How trading apps are responding to the GameStop fustercluck

The furor surrounding GameStop and its stock price has consumed social media, business television, and the hopes and dreams a many retail investors. It has even convinced some folks that causing short-term economic damage to a few hedge funds is similar to shaking up the global financial market.

It isn’t, but a lot of folks are doing some downright risky things with their personal capital all the same. And some of them are making those investments — bets, let’s be honest — on platforms that have lowered barriers to buying and selling stocks by cutting trading fees to zero. Apps and services like Robinhood, Public, M1 Finance, and Freetrade.

After noting reports that some traditional brokers were limiting access to GameStop and other so-called meme stocks, TechCrunch was curious what the newer, app-based investing services were doing for their own users.

A spokesperson for M1 Finance, a Midwest-based consumer fintech player that offers a basket of banking and investing services — more on its growth here and here — told TechCrunch via email that it wasn’t taking “specific” steps regarding individual stocks.

But the company also provided a statement from its CEO, Brian Barnes. In his comment, Barnes drew a delineation between investing, and trading, which he likened to a casino, adding that his firm “question[s] whether short-term trading is predictable, sustainable, or repeatable.”

It isn’t for nearly anyone, of course. Barnes went on to say that his company thinks that “ownership of great companies and assets at reasonable prices that compound for long periods of time is the most straightforward and repeatable way to build wealth,” and that they have focused their company more around that ethos, “forego[ing] the mania of the moment.”

Turning to the well-known Robinhood, an impressive 2020 growth story, TechCrunch asked the same question regarding warnings or other guardrails for users concerning certain equities.

In an email a Robinhood spokesperson directed TechCrunch to a comment that its CEO, Vlad Tenev, made on CNBC earlier today:

Like other brokerages do, we monitor volatility and we take steps as appropriate like raising the margin requirements. I do think it’s wrong to assume though that most of our activity is characterized by trading of volatile stocks. As I’ve said before, most of our customers are what’s called buy and hold. They deposit and buy over the long term.

Robinhood changed margin requirements for GameStop and AMC Entertainment to 100%, TechCrunch understands. And like M1, Robinhood doesn’t allow users to short equities. So, there’s that.

Something notable about the companies we are discussing is that not a one of them wants to be labeled as the place where folks like to trade a lot. Which amuses me as cutting fees to zero, which they have largely done, is at once a great way to democratize investing, and, also, a great way to encourage folks to trade more frequently. And as the apps and services that offer free trading often make money when users trade (read this), their chatter about their users being focused on buying and holding always rings slightly thin.

Anyhoo, some apps are going as far as adding warnings. Public, a company that TechCrunch recently covered, a spokesperson told TechCrunch that the company has added “‘High Risk’ safety labels” to the meme stocks that are causing so much ruckus.

As Public has long had a stated focus on building community over trading — which led to us having a question or two about when it is going to kickstart its monetization plans; the company did just hire a CFO, so more to come there we presume — which makes this move appear in concert with its general ethos.

And, finally, UK-based Freetrade. TechCrunch has covered the service before, making it a good company to rope into this group. Per the company, Freetrade restricts small-cap stocks to the subscription tier of its service, which should limit access amongst its user base to GameStop and other memetic equities.

The company also stressed that it does not offer options or “any other form of leveraged derivatives” and has made “huge investment in investor education and financial literacy.”

So there’s a general bent towards either building products that are not tuned for day-trading in silly stocks, or providing some protection against users’ worst instincts amongst the cohort of companies that have also made it inexpensive to trade. There’s tension there, akin to this.

But they can only do so much. People are dumb, and it’s not looking like that’s going to get much better anytime soon.

Startups – TechCrunch

PC Website Builders Market By Current Industry Status, Growth Opportunities – Global Review 2021 to 2028 – National Gridiron League – National Gridiron League

PC Website Builders Market By Current Industry Status, Growth Opportunities – Global Review 2021 to 2028 – National Gridiron League  National Gridiron League
“nigeria startups when:7d” – Google News

Prime Movers Lab raises $245 million for second fund to invest in early stage science startups

After revealing its first fund just last year, a $ 100 million pool of investment capital dedicated to early stage startups focusing on sustainable food development, clean energy, health innovation and new space technologies, Prime Movers Lab is back with a second fund. Prime Movers Lab Fund II is larger, with $ 245 million committed, but it will pursue the same investment strategy, albeit with a plan to place more bets on more companies, with an expanded investment team to help manage the funds and portfolio.

