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Andrew Yang Fast Facts | CNN Politics

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Here is a look at the life of Andrew Yang, entrepreneur and former 2020 Democratic presidential candidate.

Birth date: January 13, 1975

Birth place: Schenectady, New York

Birth name: Andrew M. Yang

Father: Kei-Hsiung Yang, researcher at IBM and GE

Mother: Nancy L. Yang, systems administrator

Marriage: Evelyn (Lu) Yang (2011-present)

Children: Two sons

Education: Brown University, B.A. in Economics, 1996; J.D. Columbia University School of Law, 1999

Religion: Protestant

His parents are originally from Taiwan.

The primary proposal for his political platform was the idea of universal basic income (UBI). This “Freedom Dividend” would have provided every citizen with $1,000 a month, or $12,000 a year.

Yang established Freedom Dividend, a pilot program to push for universal basic income, in which he personally funds monthly cash payments.

Is featured in the 2016 documentary, “Generation Startup.”

His campaign slogan was “MATH,” or “Make America Think Harder.”

In 1992, he traveled to London as a member of the US National Debate Team.

After graduating from Columbia, Yang practiced law for a short time before changing his career focus to start-ups and entrepreneurship.

2002-2005 – Vice president of a healthcare start-up.

2006-2011 – Managing director, then CEO, of Manhattan Prep, a test-prep company.

2009 – Kaplan buys Manhattan Prep for more than $10 million.

September 2011 – Founds Venture for America, a non-profit which connects recent college graduates with start-ups. Leaves the company in 2017.

2012 – Is recognized by President Barack Obama as a “Champion of Change.”

April 2012 – Ranks No. 27 on Fast Company’s list of 100 Most Creative People in Business.

February 4, 2014 – His book, “Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America,” is published.

May 11, 2015 – Obama names Yang an ambassador for global entrepreneurship.

November 6, 2017 – Files FEC paperwork for a 2020 presidential run.

February 2, 2018 – Announces his run for president via YouTube and Twitter.

April 3, 2018 – His book, “The War on Normal People,” is published.

March 2019 – Yang explores the possibility of using a 3D hologram to be able to campaign remotely in two or three places at once.

January 4, 2020 – Launches a write-in campaign for the Ohio Democratic primary in March of 2020 after failing to fully comply with the state’s ballot access laws.

February 11, 2020 – In New Hampshire, Yang suspends his presidential campaign.

February 19, 2020 – CNN announces that Yang will be joining the network as a political commentator.

March 5, 2020 – Launches Humanity Forward, a nonprofit group that will “endorse and provide resources to political candidates who embrace Universal Basic Income, human-centered capitalism and other aligned policies at every level,” according to its website. Yang also announces that he will launch a podcast.

December 23, 2020 – Files paperwork to participate in New York’s 2021 mayoral race, according to city records.

January 13, 2021 – Yang announces his candidacy for New York City mayor.

June 22, 2021 – Yang concedes the New York City mayoral race.

October 4, 2021 – Yang announces in a blog post that he is “breaking up” with the Democratic Party and has registered as an independent

July 27, 2022 – Yang, along with former New Jersey Gov. Christine Todd Whitman, and a group of former Republican and Democratic officials form a new political party called Forward.

September 12, 2023 – Yang’s political thriller “The Last Election,” co-written with Stephen Marche, is published.

2020 hopeful wants holograms to campaign in multiple cities

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December 28, 2023
Neuralink, Elon Musk’s brain implant startup, raises $280 million from Peter Thiel’s VC fund | CNN Business

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New York
CNN
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Elon Musk’s biotechnology startup Neuralink raised $280 million in a fundraising round, the company announced Monday via X, the Musk-owned social media platform formerly known as Twitter.

The Series D round was led by Founders Fund, a San Francisco-based VC firm established by Peter Thiel, the controversial billionaire who was also a cofounder at PayPal.

“We’re extremely excited about this next chapter at Neuralink,” the company wrote.

The brain chip startup wants to use implants to connect your brain to a computer, a goal Musk has been working on for five years. The company so far has only tested on animals and faced scrutiny after a monkey died in project testing in 2022 as part of efforts to get the animal to play Pong, a computer game.

Macaque monkeys have been used in testing by Neuralink as the company has been developing Bluetooth-enabled implantable chips — inserted into the monkey’s brains — that the company says can communicate with computers via a small receiver.

The funding news comes months after Musk announced the company was moving towards human trials. The billionaire said at a December recruiting event that Neuralink has submitted “most” of its paperwork to the US Food and Drug Administration and could begin testing on humans within six months.

But employees have said the company is rushing to market, resulting in careless animal deaths and a federal investigation, according to a December report by Reuters.

Before Neuralink’s brain implants are mass-produced and hit the broader market, they’ll need regulatory approval. The FDA put out a paper in 2021 mapping out the agency’s initial thoughts on brain-computer interface devices, noting the field is “progressing rapidly.”

A tweet by Neuralink Monday announced they were hiring and invited those interested to “join in on engineering challenges to restore vision and mobility.”

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August 2, 2023
Neuralink, Elon Musk’s brain implant startup, set to begin human trials | CNN Business

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CNN
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Elon Musk’s controversial biotechnology startup Neuralink opened up recruitment for its first human clinical trial Tuesday, according to a company blog.

After receiving approval from an independent review board, Neuralink is set to begin offering brain implants to paralysis patients as part of the PRIME Study, the company said. PRIME, short for Precise Robotically Implanted Brain-Computer Interface, is being carried out to evaluate both the safety and functionality of the implant.

Trial patients will have a chip surgically placed in the part of the brain that controls the intention to move. The chip, installed by a robot, will then record and send brain signals to an app, with the initial goal being “to grant people the ability to control a computer cursor or keyboard using their thoughts alone,” the company wrote.

Those with quadriplegia due to cervical spinal cord injury or amyotrophic lateral sclerosis (ALS) may qualify for the six-year-long study – 18 months of at-home and clinic visits followed by follow-up visits over five years. Interested people can sign up in the patient registry on Neuralink’s website.

Musk has been working on Neuralink’s goal of using implants to connect the human brain to a computer for five years, but the company so far has only tested on animals. The company also faced scrutiny after a monkey died in project testing in 2022 as part of efforts to get the animal to play Pong, one of the first video games.

In May, Neuralink tweeted that it had received FDA clearance for human clinical trials, with the approval acknowledged by the agency in a statement. The opening of human trials also comes over a month after the brain chip startup raised $280 million in a fundraising round led by Founders Fund, a San Francisco-based VC firm established by Peter Thiel, the controversial billionaire who was also a co-founder at PayPal.

