When fundraising, New Zealand startup founders should play the ‘Kiwi card’

New Zealand, a country of 5 million people in the South Pacific, has witnessed a shifting tech startup landscape over the last couple of years. While some major global companies like Xero, Rocket Lab, LanzaTech and Seequent have shined a spotlight on New Zealand’s startup scene, the country historically hasn’t had access to much venture capital.

As a country with an economy that primarily exports agricultural products, the New Zealand startup world has usually relied on funding from a community of high-net-worth individuals and family offices who probably made their millions through real estate or farming.

In March last year, the New Zealand government launched Elevate, an NZD $300 million fund of funds program that’s been providing millions to local VCs to invest into the startup community to fill the early-stage capital gap. At the same time, foreign investors have been flooding onto the scene, attracted to the small country that has a reputation for producing great companies. Founders and VCs in New Zealand are hopeful that the increase in funding from multiple sources is a signal that technology might just become the country’s next big industry.

That is, if the momentum that has led to more early-stage capital continues.

We spoke to two founders (Peter Beck of Rocket Lab and Cecilia Robinson of Au Pair Link, My Food Bag and Tend) as well as two investors (Phoebe Harrop, principal at Blackbird Ventures, and Robbie Paul, CEO of Icehouse Ventures) to nail down the top tips for New Zealand founders looking to put their mark on the markets. Here’s what we learned.

Think big and back yourself

New Zealanders typically tend to have an introspective view, failing to think big and globally from day one, Beck said. This is in part due to the fact that Kiwis grow up in a culture that suffers from “tall poppy syndrome,” a phenomenon where people who have achieved any measure of success are derided, cut down or sabotaged. As a result, not many people want to be a tall poppy.

Play the Kiwi card. New Zealand sits favorably on the minds of the international community. Icehouse Ventures CEO Robbie Paul

“If you’re going to build a company, it’s incredibly painful, it takes a lot of work,” Beck told TechCrunch. “Why would you waste your time building a little company? Let’s build a big company. So go after big problems.”

In order to psych yourself up to tackle those big problems, don’t be too humble. New Zealand consistently punches above its weight and produces world-class entrepreneurs and tech startups, Paul said.

“Back yourself and know you can win on a global stage,” Paul told TechCrunch. “While starting on a rock at the bottom of the world comes with challenges, there are plenty of advantages, too.”

Don’t get starry-eyed over a big check

“Remember that the least valuable thing an investor ever gives you is their money,” said Beck. “As you think about building your business, how and where you want to go, make sure you utilize investors to help you get there. People get starry-eyed by the check and don’t really sit back and go, ‘Well, is this person actually strategic to me or not?'”

When Beck was building Rocket Lab, he was highly selective about the investors he brought in, saying the differentiating factor between investors is not their capital, but rather who they can call. For example, Khosla Ventures participated in Rocket Lab’s Series A round, which Beck said opened the door to another big VC, Bessemer, to invest, in a Series B. DCVC led the Series C, but by the time Rocket Lab got around to its Series D, Bessemer was paving the way to Greenspring, which is a limited partner (LP) of Bessemer. Sovereign wealth funds, where the real big checks come from, participated in the company’s E round, and they were LPs of Greenspring.

“So as your company continues to grow, there are larger and larger pools of capital that you can then go and attract, and if all you’ve got is John from Pakuranga, John doesn’t have the phone number and credibility to sovereign wealth funds,” said Beck. “It’s all about setting up the company so that when you want to do a bigger round, you can go and tap that venture capitalist’s LPs and then it can tap that LP’s LPs and ultimately end up in sovereign wealth funds or others that can write a $100 million check no problems at all. It’s a smooth path there, and where it’s tricky is when there’s no path or the path is truncated, and the challenge with New Zealand is even though there are some better quality venture capital firms in New Zealand, where are their relationships with LPs?”

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Let’s talk CES 2022 trends

I spent a chunk of yesterday morning rediscovering the big trends of CES 2012. It’s a strange experience, examining so much technology that feels — at once — extremely dated and very recent. With 10 years between you and an event, the macro trends really take shape. Some items are a clear part of a continuum that brings us to the present day. Even more often, however, these things prove to be a kind of evolutionary dead end.

Even so, there’s a lot we can learn in the moment. CES is billed as a bellwether for the year to come. It also demonstrates how the tech world responds to largely global trends, in a one-stop shop. And let’s be real, there’s really one key global trend from the past couple of years that’s going to drive what happens at the show in every way imaginable.

Over the past few weeks, we’ve received some pushback on our coverage of big-name drop-outs from the in-person portion of the event. To some degree, I understand — or at least can empathize with — the criticism of focusing coverage on COVID-fueled exits, rather than the manufacturer news tied to the event. To that I say, simply, we’ll be covering that, too, only we’ll be doing it next week when it’s actually announced at the show (albeit remotely).

In the lead up to the show, however, we can identify/predict the industry trends that are best poised to define CES — and, perhaps by extension, 2022.

First, the elephant in the room.

CES drop-outs

As I write this the list of big-name tech companies that have announced they will be opting out of (or dramatically scaling back from) in-person events includes: GM, Google, Microsoft, AMD, OnePlus, MSI, Lenovo, Intel, T-Mobile, AT&T, Meta, Twitter, Amazon, Proctor & Gamble, Mercedes, BMW, Panasonic, IBM, TikTok and Pinterest. The media side includes TechCrunch, Engadget, The Verge, CNET, PCMag, Tom’s Guide, Tech Radar and more.

It’s not exactly a full list — but it’s surely a lot more than the CTA hoped for. There are, however, still some big names participating, including Samsung, Sony, LG and Qualcomm. Given the late stage at which many companies opted out, those who attend the show are due for a surreal experience, full of big-name, unstaffed booths.

CES dodged the shutdown bullet in 2020 by the skin of its teeth. 2021, meanwhile, felt like a referendum on whether a hardware event at this scale can go entirely virtual. Based on our own experiences of navigating the show online, the answer was decidedly a no. With the CTA planning a return to an in-person event for 2022, I will be interested to see whether the organization has dramatically improved the experience for those who won’t be in Vegas.