“There are a lot of VCs out there,” explained founder and general partner Dakin Sloss about the concept behind the fund. “But there aren’t many VCs that are focused exclusively on breakthrough science, or deep tech. Even though there are a couple, when you look at the proportion of capital, I think it’s something like less than 10% of capital is going to these types of companies. But if you look at what’s meaningful to the life of the average person over the next 30 years, these are all the companies that are important, whether it’s coronavirus vaccines or solar energy production, or feeding the planet through aquaponics. These are the things that are really meaningful to to making a better quality of life for most people.”

Sloss told me that he sees part of the issue around why the proportion of capital dedicated to solving these significant problems is that it requires a lot of deep category knowledge to invest in correctly.

“There’s not enough technical expertise in VC firms to choose winners intelligently, rather than ending up with the next Theranos or clean tech bubble,” he said. “So that’s the first thing I wanted to solve. I have a physics background, and I was able to bring together a team of partners that have really deeply technical backgrounds.”

As referenced, Sloss himself has a degree from Stanford in Mathematics, Physics and Philosophy. He was a serial entrepreneur before starting the fund, having founded Tachyus, OpenGov and nonprofit California Common Sense. Other Partners on the team include systems engineer Dan Slomski, who previously worked on machine vision, electro-mechanical systems and developing a new multi-phase flow fluid analyzer; Amy Kruse, who holds a PhD in neuroscience and has served as an executive in defence technology and applied neuroscience companies; and Carly Anderson, a chemical engineer who has worked in biomedicine and oil & gas, and who has a PhD in chemical and biomolecular engineering. In addition to core partners with that kind of expertise, Prime Movers Lab enlists the help of venture partners and specialist advisors like former astronaut Chris Hadfield.

Having individuals with deep field expertise on the core team, in addition to supplementing that with top-notch advisors, is definitely a competitive advantage, particularly when investing in the kinds of companies that Prime Movers Lab does early on in their development. There’s a perception that companies pursuing these kinds of hard tech problems aren’t necessarily as viable as a target for traditional venture funding, specifically because of the timelines for returns. Sloss says he believes that’s a misperception based on unfortunate past experience.

“I think there are three big myths about breakthrough science or hard tech or deep tech,” he said. “That it takes longer, that it’s more capital intensive, and that it’s higher risk. And I think the reason those myths are out there is people invested in things like Theranos, and the clean tech bubble. But I think that there were fundamental mistakes made in how they underwrote risk of doing that.”

Image Credits: Momentus

To avoid making those kinds of mistakes, Sloss says that Prime Movers Lab views prospective investments from the perspective of a “spectrum of risk,” which includes risk of the science itself (does the fundamental technology involve actually work), engineering risk (given the science works, can we make it something we can sell) and finally, commercialization or scaling risk (can we then make it and sell it at scale with economics that work). Sloss says that if you use this risk matrix to assess investments, and allocated funds to address primarily the engineering risk category, concerns around timeframes to return don’t really apply.

He cites Primer Movers Lab’s Fund I portfolio, which includes space propulsion company Momentus, heading for an exit to the public markets via SPAC (the company’s Russian CEO actually just resigned in order to smooth the path for that, in fact), and notes that of the 15 companies that Fund I invested in, four are totally on a path to going public. That would put them much faster to an exit than is typical for early stage investment targets, and Sloss credits the very different approach most hard science startups take to IP development and capital.

“The inflection points in these types of companies are actually I think faster to get to market, because they’ve spent years developing the IP, staying at relatively low or attractive valuations,” he said. “Then we can kind of come in, at that inflection point, and help them get ready to commercialize and scale up exponentially, to where other investors no longer have to underwrite the difference between science and engineering risk, they can just see it’s working and producing revenue.”

Companies that fit this mold often come directly from academia, and keep the team small and focused while they’re figuring out the core scientific discovery or innovation that enables the business. A prime example of this in recent memory is Wingcopter, a German drone startup that developed and patented a technology for a tilt-wing rotor that changes the economics of electric autonomous drone flight. The startup just took its first significant startup investment after bootstrapping for four years, and the funds will indeed be used to help it accelerate engineering on a path towards high-volume production.

While Wingcopter isn’t a Prime Movers Lab portfolio company, many of its investments fit the same mold. Boom Aerospace is currently working on building and flying its subscale demonstration aircraft to pave the way for a future supersonic airliner, while Axiom Space just announced the first crew of private tourists to the International Space Station who will fly on a SpaceX Falcon 9 for $ 50 million a piece. As long as you can prove the fundamentals are sound, allocating money turning it into something marketable seems like a logical strategy.

