17 October, 2024
Sam Altman reportedly poised to get equity in OpenAI for the first time
Following the abrupt departure of OpenAI’s CTO, Mira Murati, CEO Sam Altman is reportedly poised to receive equity in the company for the first time as OpenAI moves away from its longstanding nonprofit structure.
Reuters, citing people familiar with the matter, reports that OpenAI plans to restructure into a for-profit benefit corporation — similar to rivals such as Anthropic and Elon Musk’s xAI. The nonprofit OpenAI board, which currently oversees OpenAI’s for-profit operations, will relinquish control but retain a minority stake in the new for-profit OpenAI entity.
The transition is intended to make OpenAI more attractive to outside investors, who’ve chafed at the company’s current cap on returns. But it’s likely to raise concerns from the AI safety community about whether OpenAI can hold itself accountable in its pursuit of superintelligent AI.
Per Reuters, much of the restructuring plan’s details — and timeline — are still being hashed out.
Fetcherr lands $90M to get airlines on board with dynamic pricing
The airline industry is headed for record revenue this year — $996 billion — as the demand for travel soars. But the margins remain razor-thin. According to the trade association IATA, total expenses for airlines are projected to reach $936 billion, with earnings coming out to around $6.14 per passenger. That’s about the price of a latte in NYC.
In a push to bolster profits, more airlines are turning to controversial dynamic pricing tech, which prices fares and amenities variably based on a traveler’s willingness to pay for them. Despite the less-than-stellar reception from consumers, 258 carriers have deployed some form of dynamic pricing today, up from 220 in 2022, per travel industry group ATPCO.
One of the vendors providing infrastructure for dynamic pricing systems is Fetcherr, which launched in 2019. The app, which was founded by entrepreneurs Uri Yerushalmy, Roy Cohen and Robby Nissan, taps AI to forecast the demand for particular airline routes and generate a dynamic price, which it shows to customers as they search a carrier’s website.
“The airline industry faces significant challenges in adopting continuous pricing,” Cohen, Fetcherr’s CEO, told TechCrunch. “Traditional, outdated infrastructure and rule-based systems limit real-time adjustments and swift market adaptation … Fetcherr employs AI to generate optimal market moves, dynamically optimizing pricing and automating real-time publishing of prices.”
Fetcherr, like other dynamic pricing tech, calculates the prices that buyers see using AI models tailored to a company’s customer demographics. Fetcherr’s models are trained on several years of bookings, flight schedules, availability and fares data, as well as variables like weather and microeconomic/macroeconomic market conditions.
“Our models are based on public data and our customer private data, all are stored on a private cloud for each of our customers,” Cohen said.
While carriers like dynamic pricing for its revenue-boosting potential (see JetBlue’s recently introduced dynamic baggage fees), one wonders if the tech has staying power, given consumers’ aversion to it.
Dynamic pricing is especially bad for travelers on a tight schedule who need to fly at popular times. Forbes found that fares for a direct flight from NYC to Chicago, which might cost less than $100 in the fall, can climb by five times or more in the days leading up to and after Thanksgiving under a dynamic pricing regime.
Dynamic pricing can also lead to what the Financial Times’ John Thornhill calls “implicit collusion” between firms, which raises prices overall. Because airlines relying on dynamic pricing tend to instantly match their rivals’ price cuts, carriers that aren’t using the tech have little incentive to lower fares.
It’s not clear that dynamic pricing is in airlines’ best interests, either. One Yale study found that dynamic pricing systems that factor in competitor behavior could result in airlines selling too many tickets too quickly. And in some countries, dynamic pricing might eventually be outlawed or curtailed under tariff requirements, depending on how local courts interpret those requirements.
For now, though, business appears to be going strong at Fetcherr, which counts WestJet, Viva Aerobus, Virgin Atlantic, Royal Air Maroc and Azul Airlines among its customers. Fetcherr this month closed a $90 million Series B funding round led by Battery Ventures, bringing its total raised to $114.5 million.
Battery Ventures senior partner Scott Tobin said that he sees Fetcherr as uniquely positioned to get more “legacy” airlines on board with dynamic pricing tech.
