2018-09-10

Rigetti announces its hybrid quantum computing platform — and a $1M prize

Rigetti, a quantum computing startup that is challenging the likes of IBM, Microsoft and Google in this nascent space, today at our TechCrunch Disrupt SF 2018 event announced the launch of its new hybrid quantum computing platform.

While Rigetti already offered API access to its quantum computing platform, this new service, dubbed Quantum Cloud Services (QCS), offers a combination of a cloud-based classical computer, its Forest development platform and access to Rigetti’s quantum backends. Thanks to this, developers will be able to write and test their algorithms significantly faster than with the company’s previous approach.

In addition to the new platform, which is now in private testing, Rigetti also announced a $1 million prize for the first team that manages to show quantum advantage on this hybrid platform. Quantum advantage, at least according to Rigetti’s definition, is the milestone where a quantum system will be able to solve a real problem that is beyond the reach of classical computers. The company plans to announce more details around this prize at the end of October.

As Rigetti founder and CEO Chad Rigetti told me, the reason the hybrid approach is faster is simply because the two systems are closely integrated — and you will likely always need a classical computer in parallel with a quantum computer for solving virtually any problem. And the company expects that this hybrid approach — and likely the 128-qubit machine that Rigetti plans to launch next year — will allow for running an algorithm that demonstrates quantum advantage. The current API Rigetti makes available to developers features 8-qubit and 19-qubit machines. Those machines are nowhere near powerful enough to show quantum advantage, but they do give developers the ability to start experimenting with using quantum computers.

On the old platform, Rigetti also noted, the kind of loops you need to run to use the quantum machine for machine learning, for example, had a latency on the order of a second or more. “A lot of these algorithms require thousands and tens of thousands of iterations,” Rigetti said. “And now we have reduced this down to the order of milliseconds.”

Rigetti also today announced that it is partnering with a number of leading quantum computing startups (the kind that work on the software, not the hardware side of this ecosystem). These startups, including Entropica Labs, Horizon Quantum Computing, OTI Lumionics, ProteinQure, QC Ware and Riverlane Research, will build and distribute the applications through the Rigetti QCS platform.

2018-09-10

Deep-linking startup Branch is raising more than $100M at a unicorn valuation

Branch, the deep-linking startup backed by Andy Rubin’s Playground Ventures, will enter the unicorn club with an upcoming funding round.

The four-year-old company, which helps brands create links between websites and mobile apps, has authorized the sale of $129 million in Series D shares, according to sources and confirmed by PitchBook, which tracks venture capital deals. The infusion of capital values the company at roughly $1 billion.

In an e-mail this morning, Branch CEO Alex Austin declined to comment.

The Redwood City-based startup closed a $60 million Series C led by Playground in April 2017, bringing its total equity raised to $113 million. It’s also backed by NEA, Pear Ventures, Cowboy Ventures and Madrona Ventures. Rubin, for his part, is a co-founder of Android, as well as the founder of Essential, a smartphone company that, though highly valued, has had less success.

Branch’s deep-linking platform helps brands drive app growth, conversions, user engagement and retention.

Deep links are links that take you to a specific piece of web content, rather than a website’s homepage. This, for example, is a deep link. This is not.

Deep links are used to connect web or e-mail content with apps. That way, when you’re doing some online shopping using your phone and you click on a link to an item on Jet.com, you’re taken to the Jet app installed on your phone, instead of Jet’s desktop site, which would provide a much poorer mobile experience.

Branch supports 40,000 apps with roughly 3 billion monthly users. The company counts Airbnb, Amazon, Bing, Pinterest, Reddit, Slack, Tinder and several others as customers.

Following its previous round of venture capital funding, Austin told TechCrunch that the company had seen “tremendous growth” ahead of the raise.

“[We] have been fortunate enough to become the clear market leader,” he said. “There’s so much more we can accomplish in deep linking and this money will be used to fund Branch’s continued platform growth.”

2018-09-10

And the winner of Startup Battlefield at Disrupt SF 2018 is… Forethought

t the very beginning, there were 21 startups. After three days of incredibly fierce competition, we now have a winner.

Startups participating in the Startup Battlefield have all been hand-picked to participate in our highly competitive startup competition. They all presented in front of multiple groups of VCs and tech leaders serving as judges for a chance to win $100,000 and the coveted Disrupt Cup.

After hours of deliberations, TechCrunch editors pored over the judges’ notes and narrowed the list down to five finalists: CB Therapeutics, Forethought, Mira, Origami Labs and Unbound.

These startups made their way to the finale to demo in front of our final panel of judges, which included: Cyan Banister (Founders Fund), Roelof Botha (Sequoia Capital), Jeff Clavier (Uncork Capital), Kirsten Green (Forerunner Ventures), Aileen Lee (Cowboy Ventures) and Matthew Panzarino (TechCrunch).

And now, meet the Startup Battlefield winner of TechCrunch Disrupt SF 2018.

Winner: Forethought

Forethought has a modern vision for enterprise search that uses AI to surface the content that matters most in the context of work. Its first use case involves customer service, but it has a broader ambition to work across the enterprise.