For Prime Movers Lab’s Fund II, the plan is to invest in around 30 or so companies, roughly doubling the number of investments from Fund I. In addition to its partners with scientific expertise, the firm also includes Partners with skill sets including creative direction, industrial design, executive coaching and business acumen, and provides those services to its portfolio companies as value-add to help them supplement their technical innovations. Its Fund I portfolio includes Momentus and Axiom, as mentioned, as well as vertical farming startup Upward Farms, coronavirus vaccine startup Covaxx, and more.

Startups – TechCrunch

Adaugo Nwankpa: To Solve Problems in Africa, We Need to Create Businesses that Bring Solutions – BellaNaija

Adaugo Nwankpa: To Solve Problems in Africa, We Need to Create Businesses that Bring Solutions  BellaNaija
“nigeria startups when:7d” – Google News

How we almost got acquired by Facebook and failed. Here’s what I learned.

This is not a happy ending story.

The beginning

It all started back in 2014. I had a startup whose clients were advertisers. It was a platform for users to review video ads in exchange for online points that could be redeemed for money or coupons. Watch and ad; rate it; be rewarded. Simple.

After 100 campaigns I kept hearing it would be wonderful to connect their offline ads (e.g. TV ads, billboards, magazines, etc) with our platform. Advertisers wanted real insights and analytics from their offline advertising investment.

As dedicated founders we started working hard on this concept: “from offline to online with your phone”. Within 4 months we had our first version. I remember showing it to our friends and constantly hearing “Wow this is brilliant! It’s like Shazam but for videos”. I was ecstatic!

The investment

The revenue was coming in but it wasn’t recurrent. It was difficult to enter the yearly advertising budget. Advertisers assumed our platform as an experiment (mainly to get feedback) and not as a serious distribution channel — despite the fact we picked at 100,000 registered users.

We needed investment to grow and build the new technology’s infrastructure. It wasn’t cheap to maintain a technology that recognized millions of videos within 4s. More on this latter.

In 2015 we raised $ 0.5M from angels and led by a VC. This allowed us to grow our team to 7 members and accelerate product development.

We were ready to storm the world!

The pivot

In retrospect, our product decisions after the investment killed our startup. We shifted our focus from the local videos ads review platform — where we had 100k users and 60 clients — to a global video recognition consumer product.

We created an App — like Shazam — that recognized millions of videos. Our goal was to have advertisers make their offline assets interactive and invite their audience to download our App and use it to unlock “something”. The practical end was the same as the QR code. How cool is that? Scan a video and “magically” show related content on your screen? Exciting, right?

Wrong. Very few people downloaded the App. It turns out the barrier of downloading the App was too much for the reward (whatever the brand wanted to offer). Don’t get me wrong, we did some cool campaigns with Kia, Unilever, or Volkswagen. But again these were one-shot campaigns. Basically an investment in innovation from the brands.

After long days discussing our future, we thought of something. What if our technology was embedded in native apps like Snapchat, Facebook, IMDB, or even in the Operating Systems of mobile devices — Android and iOS? This would mean everyone could easily interact with their offline environment and get something in return. Brilliant!

Interactive The Walking Dead

This is now 2016 and we had a new strategy. White-label our technology and allow anyone to embed it in their platforms. We built SDKs for Web, Android and iOS and off we went searching for customers. One of our main goals was to have TV shows interactive. Allow viewers to point their phone to the TV and delight them with a new experience.

In this quest, I scrapped all my network, cold reach on Linkedin, went to conferences, traveled between London, New York and San Francisco. I ended up talking to all major TV networks — Comcast, BBC, FOX, PRISA, Viacom, CNN — and closed a contract with FOX. This was a pilot experiment where FOX would use Portugal as an assessment market. It took us 9 months (!) to close the contract.

Even so, we started to see the light at the end of the tunnel. The worst part was over, we could take our learnings from our local pilot and catapult it to the world. We will change how people consume TV and will take our place in the TV innovation history.

We were ready to build a $ 1B company.

After several negotiations with FOX we were able to add our technology to three shows: The Walking Dead, MacGyver and Prison Break. What a victory! All the major shows were interactive. FOX will advertise the shows are interactive, people will scan the TV and have an amazing, memorable experience. Win-win-win.

When the first results started to come in… well let’s take a detour first and come back to the results later.

Entering Facebook

During 2016 I was mainly traveling demoing our technology to as many people as I could.

Besides TV networks I’ve met with Google, Amazon, Snapchat, Verizon, Blippar and Facebook. Our goal was to integrate the technology in their existing apps and make their users interact with the world connecting the offline and the online seamlessly.