“Our experience with successful technology investments in the airline industry, such as ITA Software and Sabre, has taught us a lot about the complexities of airline processes like setting fares,” Tobin said in an emailed statement. “The potential of AI to make a tenfold impact in this sector is very clear, and Fetcherr has already made significant strides in helping its customers boost their topline.”
Cohen says that the Series B proceeds will be put toward developing a new AI-powered “offer engine” to bundle and price multiple carrier services together, plus growing Fetcherr’s headcount to around 150 by year-end (up from 110). To beat back competition like PROS, which also offers a dynamic airfare pricing product, Fetcherr plans to expand beyond the airline industry into other markets (hopefully not fast food).
“Our business was based from day one on being cash-positive as fast as we can, and part of that is our planning on being lean in all aspects,” Cohen said. “We don’t have a burn rate, we have a run rate — the company is growing each year.”
Defense tech and 'resilience' get global funding sources: Here are some top funders
We live in a very different world since the Russian invasion of Ukraine in 2022 and Hamas’s October 7 attack on Israel. With global military expenditure reaching $2.4 trillion last year, startups are hoping to get a share of the pie, and formerly reluctant investors are keen to help them do so.
The U.S. budget is by far the largest, with contracts worth $53 billion to major tech firms between 2019 and 2022. But the rise of defense tech as an investment trend is very much global.
German-based AI startup Helsing is a strong example of the unprecedented amounts of capital available to tech companies with military potential.
Investor appetite is particularly strong for tech solutions with dual-use potential, meaning that they can be used for both civilian and military applications. The idea that defense tech can benefit society more broadly is also reflected in the rising concept of “resilience tech.”
More than the worn-out term of “defense,” the word “resilience” reflects the idea that innovation can make democratic societies less vulnerable to attacks and help them recover faster.
For instance, Helsing co-CEO Gundbert Scherf said that he and his co-founders created the company “because we believe that AI will be essential so that democracies can continue to defend their values.”
The fact that Helsing’s mission resonated with mainstream investors such as Spotify founder Daniel Ek reflects a mindset change in society as a whole, but also in venture capital itself.
While typically prevented from investing into weapons by their so-called vice clause, funds large and small are now willing to fund international startups in the broader resilience tech space, with the blessing of major limited partners such as the European Investment Fund.
From the EU to Ukraine to Israel, here are some venture capital firms taking a bet on resilience tech outside of the U.S.
NATO Innovation Fund
NATO Innovation Fund is currently one of the most frequently mentioned players in resilience tech conversations. A $1 billion fund rarely goes unnoticed, and even more so when it is dedicated to a sector where venture capital has been scarce. However, it had maintained a low profile following its official launch in August 2023, even declining interview requests.
Not anymore: One year in, NIF disclosed the first investments it made into a wide range of verticals — AI, space tech, manufacturing, transportation and robotics — but always with an eye on “advancing defense, security and resilience.”
NIF’s direct investments can only go to startups from the 24 countries that are its LPs. This includes Iceland, but not France, for instance, which could help bring fresh funding to locations that have traditionally received less capital but are even keener than larger countries on resilience tech.
However, NIF’s scope is made a bit more flexible by the fact that it is also a fund of funds. The VC firms it has backed so far include Alpine Space Ventures, Join Capital, OTB Ventures and Vsquared Ventures.
OTB Ventures
Founded in 2017, above-mentioned OTB Ventures existed long before NIF, but its focus on deep tech is taking on a new flavor. With support from NIF, but also the European Investment Fund (EIF), the Amsterdam-based firm with Polish roots has already started deploying its $185 million early-growth fund into what it calls “real tech.”
With backing from NATO Innovation Fund, OTB Ventures will invest $185M into European deep tech
OTB’s take on “real tech” translates into a focus on space tech, enterprise automation and AI, cybersecurity and fintech infrastructure; all of which can easily fall under resilience tech, too.
Its co-founder and managing partner Marcin Hejka also understands dual-use technology as a reality for many startups. “It’s absolutely natural that the defense sector is applying more and more technologies with civilian roots,” he told TechCrunch in March.
MD One Ventures
Dual use is the focus of MD One Ventures, a VC firm based in the U.K. and investing in early-stage companies. Founded in 2021, it describes itself as “dedicated to supporting applied deep tech innovation for the U.K., Europe and Allies.”
