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January 18, 2019
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That GoFundMe to build a border wall is issuing $20 million in refunds

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A Trump-inspired GoFundMe campaign that raised $20 million to ostensibly to build a wall on the southern U.S. border will refund every cent. Run by Brian Kolfage, a veteran with a track record of questionable business practices, the project defied all logistical considerations with its proposal for a “simple and straightforward” plan to build the wall. That didn’t stop the fund from attracting the attention of 337,559 donors at the time of writing.

Surprising perhaps no one beyond its donors, the campaign collided with reality, with Kolfage coming to the realization that “the federal government won’t be able to accept our donations anytime soon” given that there is no actual mechanism through which it could do so. On the campaign page, Kolfage newly disclosed his plans to form a nonprofit, “We Build The Wall, Inc.” that would hold onto the donations until the federal government is able to accept them or until all of the donors eventually forget the project altogether.

Initially, donors were told that their money would be refunded if the goal for the project was not met. On December 22, the project’s language changed, removing any mention of refunds if the goal was not met. With that, the project appears to have run afoul of GoFundMe’s policies.

Kolfage claims that he has formed an advisory board that features war privatization enthusiast and brother of the Secretary of Education Erik Prince and the also ethically questionable former Kansas Secretary of State Kris Kobach who lost his race this past November.

While Kolfage might be in good company, it sounds like GoFundMe will be automatically handing back every bit of the $20 million he raised before getting called out changing the terms of the campaign. Donors who still want their money to go to Kolfage will need to opt in specifically.

“If a donor does not want a refund, and they want their donation to go to the new organization, they must proactively elect to redirect their donation to that organization,” GoFundMe told The Hill. “If they do not take that step, they will automatically receive a full refund.”

News Source = techcrunch.com

Indonesia e-commerce leader Tokopedia raises $1.1B from Alibaba and SoftBank’s Vision Fund

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Indonesia-based e-commerce firm Tokopedia is the latest startup to enter the Vision Fund after it raised $1.1 billion Series G round led by the SoftBank megafund and Alibaba.

SoftBank and Alibaba are existing investors in the business — the Chinese e-commerce giant led a $1.1 billion round last year, while SoftBank recently transitioned its shareholding in Tokopedia to the Vision Fund. That latter detail is what held up this deal which had been agreed in principle back in October, TechCrunch understands.

Tokopedia didn’t comment on its valuation, but TechCrunch understands from a source that the deal values the company at $7 billion. SoftBank Ventures Korea and other investors — including Sequoia India — also took part in the deal. It has now raised $2.4 billion from investors to date.

The deal comes weeks after SoftBank made a $2 billion investment in Coupang, Korea’s leading e-commerce firm, at a valuation of $9 billion. Like Tokopedia, Coupang countered SoftBank as an investor before its stake transitioned to the Vision Fund.

Founded nine years ago, Tokopedia is often compared to Taobao, Alibaba’s hugely successful e-commerce marketplace in China, and the company recently hit four million merchants. Tokopedia said it has increased its GMV four-fold, although it did not provide a figure. Logistics are a huge issue in Indonesia, which is spread across some 17,000 islands. Right now, it claims to serve an impressive 93 percent of the country, while it said that one-quarter of its customers are eligible for same-day delivery on products. That’s also notable given that it operates a marketplace, which makes coordinating logistics more challenging.

The firm plans to use this new capital to develop its technology to enable more SMEs and independent retailers to come aboard its platform. On the consumer side, it is developing financial services and products that go beyond core e-commerce and increase its captive audience of consumers.

Indonesia’s super app

Despite this new round, CEO and co-founder William Tanuwijaya told TechCrunch that there are no plans to expand beyond Indonesia, which is Southeast Asia’s largest economy and the world’s fourth most populous country with a population of over 260 million.