Read more about Forethought in our separate post.

Runner-Up: Unbound

Unbound makes fashion-forward vibrators, and their latest is the Palma. The new device masquerades as a ring, offers multiple speeds, and is completely waterproof. And the team plans to add accelerometer features.

2018-09-10

Coinbase’s Brian Armstrong: ‘I’d love to run a public company’

Brian Armstrong, the CEO of cryptocurrency trading platform Coinbase, wants to take his company public — maybe on the blockchain.

Onstage at TechCrunch Disrupt SF 2018, Armstrong dished on his ambitions for the future of Coinbase.

“We are self-sustaining,” Armstrong said. “You know, we’ve been profitable for quite a while. We don’t have any plans to raise additional capital at this point, but never say never … Someday I’d love to run a public company.”

Armstrong didn’t rule out going public on the blockchain. He said he’s even considered going public on his own platform.

“I think it would be very on mission for us to do that because, of course, we are creating an open financial system,” he said. “Companies could list their stock, which are really tokens, and instead of a cap table, you tokenize the cap table. But I don’t have any decisions on that to share at the moment.”

2018-09-10

Unmortgage scores £10M seed round to offer ‘part-own, part-rental’ housing

“Unmortgage enables everyone to live in the home they want to, that’s our mission,” Unmortgage co-founder and CEO Ray Rafiq-Omar tells me. “We do that by allowing people to buy as little as five percent of a home and rent the rest. So there’s no mortgage involved, hence the name Unmortgage”.

The burgeoning London startup, which aims to launch next year having just closed a hefty £10 million seed round, calls its model “part-own, part-rent”. However, unlike traditional shared ownership schemes, Unmortgage doesn’t want you to have to take out a mortgage to buy the first portion of your own, and it isn’t targeting new-builds.

Like a number of other fintech/proptech companies, such as Strideup and Proportunity, it is the latest attempt to solve the increasing difficulty first time buyers face trying to get on the housing ladder as rising house prices typically outstrip wages. If people rent, they often cannot save the large deposit required for a mortgage. It is this “vicious circle” that Unmortgage want to break: by helping families that can afford to rent gradually buy a home.

“The way we like to think about it is the security of home ownership with the flexibility of renting,” says Rafiq-Omar. “You find a home. If we like it too, we’ll but it together in partnership. You’ll own your bit and you’ll pay rent on our bit. Then you have the option to buy more of your home from as little as a pound at any time”.

To keeps things fair — Rafiq-Omar stresses that fairness is “our core value” — Unmortgage will revalue the property on a monthly basis so you’ll always have an up-to-date valuation when increasing your stake. And at any point you are free to either buy out Unmortgage with a mortgage or an inheritance or to give the company three month’s notice for it to buy you out so you can take your cash at market price and move on to your next home.

Likewise, the rent you pay on the part of the property you don’t own is pegged to rises to inflation. But in case inflation outpaces market rate rents, Rafiq-Omar says Unmortgage will allow the customer to ask for a rent review. “They have the ability to not have to worry about their rent but if they are worried they can have it reviewed,” he says.

Unmortgage will use institutional funding to finance its part of the homes it purchases, who Rafiq-Omar says would like to own residential property, and the secure income stream it brings, but don’t want to be landlords or end up in the media for behaving like a landlord. “Unmortgage gives them a way to invest in residential property while solving societal need, which is [that] people want to own their own homes and have security over their housing situation”.

Meanwhile, investors in Unmortgage’s seed round are fintech venture capital firms Anthemis Exponential Ventures, and Augmentum Fintech plc. “”We’re grateful to our investors for believing in us and our social mission and excited to be working with them – especially Tee Pruitt [of Anthemis], who was instrumental through much of this process,” adds Rafiq-Omar.

2018-09-10

Tokens can better incentivize startup employees than equity

Token structuring and tokeneconomics are among of the most important considerations when designing a blockchain. When thinking about how best to distribute these tokens, founders often think about how the tokens will impact external stakeholders such as their investors, the community, and stakers (people that can mine or validate block transactions according to how many coins he or she holds). But token economies are also bringing disruption to organizations internally, especially when it comes to HR and compensation.

If the tokens are structured properly for a blockchain, external stakeholders will be directly aligned with the goal of the project. Those incentives can encourage participation on the blockchain platform and/or drive token demand with community-building and marketing. Similarly, if internal stakeholder incentives are structured correctly, the project could accrue long-term value by motivating employees to work towards the same goal, while reducing adversarial behavior and also bad actors.

For any blockchain company to succeed long-term and scale, it’s inevitable that they need to structure their tokens to retain and reward the best employees sustainably. This is as important it not moreimportant than incentivizing external token holders.

How does an employee look at tokens vs equity?

Currently, equity in the form of stock options is widely distributed as part of compensation packages amongst startups. When employees join a company, they are usually offered a combination of cash and stock options. The options become a way for the employees to meaningfully participate in a company’s upside should they succeed. Often, employees can negotiate between taking a higher cash comp or higher options amount, depending on their risk appetite.