Connected fitness

The last few years have been huge for this category — for what should be obvious reasons. Mirror was acquired by Lulu Lemon, Peloton had a banner couple of years (in spite of numerous setbacks) and the funding flowed for a range of different home fitness suppliers. This was fueled by widespread gym closures, coupled with the general inactivity of those forced to stay at home.

There’s been some regression for companies as gyms have reopened in different parts of the country and world, but with the arrival of troubling variants like delta and omicron, many have remained committed to their home workout routines.

Bonus: Expect more startups trying new wearable form factors, including rings, after Oura proved out success on that side. Mindfulness and sleep will also be focuses, in addition to more traditional health tracking.

Robots

As someone who writes a lot about robots, it’s heartening to see them playing an increasingly important role at CES. That includes moving beyond sheer novelty and tried and true form factors like robot vacuums. My list includes exoskeletons, elder tech, agtech, prosthesis and — at the very top — disinfecting robots. There are going to be a TON of these, driven by an increased focus on surface-based disease transmission during the pandemic and the fact that it’s reasonably simple to mount UV-C light panels to an autonomous robot that can take laps around an office.

Bonus: With last-mile delivery robots taking off in a big way, expect to see a number of newer companies getting in on the act during the show.

Lidar

Okay, so Velodyne has opted out of the in-person event, but between robotics, self-driving cars and drones (among others) the demand for lidar is massive. Expect to see a lot of new offers from companies at the show — both new and old.

Bonus: It’s going to be a big year for e-bikes, too. Mark my words.

Remote work

This one’s a bit nebulous, I confess, but the pandemic had a profound impact on the category. After years of decline, PC and tablet sales shot up, as people scrambled to build home offices. Even after nearly two years in isolation, there’s still a lot that needs improving with our home setups. If you started building solutions like webcams, lighting, conferencing devices and microphones at the beginning of the pandemic, CES 2022 would be a great place to debut them — for many reasons.

Bonus: For the (large number)th year in a row, smart home stuff will occupy a huge portion of mindshare for the show.

CES 2022 kicks off next week. We’ll be there (virtually), so stay tuned.

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The Equity team’s 2022 predictions

Hello and welcome back to Equity, a podcast about the business of startups where we unpack the numbers and nuance behind the headlines.

As is tradition on the show, we used the last episode of the year to make predictions about the next year. To continue an annual tradition, Grace and Chris joined Natasha and Mary Ann and Alex on the mic, a rare treat and one simply for your enjoyment. Expectedly, they had a lot to say.

So what did we manifest for 2022? Here’s a sampling:

• We’re bullish on climate-focused startups: A notable theme from a number of us was the importance of climate startups, and how many types of startups are going to have a climate-flavor. In short, as the planet changes, it’s going to touch just about everything. And if sustainability is not your entire pitch, it’s going to be at least a strategy soon enough.
• We had a lot to say about crypto: Sure, we’re all a bit tired of talking crypto, but there’s also no chance that we could get away from the topic when considering next year. The classic tension between reinvention and regulation continues to be a dynamic we all care about, and predict will be full force over the next twelve months.
• We’re not nearly as bullish on media: The Buzzfeed SPAC had some of us bummed out, but when it came to creators and not just writers, we were a bit more positive. Everything is media, even if everything doesn’t make money.
• Space is controversial: We won’t spoil it, but the space chat got a bit spicy. The argument wound up showing an interesting issue in the tech space, namely is all the money going to where it will have the greatest impact?

A big hug from the Equity team for your continued listenership this year. Thanks for sticking with us, and we’re back in a heartbeat with another year’s shows – some of which may even be in person!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!

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India antitrust watchdog orders investigation into Apple’s business practices

Indian antitrust watchdog on Friday ordered an investigation into Apple’s business practices — in particular, the company mandating iPhone app developers to use a proprietary payments system — in India, where the American firm commands less than 2% of the smartphone market.

The Competition Commission of India, which ordered the Director General to conduct the probe within 60 days, said it is of the prima facie view that the mandatory use of Apple’s in-app payments system for paid apps and in-app purchases “restrict[s] the choice available to the app developers to select a payment processing system of their choice especially considering when it charges a commission of up to 30% for app purchases and in-app purchases.”

The watchdog began reviewing the case after a complaint filed by Together We Fight Society, a non-profit based in India’s western state of Rajasthan. The organization said Apple’s move, which prevents app developers from using a third-party or their own payments system, makes a significant dent in the revenues they generate.

Apple had urged the CCI to dismiss the case, saying it was too small a player in India.

India is the latest nation to express concerns over Apple and Google requiring app developers to use the firm’s payments system for in-app purchases. (The Indian watchdog opened the investigation into Google’s business practices last year.) Earlier this year, South Korea approved a measure that makes it illegal for Apple and Google to make a commission by forcing developers to use their proprietary payments systems.

In the U.S., Fortnite-maker gaming firm Epic publicly challenged Google and Apple by introducing its own payments system in the sleeper hit title. Now it’s locked in legal battles with Google and Apple. This year, attorneys general from 36 U.S. states filed an antitrust lawsuit against Google alleging its Google Play app store is an illegal monopoly. A bipartisan bill introduced this year in the U.S. Senate seeks to restrict how the Apple and Google app stores operate and what rules can be imposed on app developers.

The European Union last year proposed the Digital Markets Act, which is meant to prevent technology platforms from abusing their gatekeeper position.

“At this stage, it appears that the lack of competitive constraint in the distribution of mobile apps is likely to affect the terms on which Apple provide[s] access to its App Store to the app developers, including the commission rates and terms that thwart certain app developers from using other in-app payment systems,” the CCI wrote Friday in a 20-page order.

The CCI said it is also worth probing whether Apple uses data it collects from the users of its competitors to “improve its own services.”

Despite a considerable uptick in iPhone sales in India in recent years, Apple is still a small player in the market. Google’s Android commands a marketshare that swings between 98 to 99% each year.

