a more secure product.

In a blog post announcing the deal, CEO Eric Yuan said they acquired Keybase to give customers a higher level of security, something that’s increasingly important to enterprise customers as more operations are relying on the platform, working from home during the pandemic.

“This acquisition marks a key step for Zoom as we attempt to accomplish the creation of a truly private video communications platform that can scale to hundreds of millions of participants, while also having the flexibility to support Zoom’s wide variety of uses,” Yuan wrote.

He added that that tools will be available for all paying customers as soon as it is incorporated into the product. “Zoom will offer an end-to-end encrypted meeting mode to all paid accounts. Logged-in users will generate public cryptographic identities that are stored in a repository on Zoom’s network and can be used to establish trust relationships between meeting attendees,” he wrote.

Under the terms of the deal, the Keybase will become a subsidiary of Zoom and co-founder and Max Krohn will lead the Zoom security engineering team, reporting directly to Yuan to help build the security product. The other almost two dozen employees will become Zoom employees. The vast majority are security engineers.

It’s not clear what will happen to Keybase’s products, but the company did say Zoom is working with Keybase to figure that out.

Keybase was founded in 2014 and has raised almost $11 million according to Crunchbase data.


By Ron Miller

Box makes quick decision to add new collaboration capabilities in face of pandemic

When the shutdown began six weeks ago, the powers that be at Box sat down for a meeting to discuss the situation. They weren’t in the same room of course. They were like everyone else, separated by the virus, but they saw this as a key moment for Box as a company.

They had been talking about digital transformation for years, trying to help customers get there with their cloud content management platform, and this was a pivotal moment with millions of employees working at home.

Box CEO Aaron Levie says the company’s executives had to decide if the change in work style they were seeing at that moment was going to be a temporary event or something that changed work forever.

After some debate, they concluded that it was going to change things for the long term, and that meant accelerating the product road map. “We made the bet six weeks ago that this was going to be a long-term change about how business works, and even if offices opened back up, we thought that companies were going to want to be resilient for this type of event in the future,” Levie explained.

From Box’s perspective, they saw this playing it in three crucial ways. Employees would need to be able to share files securely (their sweet spot). They would need to collaborate with folks inside and outside the organization. Finally, as you are working inside other cloud applications, what is the best way to interact with files stored in Box?

These are all scenarios that Levie has been talking about for years, and to some extent Box offered already, but they wanted to tighten everything up, while adding some new functionality. For starters, they are offering a cleaner interface to make it easier for users to interact with and share files.

They are also helping users organize those files with a new feature called Collections, which lets them group their files and folders in ways that make sense to them. For starters, this is on an individual basis, but Levie says they are already hearing requests to be able to publish collections inside the organization, something that could come down the road.

Next, they are adding an annotations capability that makes it easy to add comments either as a single editor or in a group discussion about a file. Think Google Docs collaboration tools, but for any document, allowing an individual or group to comment on a file remotely in real time, something many folks need to do right now.

Image Credit: Box

Finally, external partners and customers can share files in Box from a special landing page. Levie says that this is working in conjunction with Box Shield, and the malware detection capability announced last month to make sure these files are shared in a secure fashion.

“Companies are going to need to make sure that no matter what happens — in the fall, next year or 10 years from now — that they can be resilient to an event where people can’t transact physically, where you don’t have  manual processes, where employees can go work from home instantaneously, and so that’s going to change dramatically how you adjust your company’s priorities from a technology standpoint,” Levie said.

These new features may not answer all of those huge strategic questions, but this is a case where Box saw an opening for the company to address this change in how people work more directly, and they sped up the roadmap to seize it.

These features will be rolling out starting today, and over the next weeks.


By Ron Miller

Dtex, a specialist in insider threat cybersecurity, raises $17.5M

A lot of enterprise cybersecurity efforts focus on malicious hackers that work on behalf of larger organizations, be they criminal groups or state actors — and for good reason, since the majority of incidents these days come from phishing and other malicious techniques that originate outside the enterprise itself.

