Pokémon Company says it intends to investigate Palworld

Image Credits: Pocketpair

The Pokémon Company said Thursday it has not granted any permission to “another company,” referring to viral new game Palworld-developer Pocketpair, to use Pokémon intellectual property or assets and “intends to investigate and take appropriate measures” against the fast-growing survival game operator.

The statement is Pokémon Company’s first acknowledgement of Palworld’s fast-growing survival title, which has sold over 8 million copies in fewer than six days, exceeding the performance of even the most popular AAA titles. But as TechCrunch previously reported, Palworld is also attracting a growing number of criticism — many from the fans of Japan’s legendary firm — over perceived plagiarism and uncanny resemblance. However, its fusion of monster collecting, automation, and survival/crafting mechanics has struck a chord with players nonetheless.

Palworld, available on PCs via Steam and on Xbox, taps into pent-up demand for a modern take on the monster taming genre that Pokémon arguable created but has failed to significantly evolve. Whether driven by genuine interest or a desire to punish Nintendo, the primary distributor of Pokémon games, for stagnation, gamers have flocked to Palworld for its fresh take.

Pocketpair, which released the title on January 19, insisted earlier that its game had more resemblance to a title such as Ark Survival than Pokémon. Pocketpair chief executive Takuro Mizobe cautioned earlier this week that his team was receiving slanderous comments and also seeing tweets that appeared to be “death threats.”

“We have received many inquiries regarding another company’s game released in January 2024. We have not granted any permission for the use of Pokémon intellectual property or assets in that game,” The Pokemon Company wrote in a statement on its website Thursday.

“We intend to investigate and take appropriate measures to address any acts that infringe on intellectual property rights related to the Pokémon. We will continue to cherish and nurture each and every Pokémon and its world, and work to bring the world together through Pokémon in the future.”

couple on couch watching plex live tv

Streaming media company Plex raises $40M as it nears profitability

couple on couch watching plex live tv

Image Credits: Plex

Media streamer Plex has raised new capital. The company, which began as a media organization startup, has morphed over the years to become a one-stop shop for all your media, including ad-supported streaming, which now accounts for much of its revenue growth. The new round, which has not yet been disclosed, was initially said to be larger than Plex’s $50 million growth round closed a few years ago, but we now understand it’s $40 million, a rep for Plex has confirmed. The funds will help fuel the company’s push toward profitability, expected by year-end or just after.

Plex CEO Keith Valory confirmed the round closed this month, but was unable to disclose Plex’s new valuation. While he joked that he likes to think of himself as a unicorn, Plex’s real-world valuation is unknown as the company hasn’t raised outside funds in some time, preferring instead to work with its existing set of investors.

The same holds true for Plex’s new investment, as it’s an inside round that includes existing Series C investors — lead investor Intercap and Kleiner Perkins. (Technically, it’s Plex’s Series C-3, if you’re counting.) The size of the round will later be disclosed through securities filings.

“We have the most supportive investors of any,” Valory said. “I feel like funding has never been a concern of ours,” he added.

The fundraising follows a number of changes to Plex’s core product over the years, which has transformed itself from a software platform used by consumers for organizing their home media collections to one that has multiple facets. Today, Plex users can watch free, ad-supported shows and movies, listen to music, stream live TV channels or their own media, and more, including the discovery of new things to watch. Recently, the company has been developing social features, as well, allowing Plex users to opt into a feature that tracks their viewing and shares it with friends.

This feature will be further developed over the course of the year. Plex says it aims to expand the community capabilities for both the content owners and for users through the use of public pages that will offer content owners a bigger stake in the conversations that take place around their movies and shows.

Another planned feature, announced at CES, is the forthcoming launch of Plex’s TVOD marketplace — an online storefront that will allow users to rent shows and movies from top studios.

To date, however, it’s Plex’s ad-supported streaming that’s been helping Plex grow its revenue. Though Plex was impacted by the market downturn, leading to layoffs, Plex’s ad revenue grew by nearly 45% in 2023 and the overall business grew by 30%, the company tells us. Engagement and usage have been growing as well. The company is still on track to be profitable by the end of 2024 or early next year, Valory noted.

“We’re a leader in this market. And we’re in, at least, the top five if not higher in this space, and we feel like we’re doing really, really well,” he said.