We have reached out to Apple for comment.

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Securing the global digital economy beyond the China challenge

Ainikki Riikonen Contributor

Ainikki Riikonen is a research associate with the Technology and National Security Program at the Center for a New American Security (CNAS). She is a co-author of the CNAS report “Edge Networks, Core Policy: Securing America’s 6G Future.”

The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

The push by countries at all levels of development to modernize their information and communications networks has created unprecedented demand for technological infrastructure. Governments and industry are investing billions of dollars to expand digital connectivity worldwide. New deployments of 4G, 5G, satellites and fiber-optic cables could create huge opportunities for host nations but pose significant risks if networks are built without adequate safeguards. The U.S. has a role to play in securing the future of the internet and the global digital economy but will need to move beyond confrontation with China to succeed.

China’s network effects

Digital access is the foundation for digital services, like fintech and e-commerce, that connect communities to trade and financial resources. As startups in Latin America and Sub-Saharan Africa draw billions in investment, their services require a strong and wide-reaching information communications technology (ICT) backbone to flourish.

​​China, through its Digital Silk Road, Belt and Road Space Information Corridor and other state-led initiatives, has become a leading purveyor of ICT infrastructure virtually everywhere, especially by financing projects in less affluent nations. But these investments come with a price: cybersecurity and manipulation risks due to the influence of China’s government on its vendors.

Due to legal obligations to the Chinese state — including sharing customer data at its request — China’s tech firms cannot guarantee that they will put their clients first. Many firms also host internal Party organizations that influence decision-making. The Communist Party of China (CPC) is not omnipotent — some companies have slow-rolled compliance with information requests — but the CPC’s ongoing crackdown on tech companies is diminishing their ability to circumvent directives.

But because network modernization is an economic imperative and Chinese firms often offer lower prices than their global competitors, many countries choose to source their technology despite these political and security hazards.

While the risks posed by companies such as Huawei are not evidence of collaboration with China’s government, these legal and institutional pressures, combined with engineers’ track record of spying for other national governments, such as in Uganda and Zambia, suggest that even China’s most powerful ICT companies can be susceptible to co-option. As the digital economy grows and diversifies, more kinds of data, from personal communications to financial, business, health and other sensitive information will become vulnerable to a “data trap.”

While state intervention is not guaranteed, the CPC’s approach to foreign affairs heightens that likelihood. Beijing wants international audiences to accommodate its priorities and activities and pursues “information dominance” with that purpose in mind. Data is important for understanding the information environment and shaping perceptions of the CPC, so access to and influence over ICT infrastructure — the vehicle for modern communications — makes the companies that provide it pivotal to Chinese foreign policy.

Information dominance also means preference for CPC-friendly content and platforms, which hinders opportunities for local populations. For example, StarTimes, a Beijing-based media company that upgraded and operates television networks in 30 African countries, received hundreds of millions of dollars from China’s EXIM Bank to enter African markets. It offers state-run media channels in its cheapest subscriptions or even for free which “tell the China story well” to local audiences, at the cost of excluding bandwidth dedicated to local perspectives or media free from CPC propaganda.

America’s response: Still loading

In response to the spread of China’s network projects, U.S. policymakers have begun to tackle vendor security assessments and expand government mechanisms to finance ICT. Buried under the Trump administration’s “us or China” rhetoric, the State Department’s Clean Network initiative included country-agnostic criteria for assessing vendor-based cyber risks and support for the multilateral Prague Proposals, which underscored non-technical aspects of 5G security. The administration also retooled the U.S. International Development Finance Corporation (DFC) to better support digital modernization and network construction. In an early victory for DFC, Ethiopia selected a Vodafone-led group in lieu of a bid linked to China’s Silk Road Fund, despite long-standing relationships with Huawei and ZTE to supply telecommunications.

These developments highlight the U.S. commitment to generating alternatives, in collaboration with other countries. But these measures alone may be insufficient to address the scale of China’s approach. In addition to vast government investments into overseas projects, China has subsidized its tech giants to such an extent that Huawei once proposed a 5G project at “a price that wouldn’t even cover the cost of parts.”

The United States, while motivated to offset China’s influence, should not look to outspend it or mimic its approach. Instead, U.S. leadership should mobilize a variety of sustainable investments, find technology solutions to make tech adoption cheaper and pitch neutral infrastructure that will offer equitable opportunities for local economies.

The White House should spearhead creation of a multilateral digital development bank to make more resources available to states looking to modernize their networks. Doing so would also add heft to commitments the Biden administration has made under the G7’s Build Back Better World initiative.

In coordination with Congress, the Biden administration should also back efforts to lower the cost of equipment itself to sustainably compete with China’s low-priced kit. One solution is interoperability in technology standards; Open RAN for 5G networks is one example of how this approach has already proven less expensive than traditional network architecture.

Another avenue to lower costs is to invest in research and development for network technologies that can replace the most expensive legacy components. For example, fiber-optic cables are expensive to deploy on land; workarounds may include wireless optic solutions or integration of satellite mesh networks with terrestrial systems.

Finally, the White House should explore ways to integrate net neutrality principles into network financing projects run by agencies such as DFC. Net neutrality could offer economic benefits to host nations by keeping the digital playing field open for local media and innovation. Neutral networks would set the foundation for a third way forward from what has been criticized as digital colonization by China’s government and similar criticisms of the U.S. private sector.

A digital network is ultimately a means to an end: infrastructure for interpersonal communications, content, services, industry and innovation. While few countries, at least for now, supply ICT infrastructure to the majority of the world, that majority should have full access to the opportunities it can offer. A revised route to digital modernization, premised on open participation, can not only offset the local costs of China’s cyber and influence power, but pave the way for an equitable internet for all.

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Record number of unicorns and IPOs: Indian startups raised $39B in 2021

In late March last year, as the virus started to spread across India, investors began to worry about the impact a potential pandemic could have on their portfolio firms.

They exchanged notes, and on April 1, penned a joint open letter to the local startup ecosystem, advising firms to “prepare for the worst.”