But there has also been a persistent, and now growing, focus also on “insider threats” — that is, breaches that start from within organizations themselves. And today a startup that specialises in this area is announcing a round of growth funding to expand its reach.

Dtex, which uses machine learning to monitor network activity within the perimeter and around all endpoints to detect unusual patterns or behaviour around passwords or data movement, is today announcing that it has raised $17.5 million in funding.

The round is being led by new investor Northgate Capital with Norwest Venture Partners and Four Rivers Group, both previous investors, also participating. Prior to this, the San Jose-based startup had raised $57.5 million, according to data from PitchBook, while CrunchBase puts the total raised at $40 million.

CEO Bahman Mahbod said the startup is not disclosing valuation except to say that it’s “very excited” about it.

For some context, the company works with hundreds of large enterprises, primarily in the financial, critical infrastructure, government and defence sectors. The plan is to now extend further into newer verticals where it’s started to see more activity more recently: pharmaceuticals, life sciences and manufacturing. Dtex says that over the past 12 months, 80% of its top customers have been increasing their level of engagement with the startup.

Dtex’s focus on “insider” threats sounds slightly sinister at first: is the implication here that people are more dishonest and nefarious these days and thus need to be policed and monitored much more closely for wrongdoing? The answer is no. There are no more dishonest people today than there ever have been, but there are a lot more opportunities to make mistakes that result in security breaches:

The working world has been on a long-term trend of becoming increasingly digitised in all of its interactions, and bringing on a lot more devices onto those networks. Across both “knowledge” and front-line workers, we now have a vastly larger number of devices being used to help workers do their jobs or just keep in touch with the company as they work, with many of them being brought by the workers themselves rather than being provisioned by the companies. There has also been a huge increase in cloud services,

And in the realm of “knowledge” workers, we’re seeing a lot more remote or peripatetic working, where people don’t have fixed desks and often work outside the office altogether — something that has skyrocketed in recent times with stay-at-home orders put in place to mitigate the spread of COVID-19 cases.

All of this translates into a much wider threat “horizon” within organizations themselves, before even considering the sophistication of external malicious hackers.

And the current state of business has exacerbated that. Mahbod tells us that Dtex is currently seeing spikes in unusual activity from the rise in home workers, who sometimes circumvent VPNs and other security controls, thus committing policy violations; as well as more problems arising from the fact that home networks have been compromised and that is leaving work networks, accessed from home, more vulnerable. These started, he said, with COVID-19 phishing attacks but have progressed to undetected malware from drive-by downloads.

And, inevitably, he added that there has been a rise in intentional data theft and accidental loss arising in cases where organizations have had to lay people off or run a round of furloughs, but might still result from negligence rather than intentional actions.

There are a number of other cybersecurity companies that provide ways to detect insider threats — they include CloudKnox and Obsidian Security, along with a number of larger and established vendors. But Mabhod says that Dtex “is the only company with ‘next-generation’ capabilities that are cloud-first, AI/ML baked-in, and enterprise scalable to millions of users and devices, which it sells as DMAP+.

“Effectively, Next-Gen Insider Threat solutions must replace legacy Insider Threat point solutions which were borne out of the UAM, DLP and UEBA spaces,” he said.

Those providing legacy approaches of that kind include Forcepoint with its SureView product and Proofpoint with its ObserveIT product. Interestingly, CyberX, which is currently in the process of getting acquired by Microsoft (according to reports and also our sources), also includes insider threats in its services.

This is one reason why investors have been interested.

“Dtex has built a highly scalable platform that utilizes a cloud-first, lightweight endpoint architecture, offering clients a number of use cases including insider threat prevention and business operations intelligence,” said Thorsten Claus, partner, Northgate Capital, in a statement. Northgate has a long list of enterprise startups in its portfolio that represent potential customers but also a track record of experience in assessing the problem at hand and building products to address it. “With Dtex, we have found a fast-growing, long-term, investible operation that is not just a band-aid collection of tools, which would be short-lived and replaced.”