“We’re extremely excited about this next chapter at Neuralink,” the company wrote at the time on X, the Musk-owned social media platform formerly known as Twitter.

Musk has forecast human trials at the startup at least four times since 2019, yet the company didn’t seek FDA approval until 2022. At that time, the agency rejected the bid, according to a March Reuters report, citing safety concerns about parts of the implant migrating to other parts of the brain and possible brain tissue damage when the devices are removed. Musk said at a December recruiting event that Neuralink has submitted “most” of its paperwork to the US Food and Drug Administration and could begin testing on humans within six months.

But employees told Reuters in December that the company is rushing to market, resulting in careless animal deaths and a federal investigation.

Neuralink did not respond to CNN’s request for comment.

Before Neuralink’s brain implants hit the broader market, they’ll need regulatory approval. The FDA put out a paper in 2021 mapping out the agency’s initial thoughts on brain-computer interface devices, noting the field is “progressing rapidly.”

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August 2, 2023
26-year-old tech CEO found dead in Baltimore with signs of blunt-force trauma | CNN Business

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CNN
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The Baltimore Police Department has announced an arrest warrant for a suspect wanted for the murder of Pava LaPere, the 26-year-old CEO of startup EcoMap Technologies, who was found dead in a downtown Baltimore apartment Monday with signs of blunt-force trauma to her head.

Police are looking for 32-year-old Jason Dean Billingsley, Acting Police Commissioner Richard Worley said during a news conference Tuesday.

Officers responded to a call for service at an apartment complex in the 300 block of West Franklin Street at around 11:34 a.m. Monday, according to Baltimore police. Upon arriving, the officers found LaPere with severe injuries to her head. Police have not released any further information on her death.

The medical examiner’s office took possession of the body, and an examination is pending, police said.

Billingsley is wanted for first-degree murder, assault, reckless endangerment and additional charges. He should be considered armed and dangerous, police said.

“This individual will kill and he will rape. He will do anything he can to cause harm,” Worley warned.

Baltimore police said they do not believe LaPere and Billingsley knew each other.

The police did not say how they identified Billingsley as a suspect.

In a message to Billingsley, Worley urged him to turn himself in. “We will find you, so I would ask you to turn yourself in to any officer, any police station,” he said.

EcoMap was founded by LaPere and Sherrod Davis while LaPere was a 21-year-old college student at Johns Hopkins, according to EcoMap’s website. With just over 30 employees, the startup is part of the artificial intelligence wave. It sells AI tools, including a customizable chatbot, that aim to make clients’ information easier to access and customer communications more seamless, the company says.

The company confirmed LaPere’s passing to CNN.

“With profound sadness and shock, EcoMap announces the tragic and untimely passing of our beloved Founder and CEO, Pava LaPere,” EcoMap said in a statement. “The circumstances surrounding Pava’s death are deeply distressing, and our deepest condolences are with her family, friends, and loved ones during this incredibly devastating time.”

In August, the company said it had reached nearly $8 million in financing.

Earlier this year, LaPere was named on the Forbes 30 under 30 list in the social impact category.

“Pava was not only the visionary force behind EcoMap but was also a deeply compassionate and dedicated leader. Her untiring commitment to our company, to Baltimore, to amplifying the critical work of ecosystems across the country, and to building a deeply inclusive culture as a leader, friend, and partner set a standard for leadership, and her legacy will live on through the work we continue to do,” the company said.

The CEO of Baltimore-based company Fearless, Delali Dzirasa, served as a mentor to LaPere and remembers her as being a determined leader who was highly regarded across the community.

“There is no person on planet Earth that could tell Pava that she couldn’t do something,” Dzirasa said. “Even though she was a force, she always made space for other people,” he told CNN.

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August 2, 2023
Silicon Valley Bank collapse renews calls to address disparities impacting entrepreneurs of color | CNN Business

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CNN
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When customers at Silicon Valley Bank rushed to withdraw billions of dollars last month, venture capitalist Arlan Hamilton stepped in to help some of the founders of color who panicked about losing access to payroll funds.

As a Black woman with nearly 10 years of business experience, Hamilton knew the options for those startup founders were limited.

SVB had a reputation for servicing people from underrepresented communities like hers. Its failure has reignited concerns from industry experts about lending discrimination in the banking industry and the resulting disparities in capital for people of color.

Hamilton, the 43-year-old founder and managing partner of Backstage Capital, said that when it comes to entrepreneurs of color, “we’re already in the smaller house. We already have the rickety door and the thinner walls. And so, when a tornado comes by, we’re going to get hit harder.”

Established in 1983, the midsize California tech lender was America’s 16th largest bank at the end of 2022 before it collapsed on March 10. SVB provided banking services to nearly half of all venture-backed technology and life-sciences companies in the United States.

Hamilton, industry experts and other investors told CNN the bank was committed to fostering a community of minority entrepreneurs and provided them with both social and financial capital.

SVB regularly sponsored conferences and networking events for minority entrepreneurs, said Hamilton, and it was well known for funding the annual State of Black Venture Report spearheaded by BLK VC, a nonprofit organization that connects and empowers Black investors.

“When other banks were saying no, SVB would say yes,” said Joynicole Martinez, a 25-year entrepreneur and chief advancement and innovation officer for Rising Tide Capital, a nonprofit organization founded in 2004 to connect entrepreneurs with investors and mentors.

Martinez is also an official member of the Forbes Coaches Council, an invitation-only organization for business and career coaches. She said SVB was an invaluable resource for entrepreneurs of color and offered their clients discounted tech tools and research funding.

Minority business owners have long faced challenges accessing capital due to discriminatory lending practices, experts say. Data from the Small Business Credit Survey, a collaboration of all 12 Federal Reserve banks, shows disparities on denial rates for bank and nonbank loans.

In 2021, about 16% of Black-led companies acquired the total amount of business financing they sought from banks, compared to 35% of White-owned companies, the survey shows.

“We know there’s historic, systemic, and just blatant racism that’s inherent in lending and banking. We have to start there and not tip-toe around it,” Martinez told CNN.

Asya Bradley is an immigrant founder of multiple tech companies like Kinley, a financial services business aiming to help Black Americans build generational wealth. Following SVB’s collapse, Bradley said she joined a WhatsApp group of more than 1,000 immigrant business founders. Members of the group quickly mobilized to support one another, she said.

Immigrant founders often don’t have Social Security numbers nor permanent addresses in the United States, Bradley said, and it was crucial to brainstorm different ways to find funding in a system that doesn’t recognize them.