In the months that followed, the virus engulfed the South Asian market and, among other things, hit the brakes on funding activity. Scrambling to steer through the unprecedented event, startups began to cut expenses. Some didn’t survive, and a few got acquired in fire sales. Many entrepreneurs and investors stepped up and volunteered to help the nation fight the pandemic, too.

Investors were right about the impact the virus would have on the country, and by extension, on the firms attempting to fuel the economy. But very few were prepared for what was about to happen in just a few quarters.

Scores of startups, many operating in edtech and fintech categories, began to report fast growth. “We started to see three years and five years of growth in one year,” said Ashish Dave, chief executive of Mirae Asset Venture’s India business.

While several investors, including many tier 1 funds that are generally very active in India, were still cautious, a group of investors including Tiger Global, Falcon Edge Capital, and SoftBank shifted into a higher gear.

Navroz Udwadia of Alpha Wave Global (formerly known as Falcon Edge Capital) said in a conference earlier this year that his firm likes to get aggressive when most other funds are cautious about the market conditions.

Tiger Global backed Infra.Market in February this year, propelling the business-to-business e-commerce platform’s valuation from $200 million to over $1 billion in a span of two months.

In a letter to investors in February, Tiger Global said the opportunity it sees in areas such as consumer, enterprise, and financial technology in the U.S., China, and India is “very large relative to the amount of capital we manage and evolving at a rate that is often hard to comprehend.”

Several factors worked in India’s favor, many investors said. There’s an abundance of dry powder in the market and investors are increasingly looking at growth avenues such as emerging regions as their next big bets. It also helped that Beijing enforced a series of crackdowns on its own startups and made it difficult for foreign money to flow into China.

Another thing swinging in favor of India was the record number of IPOs that we saw this year. Food delivery firm Zomato made a stellar debut. Fashion commerce Nykaa, online insurer PolicyBazaar also made strong debuts on the stock exchanges. Paytm filed for the nation’s largest IPO, though the public market is still giving it less valuation than it sought.

Dave said Indian startups going public addressed the exit challenge that many investors have faced over the years.

The investors’ bullishness on India was on full display in April, when the virus was beginning to gain pace again in the country.

Eight Indian startups — including social commerce Meesho, fintech CRED, investment platform Groww, business-to-business messaging platform Gupshup, payments firm Chargebee — joined the unicorn club in April. Tiger minted five of these unicorns.

The sudden flow of cash also created a crunch for talent in the market. Startups began to offer lucrative stock options and salary hikes to employees to win and retain them.

In total, capital flowing to private Indian startups surged over four times to about $39 billion this year and nearly three times from the previous best of $14.6 billion in 2019, according to data from insight platform Tracxn, which has also filed for an IPO.

India now has 81 unicorns, 44 of which joined the club this year. Several of the unicorns and many other fast growing startups have raised multiple rounds this year and increased their valuations multiple times over. Fintech Slice, which is giving millions of Indians access to credit card features and helping them build credit scores, increased its valuation multiple-fold in a recent round it raised from Insight Partners and Tiger Global.

CRED, for instance, has raised three funding rounds and has held talks for a fourth one, TechCrunch reported earlier. Indian edtech giant Byju’s has raised over $1.5 billion since last year. Instant grocery delivery startup Zepto, co-founded by two 19-year-old Stanford dropouts, doubled its valuation to $570 million in a span of two months.

Fintech startup Jar, which is helping hundreds of thousands of Indians start their investment journey, is about to close a round from a high-profile investor, said two people familiar with the matter. The startup, founded this year, is likely to increase its valuation by about 15 times in the new round.

Bangalore-based QuestBook, which is helping developers transition to web3, is about to close a round from a number of investors including entrepreneur Balaji Srinivasan, according to a person familiar with the matter. Polygon is in talks to raise from Sequoia Capital India and Steadview Capital, TechCrunch reported this month. (Also Amazon is in talks to back an agritech startup, per two people familiar with the matter.)

“Startups have become mainstream in India,” said Dave, pointing to a number of recent developments including the arrival of Shark Tank in the country. “Indian parents are no longer hesitant to tell their friends that their kid works at a startup or has founded one. Everyone now knows what a startup is. For years, I had to explain to my dad what I do for a living!”

Tiger Global, which has made over 50 investments in India this year, is currently conducting due diligence to back an additional nine startups in the country, according to a person familiar with the matter. Other than Tiger Global, SoftBank, and Alpha Wave Global have also deployed serious capital in the country this year. SoftBank has invested over $3 billion in India this year. Alpha Wave Global has poured over $2 billion.

The frenetic pace at which some of these firms have written checks to Indian startups this year has also forced many of their global peers to take India more seriously. Temasek, which typically backs late stage startups, has made a record 20 investments in India this year.

Insight Partners, which became more prolific in India this year, made some changes to its investment process in the country to speed up the time it takes to back a startup, two people familiar with the matter said. It’s currently engaging to back Indian NFT platform Faze, according to two people with knowledge of those proceedings.

General Catalyst is building a team in India, too. The firm is also in talks to back a number of startups including OneCode, a person familiar with the matter said. Andreessen Horowitz made its first investment in India this year. B Capital Group has also appointed a new India head.

“Tiger has changed the game,” said Dave. “Every fund on the planet has at some point relooked and reassessed their strategy and tried to figure out what is the best they can do. Not everyone can play Tiger’s game. But what is the next best you can do? Because you can’t play the same game that you used to.”

Sequoia Capital India, which has been investing in India for over a decade, remains the most prolific investor in India and Southeast Asia. It has made over 60 investments this year.

Dave said he expects the pace of investments to continue in the new year. “The market will continue to become more competitive. Just look at the number of people who are beginning to do angel investing.”

“Overseas, the market is huge. The number of investors and firms are also very large. That’s still not the case in India. So the competition for good deals is very high.”

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Five stories that shook up the enterprise in 2021

There is often a mistaken impression that covering the enterprise is kind of dull when compared to the consumer side of the house, but having followed the space for a couple of decades now, I can tell you that nothing could be further from the truth.