As a result of Plex’s ability to track users’ media discovery behavior and consumption across platforms and services, the company has a unique perspective from a data standpoint. That will be the focus of its future business initiatives, too.

“One of the things we’ve already started to prove in 2023 is that we can absolutely monetize some of that data…in a very privacy-friendly way. There’s no personally identifiable information being used,” Valory said. “We already proved we could make money on that this year, so, in 2024, we’re putting more wood behind that arrow. And arguably, even though our current business is already growing 30%-40% per year, that could dwarf it in two to three years. That is a really big market opportunity,” he added.

1/249/24, 7:10 pm et: Updated with round size; round size confirmed by Plex

WASHINGTON, DC - JANUARY 31: Linda Yaccarino, CEO of X, testifies before the Senate Judiciary Committee at the Dirksen Senate Office Building on January 31, 2024 in Washington, DC. The committee heard testimony from the heads of the largest tech firms on the dangers of child sexual exploitation on social media. (Photo by Alex Wong/Getty Images)

X CEO Linda Yaccarino claims company has 90M US users, less than 1% are teens

WASHINGTON, DC - JANUARY 31: Linda Yaccarino, CEO of X, testifies before the Senate Judiciary Committee at the Dirksen Senate Office Building on January 31, 2024 in Washington, DC. The committee heard testimony from the heads of the largest tech firms on the dangers of child sexual exploitation on social media. (Photo by Alex Wong/Getty Images)

Image Credits: Alex Wong / Getty Images

During today’s Senate Judiciary Committee hearing focused on kids’ online safety, X CEO Linda Yaccarino downplayed the social network’s reach among younger users, when she noted that less than 1% of the app’s U.S. users were teens ages 13 through 17. The executive put that number in context by also sharing that there were 90 million X users in the U.S. — a drop from its reported 95.4 million estimated users as of January 2023, according to data from Statista.

When Elon Musk acquired Twitter, which has since rebranded as X, the U.S. was its largest market, ahead of Japan, India, Brazil and others. Speaking at an event last fall, Musk claimed the network overall had grown to 550 million monthly active users, though it wasn’t clear if his calculations included fake accounts, like bots and spammers.

Though Musk hadn’t broken down X usage by market, at the time, Yaccarino last month indicated that X’s user base overall was growing, noting that as of December 7, 2023, more than 10 million people had already signed up for X during the month.

But her figures shared with the U.S. Senate today suggest that X may be facing a slight year-over-year decline in the U.S., assuming the 2023 market estimates were accurate. (Statista noted they were based on addressable ad audiences and were provided by DataReportal.) A decline would align with market expectations, as a Pew Research study published in July 2023 found that a quarter of Twitter users said they were unlikely to be on the site in a year’s time. Though Twitter, now X, has remained stickier than first thought, it has been facing a number of new competitors, including the decentralized network Mastodon, Bluesky and Instagram Threads, among others. Third-party data also indicated that X usage had dropped during Musk’s first year of ownership, Axios reported in October.

Despite the fact that X has come under fire for failing to take adequate measures to block CSAM (child sex abuse material) on its platform in markets including the EU and Australia, has been sued by CSAM victims and last year unblocked the account of a user who had posted CSAM imagery, the company largely escaped deeper questions about its plans to combat CSAM during today’s hearing. The lawmakers also didn’t reference the recent Taylor Swift deepfake porn debacle, even though the news had reached the White House.

In addition to downplaying X’s reach among young people, Yaccarino also distanced the company from its predecessor, Twitter, by calling X “a 14-month-old company” that has “reprioritized child protection and safety measures.” She added that X has “just begun to talk about and discuss how we can enhance those [measures] with parental controls.”

Timed alongside the hearing, the company shared that it suspended 12.4 million user accounts for violating its CSE (child sexual exploitation) policies in 2023, up from the 2.3 million accounts removed by Twitter in 2022. It also sent 850,000 reports to NCMEC (National Center for Missing & Exploited Children), eight times more than before Musk’s acquisition.

Those figures, of course, can be viewed in different ways — either that X has increased enforcement, as it wants people to believe, or that CSAM-related activity itself has increased on X, and an increase in the number of reports has followed.