“The community was really special because a lot of these folks then were sharing different things that they had done to achieve success in terms of getting accounts in different places. They also were able to share different regional banks that have stood up and been like, ‘Hey, if you have accounts at SVB, we can help you guys,’” Bradley said.

Many women, people of color and immigrants opt for community or regional banks like SVB, Bradley says, because they are often rejected from the “top four banks” — JPMorgan Chase, Bank of America, Wells Fargo and Citibank.

In her case, Bradley said her gender might have been an issue when she could only open a business account at one of the “top four banks” when her brother co-signed for her.

“The top four don’t want our business. The top four are rejecting us consistently. The top four do not give us the service that we deserve. And that’s why we’ve gone to community banks and regional banks such as SVB,” Bradley said.

None of the top four banks provided a comment to CNN. The Financial Services Forum, an organization representing the eight largest financial institutions in the United States has said the banks have committed millions of dollars since 2020 to address economic and racial inequality.

Last week, JPMorgan Chase CEO Jamie Dimon told CNN’s Poppy Harlow that his bank has 30% of its branches in lower-income neighborhoods as part of a $30 billion commitment to Black and Brown communities across the country.

Wells Fargo specifically pointed to its 2022 Diversity, Equity, and Inclusion report, which discusses the bank’s recent initiatives to reach underserved communities.

The bank partnered last year with the Black Economic Alliance to initiate the Black Entrepreneur Fund — a $50 million seed, startup, and early-stage capital fund for businesses founded or led by Black and African American entrepreneurs. And since May 2021, Wells Fargo has invested in 13 Minority Depository Institutions, fulfilling its $50 million pledge to support Black-owned banks.

Black-owned banks work to close the lending gap and foster economic empowerment in these traditionally excluded communities, but their numbers have been dwindling over the years, and they have far fewer assets at their disposal than the top banks.

OneUnited Bank, the largest Black-owned bank in the United States, manages a little over $650 million in assets. By comparison, JPMorgan Chase manages $3.7 trillion in assets.

Because of these disparities, entrepreneurs also seek funding from venture capitalists. In the early 2010s, Hamilton intended to start her own tech company — but as she searched for investors, she saw that White men control nearly all venture capital dollars. That experience led her to establish Backstage Capital, a venture capital fund that invests in new companies led by underrepresented founders.

“I said, ‘Well, instead of trying to raise money for one company, let me try to raise for a venture fund that will invest in underrepresented — and now we call them underestimated — founders who are women, people of color, and LGBTQ specifically,’ because I am all three,” Hamilton told CNN.

Since then, Backstage Capital has amassed a portfolio of nearly 150 different companies and has made over 120 diversity investments, according to data from Crunchbase.

But Bradley, who is also an ‘angel investor’ of minority-owned businesses, said she remains “really hopeful” that community banks, regional banks and fintechs “will all stand up and say, ‘Hey, we are not going to let the good work of SVB go to waste.’”

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April 13, 2023
Silicon Valley Bank left a void that won’t easily be filled | CNN Business

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New York
CNN
—

It’s difficult to overstate the influence that Silicon Valley Bank had over the startup world and the ripple effect its collapse this month had on the global tech sector and banking system.

While SVB was largely known as a regional bank to those outside of the tight-knit venture capital sphere, within certain circles it had become an integral part of the community – a bank that managed the idiosyncrasies of the tech world and helped pave the way for the Silicon Valley-based boom that has consumed much of the economy over the past three decades.

SVB’s collapse was the largest bank failure since the 2008 financial crisis: It was the 16th largest bank in the country, holding about $342 billion in client funds and $74 billion in loans.

At the time of its collapse, about half of all US venture-backed technology and life science firms were banking with SVB. In total, it was the bank for about 2,500 venture firms including Andreessen Horowitz, Sequoia Capital, Bain Capital and Insight Partners.

But the influence of SVB went beyond lending and banking – former CEO Gregory Becker sat on the boards of numerous tech advocacy groups in the Bay Area. He chaired the TechNet trade association and the Silicon Valley Leadership Group, was a director of the Federal Reserve Bank of San Francisco and served on the United States Department of Commerce’s Digital Economy Board of Advisors.

There’s no doubt that the failure of Silicon Valley Bank left a large void in tech. The question is how that gap will be filled.

To find out, Before the Bell spoke with Ahmad Thomas, president and CEO of the Silicon Valley Leadership Group. The influential advocacy group is working to convene its hundreds of member companies – including Amazon, Bank of America, BlackRock, Google, Microsoft and Meta – to discuss what happens next.

This interview has been edited for length and clarity.

Before the Bell: What’s the feeling on the ground with tech and VC leadership in Silicon Valley?

Ahmad Thomas: Silicon Valley Bank has been a key part of our fabric here for four decades. SVB was truly a pillar of the community and the innovation economy. The absence of SVB – that void – and coalescing leaders to fill that void is where my energy is focused and that is not a small task.

I would say there was a fairly high level of unease a few days ago, and I believe the swift steps taken by leaders in Washington have helped quell a fair amount of that unease, but looking at Credit Suisse and First Republic just over the last couple of days, clearly we are in a situation that is going to continue to develop in the weeks and months ahead.

So how do you fill it?

We’re working to be a voice around stability, particularly about the fundamentals of the innovation economy. We can acknowledge the void given the absence of Silicon Valley Bank, but I do think we need voices out there to be very clear in highlighting that the fundamentals and the innovation infrastructure remains robust here in Silicon Valley.

This is a moment where I think people need to take a step back, let cooler heads prevail, and understand that there are opportunities both from an investment standpoint, a community engagement standpoint and corporate citizenship standpoint for new leaders in Silicon Valley to step up.

Are you working to advocate for more permanent regulation in DC?

It’s far too early for that. But if there are opportunities to enhance access to capital to entrepreneurs to founders of color or in marginalized communities and if there are opportunities to try and drive innovation and economic growth, we will always be at the table for those conversations.

Do you have any ideas about how long this crisis will continue for? What’s your outlook?

The problem is twofold: A crisis of confidence and the set of economic conditions on the ground. The economic conditions remain volatile for a variety of reasons: The softening economy, inflationary pressures and the interest rate environment. But I think right now we need to focus on stabilizing confidence in the investor community, in our business executive community and in the broader set of stakeholders around the strength of the innovation economy. That is something we need to shore up near term.

From CNN’s Mark Thompson

Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse (CS) in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.

“UBS today announced the takeover of Credit Suisse,” the Swiss National Bank said in a statement. It said the rescue would “secure financial stability and protect the Swiss economy.”

UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.

Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.

Credit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

Read more here.

From CNN’s David Goldman

A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.

On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers won’t need to make any changes to do their banking Monday.

New York Community Bank bought substantially all of Signature’s deposits and a total of $38.4 billion worth of the company’s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank purchased at a steep discount -— it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.

At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.

Not included in the transaction is about $60 billion in other assets, which will remain in the FDIC’s receivership. It also doesn’t include $4 billion in deposits from Signature’s digital bank business.

Read more here.

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March 20, 2023
SVB collapse was driven by ‘the first Twitter-fueled bank run’ | CNN Business

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CNN
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The massive amount of customer withdrawals that led to the collapse of Silicon Valley Bank had all the hallmarks of an old-fashioned bank run, but with a new twist befitting the primary industry the bank served: much of it unfolded online.

Customers withdrew $42 billion in a single day last week from Silicon Valley Bank, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing. The staggering withdrawals unfolded at a speed enabled by digital banking and were likely fueled in part by viral panic spreading on social media platforms and, reportedly, in private chat groups.

In the day leading up to the bank’s collapse, multiple prominent venture capitalists took to Twitter in particular, and used their large platforms to raise alarms about the situation, sometimes typing in all caps. Some investors urged startups to rethink where they kept their cash. Founders and CEOs then shared tweets about the concerning situation at the bank in private Slack channels, according to The Wall Street Journal.

On the other side of a screen, startup leaders raced to withdraw funds online – so many, in fact, that some told CNN the online system appeared to go down. Still, the end result was a modern race to withdraw funds, which House Financial Services Chair Patrick McHenry later described in a statement as ” the first Twitter-fueled bank run.”

“Even back in the ancient days, way before we had any form of modern communication, this stuff tended to be rumors that moved really fast. The reason it would happen is people would walk down the street and observe people standing outside of banks,” Andrew Metrick, Janet L. Yellen Professor of Finance and Management at the Yale School of Management, told CNN. “Now we don’t have that, but we have Twitter.”

The experience of the bank run was also far removed from prior eras when a large number of customers would physically show up at a bank to withdraw funds (though some did line up outside Silicon Valley Bank locations, too.) Now, many could do so online or through mobile devices.

“What made the Silicon Valley Bank run unique was (1) the ease with which its customers could execute withdrawals and (2) the speed with which news of Silicon Valley Bank’s impending demise spread,” Ben Thompson, an analyst who tracks the tech industry, wrote in a post on Monday. “It was the speed, fueled by zero distribution costs for both rumors and withdrawals, that was so destabilizing.”

Silicon Valley Bank was arguably uniquely susceptible to those factors given its tech-focused customer base. Moreover, its clients, many of whom were venture-backed businesses, were far more likely than the average consumer to keep more than the standard maximum FDIC insured amount of $250,000 in their accounts.

“The FDIC covers 250K, but am I going to recover my whole 8 figures?” one startup founder told CNN last week, after the bank had collapsed. Other large tech companies kept even larger sums with the bank. That likely made the bank’s customers even more susceptible to the panic spreading online.

Some prominent tech figures, including Mark Suster, a partner at venture capital firm Upfront Ventures, urged those in the VC community to “speak out publicly to quell the panic” around Silicon Valley Bank last week and cautioned against creating “mass hysteria.”

“Classic ‘runs on the bank’ hurt our entire system,” he wrote in a lengthy Twitter thread on Thursday. “People are making public jokes about this. It’s not a joke, this is serious stuff. Please treat it as such.”

His calls for calm weren’t enough. The next day, the US Federal Deposit Insurance Corporation stepped in and took control of the bank, which only added to the viral panic on Twitter.

“YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW,” Jason Calacanis, a tech investor, wrote on Twitter Sunday. “THAT IS THE PROPER REACTION.”

Hours later, the Biden administration stepped in and guaranteed the bank’s customers would have access to all their money starting Monday.

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March 17, 2023
The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed | CNN Business

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For much of the weekend, Silicon Valley scrambled to find a way through what one prominent tech investor described as an “extinction-level event for startups” after the collapse of a top lender in the industry.

Startups raced to line up loans from venture funds and fintech firms to make payroll. Venture-backed retailers hosted last-minute sales to boost their cash reserves. And at least one prominent startup accelerator convinced thousands of CEOs and founders to sign an “urgent” petition calling for Treasury Secretary Janet Yellen and others to offer “relief.”

Then, late Sunday, federal officials stepped in to guarantee that all customers of the failed Silicon Valley Bank would have access to their full deposits on Monday. The sense of relief was palpable throughout the tech sector.

“Obviously, I’m quite relieved,” said Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, who told CNN that his company would have had to shut down by the end of the week without the government intervention. “It was a very stressful weekend and I’m quite relieved with the news.”

Parker Conrad, the CEO of HR platform Rippling, who had previously said some customers’ payrolls were being delayed by the bank failure, tweeted Sunday: “Anyone else breathing a sigh of relief and looking forward to a good night’s sleep tonight?”

And Garry Tan, the CEO of tech startup accelerator Y Combinator who authored the petition to Yellen, praised the federal government for “decisive action.” Tan, the investor who had previously warned of “an *extinction level event* for startups” that would “set startups and innovation back by 10 years or more,” added his appreciation on Sunday for “everyone who helped us through a very very intense time.”

But even as the tech industry enjoys a respite from a fearful weekend, unknowns remain. “You can feel the collective *sigh*,” Ryan Hoover, a tech founder and investor wrote on Twitter Sunday. “I’m still nervous,” he added. “Hard to predict the collateral effects.”

It’s unclear how the aftershocks of the bank’s collapse will add to the startup industry’s growing challenges accessing capital. SVB’s collapse also risks changing how the world, and prospective recruits, think of Silicon Valley.

For years, the term itself conjured an image of an enclave of bright, contrarian, libertarian engineers and thinkers who could see around corners and make big bets on the future. Now, that same industry is relying on the federal government to survive after failing to see the risk, or worse, contributing to it through a shared hysteria.

In the chaotic days leading up to the bank’s collapse on Friday, some venture firms reportedly urged their portfolio companies to withdraw their money, which may have contributed to the bank failing.

Then, over the weekend, many venture capitalists and tech founders banded together to try and lobby government and public goodwill towards saving the companies impacted by Silicon Valley Bank’s sudden collapse.

While some VCs appeared to embrace fear-mongering on Twitter, much of the public messaging focused on the small businesses with exposure to Silicon Valley Bank that might be not be able to continue operating after losing access to the money in their bank account.

