Wall Street Journal:
Sources: Disney eliminates its metaverse unit, cutting ~50 jobs, and ceases work on an Amazon Prime-like program integrating Disney+ and other Disney platforms — The unit, once seen as developing a new form of storytelling, had about 50 employees — Mickey Mouse has left the metaverse.
Category Archives: Startups
‘High conviction, low volume’: Playfair launches $70M pre-seed fund for European startups
Early-stage investments inherently have a higher risk of failing, but these risks also come with potentially higher rewards — getting in at the ground floor of a startup’s journey gives VCs more negotiation clout. This is particularly true at the very early pre-seed stage, where companies might barely have a functioning product to shout about. And this is something that London-based generalist VC firm Playfair Capital knows all about, given its focus on backing super young startups that have yet to make much of a ripple in their respective industries.
In its 10 year history, Playfair has invested in around 100 companies, including well-established unicorns such as Stripe, and Mapillary, a startup that exited to Facebook back in 2020. Those specific investments were from Playfair’s inaugural fund which wasn’t focused on any particular “stage” of company. But Playfair transitioned into more of a pre-seed firm with its second fund announced in 2019, a focus that it’s maintaining for its new £57 million ($70 million) third fund, which it’s announcing today.
While many early-stage VC funds might look to make a few dozen investments annually, Playfair has kept things fairly trim throughout its history, committing to no more than eight investments each year, while ringfencing some of its capital for a handful of follow-on investments. Its latest fund comes amid a swathe of fresh early-stage European VC funds, including Emblem which announced a new $80 million seed fund last week, while France-based Ovni Capital emerged on the scene last month with a $54 million early-stage fund.
‘High conviction, low volume’
Playfair, for its part, seeks out founders “outside of dominant tech hubs,” as well as founders working on projects that may run more tangential to where the main hype and “buzzy-ness” exists. This is perhaps even more integral if its stated goal is to only invest in a handful of startups each year — they don’t have the luxury of spreading a lot of money around to increase their chances of finding a winner. “High conviction, low volume” is Playfair’s stated ethos here, and identifying true differentiators is a major part of this.
“I’d say probably half the funding in our portfolio is pre-product, pre-traction,” Playfair managing partner Chris Smith explained to TechCrunch. “And the other half have some sort of really early traction, maybe a MVP (minimal viable product) or a couple of POCs (proof-of-concepts). But we tend to invest where there’s very little in the way of traction.”
It wasn’t that long ago when autonomous automobile technology was all the rage, dominating just about every trade show and tech conference. And there was one specific event several years back, the EcoMotion mobility event in Israel, that Smith says really helps to highlight its investment ethos.
“I went in to look at the roughly 120 companies exhibiting, about 116 of the companies were doing autonomy for cars,” Smith said. “And as an investor, I look at this and think that if you’re writing tons of checks a year, you probably just invest in lots of them, and try and find a winner — but we don’t, we only do six to eight [annual investments]. So my view was, ‘I don’t want to play in that space’. The only real distinction between them was whether they were choosing LIDAR or computer vision. There just wasn’t enough differentiation.”
However, at this same conference, there were four companies doing something completely different. One of them was Orca AI which was developing a collision-avoidance system for ships, and it was this company from a sea of samey startups that Playfair ended up investing in — both in its 2019 pre-seed funding round, and its follow-on Series A round two years later.
“That’s where we like to look,” Smith said. “We like these nascent markets — I call them ‘overlooked and unsexy sectors’. That’s where we really like to get stuck in, and where I see the opportunity.”
A large chunk of early-stage deals fall apart in the due diligence phase. But if a company doesn’t have any market traction or even a fully-working product yet, how exactly do VCs go about deciding who’s worth a bet? While one of the oldest investment cliches says something about the importance of ‘investing in people rather than companies,’ that is perhaps even more true at the super early stage. And while having previous exits and success in the business world can be a useful indicator, there are many things that can ultimately determine whether a founder or founding team are intrinsically investable.
“We look for a few things, including examples of exceptional performance,” Smith said. “And I think the key thing is that it doesn’t necessarily have to be in the business world, or even in the domain they’re building the company.”
Playfair capital staff portraits Image Credits: Playfair Capital
By way of example, PlayFair recently re-invested in AeroCloud, a four-year-old SaaS startup from the Northwest of England that’s building airport management software, having also invested in its seed round some two years previous. AeroCloud co-founder and CEO George Richardson had been a fairly successful professional racing driver since the age of 15, but he didn’t really have any direct experience of the aviation sector before setting up AeroCloud.
“He didn’t know anything about airports before he started the company,” Smith said. “But we thought, if someone can podium at Le Mans and exist under such enormous pressure, that’s an amazing character trait path for a founder.”