“We do not have plans to expand beyond Indonesia at this moment. We will double down on the Indonesia market to reach every corner of our beautiful 17,000-island archipelago,” Tanuwijaya said via an emailed response to questions. (Tokopedia declined a request for an interview over the phone.)

William Tanuwijaya, co-founder and chief executive officer of PT Tokopedia, gestures as he speaks during a panel session on the closing day of the World Economic Forum (WEF) in Davos, Switzerland, on Friday, Jan. 26, 2018. World leaders, influential executives, bankers and policy makers attend the 48th annual meeting of the World Economic Forum in Davos from Jan. 23 – 26. Photographer: Jason Alden/Bloomberg

That Indonesia-only approach is in contrast to Go-Jek, the Indonesia-based ride-hailing firm which is rapidly expanding across Southeast Asia. Go-Jek has already moved into Vietnam, Singapore and Thailand with doubtless more plans in 2019.

But Go-Jek and Tokopedia do share similarities in that they have both expanded beyond their central business.

Go-Jek has pushed into on-demand services, payments and more. In recent times, Tokopedia has moved into payments, including mobile top-up, and financial services, and Tanuwijaya hinted that it will continue its strategy to become a ‘super app.’

“We will go deeper and serve Indonesians better – from the moment they wake up in the morning until they fall asleep at night; from the moment a person is born, until she or he grows old. We will invest and build technology infrastructure-as-a-services, in logistics and fulfillment, payments and financial services, to empower businesses both online and offline,” Tanuwijaya added.

Vision Fund controversy

But, with the Vision Fund comes controversy.

A recent CIA report concluded that Saudi Crown Prince Mohammed bin Salman ordered the murder of journalist Jamal Khashoggi. The prince manages Saudi Arabia’s PIF sovereign fund, the gargantuan investment vehicle that anchored the Vision Fund through a $45 billion investment.

SoftBank chairman Masayoshi Son has condemned the killing as an “act against humanity” but, in an analyst presentation, he added that SoftBank has a “responsibility” to Saudi Arabia to deploy the capital and continue the Vision Fund.

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tanuwijaya told us via email, although it remains unclear exactly what Tokopedia could (or would) do even in the worst case scenario.

Given that the Trump administration seems focused on continuing the status quo with Saudi Arabia as a key ally, the situation remains in flux although there’s been plenty of discussion around whether the Saudi link makes the Vision Fund tainted money for founders.

Son himself said recently that he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did admit that there “may be some impact” in the future.

Tanuwijaya didn’t directly address our question on whether he anticipates a backlash from this investment. The Vision Fund’s recent deal with Coupang doesn’t appear to have generated a negative reaction.

Even the involvement of Alibaba throws up other questions, given that it owns Lazada — which is arguably Southeast Asia’s most prominent e-commerce service.

Unlike Tokopedia, Lazada covers six markets in Southeast Asia, it is focused on retail brands and it maintains close links to Alibaba’s Taobao service, giving merchants a channel to reach into the region. According to sources who spoke to TechCrunch earlier this year, Tokopedia’s management was originally keen to take money from Alibaba’s rival Tencent, but an intervention from SoftBank forced it to bring Alibaba on instead.

Tanuwijaya somewhat diplomatically played down the rivalry and any rift, insisting that there is no impact on its business.

“Tokopedia is an independent company with a diversified cap table,” he said via email. “No single shareholder owns the majority of the company. We work closely with our shareholders’ portfolio companies and tap into available synergies.”

“For example, Tokopedia works closely with both Grab — a SoftBank portfolio — and Gojek — a Sequoia portfolio. We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he added.

Tokopedia has many similarities to Alibaba’s hugely successful Taobao marketplace in China

“How can we be less excited about this moment?”

At nearly a decade old, Tokopedia was one of the earliest startups to emerge in Indonesia. Famously, Tanuwijaya and fellow co-founder Leontinus Alpha Edison famously saw nearly a dozen pitches for venture capital rejected by VCs before they struck out and raised money.