Also during the hearing, Yaccarino answered a question about how many content moderators were on staff by saying that X had 2,300 people “all over the world.” That’s more than the number of X employees. (After Musk’s acquisition, 80% of its workforce of 7,500 was laid off or quit, including most of the trust and safety team.) X recently said that it was planning to build back up its trust and safety teams by hiring 100 full-time moderators in Austin, Texas.

In an email response, a rep for X said it does have 2,300 people, as Yaccarino said, but they are a combination of full-time employees and full-time contractors.

Ahead of congressional hearing on child safety, X announces plans to hire 100 moderators in Austin

INRIA office building in France

Probabl is a new AI company built around popular library scikit-learn

INRIA office building in France

Image Credits: ricochet64 / Getty Images

Probabl isn’t your average AI startup, as this new French company is an Inria spin-off company that revolves around an open source data science library called scikit-learn — Inria is a well-known French technology research institute.

As for scikit-learn, with more than 45,000 stars on GitHub, this Python module is widely used by machine learning teams working on tabular data. It can be used for model fitting, predicting, cross-validation, etc.

Unless you’re an ML developer, this might be the first time you’re hearing about scikit-learn. But many big companies have relied on the library for their own products, such as Spotify, Hugging Face, Booking.com and Dataiku.

Some of the contributors behind scikit-learn and other Inria-backed open source libraries have decided to create a company to ensure that these projects remain actively developed and properly funded with revenue-making activities.

Researchers who are joining this project include Camille Troillard, Gaël Varoquaux, Olivier Grisel, François Goupil, Guillaume Lemaitre, Jérémie Du Boisberranger and Fabien Gandon.

Yann Lechelle, the former CEO of cloud hosting company Scaleway, spent four months as Entrepreneur in Residence at Inria working on this project. Following the spin-off from Inria, he will assume the role of CEO of Probabl.

“We are a software publisher, but our first commercial offerings will include professional services, training and certification, specifically around scikit-learn,” Lechelle told me. “Our scope will be broader to cover the complete data cycle from organization and cleaning to machine learning and MLOps.”

As a company, Probabl now has three types of shareholders:

Public shareholders, such as Inria’s investment subsidiary Inria Participations, the French government through its French Tech Souveraineté program;Private shareholders, such as Costanoa Ventures;And finally individual contributors.

They will all play a part in the governing body of the newly formed organization. Probabl is calling itself a company with an industrial and digital sovereignty mission. As a result, it wants to release truly open source projects, which hasn’t been the case lately in the AI industry.

Logo for Getaround peer-to-peer car sharing service on the side of a car.

Car-sharing company Getaround cuts one-third of US workforce

Logo for Getaround peer-to-peer car sharing service on the side of a car.

Image Credits: Photo by Smith Collection/Gado / Getty Images

Getaround, a company that helps vehicle owners rent out their cars, trucks and SUVs to other peers, is cutting 30% of its North American workforce as part of a restructuring.

The company said in a statement it will restructure its workforce and operations to reduce costs in hopes of extending its cash runway and accelerating “its path to profitability.”

Getaround wouldn’t disclose the number of workers it currently employs in North America or in Europe, where it also operates. The company employed 283 full-time employees as of December 31, 2022, according to its most recent full-year earnings report. That figure has fluctuated since then due to a 10% workforce reduction in February 2023, which was also conducted to “achieve a leaner path to profitability,” and an acquisition of Hyrecar in May 2023.

Getaround said this latest restructuring will result in savings of about $7 million on an annualized run-rate basis. The company said it expects up to $1 million in restructuring costs in connection with the workforce reductions.

“Our focus on profitability and sustainable business growth necessitated this difficult workforce reduction program,” Getaround CEO Sam Zaid said in a statement. “We’ve made significant progress over the past year, including steady improvements in revenue growth and unit economics, as well as in overall adjusted EBITDA profile and operating efficiency. We launched a new artificial intelligence model (Trustscore AI) to improve the safety and economics of our marketplace, deployed a powerful new global app that unifies and enables seamless trip coordination across the U.S. and Europe, and expanded to gig carsharing, enabling gig workers across the U.S. to rent cars to drive for services like Uber and DoorDash. As the only truly global and digital carsharing marketplace, and as the leader in gig carsharing, we believe Getaround is increasingly well positioned for the future.”