Obviously there are many other factors that go into the due diligence process, including meticulous industry research to establish the scale of a problem the startup proclaims to be solving. But some sort of successful track record, in just about anything, is a useful barometer at the early investment stage.
“If you can play a musical instrument to an incredible level, or [if you’re] a professional racing driver, or golfer or whatever it is — I do think that is quite a useful predictor of future performance,” Smith said. “But it’s [investing due diligence] a combination of spending plenty of time with the founders and getting to understand what makes them tick. Then going really deep to support the thesis.”
Insulated
A lot has happened in the world between 2019 and 2023, with a global pandemic and major economic downturn intersecting Playfair’s second and third funds. In the broader sphere of Big Tech, startups, and venture capital, we’ve seen major redundancies, plunging valuations, and delayed IPOs, but in the early-stage world Playfair inhabits, it’a been a slightly different experience.
“At pre-seed where we invest, we’re quite insulated from what’s happening in the IPO markets, or what’s happening with growth funds,” Smith said.
That’s not to say nothing has changed, though. Its third fund is more than double the size of its second fund, which reflects the size of checks it’s now having to write for companies, growing from an average of around of perhaps £500,000 previously, to around £750,000 today, thought that figure may creep up toward the £1 million mark. So what has driven that change? A combination of factors, as you might expect, including the simple fact that there is more capital around, and the economic conditions that everyone is currently facing.
“In 2021, there was this crazy peak, now it’s settled again — but rounds are still significantly higher than they were in 2018-2019,” Smith said. “We’re actually really fortunate in the U.K. to have the SEIS and EIS schemes (tax-efficient schemes for investors) because they brought in a ton of angel capital, and then also capital from funds that take advantage of the tax breaks — there’s basically just more money around. I actually think inflation has played a part too. So whilst in some senses the cost of building a startup has fallen, such as access to certain tools, at the same time salaries have gone up a lot. So, startup founders back in 2018-2019 might have paid themselves £30-40,000 [annually], you see founders now being paid maybe £60-70,000. So founders need more to be able to live comfortably while they build their company.”
This, of course, follows through to the hiring and building of teams, who will also now be expecting more money to counter the cost-of-living increases across society. Throw into the mix, perhaps, a growing understanding that a fledgling company might need a little more runway to stand a chance of succeeding, and all this might go someway toward explaining growing check-sizes in the early seed stages.
“I think that Europe has maybe learned a few lessons from the U.S., which is that there’s no point in putting really small amounts of money into companies, giving them really short runways, putting unnecessary pressure on them, and then watching them fail,” Smith said. “You want to give companies enough money so that they’ve got 18 to 24 months, time to pivot, time to figure stuff out. That increases the chances of success.”
Advantages
While not unique in the early-stage investment fray, Playfair has a sole limited partner (LP) in the form of founder Federico Pirzio-Biroli who provides all the capital, and who ran it initially as both a managing partner and LP. Smith stepped in for Federico for the second fund, and Federico has since moved to Kenya where he now has a more passive role in terms of day-to-day involvement. And having a single entity providing the capital simplifies things greatly from an investment and management perspective.
“It gives us a ton of advantages — it means I don’t spend 40-50% of my time fundraising, and I can spend my time working with our founders,” Smith said. “And I think it’s also just a huge vote of confidence.”
This “vote of confidence,” according to Smith, stems from Playfair having already returned the entirety of its first fund in cash, helped in part by several exits. This number will likely receive a major boost too, with Stripe gearing up for a bumper IPO — Playfair invested in the fintech giant at its Series C round in 2014 before it narrowed its focus to pre-seed. And for its second fund, Smith said they’ve reached somewhere in the region of 95th percentile for TVPI (total value vs paid in capital).
According to Dealroom data, some 19% of seed-stage companies raise a Series A within 36 months. By contrast, Playfair says that 75% of its fund 2 investments have now also raised a Series A investment, and in 2022 alone its portfolio companies secured $570 million in follow-on funding from various VCs.
“Success for our founders is basically the same as success for us, which is getting them from pre-seed to a successful Series A round,” Smith said.
And while Playfair does typically pass the lead-investor baton on to another VC firm for subsequent rounds, it will often lead again on the seed round, as well as participating in Series A rounds and very occasionally later. In part, this is as much about displaying confidence as it is providing capital, which is crucial as a startup is gearing up to hit the market.
“I think that’s really important, because if your existing pre-seed investor won’t lead your seed, that can be quite a difficult moment to go out to the market, when you may not have that many proof-points to try and get another external investor in,” Smith added.
‘High conviction, low volume’: Playfair launches $70M pre-seed fund for European startups by Paul Sawers originally published on TechCrunch
Disney cuts metaverse division as part of broader restructuring
Walt Disney Co. has eliminated its metaverse division as part of staff cuts that promise to reduce head count by around 7,000 across the company over the next two months, reports The Wall Street Journal.