By Ingrid Lunden

Enterprise companies find MLOps critical for reliability and performance

Enterprise startups UIPath and Scale have drawn huge attention in recent years from companies looking to automate workflows, from RPA (robotic process automation) to data labeling.

What’s been overlooked in the wake of such workflow-specific tools has been the base class of products that enterprises are using to build the core of their machine learning (ML) workflows, and the shift in focus toward automating the deployment and governance aspects of the ML workflow.

That’s where MLOps comes in, and its popularity has been fueled by the rise of core ML workflow platforms such as Boston-based DataRobot. The company has raised more than $430 million and reached a $1 billion valuation this past fall serving this very need for enterprise customers. DataRobot’s vision has been simple: enabling a range of users within enterprises, from business and IT users to data scientists, to gather data and build, test and deploy ML models quickly.

Founded in 2012, the company has quietly amassed a customer base that boasts more than a third of the Fortune 50, with triple-digit yearly growth since 2015. DataRobot’s top four industries include finance, retail, healthcare and insurance; its customers have deployed over 1.7 billion models through DataRobot’s platform. The company is not alone, with competitors like H20.ai, which raised a $72.5 million Series D led by Goldman Sachs last August, offering a similar platform.

Why the excitement? As artificial intelligence pushed into the enterprise, the first step was to go from data to a working ML model, which started with data scientists doing this manually, but today is increasingly automated and has become known as “auto ML.” An auto-ML platform like DataRobot’s can let an enterprise user quickly auto-select features based on their data and auto-generate a number of models to see which ones work best.

As auto ML became more popular, improving the deployment phase of the ML workflow has become critical for reliability and performance — and so enters MLOps. It’s quite similar to the way that DevOps has improved the deployment of source code for applications. Companies such as DataRobot and H20.ai, along with other startups and the major cloud providers, are intensifying their efforts on providing MLOps solutions for customers.

We sat down with DataRobot’s team to understand how their platform has been helping enterprises build auto-ML workflows, what MLOps is all about and what’s been driving customers to adopt MLOps practices now.

The rise of MLOps


By Walter Thompson

Equinix just recorded its 69th straight positive quarter

There’s something to be said for consistency through good times and bad, and one company that has had a staggeringly consistent track record is international data center vendor, Equinix. It just recorded its 69th straight positive quarter, according to the company.

That’s an astonishing record, and covers over 17 years of positive returns. That means this streak goes back to 2003. Not too shabby.

The company had a decent quarter, too. Even in the middle of an economic mess, it was still up 6% YoY to $1.445 billion and up 2% over last quarter. The company runs data centers where companies can rent space for their servers. Equinix handles all of the infrastructure providing racks, wiring and cooling — and customers can purchase as many racks as they need.

If you’re managing your own servers for even part of your workload, it can be much more cost-effective to rent space from a vendor like Equinix than trying to run a facility on your own.

Among its new customers this quarter are Zoom, which is buying capacity all over the place, having also announced a partnership with Oracle earlier this month, and TikTok. Both of those companies deal in video and require lots of different types of resources to keep things running.

This report comes against a backdrop of a huge increase in resource demand for certain sectors like streaming video and video conferencing, with millions of people working and studying at home or looking for distractions.

And if you’re wondering if they can keep it going, they believe they can. Their guidance calls for 2020 revenue of $5.877-$5.985 billion, a 6-8% increase over the previous year.

You could call them the anti-IBM. At one point Big Blue recorded 22 straight quarters of declining revenue in an ignominious streak that stretched from 2012 to 2018 before it found a way to stop the bleeding.

When you consider that Equnix’s streak includes the period of 2008-2010, the last time the economy hit the skids, it makes the record even more impressive, and certainly one worth pointing out.


By Ron Miller