The main feedback was something like: “amazing technology, great demo! But (there’s always a but) something like this isn’t on our product roadmap”. Except for Facebook… It was late 2016 and I’ve met with a Business Developer Director.

Here’s how it went:

(After I’ve demoed the technology)

Director: Wait, can I try it?

Me: Sure, here’s my phone.

(Director takes the phone and scans the video. The phone showed information about the actor from the exact second Director scanned. Director stays hesitant for a couple of seconds…).

Director: I need this.

Me: Uhh… Ok!(My mind was like: Errr, what, how, can I ask… Wait, what?)

Director: Here’s the deal. We have a huge problem right now. We launched Facebook Watch recently and are having a lot of copyright infringements on the platform. We need to build something like YouTube’s ContentID. More info here.

Me: Ok, we can definitely help.

Director: I’ll put you in contact with the product team responsible for this and they’ll take it from there. We are evaluating acquisitions in this space to speed up our go-to-market.

After exiting the meeting I vividly remember the next five minutes. As I went through the lobby I decided to seat on a couch to recover from the excitement. There I was, all alone, in one of the most incredible buildings in Menlo Park after a meeting in one of the biggest tech companies in the world. I found myself looking at the ceiling and smiling for no apparent reason.

The M&A process

After the Facebook meeting, we discovered we had a potential new market to unveil: copyright infringements detection. Users uploaded copyrighted content with small changes (e.g. by tempering with the audio pitch, by slightly rotating the video and by changing the original video with many different techniques) to bypass Facebook’s algorithms.

Because our technology was designed from scratch to recognize videos from low-resolution images, we were pretty effective in recognizing tempered videos. We recognized videos that were rotated, mirrored or cropped. Our algorithm didn’t use audio. We even recognized a bunch of different videos inside one. Here’s a demo with a) 10 trailers in the same video and b) a rotating video.

We arrived in 2017 with our FOX partnership generating mediocre results. No relevant revenue was coming in and the user interaction data wasn’t exciting. We learned that people need a huge reward expectation to take the effort of scanning the TV. Without undisputed usage from viewers, FOX was gradually losing interest in pushing the technology and the opportunity faded during the rest of 2017.

In February we started talking with the Facebook team. They wanted to test our technology at scale. We thought it was a fair request and agreed to be tested without any compensation. We signed NDA’s and were comfortable enough discussing the internals of how our technology works.

After a couple of meetings to discuss the technology, Facebook started to test us with hundreds of hours at a scale we were never able to test before. It was scary as hell! We were all extremely nervous to see if the servers’ architecture wouldn’t crash.

When the first results started to come in we were shocked… 95% accuracy and 0.13% false positives. This was incredible for us! This was paired with the audio industry leader: Shazam. My eyes started to tear up.

We were tremendously proud and happy about this achievement.

Facebook wasn’t…

Thanks for following up with us. It was a great experience working with your team and we think there is a great potential for your company and service.

We want to provide an update about the evaluation result. From the result, overall we see a good coverage and recall, and your team solved the problems real fast. However, due to low precision and high false positive rate, we decided not to moving forward to the next stage of the evaluation.

Thanks for your time and effort. I am sure our career will get crossed in the future

Caption: Facebook’s engineer email rejecting us

Did you feel that punch in the stomach? I surely felt it. It was so unfair to have amazing results on our side and receive this email. When we asked about the differences — to understand what went wrong on our side — we got this:

Facebook has our own metrics and process to evaluate the product value of the algorithm. But due to the policy, we are not allowed to share with you. My colleague’s point is the final result. Look forward to getting chance to work with you guys in the future.

Caption: Facebook’s lead engineer email really rejecting us

We felt kind of used and disrespected to be honest. Remember this was a two months process with several emails and calls between us. It was one of the most difficult moments of my professional life mainly because of the expectations I’ve built.

We were devastated. I was immature enough and almost took it personally. At the end of the day, it was business as usual for a big company like Facebook — they ended up acquiring Source3 to help them solve the problem. For us, it was a Technical Knock Out.

If someone from a big company is reading this and it sounds familiar, please take a moment to rethink the way you say no to a startup. Especially if you’ve been interacting daily or weekly for the past months. Invite them for a meeting or call and explain them the general decision process. It will take you half an hour and it will make a huge difference for the startup. Believe me on this…

Unfortunately, after this, we weren’t having solid revenue from our FOX partnership. After discussing with our lead investor we decided to close our doors in an unfortunate ending to what could have been a tremendous success.