Compared to now — and entry to the Vision Fund for “proven champions,” as Son calls it — that’s a huge transition, and that’s not even including the business itself which has broadened into financial products and more. But that doesn’t always sit easily with every founder. Privately, many will often concede that the ‘best’ days are early times during intense scaling and all-hands-to-the-pump moments. Indeed, Traveloka — a fellow Indonesia-based unicorn — recently lost its CTO to burnout.

Is the same likely to happen to Tanuwijaya, Edison and their C-level peers in the business?

Tanuwijaya compared the journey of his business to scaling a mountain.

“Leon and I are very excited entering our tenth year. When we first started Tokopedia, it was like seeing the tip of a mountain that is very far from where we stand. We promised ourselves that we were going to climb to the top of the mountain one day,” he told TechCrunch.

“The top of the mountain is our company mission: to democratize commerce through technology. Today, we have arrived at the base of the mountain. We can finally touch the mountain and we can start to climb it. With this additional capital, we have the tools and supplies to achieve our mission at a faster rate. Should we think whether we are burned-out and go home to rest, or should we climb our mountain? How can we be less excited about this moment?” he added.

Tokopedia has certainly become a mountain in itself. The startup is the third highest valued private tech company, behind only Grab and Go-Jek, at $11 billion and (reportedly) $9 billion, respectively, and the fairytale story is likely to inspire future founders in Indonesia and beyond to take the startup route. What happens to the Vision Fund and its PIF connection by then is less certain.

News Source = techcrunch.com

Washington hit China hard on tech influence this week

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After months of back-and-forth negotiations, Washington moved rapidly this past week to fend off the increasing transcendence of China’s tech industry, with Congress passing expanded national security controls over M&A transactions and the Trump administration heaping more pressure on China with threats of increased tariffs.

We’ve been following the reforms to CFIUS — the Committee on Foreign Investment in the United States — since the proposal was first floated late last year. The committee is charged with protecting America’s economic interests by preventing takeovers of companies by foreign entities where the transaction could have deleterious national security consequences. The committee and its antecedents have slowly gained powers over the past few decades since the Korean War, but this week, it suddenly gained a whole lot more.

Through the Foreign Investment Risk Review Modernization Act of 2018, which was rolled into the must-pass National Defense Authorization Act and passed by Congress this week, CFIUS is gaining a number of new powers, more resources and staff, more oversight, and a charge to massively expand its influence in any M&A process involving foreign entities.

Lawfare has a great summary of the final text of the bill and its ramifications, but I want to highlight a few of the changes that I think are going to have an outsized effect on Silicon Valley and the tech industry more widely.

One of the top priorities of this legislation was to make it more difficult for Chinese venture capital firms to invest in American startups and pilfer intellectual property or acquire confidential user data.

Congress fulfilled that goal in two ways. First, the definition of a “covered transaction” has been massively expanded, with a focus on “critical technology” industries. In the past, there was an expectation that a foreign entity had to essentially buy out a company in order to trigger a CFIUS review. That jurisdiction has now been expanded to include such actions as adding a member to a company’s board of directors, even in cases where an investment is essentially passive.

That means that the typical VC round could now trigger a review in Washington — and in the fast timelines of startup fundraising, that might be enough friction to keep Chinese venture capital out of the American ecosystem. Given that Chinese venture capital (at least by some measures) has outpaced U.S. venture capital in the first half of this year, this provision will have huge ramifications for startups and their valuations.

The second element Congress added was requiring that CFIUS receive all partnership agreements that a company has signed with a foreign investor. Often in a transaction, there is a main agreement spelling out the overall structure of a deal, and then side agreements with individual investors with special terms not shared with the wider syndicate, such as the right to access internal company data or intellectual property. By requiring further disclosure, CFIUS will have a more holistic picture of a deal and any risks it might add for national security.