“We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy,” the Y Combinator petition stated. “We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank.”

A separate coalition of more than a dozen venture capital firms, including Lightspeed Venture Partners and Upfront Ventures, released a joint statement late Friday supporting Silicon Valley Bank, given its unique and vital role in the startup economy. The bank worked with nearly half of all venture-backed tech and healthcare companies in the United States.

“For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US,” the statement read. “In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.”

Even before the bank’s collapse, the startup industry was in a tough moment. Venture capital funding had dwindled amid rising interest rates and broader macroeconomic uncertainty; tech companies were cutting staff and ambitious projects; and some of the biggest private companies were reportedly slashing their valuations.

The instability at a top tech lender, and the lingering questions about its impact on other regional banks and the broader financial system, risk making it even harder for money-losing startups to access the capital they need to survive.

President Joe Biden emphasized in remarks Monday that “no losses will be borne by the taxpayers” related to the government’s intervention for Silicon Valley Bank. But some are already skeptical of that statement, including Democratic Sen. Elizabeth Warren of Massachusetts, who wrote in an op-ed Monday morning, “We’ll see if that’s true.”

More immediately, there’s uncertainty around how long it will take for companies to get their money out of the bank.

As of Monday, Kalb said the money in his Silicon Valley Bank account has not been transferred yet to the new JPMorgan Chase account he set up for Shelf Engine on Thursday. “I’ve been obsessively checking my email,” he said. “Hopefully the money will be able to be transferred shortly.”

Ben Kaufman, the co-founder of venture-backed toy store and online retailer Camp, told CNN’s Poppy Harlow in an interview Monday morning that he and his team spent the weekend trying to “fight for survival,” including holding a last-minute 40% off sale, using the code “BANKRUN,” to raise capital over the weekend.

“We did not know how long it was going to take for us to get our cash out … we still kind of don’t, they say today, we’ll see what happens,” he said, noting the bank held 85% of his company’s assets. “We hope we can, and we’re so grateful that the Fed stepped in, and the way they did.”

When asked if the past week’s events would change how and where he stores his money, Kaufman said that is “going to have to be a consideration moving forward.”

“I don’t want to do this again,” he said.

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March 13, 2023
Camp toy store pleads for help after Silicon Valley Bank collapse | CNN Business

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CNN
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A toy company based in New York has gotten caught up in the collapse of Silicon Valley Bank and is pleading with customers for help keeping it afloat.

Camp, a venture-backed retailer, sent an email to customers Friday announcing it was slashing prices and would use sales to help fund its continued operations after much of its money was tied up in the bank failure.

“Unfortunately, we had most of our company’s cash assets at a bank which just collapsed. I’m sure you’ve heard the news,” co-founder Ben Kaufman said in an email to customers.

He urged customers to use the code “BANKRUN” to save 40% off all merchandise, in an apparent nod to the run on the bank that may have helped bring down the Silicon Valley lender. Camp also said customers could pay full price, which it said would be appreciated.

Kaufman said the company was “hopeful that this will be resolved soon.”

CNN has not confirmed if Camp had funds with Silicon Valley Bank when the bank collapsed.

Silicon Valley Bank was put under control of the US Federal Deposit Insurance Corporation on Friday, capping off a stunning 48 hour period during which fears of a liquidity crisis at the firm prompted some startups to weigh withdrawing funds.

The sudden collapse of the Silicon Valley lender has pushed tech investors and startups to scramble to figure out their financial exposure to the bank, with founders worrying about getting their money out, making payroll and covering operating expenses.

The rapidly unfolding fallout at Silicon Valley Bank comes at a challenging moment for startup and tech industries. Rising interest rates have eroded the easy access to capital that helped fuel soaring startup valuations and funded ambitious, money-losing projects.

Kaufman, a former BuzzFeed executive, founded Camp in 2018. It has nine stores in California, Connecticut, Massachusetts, New York, New Jersey and Texas.

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March 11, 2023
Mental health startup exposes the personal data of more than 3 million people | CNN Politics

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Washington
CNN
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A mental health startup exposed the personal data of as many as 3.1 million people online. In some cases, possibly sensitive information on mental health treatment was leaked, according to a company statement and a Department of Health and Human services filing.

Cerebral, a California-based firm that connects people suffering from anxiety and depression with mental health professionals via video calls, said it discovered the “inadvertent” data exposure more than three years after it started using “pixels” – a common method that companies and advertisers use to track user behavior for marketing purposes.

The company determined in January that tracking pixels had been sharing client and user data to “third-party platforms” and “subcontractors” that it didn’t name, according to a privacy notice near the bottom of its website.

Cerebral said it was unaware of any misuse of the protected health information that was disclosed. But privacy advocates have for years warned that such data troves can be used to aggressively market products at consumers and infringe on their privacy.

Some of the data potentially exposed in the Cerebral breach includes answers to online “self-assessments” about mental health that Cerebral asks prospective clients to fill out. That can include questions on whether someone is experiencing panic attacks, abusing alcohol or has a personality disorder, CNN’s review of the online assessments found.

Cerebral said in a statement to CNN on Friday that it was “committed to correcting historical errors and leading the industry in privacy standards moving forward.”

Cerebral notified the Department of Health and Human Services (HHS), which said in a filing this month that the breach affects over 3.1 million users. The department investigates potential violations of the Health Insurance Portability and Accountability Act (HIPAA), a law that requires medical providers to safeguard patient data.

Rachel Seeger, a spokesperson for the HHS Office for Civil Rights, said the office typically “does not comment on open or potential investigations.”

Cerebral said in its public statement that it had disabled the tracking pixels on its platforms and stopped sharing data with subcontractors “not able to meet all HIPAA [Health Insurance Portability and Accountability Act] requirements.”

“It is important to note that Cerebral never impermissibly transmitted clinician generated notes or clinician communications,” the company told CNN.

Cerebral spokesperson Chris Savarese did not respond to emailed questions about which and how many platforms and contractors to which the company disclosed the client health information.

Some analysts argue that the broader market for data tracking tools is out of control. A group of conservative Catholics has spent millions of dollars to buy mobile data that identified priests who used gay dating and hookup apps, the Washington Post reported this week.

Andrea Downing, who has done extensive research on pixel tracking and privacy, said patients are often unaware of how much personal data health care startups collect and potentially transmit to other parties.

“What is in the fine print or the details of how data is being shared for advertising is not apparent to us when we’re going through the trauma of a diagnosis and seeking knowledge,” said Downing, who is co-founder of Light Collective, a digital rights nonprofit.

“The only thing that is incentivizing change right now is the threat of liability,” Downing told CNN.