For one thing, there’s big money in the enterprise, like Oracle buying Cerner last week for $28 billion and shaking up the healthcare vertical while they were at it, or UiPath going from obscure startup to $35 billion RPA juggernaut earlier this year, before falling back a bit after going public.

There’s intrigue, like when activist investors try to force companies to make moves they normally wouldn’t want to make, and battles for control of the board like we saw at Box this year.

There’s drama, like the three-year battle among the biggest enterprise cloud infrastructure companies in the world for the $10 billion Department of Defense JEDI cloud contract, a procurement process that had everything from lawsuits to repeated internal reviews to presidential interference.

So you can say a lot of things about the enterprise… but boring? Definitely not — and this year was no different. So I decided to close out 2021 with a look at five stories that rocked the enterprise. It’s hard to narrow 12 months of news down to the five biggest stories, but here are my choices.

The Bezos-Jassy-Selipsky musical chairs at Amazon

Perhaps the biggest news this year involved Jeff Bezos deciding to step back as CEO, taking on the chairman role. Now that in itself did not have a huge enterprise impact because Amazon is an e-commerce company, which doesn’t necessarily fall within my purview, but then there was what happened next.

That February day when Bezos made his announcement, he also indicated he had chosen his replacement, Amazon Web Services CEO Andy Jassy. He had helped build the cloud infrastructure business at Amazon into a massive business, surpassing a $64 billion run rate in the most recent quarter.

Replacing him wouldn’t be easy, but they turned to an old friend when they hired Tableau CEO Adam Selipsky to take over for Jassy. Selipsky had previously been at AWS from its inception until 2016, when he left to take over Tableau. Now it’s his job to keep the train moving. He has momentum in his favor, but competition is getting ever more fierce, and it bears watching what happens next year under Selipsky’s leadership.

Bret Taylor’s totally excellent week

One of the other top stories involved Salesforce executive Bret Taylor getting a couple of big jobs in the same week at the end of November, making for a pretty sweet week for him. For starters he was named chairman of the board at Twitter. If that weren’t enough, he was also named co-CEO at Salesforce, where he had moved rapidly up the ladder since his company, Quip was acquired in 2016 for $750 million.

While Twitter had turmoil of its own with long-time CEO Jack Dorsey stepping down and Parag Agrawal taking over, the move to co-CEO at the CRM giant was clearly the bigger news from an enterprise perspective. While The Information reported that Taylor would still be reporting to company co-founder, chairman and co-CEO Marc Benioff, the promotion put Taylor in line to be Benioff’s heir apparent should Benioff decide to step back into the chairman role in the same way that Bezos did earlier this year. Another storyline to consider in 2022 is whether Salesforce revisits its desire to buy Twitter, a move it thought of making in 2016 before walking away.

Box-Starboard Value proxy fight

Box beat back an attempt by activist investor Starboard Value to take over the board, a move that likely would have resulted in the removal of co-founder and CEO Aaron Levie, the sale of the company, or both. It was the culmination of months of drama and it made it a major enterprise story line for 2021.

Starboard Value, an activist investor, bought a 7.5% stake in the cloud content management company in 2019, which would grow to 8.8%, giving the firm considerable influence over the company. They remained quiet for a time, but last year they decided to make a move and put Box on notice that they wanted to take over the board, which resulted in a proxy battle.

Along the way, Box answered with a $500 million investment from KKR, further angering Starboard, filed a document with the SEC pushing back against Starboard’s slate of board candidates and issued their earnings report early to give voters a chance to see their latest results. As luck would have it, the company scored two decent quarters following Starboard’s action and easily won the proxy battle, leaving the status quo for now. What happens in 2022? As I wrote, perhaps it’s time for Box to make some bold moves, and use some of KKR’s money to buy some adjacent functionality.

DoD kills JEDI and announces new cloud initiative

The $10 billion, decade-long JEDI cloud contract has been drama-filled from the day it was announced in 2018. Over those years, I wrote more than 30 articles on it, so when the Pentagon decided to kill it finally this year, that was big news.

From the start, conventional wisdom said that it was Amazon’s contract to win. There were complaints that the RFP was written with Amazon in mind, but in the end it was Microsoft that won the deal. Amazon went to court though, stating that the previous president had directly interfered with the procurement process because of his personal dislike for Amazon CEO Jeff Bezos, who also happens to own The Washington Post newspaper. Amazon also argued that it should have won on merit.

Regardless, it succeeded in convincing a judge to put the project on hold in February 2020. It would never restart, and the DoD decided to move on to a new project in July, stating that technology had changed since 2018 (which is true) and wisely deciding to go with a multi-vendor approach with its new initiative, instead of the winner-take-all approach it had pursued with JEDI.

Dell spins out VMware

When Dell bought EMC in 2015 for $67 billion (later amended to $58 billion), it was the largest deal in tech history, and another doozy of a story to follow and write about over the years. VMware was always the crown jewel of the deal, and so enterprise reporters like me kept a close eye on what Dell was going to do with it. For a long time it stood pat, but it was a huge story in the early part of the year when it announced it was spinning out the company in a deal valued at $9 billion.

It seemed a little light perhaps given the amount of money that’s still on the books for the EMC deal. What happens next year? Could someone make a run to acquire VMware now that it’s free of Dell? Dell remains a major shareholder and still has plenty of debt left over from that EMC deal, so it is definitely something to watch in 2022.

It’s hard to choose just five because inevitably I’ve left out some worthy storylines. What would you have included? Leave a comment and let me know.

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Best of TechCrunch 2021

Just when we thought things couldn’t get more unexpected than a pandemic that shut down the world in 2020, 2021 entered the chat.

As we started to navigate a “new normal,” we also started challenging the systems around us with advancements in crypto, web3, the metaverse and so much more.

When looking at our top-performing stories of the year, a lot stood out. Some stories were to be expected, like product launches and major outages (ahem, Facebook). Others were deep analyses and interviews on different sectors of the industry. It was hard to narrow down a top 10.