Getaround has seen revenue growth, according to its third-quarter earnings report which revealed a 42% year-over-year increase. While progress has been made, profitability is still a ways off. In that same quarter, Getaround reported $42.9 million worth of operating expenses and a $27.3 million loss on a net GAAP basis. Even when using more generous profit calculations, Getaround was still unprofitable in the third quarter, with an adjusted EBITDA of -$11.3 million during the three-month period.

Chatbot concept. Hand holding phone with illustration of woman chatting with chat bot in smartphone. User chatting with chat bot on smartphone. Customer service help. Vector illustration

Bret Taylor’s new AI company aims to help customers get answers and complete tasks automatically

Chatbot concept. Hand holding phone with illustration of woman chatting with chat bot in smartphone. User chatting with chat bot on smartphone. Customer service help. Vector illustration

Image Credits: mi-vector / Getty Images

We’ve been hearing about former Salesforce co-CEO Bret Taylor’s latest gig since he announced he was leaving the CRM giant in November 2022. Last February we heard he was launching an AI startup built with former Google employee Clay Bavor. Today, the two emerged with a new conversational AI company called Sierra with some bold claims about what it can do.

At its heart, the new company is a customer service bot. That’s not actually all that Earth-shattering, but the company claims that it’s much more than that, with its software going beyond being an extension of a FAQ page and actually taking actions on behalf of the customer.

“Sierra agents can do so much more than just answer questions. They take action using your systems, from upgrading a subscription in your customer database to managing the complexities of a furniture delivery in your order management system. Agents can reason, problem solve and make decisions,” the company claimed in a blog post.

Having worked with large enterprise customers at Salesforce, Taylor certainly understands that issues like hallucinations, where a large language model sometimes makes up an answer when it lacks the information to answer accurately, is a serious problem. That’s especially true for large companies, whose brand reputation is at stake. The company claims that it is solving hallucination issues.

Sierra conversational AI in action using a Yoga studio customer asking for an appointment and the bot making it for them.
Image Credits: Sierra

At the same time, it’s connecting to other enterprise systems to undertake tasks on behalf of the customer without humans being involved. These are both big audacious claims and will be challenging to pull off.

Some other startups working on this problem include former TechCrunch Disrupt Battlefield winner Forethought, which has been working on this problem since long before ChatGPT came along, and Ada, which launched an AI customer service suite last spring.

It makes sense that Taylor, who spent seven years at Salesforce, would be looking at AI to solve customer problems. Salesforce bought his last company, Quip, for $750 million in the summer of 2016. He rose through the ranks all the way to co-CEO before leaving to start building Sierra with Bavor.

They already have several big consumer brands using the initial version of the platform, including SiriusXM, Sonos and WeightWatchers.

Bavor was previously at Google for seven years, where he was in charge of AR and VR, before joining forces with Taylor, who also did a stint at Google in the early 2000s.

In addition to his day job running Sierra, Taylor is chairman of the board at OpenAI after previously serving on the board at Twitter. He was dismissed from that position when Elon Musk dissolved the board shortly after taking over the company in October 2022.

Motional IONIQ 5 Robotaxi Manufactured at HMGICS

Hyundai-backed autonomous company Motional cuts 5% of workforce

Motional IONIQ 5 Robotaxi Manufactured at HMGICS

Image Credits: Motional

Motional, the autonomous vehicle company born out of a joint venture between Hyundai Motor Group and Aptiv, told employees Wednesday it will cut about 5% of its workforce, TechCrunch has learned.

The cuts, which translate to fewer than 70 people, mostly affect administrative roles and some employees working in Boston, one of several cities where it tests autonomous vehicles, according to sources who asked to not be named because they are not authorized to speak for Motional. The autonomous vehicle company last had layoffs in December 2022, when it cut about 10% of its workforce. That earlier layoff mostly affected the company’s operations in Pittsburgh, where it tests AVs.

Motional operates an autonomous vehicle taxi service in Las Vegas (still with human safety operators behind the wheel) on Uber, Lyft and Via platforms. It also has an autonomous delivery pilot with Uber Eats in Santa Monica, California.

A Motional spokesperson confirmed the layoffs.