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March 10, 2023
Twitter is stumbling. Some ex-employees are launching rivals | CNN Business

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CNN
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After Sarah Oh lost her job as a human rights advisor at Twitter late last year in the first round of layoffs following Elon Musk’s chaotic acquisition of the company, she decided to join a friend in building a rival service.

With Gabor Cselle, who previously worked at Twitter and Google, she launched T2, currently available in beta. Like Twitter, it offers a social feed of posts with 280-character limits. But the key selling point, according to Oh, is its focus on safety.

“We really do want to create an experience that allows people to share what they want to share without fearing risk of things like abuse and harassment, and we feel like we’re really well positioned to deliver on that,” Oh told CNN.

In the months since Musk completed his takeover, a small but growing number of services have launched or gained traction by appealing to users who are uncomfortable with the billionaire’s decisions to slash Twitter’s staff, rethink content moderation policies and reinstate numerous incendiary accounts that were previously banned, among other moves.

The list of newer entrants in the markets includes apps like T2 and Spill created by former Twitter employees, a startup backed by one of Musk’s Twitter investors, and a service from former Twitter CEO Jack Dorsey. While some apps like T2 strongly resemble Twitter, others take a different approach.

Last month, for example, the founders of Instagram announced Artifact, “a personalized news feed” powered by artificial intelligence, a description that quickly earned it comparisons to Twitter. In CNN’s recent test of the app, however, it resembled news reader applications like Apple News or the defunct Google Reader. Artifact displayed popular articles from large media organizations and smaller bloggers in a main feed, tailored to users based on their activity and selected interests.

But all of these apps appear to be vying for the opportunity to scratch the itch users may feel for a news feed that isn’t Twitter — at least for as long as that itch lasts.

“Something that we’ve heard a lot from people who are moving over from Twitter, either partially or fully, is that it is just for them a nicer experience overall,” said Jae Kaplan, co-founder of Anti Software Software club, the group that develops Cohost, a text-based social media feed similar to Twitter. The service launched publicly in June of last year, after Musk offered to buy Twitter. In November, after Musk completed the takeover, the platform saw a surge in activity, adding 80,000 users within 48 hours.

“People have been referring to us when they do as a Twitter alternative, which I think is an important distinction from a Twitter replacement,” Kaplan said.

Replacing Twitter, with its robust network of journalists, politicians and entertainers and sizable audience of users obsessed with real-time news, may be a challenge. While apps like Cohost have seen renewed momentum, their audiences remain a small fraction of the size of Twitter, which had more than 200 million daily active users as of last year.

Cohost currently has 130,000 users, only 20,000 of which are what Cohost considers active users, according to Kaplan. T2 has a waitlist in the five digits, according to Oh, who says that number continues to grow. Mastodon, the most high-profile recent Twitter rival, hit 2.5 million users in November, but it has since declined to 1.4 million users, in a possible cautionary tale to other services.

“The incumbent has the advantage of scale, and even in a situation where you have kind of a polarizing figure like Musk take over Twitter, people are realizing that the newer platforms are not nearly as effective from a one-to-many, getting your message out there,” said Tom Forte, a senior research analyst at D.A. Davidson. “Despite the fact that there may be disgruntled consumers, they’re still tweeting.”

In November, shortly after taking over the company, Musk repeatedly claimed Twitter continued to hit “all-time high” user numbers despite the initial wave of users calling to abandon the social network. (As part of the acquisition, Musk took Twitter private and the company no longer reports user numbers in quarterly securities filings.)

“If people leave, where do they go? By all accounts, there is no platform right now that is able to take on the function of Twitter, and nothing is really prepared for it,” said Karen North, a clinical professor at the USC Annenberg School for Communication and Journalism. “No platform has the global user base, representing people from all walks of life the way that Twitter does.”

To complicate matters for rivals, some of the initial fury and media attention about Twitter under Musk has arguably faded in the months since the deal closed. Though controversy remains, many Twitter users may feel less urgency to jump ship today than in late October.

Still, Mastodon founder Eugen Rochko is not worried.

“A platform cannot continue to go viral perpetually,” Rochko recently told CNN about Mastodon’s sagging user numbers. “The cycle of media news and attention on social media just simply goes away after awhile, but behind it leaves organic growth which is what we had before November and which we still have now.”

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February 13, 2023
Judge reportedly allows Meta to move forward with VR startup acquisition, in blow to FTC | CNN Business

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A federal judge will not block Meta from buying a virtual reality tech startup, according to multiple reports, in a setback for the US government, which had alleged the deal would threaten competition in a nascent market.

Tuesday’s decision, issued by the US District Court for the Northern District of California, is sealed. But according to The Wall Street Journal and The New York Times, the contents of the decision dealt Meta a victory by denying the US government’s request for a preliminary injunction that would have prevented the acquisition from closing. The New York Times cited two people with knowledge of the matter and the Wall Street Journal cited one person familiar with the ruling.

CNN has not independently confirmed the contents of the court’s decision. The Federal Trade Commission, which had sued to block the deal last summer, declined to comment. Meta declined to comment, and several outside attorneys for the company didn’t immediately respond to requests for comment.

The closely watched case involves Meta’s purchase of Within Unlimited, a virtual reality company and maker of a VR fitness app called “Supernatural.” The FTC’s suit had been seen as a major test for Chair Lina Khan, a critic of large tech platforms, as well as of the FTC’s unusual legal theory alleging that Meta’s deal would harm future competition in a rapidly evolving industry.

According to the reports, the judge in the case also issued a separate order that delays Meta’s ability to close its deal for another week to allow the FTC to decide whether to appeal the ruling.

A separate challenge to Meta’s deal is ongoing before an in-house administrative law judge at the FTC. That proceeding could continue despite Tuesday’s ruling, but whether agency officials intend to press ahead is unclear.

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February 5, 2023
From color-changing cars to self-driving strollers, here’s some of the coolest tech from CES 2023 | CNN Business

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A long list of companies once again showed off an assortment of cutting edge technology and oddball gadgets at the Consumer Electronics Show in Las Vegas last week.

There were new twists on foldable devices, cars that changed colors and smart ovens that live streamed dinners. There was a self-driving stroller, a pillow that pulsates to reduce anxiety and a locker from LG that claims to deodorize smelly sneakers in less than 40 minutes. At the event, some people gathered in groups, sitting in silence, to test out the latest virtual reality products.

While some of these devices may never find their way into households, the products on display offer a glimpse at some of the biggest tech trends companies are anticipating this year and in the years ahead.