Lessons Learned

So many lessons learned! We could have done so much differently. It was a rollercoaster ride with so much emotional commitment. It’s a challenging exercise but I’ll try to generally sum up the main learnings from the whole journey.

Here’s what I learned:

  • The line that defines success and failure is extremely thin.
  • If you are being evaluated (by customers, partners or possible acquirers) define success KPIs beforehand. That way everyone will have the same common ground.
  • Don’t put all your eggs (expectations) into one basket.
  • Stick to what is working, i.e., work on what people want and measure it with data; not words nor promises.
  • Be kind to everyone. If you feel disrespected or hurt, take a step back. Take some time to breathe and don’t reply right away. Time heals everything and gives your perspective.
  • Don’t take life too seriously. Be patient but persistent.

Despite all learnings, the cold reality is that this was a failed startup… but I’m trying it again. This time I’m doing things differently.

Hope you guys had a good read and learned a thing or two 🙂 Let me know if you have any questions.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Classiq raises $10.5M Series A round for its quantum software development platform

Classiq, a Tel Aviv-based startup that aims to make it easier for computer scientists and developers to create quantum algorithms and applications, today announced that it has raised a $ 10.5 million Series A round led by Team8 Capital and Wing Capital. Entrée Capital, crowdfunding platform OurCrowd and Sumitomo Corporation (through IN Venture) also participated in this round, which follows the company’s recent $ 4 million seed round led by Entrée Capital.

The idea behind Classiq, which currently has just under a dozen members on its team, is that developing quantum algorithms remains a major challenge.

“Today, quantum software development is almost an impossible task,” said Nir Minerbi, CEO and Co-founder of Classiq. “The programming is at the gate level, with almost no abstraction at all. And on the other hand, for many enterprises, that’s exactly what they want to do: come up with game-changing quantum algorithms. So we built the next layer of the quantum software stack, which is the layer of a computer-aided design, automation, synthesis. […] So you can design the quantum algorithm without being aware of the details and the gate level details are automated.”

Image Credits: Classiq

With Microsoft’s Q#, IBM’s Qiskit and their competitors, developers already have access to quantum-specific languages and frameworks. And as Amir Naveh, Classiq’s VP of R&D told me, just like with those tools, developers will define their algorithms as code — in Classiq’s case a variant of Python. With those other languages, though, you will write sequences of gates on the cubits to define your quantum circuit.

“What you’re writing down isn’t gates on cubits, its concepts, its constructs, its constraints — it’s always constraints on what you want the circuit to achieve,” Naveh explained. “And then the circuit is synthesized from the constraints. So in terms of the visual interface, it would look the same [as using other frameworks], but in terms of what’s going through your head, it’s a whole different level of abstraction, you’re describing the circuit at a much higher level.”

This, he said, gives Classiq’s users the ability to more easily describe what they are trying to do. For now, though, that also means that the platform’s users tend to be quantum teams and scientists and developers who are quantum experts and understand how to develop quantum circuits at a very deep level. The team argues, though, that as the technology gets better, developers will need to have less and less of an understanding of how the actual qubits behave.

As Minerbi stressed, the tool is agnostic to the hardware that will eventually run these algorithms. Classiq’s mission, after all, is to provide an additional abstraction layer on top of the hardware. At the same time, though, developers can optimize their algorithms for specific quantum computing hardware as well.

Classiq CTO Dr. Yehuda Naveh also noted that the company is already working with a number of larger companies. These include banks that have used its platform for portfolio optimization, for example, and a semiconductor firm that was looking into a material science problem related to chip manufacturing, an area that is a bit of a sweet spot for quantum computing — at least in its current state.

The team plans to use the new funding to expand its existing team, mostly on the engineering side. A lot of the work the company is doing, after all, is still in R&D. Finding the right software engineers with a background in physics — or quantum information experts who can program — will be of paramount importance for the company. Minerbi believes that is possible, though, and the plan is to soon expand the team to about 25 people.

“We are thrilled to be working with Classiq, assisting the team in achieving their goals of advancing the quantum computing industry,” said Sarit Firon, Managing Partner at Team8 Capital. “As the quantum era takes off, they have managed to solve the missing piece in the quantum computing puzzle, which will enable game-changing quantum algorithms. We look forward to seeing the industry grow, and witnessing how Classiq continues to mark its place as a leader in the industry.”

Startups – TechCrunch

$740m Bitcoin Scam Could Bring South Africa’s Crypto Space Under Severe Regulations – Technext

$ 740m Bitcoin Scam Could Bring South Africa’s Crypto Space Under Severe Regulations  Technext
“nigeria startups when:7d” – Google News