“Motional recently announced steps to reallocate resources to areas of the company that will directly enable long-term commercial success, including staff reductions that impacted less than 5% of employees working in non-technical roles,” Motional said in an emailed statement. “We are continuing to hire critical talent needed to develop our technology and meet our commercial goals. We’re confident in our funding roadmap and are well positioned for the next phase of our commercialization. Our team is focused on scaling our driverless services, expanding Motional’s commercial partnerships, and furthering development on Motional’s next-generation robotaxi in collaboration with Kia.”

The layoffs come one month after automotive supplier Aptiv — the other half of a $4 billion joint venture with Hyundai that created Motional — said it would no longer allocate capital toward the endeavor.

With Aptiv pulling out of future funding, Hyundai is left as the sole backer, unless Motional is able to court another company to fund its efforts. Motional is also exploring outside funding deals, according to one source. The company has previously said in internal meetings that it had enough runway to last through the end of Q1 2024.

Despite its financial woes, the company has continued to make some progress toward its goal of launching a robotaxi service using driverless Hyundai Ioniq 5 vehicles in 2024. In November, Hyundai Motor Group and Motional announced plans to co-develop production-ready versions of the all-electric Ioniq 5 robotaxi at the automaker’s new innovation center in Singapore, the Hyundai Motor Group Innovation Center Singapore (HMGICS). A production-ready autonomous vehicle, equipped with the kind of redundancies designed for safe operations without a human driver, is a critical milestone required for commercial operations.

During CES 2024, the company announced plans to work with Kia on a next-generation vehicle that will enter commercial operations later this decade. The initial development process will begin this year, according to the company.

Telegram logo behind silhouette of person checking a mobile device

Telegram founder says the company will become profitable next year

Telegram logo behind silhouette of person checking a mobile device

Image Credits: Chris Ratcliffe/Bloomberg via Getty Images

Telegram founder Pavel Durov said that the company expects to hit profitability next year with eyes on going public in the future.

The chat app, which crossed 900 million users, is making “hundreds of millions of dollars” through ads and subscriptions, Durov told the Financial Times in an interview. While global investors have offered the company money at a more than $30 billion valuation, he mentioned that Telegram aims to go public in the future.

“The main reason why we started to monetize is because we wanted to remain independent. Generally speaking, we see value in [an IPO] as a means to democratize access to Telegram’s value,” he told FT.

While Telegram is not looking to raise a mega-round, the company is open to investment in exchange for smaller equity.

Telegram launched a premium subscription two years ago. Within months, it crossed the mark of one million paid users. The company also offers ad solutions for one-to-many channels and plans to launch ad revenue sharing with channel owners this month. Durov told FT that ad solutions are currently limited to certain geographies. The company also mandates agencies to spend between €1 million and €10 million. Telegram is looking to expand ad offerings globally this year and also make room for small-ticket spenders.

Earlier this month, the company announced that personal users can convert their accounts to business accounts by paying a subscription fee.

Apart from these solutions, Telegram has also experimented with blockchain-based projects through the TON foundation. In December 2022, the company auctioned premium usernames using TON Blockchain to let people use the app without any SIM. In September 2023, Telegram added a self-custodial crypto wallet globally except in the U.S.

Durov has said in the past that Telegram wants to launch AI-powered chatbots for customer service for business users. The company also plans to invest in AI to solve moderation issues that often plague the platform.

Why Elon Musk's AI company 'open-sourcing' Grok matters — and why it doesn't

The xAI Grok AI logo

Image Credits: Jaap Arriens/NurPhoto (opens in a new window) / Getty Images

Elon Musk’s xAI released its Grok large language model as “open source” over the weekend. The billionaire clearly hopes to set his company at odds with rival OpenAI, which, despite its name, is not particularly open. But does releasing the code for something like Grok actually contribute to the AI development community? Yes and no.

Grok is a chatbot trained by xAI to fill the same vaguely defined role as something like ChatGPT or Claude: You ask it, it answers. This LLM, however, was given a sassy tone and extra access to Twitter data as a way of differentiating it from the rest.

As always, these systems are nearly impossible to evaluate, but the general consensus seems to be that it’s competitive with last-generation, medium-size models like GPT-3.5. (Whether you decide this is impressive given the short development time frame or disappointing given the budget and bombast surrounding xAI is entirely up to you.)