It’s important to note that Congress was keen on balancing the need for investment with the need of national security. Through oversight provisions, including allowing CFIUS decisions to be contested in the DC Court of Appeals, Congress has designed the reform to be fairer, even as it takes a harder line on certain transactions.

It will take many months for the provisions to come in full force, so some of the effects of this bill won’t be felt until the end of next year. Nonetheless, Congress has sent a clear message of its intent.

Congress’ national security concerns in financial transactions are also crossing the Atlantic. British Prime Minister Theresa May and her government are spearheading new controls over foreign investment transactions, and the EU has also launched more screenings to ensure that transactions are in the best interests of the continent. All of these legislative moves are a response to Chinese foreign direct investment, which has skyrocketed in Europe while almost disappearing in North America.

President Trump signed tariffs on China earlier this year. Now, the administration wants to more than double them.

That disappearance is a function of the on-going trade dispute between the U.S. and China, which crescendoed this past week. The Trump administration said it is considering increasing tariffs from 10% to 25% on $200 billion worth of Chinese goods, significantly heightening the tariffs it had put in place earlier this year.

That threat got a swift response from China overnight, with the Chinese Commerce Ministry saying that it would put tariffs on $60 billion worth of American goods in retaliation if the U.S. followed through with its threat.

So far, the tech industry appears to have been more insulated from the back-and-forth than expected, although the increasing scope and intensity of tariffs could change that calculus. Apple updated its quarterly filing this week to include a new risk around trade disputes, saying that “Tariffs could also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand.” Legal boilerplate for sure, but it is the first time the company has included such a provision in its filing.

The tariffs drama is going to continue in the weeks and months ahead. But this week in particularly was a watershed for U.S. and China technology relations, and a busy week for tech lobbyists and policy officials.

For startups, most of this news basically boils down to the following: the U.S. is one market, and China is another. Cross-investing and cross-distribution just aren’t going to be easy as they were even a few months ago. Pick a market — one market — and focus your energies there. Clearly, it’s going to be tough times for anyone caught in the middle between the two.

News Source = techcrunch.com

Putin proposes a joint cybersecurity group with the US to investigate Russian election meddling

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Over the course of Monday’s controversial Helsinki summit, Russian President Vladimir Putin pushed an agenda that would ostensibly see the U.S. and Russia working side by side as allies. The two countries make stranger bedfellows than ever as just days prior, Trump’s own Department of Justice indicted 12 Russian intelligence officials for the infamous 2016 Democratic National Committee hack.

Nonetheless, the Russian president revived talks of a joint group between the U.S. and Russia dedicated to cybersecurity matters. For anyone with the security interests of the U.S. at heart, such a proposal, which Trump endorsed in a tweet one year ago, would truly be a worst-case scenario outcome of the puzzlingly cozy relationship between the two world leaders.

“Once again, President Trump mentioned the issue of the so-called interference of Russia [during] the American elections and I had to reiterate things I said several times…,” Putin said in Helsinki.

“Any specific material, if such things arise, we are ready to analyze together. For instance, we can analyze them through the joint working group on cyber security, the establishment of which we discussed during our previous contacts.”

Putin added that Russia favors “continued cooperation in counter-terrorism and maintaining cyber security.”

“The most recent example is their operational cooperation within the recently concluded World Football Cup,” Putin said. “In general, the contacts among the special services should be put to a system-wide basis should be brought to a systemic framework. I reminded President Trump about the suggestion to re-establish the working group on anti-terrorism.”

After a loud bipartisan rebuke followed Trump’s proposal of an “impenetrable [cybersecurity] unit” with Russia last year, the U.S. president walked his comments back a few steps, suggesting that they were hypothetical. Whether it ever materializes or not, the whole idea is a somewhat stunning departure from national security norms and one that would be broadly decried as letting the fox into the henhouse, given that evidence establishing Russia as a cyber adversary of the U.S., both currently and historically, is plentiful.