Here’s a look at some of the buzziest products announced last week:

BMW unveiled a wild color-changing concept car with 260 e-panels that can change up to 32 colors. During a demo, different parts of the car, including the wheel covers, flashed in varying hues and swirls of colors. The technology, which relies on panels that receive electrical impulses, isn’t ready for production. (Breaks between panels and what looked like wiring could be seen on the outside of the car.) But just imagine being able to drive a sporty red car on the weekends and then a conservative gray model when you go to work.

If you think snapping photos of your meal for Instagram is overdone, now you can livestream your dinner as it cooks in real time and post it to your social feeds. Samsung’s new AI Wall oven features an internal camera that can capture footage of your baking food or allow you to keep tabs on it without ever leaving the couch. The oven, which uses an algorithm to recognize dishes and suggest cooking times and temperatures, also pushes notifications to your phone to prevent you from burning meals. The oven will launch in North America later this year; a price has not yet been announced.

Canadian-based baby gear startup Gluxkind was showed off its Ella AI Powered Smart Stroller. It offers much of the same tech seen in autonomous cars and delivery robots, including a dual-motor system for uphill walks and automatic downhill brake assist. It’s meant to serve as an “extra pairs of eyes and an extra set of hands,” according to the company’s website – not a replacement for a caregiver. The Ella stroller is able to drive itself for hands-free strolling – but only when a child is not inside.

No gadget at CES this year was as striking as the Mutalk mouthpiece from startup Shiftall. The device, which looks like a muzzle, features a soundproof Bluetooth microphone that makes it difficult for others in the room to hear your voice when you’re on calls. The company thinks the $200 gadget will come in handy for everything from voice chats and playing online games to shouting in VR when you don’t want to disturb anyone else nearby. Instead of hearing you, they will simply see your new mouthpiece; you can decide which is worse.

If you ever wanted to hit 15 miles per hour on roller skates, this electric pair from French startup AtmosGear promises to help get you there. With a battery pack that holds an hour charge and the ability to travel over 12 miles, the skates can clip onto any existing roller skates, turning them into motor-propelled footwear. The skates are currently available for pre-order for $525.

You’ve probably heard of smartphones that come with headphones, but what about headphones that come with a screen? The JBL Tour Pro 2 earbuds adds a touchscreen to the case to bring smartwatch-like capabilities by allowing users to control its settings, answer calls, set alarms, manage music and check battery life. No launch date has been announced, but the new buds will cost $250 when they eventually go on sale.

Some companies offered a new twist on the foldable phone concept. For example, Samsung Display’s Flex Hybrid prototype features a foldable and slidable display (the right side slides to offer more screen space). Meanwhile, the Asus $3500 Zenbook 17 Fold OLED – the world’s first foldable 17-inch laptop – picked up significant buzz on the show floor, acting almost like a large tablet that can be folded in half when on the go.

Dubbed “the world’s first awareable,” the $500 Nowatch is a watch… with no clock. The Amsterdam-based startup of the same name launched the device to help users monitor stress, body temperature, heart rate, movement and sleep. But unlike other smartwatches, there’s no watchface – instead, a gemstone sits where the touchscreen display typically goes. “We’ve replaced the traditional watch face with ancient stones, celebrating the belief that time is NOW,” the company said on its website.

Honda and Sony have joined forces to create tech-filled electric cars that, they say, will be both fun to drive and filled with the latest entertainment innovation. According to the CEO of Sony Honda Mobility, its cars will recognize your moods and be highly communicative and sensitive to your needs. The car will have screens on the outside so it can “express itself” and share information and will be able to “detect and understand people and society by utilizing sensing and [artificial intelligence] technologies,” according to the company. That’s why the company named its first joint car brand Afeela, in that it just has to “feel” right. But it’s unclear if we’re afeeling that name.

While it typically requires a blood panel and a visit to the doctor’s office to learn more about vitamin deficiencies, Withins says its new $500 U-Scan device can tell you similar information right from the comfort of your own toilet. The device attaches to existing toilets and collects data from your urine stream to detect vitamin deficiencies, check hydration and monitor metabolism, according to the company. An additional device called the U-Scan Cycle Sync tracks periods and ovulation cycles.

Schlage’s new smart lock is one of the first to work with Apple’s Home Key functionality, which allows users to upload their keys to their Apple Wallet and unlock their deadbolted front door directly from their phone or Apple Watch. The lock also works with Amazon Alexa and Google Assistant for voice controlled, hands-free locking. Available in two finishes, the deadbolt can manage access codes, view lock history and handle multiple locks at once. The lock, which will cost $300, will be available for purchase late this spring, according to a company press release.

– CNN’s Peter Valdes-Depena contributed to this report

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January 11, 2023
Chinese rocket startup Galactic Energy sends five satellites into space | CNN Business

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CNN
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Galactic Energy, a rocket startup in China, launched five satellites into orbit on Monday, boosting the private company’s ambition to become the Chinese rival to SpaceX.

Galactic Energy’s Ceres-1 rocket lifted off Monday from the Jiuquan Satellite Launch Center in northwestern China, sending five commercial satellites into their intended orbits, the Beijing-based company said in a statement on the same day.

The five satellites will be used for telecommunication, weather forecasts and scientific research for government agencies in the country, the company added.

The mission marks the fifth launch of the Ceres-1 rocket — a small solid fuel orbital rocket designed by the company, Galactic Energy said. So far, it has successfully put 19 commercial satellites into space, setting a record for a private Chinese firm.

“It sounds the trumpet for us to start a high-density orbital launch in 2023,” it said, adding that it plans to complete 8 to 10 missions for this year.

Galactic Energy conducted the first Ceres-1 launch on November 7, 2020, which makes it the second Chinese private company to launch a satellite into low Earth orbit. A Beijing-based startup, i-Space, was the first to do so in 2019.

Many Chinese commercial satellite launch providers are currently using small solid-propellant rockets like Ceres. But some firms are developing or testing reusable liquid-propellant rocket engines, which allow precise control of the thrust after ignition.

Last year, Galactic Energy successfully tested its liquid-propellant Welkin engine for its next-generation rockets. Its founder Liu Baiqi said that they want to build the Chinese version of the Merlin engine, which was developed by SpaceX.

Founded in 2018, Galactic Energy has received several rounds of financing from private equity investors and venture capitalists, worth more than $250 million in total. Major investors include the investment arm of Aviation Industry Corporation of China, a state-owned aerospace and defense conglomerate.

China’s commercial space industry has expanded rapidly since 2015, when the government began encouraging private companies to enter the space sector. Before that, launching rockets and satellites had been the monopoly of state-owned aerospace companies.