This leaves the door open to a wide range of applications. “We are agnostic across a range of subsectors and technology types, and have invested in both software- and hardware-based companies, with [national security], enterprise and defense backgrounds,” MD One’s site explains.
Its portfolio includes startups such as Labrys Technologies, a Slack-meets-location-meets-payments for military and humanitarian scenarios, and Materials Nexus, which uses AI to discover new materials.
Labrys Technologies raises seed to serve humanitarian, military scenarios
Israel Resilience Fund
Launched in late 2023 in the aftermath of the Hamas attacks, the Israel Resilience Fund is aiming to raise $50 million to invest into startups impacted by the war or developing solutions relevant to Israel’s immediate needs.
It is one of the funds of Israeli investment platform OurCrowd, which as of March had secured $17 million in commitments for this special fund, for which it waived all management fees and carried interest, and with a focus on catalyzing co-investments from public and private sources.
From eight disclosed investments last December, the Israel Resilience Fund’s portfolio has now grown to 35 teams, representing some 1,000 jobs in a country where 14% of employees work in tech. Arguably thanks to initiatives like these, the sector has shown resilience, with Israeli startups raising more than $3.1 billion since the war began.
D3
D3 is an early-stage fund whose name stands for its call to “Dare to Defend Democracy.”
“We launched our fund in the summer of 2023 with a primary goal to invest in founders who leverage technology for helping Ukraine defend itself and define the future of the West’s national security,” its site explains.
With a usual investment of $125,000 for an equity stake of 7%, it is also open to making follow-on investments of up to $750,000 in later rounds led by other investors. Its current portfolio covers verticals such as drones, sensors and unmanned aerial vehicles (UAVs), often with an element of AI.
D3 was also one of the promoters of a recent defense tech hackathon in London. The first of its kind, but likely not the last, it confirms that these VCs will also have a growing pipeline of startups to invest in.
A VC told Keely Cat-Wells to get a male, non-disabled co-founder — she balked, nabbed a $2M pre-seed round
Talent acquisition platform Making Space, founded in 2023 by noted disability activist Keely Cat-Wells, announced today that it has closed on an oversubscribed $2 million pre-seed round led by Beta Boom.
The startup seeks to help companies from all sectors hire, train and retain disabled talent. Prospective employees can sign up for free to look for open jobs, while on the company side, recruiters can find qualified candidates to fill positions, as well as access educational resources to better support and collaborate with disabled workers.
Cat-Wells said she started this platform because traditional hiring processes are exclusionary, inaccessible and often overlook skilled, talented disabled people. She noted how many people are afraid of disclosing their disabilities at work for fear of discrimination, which prevents them from receiving proper accommodation.
A 2018 study by Accenture and the American Association of People with Disabilities found that companies that hire and support people with disabilities within their workforce have 28% higher revenue than those that don’t. Those companies also have higher profit margins. This study also found that U.S. GDP could increase at least $25 billion if more people with disabilities had the opportunity to join the workforce. Yet, studies have shown that disabled people are more than twice as likely to be unemployed, and are even less likely to graduate from college compared to non-disabled individuals.
“I saw an opportunity to build new pathways to employment that could provide equal benefit to both employers and disabled workers,” Cat-Wells said, adding that societal limitations can cause disabled workers to set their goals and dreams lower than their potential. “We are passionate about getting disabled people into actual work, and creating careers rather than just jobs.”
Furthermore, disabled employees often have higher retention rates and high performance rates compared to non-disabled employees, helping to reduce turnover rates, according to the Job Accommodation Network.
Finding the right investors for this platform was tough, she said. Despite traction and technology, Cat-Wells said many investors doubted that a disabled-focused company could be a high-growth commercial success, which is what venture investors are ultimately looking for. “Many still view disability through the lens of charity and nonprofit,” she said.
“The disabled population represents a massive economic opportunity and many do not consider that anyone can become disabled at any time,” Cat-Wells said. “When we build solutions that integrate impact into fundamental business strategy, rather than treating it as an easily discarded initiative, we can start making systemic change.”
One prospective investor openly balked at backing a company led not only by a woman but by a disabled person, she said. She recalls that person telling her, “We love what you’re building but would only consider investing if you brought on a non-disabled, male co-founder.”