CEO Bob Iger said Monday that those layoffs would begin this week. Disney’s next-generation storytelling and consumer experiences unit, the small division that was developing metaverse strategies, looks like it’s one of the first to go.
The metaverse division is headed by Mike White, who was promoted to the role from SVP of consumer experiences and platforms in February 2022 and charged with getting Disney deeper into the web3 space. The unit aimed to find ways to tell more interactive stories in immersive formats using Disney’s extensive library of intellectual property, according to WSJ. Aside from the Disney we all know and love, that extensive library includes Pixar, Marvel and all of the Star Wars movies and shows.
All 50 or so members of the team have lost their jobs, sources told WSJ. White will remain at the company, but it’s not clear in what capacity.
The company could not be reached for comment.
Disney’s former CEO, Bob Chapek, brought White on last year with the goal of creating “an entirely new paradigm for how audiences experience and engage with our stories,” according to an internal memo. Chapek also described the metaverse as “the next great storytelling frontier” and a “perfect place to pursue our strategic pillars of storytelling excellence, innovation and audience focus.”
The hiring of White and the creation of the new metaverse unit came a few months after Facebook rebranded to Meta in an attempt to identify with the futuristic technology into which CEO Mark Zuckerberg had been pouring billions of dollars.
Iger took over for Chapek in November and, despite recent developments, seems to be bullish on the metaverse. He invested in and joined the board of Genies Inc. last year, a startup that lets users create online avatars for use in metaverse applications.
The metaverse is still many years from going mainstream, which has frustrated many big tech companies that invested large sums on new entertainment formats. Despite Meta’s billions spent on the Oculus headset and building out the metaverse, there has been low user demand and general confusion among users about how to use the new technology for anything but gaming.
Last month, Disney said it would make $5.5 billion in cuts and cut 7,000 jobs as part of a broader restructuring. Like many other large conglomerates, Disney is feeling the pressure to bring costs down, and that often means cutting out expensive moonshot projects that aren’t bringing in any near-term revenue.
It’s not yet clear if Disney will continue to work on metaverse applications via other teams, since it’s a long-term bet. Zuckerberg has repeatedly asked investors to trust him, be patient and play the long game.
Disney cuts metaverse division as part of broader restructuring by Rebecca Bellan originally published on TechCrunch
Journalist plugs in unknown USB drive mailed to him—it exploded in his face
Enlarge / Ecuadorian police tweeted this picture of officials investigating a drive mailed to a journalist in Guayaquil. (credit: Policía Ecuador/Twitter)
It’s no secret that USB flash drives, as small and unremarkable as they may look, can be turned into agents of chaos. Over the years, we’ve seen them used to infiltrate an Iranian nuclear facility, infect critical control systems in US power plants, morph into programmable, undetectable attack platforms, and destroy attached computers with a surprise 220-volt electrical surge. Although these are just a few examples, they should be enough to preclude one from inserting a mysterious, unsolicited USB drive mailed to them into a computer. Unfortunately, one Ecuadorian journalist didn’t get the memos.
As reported by the Agence France-Presse (via CBS News) on Tuesday, five Ecuadorian journalists have received USB drives in the mail from Quinsaloma. Each of the USB sticks was meant to explode when activated.
Upon receiving the drive, Lenin Artieda of the Ecuavisa TV station in Guayaquil inserted it into his computer, at which point it exploded. According to a police official who spoke with AFP, the journalist suffered mild hand and face injuries, and no one else was harmed.
Ethical AI art generation? Adobe Firefly may be the answer.
Enlarge / An Adobe Firefly AI image generator example. (credit: Adobe)
On Tuesday, Adobe unveiled Firefly, its new AI image synthesis generator. Unlike other AI art models such as Stable Diffusion and DALL-E, Adobe says its Firefly engine, which can generate new images from text descriptions, has been trained solely on legal and ethical sources, making its output clear for use by commercial artists. It will be integrated directly into Creative Cloud, but for now, it is only available as a beta.
Since the mainstream debut of image synthesis models last year, the field has been fraught with issues around ethics and copyright. For example, the AI art generator called Stable Diffusion gained its ability to generate images from text descriptions after researchers trained an AI model to analyze hundreds of millions of images scraped from the Internet. Many (probably most) of those images were copyrighted and obtained without the consent of their rights holders, which led to lawsuits and protests from artists.