Instead of spitting out a list of TechCrunch’s top-performing stories, we asked our staff to vote on their favorite stories of the year, added evergreen content and our top TC+ articles for a well-rounded 2021 list. Enjoy!

Staff picks

1. Air conditioning is one of the greatest inventions of the 20th Century. It’s also killing the 21st

What started as a small Twitter Spaces interview with about 180 listeners quickly (and very unexpectedly) turned into one of TechCrunch’s top-read stories of 2021. Danny’s book reviews gained traction this year, but nothing piqued readers’ interests (see the comments for proof) quite like unpacking the modern-day air conditioner. Danny’s Spaces interview with Eric Dean Wilson focused on his book “After Cooling: On Freon, Global Warming, and the Terrible Cost of Comfort,” exploring the before, during and after story of A/C — and how damaging the comforts of cold, clean indoor air can actually be.

2. OnlyFans’ porn ban is crypto’s opportunity of a lifetime

Twitter erupted when OnlyFans announced its ban on “sexually explicit content” in mid-August in an attempt to comply with its investors and banks. At the time, the decision left creators feeling betrayed, and experts questioned if OnlyFans could even survive the transition. Although the decision has since been suspended, the tech community’s immediate solution to the ongoing regulatory issues the porn industry faces was simple: crypto. For those of you new to the world of crypto, this real-world antidote will help you understand the “why” behind the push for cryptocurrencies. And for those of you well-versed on the topic, Lucas weighs both the opportunities and potential challenges crypto and porn face.

3. Elon Musk said it was ‘Not a Flamethrower’

This is probably our “most 2021” headline. Many of us are — maybe a little too much — accustomed to the Tesla CEO’s name in headlines for wacky, meme-like behavior or commentary. But what makes this story interesting is the real-life dangers behind Musk’s money-spinning gag products. Musk sold a limited run of flamethrowers back in 2017 in an effort to raise awareness and funds for his startup, The Boring Company, which launched in 2016. However, Musk knew various countries had a ban on flamethrowers and thus labeled the product “Not a Flamethrower.” Problem solved? Not even close. TechCrunch contributor Mark Harris highlights an American who was incarcerated in Italy for the possession of Not a Flamethrower.

4. Medium sees more employee exits after CEO publishes ‘culture memo’

It’s safe to say this year brought much disruption to today’s corporate ecosystem. Not only are employees challenging work-life balance, the wealth gap and company culture, but they are also taking a stance on social and political initiatives. Natasha spoke with various former and current employees at Medium after CEO Ev Williams posted a “culture memo,” which ended up tripling churn at the company. However, after speaking to one engineer, Natasha found that there has been a long-standing “history of problematic issues at Medium, with a wave of departures that seem to be clearly triggered by the memo.” This article not only explores the downfall of Medium’s company culture but also how it relates to companies who sent out similar memos, like Coinbase and Basecamp.

5. TikTok just gave itself permission to collect biometric data on US users, including ‘faceprints and voiceprints’

TikTok took off in the thick of the pandemic as many people in 2020 turned to the platform for their daily dose of viral videos, dances and trends while in quarantine. However, now more than ever, social media users are aware of data collection as growing concerns of privacy rights emerge. TikTok changed its privacy policy in June to allow the capture of users’ biometric data, which includes faceprints and voiceprints. At first glance, the new privacy policy is on par with many other social networks’ use of data collection. But Sarah breaks down why the new policy is alarming, TikTok’s history with the U.S. government, past biometric privacy violation lawsuits and the policy update’s buggy rollout. This article is a good starting point for the ongoing data-privacy issues social media users face.

Best evergreen

With only a few days left in 2021, we looked back to see what we covered this year that we can continue to learn from in the future. NFTs aren’t going anywhere, yet, so that was at the top of our evergreen list, along with privacy laws, how Zoom effects your brain and how lessons in growth marketing from Cam Sinclair director of Ammo, a Perth-based growth marketing agency.

1. If you haven’t followed NFTs, here’s why you should start

This new(ish) wave of crypto has grown exponentially over the past year. When Cooper Turley wrote this article in February 2021, he said, “The estimated total value of crypto art has now passed $100 million according to cryptoart.io/data — just one vertical of a growing ecosystem of NFTs.” The estimated total value now, December 2021, is over $2 billion. If you don’t know much about NFT’s, this article is a great starting point.

2. This tool tells you if NSO’s Pegasus spyware targeted your phone

Are you concerned that your phone was targeted by NSO’s spyware? You probably shouldn’t be, but in July of 2021, a list was leaked that contained, “50,000 phone numbers of potential surveillance targets was obtained by Paris-based journalism nonprofit Forbidden Stories and Amnesty International and shared with the reporting consortium, including The Washington Post and The Guardian.” Zack writes about how Pegasus can be delivered and how you can tell if your phone has been targeted.

3. New York City’s new biometrics privacy law takes effect

In July of 2021, Zack also reported on a new biometric law taking effect in New York City. This law limits what businesses can do with the biometric data they collect. Zack says, “The move will give New Yorkers — and its millions of visitors each year — greater protections over how their biometric data is collected and used, while also serving to dissuade businesses from using technology that critics say is discriminatory and often doesn’t work.”

4. This is your brain on Zoom

We’ve all been working from home, faces seen by colleagues on endless video chats, so it was great to read Devin Coldewey’s breakdown of a study Microsoft conducted about how your brain needs a break. When discussing the study, Devin says, “During the meeting block with no breaks, people showed higher levels of beta waves, which are associated with stress, anxiety and concentration.” Here’s to scheduling meeting breaks in 2022!

5. Australian growth marketing agency Ammo helps startups calibrate their efforts

TechCrunch Experts launched this year with the first focus being growth marketing. Anna Heim interviewed Cam Sinclair, Ammo’s director, and they talked about when companies are ready for growth marketing, mistakes to avoid when branding and more. Sinclair says, “At Ammo, we don’t measure time, we measure outcomes. At the start of every project we define what success looks like with the client. Every client is different, and we’re responsive to that.”