That comment, she said, only reminded her of why she was building Making Space. “It’s also a reminder of the deep-seated biases and systemic barriers within venture,” she continued. “It shows how pervasive ableism and gender bias are.”
Cat-Wells ended up meeting her lead investor Beta Boom through another investor in the pre-seed round. Speaking to TechCrunch, Beta Boom founders Kimmy and Sergio Paluch called Making Space a “unique business.”
“It tackles the upskilling and trust hurdles faced by both disabled workers as well as employers,” they told TechCrunch.
The Making Space platform is just one part of Cat-Wells’ growing Making Space empire. The business also has a media arm, co-founded by disability activist Sophie Morgan, which has already partnered with the likes of Netflix and NBCUniversal to enhance employment for disabled talent in front and behind the camera. Already, Making Space is responsible for helping Netflix build a pipeline of disabled graphic designer talent, as well as the hiring of NBCU’s first disabled hosts for the Paralympics. It also signed an unscripted deal with Reese Witherspoon’s Hello Sunshine to tell the stories of those living with disabilities.
Cat-Wells says the company hopes to further expand what Making Space can offer people. Already, it created a tool called Compass, which presents any disability as a transferable skill. That tool is currently in beta but will be released in a few months, she said.
At just 28, Cat-Wells is a second-time founder, after having created and sold an entertainment talent agency that represented disabled artists and placed them in jobs for companies like Disney and Nike. She started the agency after facing discrimination herself as a teenager when her stoma bag was shown during an acting audition and the role she was offered was rescinded afterward.
“It was really not until that time and that moment that I started identifying as disabled,” she said. “I also realized that what I experienced was not an isolated issue, that unfortunately being discriminated against as a disabled person in the hiring process and at work is normal. I want to change that.”
Since then, she has become an award-winning powerhouse in the space — discussing disability rights at The White House, serving on boards and participating as an expert in discussions about disability rights with the likes of Kamala Harris and Prince Harry. Next, Making Space has some partnerships with Fortune 500 companies it will soon announce. It is also looking to expand its work in schools K-12 and spark more conversations about disability rights and opportunities.
“We want to change the stat that disabled people are 2x more likely to be unemployed than non-disabled people,” she said.
US border agents must get warrant before cell phone searches, federal court rules
A federal district court in New York has ruled that U.S. border agents must obtain a warrant before searching the electronic devices of Americans and international travelers crossing the U.S. border.
The ruling on July 24 is the latest court opinion to upend the U.S. government’s long-standing legal argument, which asserts that federal border agents should be allowed to access the devices of travelers at ports of entry, like airports, seaports and land borders, without a court-approved warrant.
Civil liberties groups who advocated for the ruling praised the judgment.
“The ruling makes clear that border agents need a warrant before they can access what the Supreme Court has called ‘a window into a person’s life,’” Scott Wilkens, senior counsel at the Knight First Amendment Institute, one of the groups that filed in the case, said in a press release Friday.
The district court’s ruling takes effect across the U.S. Eastern District of New York, which includes New York City-area airports like John F. Kennedy International Airport, one of the largest transportation hubs in the United States.
A spokesperson for U.S. Customs and Border Protection (CBP), the agency responsible for border security, said it was “reviewing” the court’s decision. “CBP cannot comment on pending criminal cases, and will continue performing its vital national security mission consistent with law and policy,” said CBP spokesperson Justin Long.
The court ruling regards a criminal case involving Kurbonali Sultanov, a U.S. citizen whose phone was taken by border agents at JFK Airport in 2022 and told to provide his password, which Sultanov did when officers told him that he had no choice. Sultanov later moved to suppress the evidence — alleged to be child sexual abuse material — taken from his phone by arguing that the search violated his Fourth Amendment rights.
The U.S. border is a legally fuzzy space, where international travelers have almost no right to privacy and where Americans can also face intrusive searches. The U.S. government asserts unique powers and authorities at the border, such as conducting device searches without a warrant, which law enforcement cannot normally use against someone who had crossed onto U.S. soil without first convincing a judge of enough suspicion to justify the search.
Critics have for years argued that these searches are unconstitutional and violate the Fourth Amendment, which protects against unwarranted searches and seizures of a person’s electronic devices.