There are many ways tokens and equity are similar. For one, both assets motivate individuals to align their goals with that of a company’s. If the company becomes more successful, the value of its tokens and equity should theoretically go up. Nonetheless, one of the downsides of stock options is that they usually require a liquidity event for an employee to convert them to paper money. Historically, that was when a company went public and the employee could convert their options into stocks and then sell them in the public markets.

However, in the last decade, with the increasing amount of private capital and subsequent larger private fundraising rounds, companies are taking way longer to IPO. Companies such as Dropbox took eleven years from founding to IPO, while Airbnb has been around ten years and still hasn’t gone public. As a result, private companies started doing option buybacks to provide liquidity for their employees. Simultaneously, this phenomenon has caused the secondary market to thrive in Silicon Valley.

Token liquidity changes the game

One of the largest differences between tokens and equity is that tokens are immediately liquid, assuming that they have already been listed on an exchange. To put simply, equity options only prove their value at the end, whereas tokens have certainty values from the beginning.

Now in cryptocurrency and blockchain companies, employees could get paid in tokens in lieu of equity or cash, primarily outside of the U.S. Many tokens have a liquidity advantage over equity. For example, it can be immediately sold upon reception, assuming that the token has been listed on an exchange and there is enough trading volume.

This is also one of the reasons why exchanges are so important for the cryptocurrency space because 1) it’s one of the easier ways to gauge the value of a company given that the industry has yet to figure out a proper valuation methodology, and 2) it provides immediate liquidity for employees who have been burned by the hopes a billion dollar company not coming to fruition and all the options going to zero.

For an employee looking for a job in a technology-based company, consider two companies that are exactly the same, with the same team quality and same targeted industry, but one company has a token incentive structure instead of an equity incentive structure, and the token is already traded on an exchange. Why would the employee ever want equity? With tokens, you’d still share the upside in the company’s success, but also have immediate liquidity.

Additionally, outside the U.S., often employees can also get paid in tokens or stable coins in lieu of cash to take advantage of tax benefits given the lack of regulatory sophistication. That may change very soon, however. Token structure, therefore, is a disruption to a company’s internal structure and we will share some examples below of how that’s already affecting a number of Chinese crypto companies.

Token incentives will disrupt traditional ways of compensating employees

These changes to employee compensation have already become popular in places like China, where a number of Chinese blockchain companies have started on the foundation of distributing tokens as compensation. Companies like Ontology, NEO, Huobi, and Binance pay their employees in their own tokens. Many of these teams operate worldwide but they are able to manage hundreds of people, often with just a handful of HR staff, through a shared incentive structure.

In the case of Neo, the original founding team, in fact, didn’t have anyone with a computer science background. When they were looking for developers, they would pay tokens to people to do development work for them. For Ontology, it was even more extreme. The founding team initially set up the Ontology Foundation. They didn’t want to hire people, so instead, they listed out a list of things that needed to be developed and paid tokens to all the developers who contributed.

Binance, similarly, paid their employees in tokens. They would then use their quarterly profits to burn tokens, which subsequently boosted the value of the remaining tokens. It is possible that partially due to these effective token incentives, Ontology has been the best performing token this year while Binance continues to hold the lead in the exchange space.

China has taken a lead here compared to the U.S. partially because of regulatory uncertainties, but there are examples in America as well of these changing compensation norms. In the early days of cryptocurrency when it was (even more) wild west, Consensys got started by compensating their employees in tokens until their first legal hire came along. That story is similar to Coinbase, where initially a number of first employees were given the choice of being paid in coins and/or cash.

Token compensation also seems to be particularly powerful incentives for Chinese blockchain companies, more so than their U.S. counterparts. Maomao Hu, Partner at Eigen Capital and CTO of Calculus Network, talks about the psyche of the young generation of Chinese developers: “Being Chinese, Chinese engineers, especially the young ones, have a hunger that you only see in some parts of Silicon Valley, and that’s like everyone. They are just doing 80 hours 100 hour weeks because they hate being poor and they hate not having an opportunity and they don’t have other ways to get an opportunity, and that’s like everyone.”

It may also be that because there have been fewer technology cycles in China, and the rise of the largest technology companies happened only in the last decade, equity compensation remains a relatively new concept to local citizens. With token compensation introduced, this is the first time for many Chinese people to be able to participate in a company’s upside so directly.

Despite their growing popularity, these incentive schemes are still early and experimental, and there are unforeseen risks associated with token issuance as compensation. In particular, the appeal of short-term, quick gains from tokens is ever more attractive. If wrongly incentivized, people could end up spending time hyping up their tokens instead of building product, allowing employees to cash out quickly without producing.

As a result, serious founders of new token-based companies should be aware of such short-sightedness when designing employee token incentives. They can potentially introduce long-term token vesting schedules, and also hire people who care about driving long-term value. For CEOs, this is going to be an increasingly important role they will have to take in the token economy. I’m certain though that the next set of large unicorns will be coming from tech companies with great token incentives structures, in or outside of the U.S.