TC+ Favorites

1. Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models

Kyle Poyar, partner at OpenView, contributed this article about usage-based pricing models in January of 2021. Poyar says, “Usage-based pricing will be the key to successful monetization in the future.” The article continues with four tips to help companies with this model. While we don’t want to give all of the tips away in this summary, one of the tips that Poyar writes about is picking the right usage metric.

2. Nubank’s IPO filing gives us a peek into neobank economics

In November, Alex and Natasha wrote about Nubank’s IPO filing, focusing on the economics of neobanking and Nubank’s financial health. If you want to take a deeper dive into Nubank, you can read Marcella McCarthy and Danny Crichton’s TC-1 here.

3. How does former Better.com CEO Vishal Garg still have a job?

Mary Ann was busy in the month of December, with one of her focuses being news from Better.com (like when they laid off 9% of their staff). While it would take a lot to shock Mary Ann and Alex, especially after this, they were surprised that Garg hadn’t been asked to completely step down. They said, “Some surmised that he had super-voting shares and thus could vote to keep himself in the role of CEO despite what others voted. But after digging into the S-4 filed by Better.com’s SPAC partner, Aurora Acquisition Corp., in November, we realized that is not the case.”

4. How should SaaS companies deliver and price professional services?

Roger Hurwitz, a founding partner at Volition Capital, contributed an article about how to charge for professional services and why that pricing may be different from other SaaS strategies. Hurwitz compares a three-year impact of two pricing strategies in this article.

5. 5 critical pitch deck slides most founders get wrong

Jose Cayasso, co-founder and CEO of Slidebean, reviews “250 to 300 investor decks every single month” and uses this experience to teach others what the must-haves are for a slide deck. His first suggestion is a go-to-market slide, and he includes why and where in the deck it should appear with an example of one in the full article.

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New Year’s robolutions

This is always a strange week — that liminal space between the Christmas holiday and New Year. Romjul — or “Dead Week” — as they call it in Norway (thanks Haje). It’s a time for quiet and reflection on the year that was for some — and CES embargoes for others. We’re currently focused on the latter, while trying to stay mindful of the former here at Actuator HQ.

We devoted much of the past few weeks to rounding up some of the year’s key trends in the space: delivery, warehouse/fulfillment and food prep. We’ve also spoken to a number of key people in the industry, including CMU robotics head Matthew Johnson-Roberson and Boston Dynamics CEO Rob Playter, OpenRobotics CEO Brian Gerkey and iRobot CEO Colin Angle.

Image Credits: Paul Marotta/Getty Images for TechCrunch

This week we’ve asked MIT CSAIL Director Daniela Rus to weigh in on the matter. She’s really gone above and beyond in her responses for this last Actuator of 2021, so I’m going to let her kick things off.

What was the defining robotics/AI/automation trend of 2021? Regarding robotics and automation, the pandemic and subsequent labor shortages made it abundantly clear that there is a critical role for robots in the workplace. Industry has seen increased adoption of robots for manufacturing and logistics applications, where autonomy can deliver value, yet autonomy on the roadways in the form of a robotaxi is still a long way away. Research has made great strides on safer and more capable robots, with advancements in soft robot bodies and machine-learning powered robot brains.

In AI, we have seen heightened awareness about the challenges with today’s AI solutions. Industry has adopted many deep neural network applications that are enabling tools to augment work in a variety of fields. But it has also become clear that these methods require data availability, meaning massive data sets that have to be manually labeled and are not easily obtained in every field. The quality of that data needs to be very high, and if the data is biased or bad, the performance of the systems trained on this data will be equally bad. Furthermore, these systems are black boxes — there is no way for users of the systems to truly “learn” anything based on the AI’s innerworkings. There are also robustness problems as the trained models are often unstable, and we need to understand that the systems do not do “deep reasoning”, they mostly perform shallow pattern matching. The research community is working to address these challenges.

What will 2022 bring for these categories? As we move forward into our rapidly changing world, I believe that robots and AI can help us unlock our human potential, as individuals and as a collective. While the past 60 years have defined the field of industrial robots and empowered hard-bodied machines to execute complex assembly tasks in constrained industrial settings, the next sixty years will usher in robots in human-centric environments to assist humans with physical tasks.

While the industrial robots of the past 60 years have mostly been inspired by the human form, the next stage will be soft robots inspired by the animal kingdom: form and diversity modeled by our own built environment, with broad potential to mimic our natural state. While the industrial robots of the past 60 years are made of hard plastics and metal, I believe the next 60 years will bring us machines made of materials available to us naturally, or through engineered processes like wood, plastics, paper, ice or even food.

We will also see new ideas for AI, get more serious about AI and privacy, and address AI sustainability. It is important to remember that today’s greatest advances are due to decades-old ideas enhanced by vast amounts of data and computation. New technical ideas and funding to back them are needed to ensure progress. Additionally, we will understand more clearly the carbon footprint of machine learning and get more serious about Sustainable AI.

AI innovations can help optimize many of our activities to slow the impacts of warming: optimizing the electricity cost of technology, making transportation more efficient, monitoring and stopping deforestation, preserving biodiversity or ensuring there’s enough food to go around. But to do all that, AI systems must consume enormous amounts of energy. Current research estimates that training a large deep-learning model produces 626,000 pounds of carbon dioxide, equal to the lifetime emissions of five cars. We need to develop simpler models, which can drastically reduce the carbon footprint of AI.

The spread of robotics, automation and AI technologies has the potential to make people’s lives easier — but many of the roles that these technologies can play will displace work done by humans today. We will also focus efforts to anticipate and respond to the economic inequality this could create.

DEARBORN, MI – SEPTEMBER 27: A Ford Motor Company worker works on a Ford F-150 truck on the assembly line at the Ford Dearborn Truck Plant on September 27, 2018 in Dearborn, Michigan. The Ford Rouge Plant is celebrating 100 years as America’s longest continuously operating auto plant. The factory produced Eagle Boats during WW I and currently produces the Ford F-150 pickup truck. (Photo by Bill Pugliano/Getty Images)

It’s going to be impossible to top Professor Rus’ words this week, but I would like to cap the year off with a couple of items that highlight what’s happened in the industry over the past year and — perhaps — give us a glimpse of where things are going. I will echo what a lot of people have already said in the pages of Actuator: It’s been a remarkable year for robotics. After spending many years covering the space and hearing people prognosticate on the eventually of robotics, the pandemic has seen many begin to be put into practice faster than many predicted.