In this court ruling, the judge relied in part on an amicus brief filed on the defendant’s behalf that argued the unwarranted border searches also violate the First Amendment on grounds of presenting an “unduly high” risk of a chilling effect on press activities and journalists crossing the border.
The judge in the case quoted the amicus brief, filed by the Knight First Amendment Institute at Columbia University and the Reporters Committee for Freedom of the Press, adding that the court “also shares [the groups’] concerns about the effect of warrantless searches of electronic devices at the border on other freedoms protected by the First Amendment — the freedoms of speech, religion, and association.”
The judge said that had the court sided with the government’s argument that device searches at the border do not require any suspicion, “the targets of political opposition (or their colleagues, friends, or families) would only need to travel once through an international airport for the government to gain unfettered access to the most ‘intimate window into a person’s life,’” the latter quoting an earlier U.S. Supreme Court ruling on cell phone privacy.
While the court ruled that the warrantless search of Sultanov’s phone was unconstitutional, the court concluded that the government had acted in good faith at the time of the search and dismissed Sultanov’s motion to suppress the evidence from his phone.
It’s not yet known if federal prosecutors will appeal the decision to the U.S. Court of Appeals for the Second Circuit, which includes New York.
According to CBP’s own data, the federal border agency conducted more than 41,700 device searches of international travelers during 2023.
Lawmakers have long tried to seal the border search loophole by crafting legislation aimed at requiring U.S. law enforcement officials to obtain a warrant for device searches at the border. The bipartisan legislation ultimately failed, but lawmakers have not given up on ending the practice altogether.
With several federal courts ruling on border searches in recent years, the issue of their legality is likely to end up before the Supreme Court, unless lawmakers act sooner.
Read more on TechCrunch:
Security researcher warns of chilling effect after feds search phone at airportCBP says it’s ‘unrealistic’ for Americans to avoid its license plate surveillanceAnother US visa holder was denied entry over someone else’s messages
Updated with comment from CBP.
Pixel phones get an AI-powered weather app
Alongside the launch of new Pixel devices, the Pixel phone lineup is getting its own new weather app, powered by AI. Introduced Tuesday at the Made by Google 2024 event, the tech giant briefly showed off the app, which offers a custom AI weather report created by Gemini Nano — Google’s AI model designed for running on mobile devices.
With the new app, users “won’t have to scroll through a bunch of numbers to get a sense of the day’s weather,” the tech company touted. Instead, users will be able to customize the app based on what sort of weather information they want to see. For example, you could opt to keep an eye on the UV index by dragging and dropping that tile to a more visible location in the app.
The app also includes a dynamic design with a colorful background, an “AI weather report,” daily and hourly forecasts, and other standard weather app features.
The news of the app had leaked ahead of today’s event, showing off features like moveable tiles for humidity, wind speed, air pressure, and other items, except for the 10-day forecast.
Google says the Pixel Weather app will ship on all of its new Pixel 9 smartphones, including the Pixel 9, Pixel 9 Pro, and Pixel 9 Pro XL, as well as the Pixel 9 Pro Fold.
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Pixel phones get an AI-powered weather app
Alongside the launch of new Pixel devices, the Pixel phone lineup is getting its own new weather app, powered by AI. Introduced Tuesday at the Made by Google 2024 event, the tech giant briefly showed off the app, which offers a custom AI weather report created by Gemini Nano — Google’s AI model designed for running on mobile devices.
With the new app, users “won’t have to scroll through a bunch of numbers to get a sense of the day’s weather,” the tech company touted. Instead, users will be able to customize the app based on what sort of weather information they want to see. For example, you could opt to keep an eye on the UV index by dragging and dropping that tile to a more visible location in the app.
The app also includes a dynamic design with a colorful background, an “AI weather report,” daily and hourly forecasts, and other standard weather app features.
The news of the app had leaked ahead of today’s event, showing off features like moveable tiles for humidity, wind speed, air pressure, and other items, except for the 10-day forecast.
Google says the Pixel Weather app will ship on all of its new Pixel 9 smartphones, including the Pixel 9, Pixel 9 Pro, and Pixel 9 Pro XL, as well as the Pixel 9 Pro Fold.