At any rate, Grok is a modern and functional LLM of significant size and capability, and the more access the dev community has to the guts of such things, the better. The problem is in defining “open” in a way that does more than let a company (or billionaire) claim the moral high ground.

This isn’t the first time the terms “open” and “open source” have been questioned or abused in the AI world. And we aren’t just talking about a technical quibble, such as picking a usage license that’s not as open as another (Grok is Apache 2.0, if you’re wondering).

5 investors on the pros and cons of open source AI business models

To begin with, AI models are unlike other software when it comes to making them “open source.”

If you’re making, say, a word processor, it’s relatively simple to make it open source: You publish all your code publicly and let community to propose improvements or make their own version. Part of what makes open source as a concept valuable is that every aspect of the application is original or credited to its original creator — this transparency and adherence to correct attribution is not just a byproduct, but is core to the very concept of openness.

With AI, this is arguably not possible at all, because the way machine learning models are created involves a largely unknowable process whereby a tremendous amount of training data is distilled into a complex statistical representation the structure of which no human really directed, or even understands. This process cannot be inspected, audited, and improved the way traditional code can — so while it still has immense value in one sense, it can’t ever really be open. (The standards community hasn’t even defined what open will be in this context, but are actively discussing it.)

That hasn’t stopped AI developers and companies from designing and claiming their models as “open,” a term that has lost much of its meaning in this context. Some call their model “open” if there is a public-facing interface or API. Some call it “open” if they release a paper describing the development process.

Arguably the closest to “open source” an AI model can be is when its developers release its weights, which is to say the exact attributes of the countless nodes of its neural networks, which perform vector mathematics operations in precise order to complete the pattern started by a user’s input. But even “open-weights” models like LLaMa-2 exclude other important data, like the training dataset and process — which would be necessary to recreate it from scratch. (Some projects go further, of course.)

All this is before even mentioning the fact that it takes millions of dollars in computing and engineering resources to create or replicate these models, effectively restricting who can create and replicate them to companies with considerable resources.

xAI open sources base model of Grok, but without any training code

So where does xAI’s Grok release fall on this spectrum?

As an open-weights model, it’s ready for anyone to download, use, modify, fine tune, or distill. That’s good! It appears to be among the largest models anyone can access freely this way, in terms of parameters — 314 billion — which gives curious engineers a lot to work with if they want to test how it performs after various modifications.

The size of the model comes with serious drawbacks, though. You’ll need hundreds of gigabytes of high-speed RAM to use it in this raw form. If you’re not already in possession of, say, a dozen Nvidia H100s in a six-figure AI inference rig, don’t bother clicking that download link.

And although Grok is arguably competitive with some other modern models, it’s also far, far larger than them, meaning it requires more resources to accomplish the same thing. There’s always a hierarchy of size, efficiency, and other metrics, and it’s still valuable, but this is more raw material than final product. It’s also not clear whether this is the latest and best version of Grok, like the clearly tuned version some have access to via X.

Overall, it’s a good thing to release this data, but it’s not a game-changer the way some hoped it might be.

It’s also hard not to wonder why Musk is doing this. Is his nascent AI company really dedicated to open source development? Or is this just mud in the eye of OpenAI, with which Musk is currently pursuing a billionaire-level beef?

If they are really dedicated to open source development, this will be the first of many releases, and they will hopefully take the feedback of the community into account, release other crucial information, characterize the training data process, and further explain their approach. If they aren’t, and this is only done so Musk can point to it in online arguments, it’s still valuable — just not something anyone in the AI world will rely on or pay much attention to after the next few months as they play with the model.

Elon Musk sues OpenAI and Sam Altman over ‘betrayal’ of nonprofit AI mission

https://techcrunch.com/2024/03/13/what-is-elon-musks-grok-chatbot-and-how-does-it-work/

The Browser Company splash screen

The Browser Company raises $50M at a $550M valuation

The Browser Company splash screen

Image Credits: The Browser Company

The Browser Company, which makes the Arc browser, has raised $50 million in a round led by Pace Capital at a $550 million valuation, TechCrunch has learned exclusively.

The company’s head of storytelling, Nashilu Mouen, confirmed the investment to TechCrunch.

“Now, more than ever, we continue to believe that the successor to the personal computer (PC) is imminent. And it starts in the browser. We’ll see you there,” Mouen said in a statement.