Over the past few years, more than 170 private companies have entered the space industry, according to a 2020 research report by Future Space Research, a research institute based in Beijing.

The successful launch by the Chinese startup came on the same day that Virgin Orbit suffered failure on its first rocket launch from the United Kingdom.

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January 10, 2023
The year that brought Silicon Valley back down to earth | CNN Business

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On the first trading day of 2022, Apple hit a new milestone for the tech industry: the iPhone maker became the first publicly traded company to hit a $3 trillion market cap, with Microsoft and Google not far behind. As eye-popping as that valuation was, there were headlines speculating about how long it would be before Apple and its rivals topped $5 trillion.

The tech industry, already dominant, only seemed destined to grow even bigger at the start of this year. The spread of the Omicron variant suggested a continued pandemic-fueled demand for digital goods and services, which had buoyed many tech companies. Near 0% interest rates meant startups still had easy access to the funding that had fueled their high valuations and risky ventures.

But the year is ending on a much different note. A perfect storm of factors have forced a dizzying reality check for the once high-flying tech sector, making it one of the biggest losers of 2022.

Over the course of the year, pandemic-era demand for many tech tools shifted; inflation soared; interest rates rose and fears of a looming recession weighed on consumer and advertiser spending, the latter of which makes up the core business of many household names in tech.

The result was a bloodbath unlike anything the tech industry has seen in the past decade. Tech stocks plunged, amid a broader market downturn. Tens of thousands of rank-and-file tech workers lost their livelihoods amid mass layoffs, both at tech giants like Amazon and Facebook-parent Meta as well as at smaller tech companies like Lyft, Peloton and Stripe. The crypto world all but imploded. And an entire industry known for burning cash on ambitious moonshots instead started shutting down projects and announcing cost-cutting efforts.

Even the title of world’s richest man, which previously belonged to serial tech founder Elon Musk, ended up passing to Bernard Arnault, the chairman of French luxury goods giant LVMH, after Musk’s chaotic purchase of Twitter appeared to sour investors on his car company, Tesla.

The sharp shift in sentiment not only removed the air of invincibility for the industry; it also exposed some of its underlying myths. For years, Silicon Valley has held up its founders as visionaries who can see far into the future. But suddenly, many of its most prominent founders had to admit a harsh truth: they couldn’t even predict two years ahead.

As Facebook founder Mark Zuckerberg put it in a memo to staff last month announcing the company would cut 11,000 employees: “Unfortunately, this did not play out the way I expected.”

He was far from the only one in the industry caught off guard.

When the pandemic upended the broader economy in early 2020, tech firms only seemed to grow bigger and more powerful as people were forced to live out their lives online. Facebook (now Meta) could afford to nearly double its headcount and make multi-billion-dollar bets on a future version of the internet dubbed the metaverse. Amazon similarly went on a hiring spree and doubled its fulfilment center footprint to meet the surge in online shopping demand.

“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg wrote in his memo to staff last month. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments.”

Then the market shifted.

“People are terrible at predicting the future, and we always think that what’s happening now is going to happen forever,” Angela Lee, a professor at Columbia Business School who teaches venture capital, leadership, and strategy courses, told CNN. “But the reality is that the pandemic was a black swan event, and none of us knew what would happen going forward.”

One by one, the visionaries of Silicon Valley issued mea culpas. The founders of Stripe, Twitter and Facebook each took turns admitting they either grew their companies too quickly or were overly optimistic about pandemic-fueled growth in their sector.

“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Patrick Collison, CEO of Stripe, wrote in a note to employees last month announcing 14% of the staff would be cut.

It wasn’t only a shift in consumers living their lives offline again that hurt the industry. The tech sector was particularly pummeled by the impacts of rising interest rates this year. Silicon Valley as a whole is arguably more sensitive to interest rate hikes than other industries, as many tech companies rely on easy access to funding to pursue their ambitious projects, typically before even turning a profit.

In a move to tame inflation, the Fed approved seven-straight rate hikes in 2022. Since the beginning of the year, the tech-heavy Nasdaq index shed more than 30% as of Dec. 21. By comparison, the Nasdaq soared more than 40% in 2020 and a further 20% in 2021. And the S&P 500’s Information Technology sector shed more than 28% this year through Dec. 21, considerably higher than the broader S&P 500’s fall of just 19% over that same period.

Apple’s market cap now hovers just above $2 trillion. Amazon’s stock has shed some 50% year to date. And shares for Meta have been hit even harder, losing nearly two thirds of their value in 2022. Once a trillion-dollar business last year, Meta has since seen its market value drop below companies like Home Depot.

The shift in sentiment for tech has also hit the next generation of companies that aspire to be household names.

Global venture funding hit a nine quarter low of $74.5 billion in the third quarter of 2022, according to data from analytics firm CB Insights. This marked the largest quarterly percentage drop in a decade (34%), and a 58% decline from the investment peak reached in the fourth quarter of 2021.

In another sign of how this played out in the startup world: more than two new unicorns (startups valued at $1 billion or more) were born on average per business day in 2021, according separate data from CB Insights. That rate dropped to a pace of less than one new unicorn for every other business day in the third quarter of 2022, per CB Insights’ most recent analysis, the lowest since the first quarter of 2020.

Lee, who is also the founder of investing network 37 Angels, said when she met with tech founders this year, “I have said these words, which is, ‘I might have done this deal last year, but I am not going to do it now.’ And I’ve heard a lot of other people say that as well.”

While the belt tightening might be painful for tech founders, Lee says she views it as a good thing for the tech industry overall. Many industry insiders have long said these sorts of corrections can help weed out some of the excess in the market and ensure more financially viable companies are the ones that survive.

“Right now, there are like a lot of headlines that are just like, ‘The sky is falling, the end is near,’ and the way that I describe it is more of like a return to normalcy,” said Lee, noting that most charts tracking VC spending (from the number of mega-rounds to the number of IPOs) had a huge hump in 2020 and 2021 when interest rates were low, and now these charts are starting to look like how they did in 2019.

“I would just call it like a ‘return to sanity,’ versus like, ‘the sky is falling,’” Lee said. “I do not think venture is cratering, or the tech industry is cratering as an industry.”

But for now, at least, there appears to be no end in sight to the pain for Silicon Valley and those who work in it.

In his own memo acknowledging job cuts at Amazon, CEO Andy Jassy said the layoffs at Amazon, reported to total some 10,000 roles, would continue into 2023. At a conference last month, he called the earlier hiring spree a “lesson” for everybody.

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December 30, 2022