In 2017, the U.S. intelligence community issued such an assertion in no uncertain terms:

Russian efforts to influence the 2016 US presidential election represent the most recent expression of Moscow’s longstanding desire to undermine the US-led liberal democratic order, but these activities demonstrated a significant escalation in directness, level of activity, and scope of effort compared to previous operations.

The report notes that this information is sourced broadly, stating that “insights into Russian efforts—including specific cyber operations—and Russian views of key US players derive from multiple corroborating sources.”

CrowdStrike, the security firm involved in investigating the 2016 DNC hack, uncontroversially included Russia on a list of “notable nation-state adversaries” of the U.S. alongside China, North Korea and Iran.

Just days ago, U.S. Director of National Intelligence Dan Coats cautioned that “warning lights are blinking red again” when it comes to attacks on federal, state and local U.S. entities. Coats named Russia, China, Iran and North Korea as cyber aggressors against the U.S., adding that “Russia has been the most aggressive foreign actor, no question.”

It’s unclear what, if anything, the U.S. would stand to gain from such an arrangement, though it would stand to lose quite a bit, given the likelihood that Russia’s interest in influencing U.S. elections is ongoing. Putin’s comments in Helsinki indicate the spirit of such an effort lives on, misguided as it may be.

News Source = techcrunch.com

A huge spreadsheet naming ICE employees gets yanked from GitHub and Medium

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A massive database of current U.S. Immigration and Customs Enforcement (ICE) employees scraped from public LinkedIn profiles has been removed from the tech platforms hosting the data. The project was undertaken by Sam Lavigne, self-described artist, programmer and researcher in response to recent revelations around ICE’s detention practices at the southern U.S. border.

Lavigne posted the database to GitHub on Tuesday and by Wednesday the repository had been removed. The database included the name, profile photo, title and city area of every ICE employee who listed the agency as their employer on the professional networking site. A more in-depth version of the data pulled all public LinkedIn data from the pool of users, including previous employment, education history and any other information those users opted to make public. The total database lists this information for 1,595 ICE employees, from the company’s CTO on down to low-level workers.

The project accompanied a Medium post about the project’s aims that has since been removed by the platform:

While I don’t have a precise idea of what should be done with this data set, I leave it here with the hope that researchers, journalists and activists will find it useful…

I find it helpful to remember that as much as internet companies use data to spy on and exploit their users, we can at times reverse the story, and leverage those very same online platforms as a means to investigate or even undermine entrenched power structures. It’s a strange side effect of our reliance on private companies and semi-public platforms to mediate nearly all aspects of our lives.

The data set appears to have violated GitHub and Medium guidelines against doxing. Medium’s anti-harassment policy specifically forbids doxing and defines it broadly, preventing “the aggregation of publicly available information to target, shame, blackmail, harass, intimidate, threaten, or endanger.”

Because it doesn’t include personal identifying information like home addresses, phone numbers or other non-public details, Lavigne’s project isn’t really doxing in the normal sense of the word, though that hasn’t made it less controversial.

GitHub’s own policy leading to the data’s removal is less clear, though the company told The Verge the repository was removed due to “doxxing and harassment.” The platform’s terms of service forbid uses of GitHub that “violate the privacy of any third party, such as by posting another person’s personal information without consent.” This leaves some room for interpretation, and it is not clear that data from a public-facing social media profile is “personal” under this definition. GitHub allows researchers to scrape data from external sites in order to aggregate it “only if any publications resulting from that research are open access.”

While Lavigne’s aggregation efforts were deemed off-limits by some tech platforms, they do raise compelling questions. What kinds of public data, in aggregate, run afoul of anti-harassment rules? Why can this kind of data be scraped for the purposes of targeted advertising or surveillance by law enforcement but not be collected in a user-facing way? The ICE database raised these questions and plenty more, but for some tech companies the question of hosting the data proved too provocative from the start.

News Source = techcrunch.com

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