The company, founded in 2019, has raised a total of $128 million across multiple rounds with well-known investors such as LinkedIn’s Jeff Weiner, Medium’s Ev Williams, Figma’s Dylan Field, Notion’s Akshay Kothari and GitHub’s Jason Warner. Next Play Ventures and Pace Capital are among the existing investors.

The Browser Company was started by Josh Miller, who was the director of product at the White House during Barack Obama’s tenure and investor at Thrive Capital; and Hursh Agrawal, who had started the conversational service Branch.com with Miller — a startup acquired by Facebook in 2014.

Building Arc

The startup’s Arc browser has managed to capture people’s attention with its feature set like command bar navigation, pinned tabs and different workspaces to separate websites for work and personal consumption. But for the longest time, the browser was available only on an invite-only basis on Mac. Last July, the company opened downloads for all users. Plus, it started making a Windows client available through a closed beta program.

With its desktop client, users often complained about a steep learning curve because the browser has treated tabs differently — they look more like applications. The company’s first iPhone app was just a companion app to save tabs that you could later access on the desktop client. However, in January, the company released the Arc Search app on iOS, focusing on putting AI-powered search at its center. The app didn’t require users to create an account and allowed them to set it as a default browser, possibly to attract a larger user base.

A bet on AI and criticism around it

In October 2023, Arc released the first set of AI features, including a way to rename downloaded files and pinned tabs, easier access to ChatGPT and a preview summary when you hover on a link. With the release of Arc Search, the company introduced the “Browse for me” feature, which read six web pages related to the query and generated a new page with a visual summary.

In February, the startup released more features, including “instant links” to directly go to a result rather than a Google page. For instance, if you search for “Barbie trailer” through this feature, the browser will directly lead you to a YouTube page. It also works on folders where the browser can create a folder with article links when you search for “Folder of Apple Vision Pro reviews.”

The company also released a pinch-to-summarize feature for Arc Search the same month. However, the summary wasn’t accurate in a lot of instances.

Additionally, several journalists criticized the feature raising concerns about the effect on web traffic for publishers. Platformer’s Casey Newton talked about how Arc’s approach might be harmful to journalism and the web overall. The Garbage Day newsletter publisher Ryan Broderick wrote a Fast Company column noting that companies building AI-powered search are not thinking about how their approach might impact websites and people’s motivation to contribute to the web through content.

“The best thing about the internet is that somebody super passionate about something makes a website about the thing that they love. This new feature from Arc intermediates and diminishes that,” Glitch CEO Anil Dash told Engadget last month.

The company is working on an AI agent that would browse the web for you. In a video released in February, Miller criticized Google’s model for driving more ads rather than getting the results that people want. With the AI-agent approach, the company wants to change that. However, critics like Dash have pointed out that this approach could diminish people’s relationships with websites and the people who maintain them.

What’s next for the company?

Despite raising millions of dollars the company has yet to reveal its plans about monetization. This week, The Browser Company launched a website called “We might not make it” to release videos to talk about points like its plans to generate revenue, competition in the space and criticisms of its product approach.

Chris Paik, the lead investor for the latest round of investment in the company, wrote an essay saying that the browser will become an operating system and all software will be accessible through web applications. 

“When a technological seam opens up–you get an expanding frontier. When the area to innovate is increasing, the only thing that matters is your rate of innovation. Any fixed amount of innovation will quickly be commoditized. This is ingrained in the DNA of The Browser Company. They ship every week, constantly pushing the boundaries of product innovation,” Paik wrote.

Paul Frazee, who built a decentralized browser called Beaker, said that scaling a browser product is hard as people are set in their way and making them switch is tough. He also noted that without search deals, monetization is difficult.

“The only model that’s had any success is to pair the browser with the search product and to place ads in the search. Browsers don’t really make sense without a search engine, so this is relatively intuitive, but it makes it pretty hard for a browser vendor to monetize without also competing with Google,” Frazee said.

LocalGlobe and YC-backed Sigma OS browser has tried a payment model by making a product for teams, but it’s not a proven model for success.

The Browser Company has a big ambition to build an “internet computer” for users. At the same time, it is facing roadblocks like giving enough incentive for users to change their default web browser while figuring out a monetization strategy to make the company sustainable over the long run.

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