To avoid those legal and ethical issues, Adobe created an AI art generator trained solely on Adobe Stock images, openly licensed content, and public domain content, ensuring the generated content is safe for commercial use. Adobe goes into more detail in its news release:
Huge collection of vintage Apple computers goes to auction next week
Enlarge / I mostly recognize this early laptop from its resemblance to a similar-looking computer in the film 2010. It’s up for auction along with hundreds of other old Apple computers. (credit: Julien’s Auctions)
If you’ve been thinking your home or workspace is perhaps deficient when it comes to old Apple hardware, then I have some good news for you. Next week, a massive trove of classic Apple computing history goes under the hammer when the auction house Julien’s Auctions auctions off the Hanspeter Luzi collection of more than 500 Apple computers, parts, software, and the occasional bit of ephemera.
Ars reported on the auction in February, but Julien’s Auctions has posted the full catalog ahead of the March 30 event, and for Apple nerds of a certain age, there will surely be much to catch your eye.
The earliest computers in the collection are a pair of Commodore PET 2001s; anyone looking for a bargain on an Apple 1 will have to keep waiting, unfortunately.
If your Netgear Orbi router isn’t patched, you’ll want to change that pronto
Enlarge / An Orbi 750 series router. (credit: Netgear)
If you rely on Netgear’s Orbi mesh wireless system to connect to the Internet, you’ll want to ensure it’s running the latest firmware now that exploit code has been released for critical vulnerabilities in older versions.
The Netgear Orbi mesh wireless system comprises a main hub router and one or more satellite routers that extend the network’s range. By setting up multiple access points in a home or office, they form a mesh system that ensures Wi-Fi coverage is available throughout.
Remotely injecting arbitrary commands
Last year, researchers on Cisco’s Talos security team discovered four vulnerabilities and privately reported them to Netgear. The most severe of the vulnerabilities, tracked as CVE-2022-37337, resides in the access control functionality of the RBR750. Hackers can exploit it to remotely execute commands by sending specially crafted HTTP requests to the device. The hacker must first connect to the device, either by knowing the SSID password or by accessing an unprotected SSID. The severity of the flaw is rated 9.1 out of a possible 10.
Twitter source code was leaked on GitHub shortly after Musk’s layoff spree
Enlarge (credit: Getty Images | Future Publishing)
Portions of Twitter’s source code recently appeared on GitHub, and Twitter is trying to force GitHub to identify the user or users who posted the code.
GitHub disabled the repository on Friday shortly after Twitter filed a DMCA (Digital Millennium Copyright Act) takedown notice but apparently hasn’t provided the information Twitter is seeking. Twitter’s DMCA takedown notice asked GitHub to provide the code submitter’s “upload/download/access history,” contact information, IP addresses, and any session information or “associated logs related to this repo or any forks.”
The GitHub user who posted the Twitter source code has the username “FreeSpeechEnthusiast,” possibly a reference to Twitter owner Elon Musk casting himself as a protector of free speech.
Android app from China executed 0-day exploit on millions of devices
Enlarge (credit: Getty Images)
Android apps digitally signed by China’s third-biggest e-commerce company exploited a zero-day vulnerability that allowed them to surreptitiously take control of millions of end-user devices to steal personal data and install malicious apps, researchers from security firm Lookout have confirmed.
The malicious versions of the Pinduoduo app were available in third-party markets, which users in China and elsewhere rely on because the official Google Play market is off-limits or not easy to access. No malicious versions were found in Play or Apple’s App Store. Last Monday, TechCrunch reported that Pinduoduo was pulled from Play after Google discovered a malicious version of the app available elsewhere. TechCrunch reported the malicious apps available in third-party markets exploited several zero-days, vulnerabilities that are known or exploited before a vendor has a patch available.
Sophisticated attack
A preliminary analysis by Lookout found that at least two off-Play versions of Pinduoduo for Android exploited CVE-2023-20963, the tracking number for an Android vulnerability Google patched in updates that became available to end users two weeks ago. This privilege-escalation flaw, which was exploited prior to Google’s disclosure, allowed the app to perform operations with elevated privileges. The app used these privileges to download code from a developer-designated site and run it within a privileged environment.
ChatGPT gets “eyes and ears” with plugins that can interface AI with the world
Enlarge (credit: Aurich Lawson | Getty Images)
On Thursday, OpenAI announced a plugin system for its ChatGPT AI assistant. The plugins give ChatGPT the ability to interact with the wider world through the Internet, including booking flights, ordering groceries, browsing the web, and more. Plugins are bits of code that tell ChatGPT how to use an external resource on the Internet.
Basically, if a developer wants to give ChatGPT the ability to access any network service (for example: “looking up current stock prices”) or perform any task controlled by a network service (for example: “ordering pizza through the Internet”), it is now possible, provided it doesn’t go against OpenAI’s rules.
Conventionally, most large language models (LLM) like ChatGPT have been constrained in a bubble, so to speak, only able to interact with the world through text conversations with a user. As OpenAI writes in its introductory blog post on ChatGPT plugins, “The only thing language models can do out-of-the-box is emit text.”