Of course, I don’t think anyone was hoping that a pandemic would be how we got here, but, well, that’s how things go. And to echo Professor Rus’ statement, here’s hoping we’re able to address climate change concerns head on before it’s too late — and that we can address the inevitable displacement of human jobs. If we’re going to be deploying robots to improve the working conditions of some, it behooves us as a society to ensure that we’re able to support those whose jobs are made redundant as a result.

Roboticists will tell you about the dull, dirty and dangerous jobs they plan to replace, but there’s a far more difficult conversation around the impact that shift has on humans. It’s true right now that companies are having a difficult time filling roles — something automation can and will address. It’s also true that most of this technology is still in a collaborative stage that requires the involvement of human workers. But as the technology progresses and becomes more capable, is it invetible that we’re going to leave large swaths of the population behind because we’ve deemed the work they do as unskilled?

Looking at the trends for the past year, these are the key categories I’ve been following in the space:

• Warehouse/fulfillment
• Transportation
• Food delivery/prep
• Farming/agriculture
• Home
• Medical/surgical
• Manufacturing
• Construction

And in some ways, that’s really just the start. For instance, a couple of weeks ago we covered Petra, a drilling company that raised $30 million to bore through solid rock for infrastructural projects. The list of fields robotics is set to disrupt is long and growing. As we look forward to 2022, let’s consider how we handle such things, going forward. I’m excited to continue discussing these and other issues in Actuator going forward. Next week, however, we’re going to get much more myopic and focus on the robots of CES.

Image Credits: Meituan’s food delivery drone seen landing on top of a pickup kiosk in Shenzhen / Photo: TechCrunch

Thankfully, the big robotics news has slowed down a bit this Romjul (I only get to use my new word like once a year, so I’m making the most of it). Rita has a great story for you about Meituan, which is taking drone-based food delivery to Shenzhen. The Tencent-backed company has delivered 19,000 meals to 8,000 customers during its two-year pilot. As the piece notes, relatively lax regulations in the manufacturing hub are a big part of what brought it to Shenzhen.

Speaking of China, the country’s Ministry of Industry and Information Technology has helped map out an ambitious five-year plan aimed at increasing robotic adoption. That includes a planned 20% per year revenue increase, with a focus on manufacturing.

Happy New Year, and congrats on getting through this last one. Not everyone was so lucky. Here’s to sharing more robot news in 2022.

Image Credits: Bryce Durbin/TechCrunch

Need a head start on your New Year’s resolution of subscribing to more free robotics newsletters? Have I got some great news for you.

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Mercedes, BMW, more join list of companies opting-out of an in-person CES

Two more auto giants have added their names to the growing list of big companies opting out of an in-person CES with less than a week remaining before kickoff. Yesterday, Mercedes confirmed that it would be skipping the physical event.

“As the health and safety of our customers, partners, employees and guests are our highest priority,” the company said in a statement. “Due to the large group of participants and the different country-specific regulations, a solid, safe and harmless planning for all participants is unfortunately not be feasible in the current situation. We deeply regret this decision but consider it necessary.”

Today, BMW followed suit, issuing a media release, announcing a shift to a virtual press conference. The carmaker’s statement was short and sweet, noting, “For many years, the BMW Group has been presenting innovations at the Consumer Electronics Show (CES) in Las Vegas. Due to the pandemic situation, the BMW Group will move all planned media activities at CES to a fully digital program livestreamed from Germany.”

Lidar company Velodyne, meanwhile, issued a full press release about its decision this week, stating:

Velodyne Lidar will not participate in person at CES 2022 due to the surge in COVID-19 infection rates. The health and safety of employees, partners and the public are the topmost priorities for Velodyne and were the primary factors in the company’s decision.

Early today, IBM also confirmed its decision to extract itself from the in-person event in a statement to TechCrunch:

Due to the evolving COVID conditions, and out of an abundance of caution, IBM will not participate on-site at CES in Las Vegas this year. We look forward to participating in the event virtually.

Also newly out is Panasonic, which had planned an in-person press conference for January 4. The company has shifted to a virtual event and will only have a limited presence at the show.

Those companies join GM, Google, Microsoft, AMD, OnePlus, MSI, Lenovo, Intel, T-Mobile, AT&T, Meta, Twitter, Amazon, Proctor & Gamble, TikTok, Pinterest and a number of major media outlets, TechCrunch included. The decision to jump ship over mounting omicron concerns is likely an especially difficult one for startups, who rely on shows like CES to get noticed. I have, however, been contacted by a growing number of smaller companies who have made the difficult decision to stay home.

Over 2200 companies are confirmed to participate in person at CES 2022 in Las Vegas. Our focus remains on convening the tech industry and giving those who cannot attend in person the ability to experience the magic of CES digitally.

— CES (@CES) December 24, 2021

The Consumer Technology Association — which runs CES — has stood firm in its plans to go ahead with the show, which starts January 5 (with media days on the 3 and 4).

“CES 2022 will be in person on January 5-8 in Las Vegas with strong safety measures in place, and our digital access is also available for people that don’t wish to, or can’t travel to Las Vegas,” the org said in a statement issued December 22. “Our mission remains to convene the industry and give those who cannot attend in person the ability to experience the magic of CES digitally.”

On Christmas Day, the Las Vegas Review Journal ran an op-ed from CTA head Gary Shapiro headlined “CES will and must go on in Las Vegas,” which accused media of “tell[ing] the story only through their lens of drama and big name companies.”

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The year the tide turned on ransomware

This year was rife with ransomware. 2021 witnessed the attack on IT software company Kaseya that knocked 1,500 organizations offline, the CD Projekt Red hack that saw threat actors make off with source code for games including Cyberpunk 2077 and The Witcher 3, and several high-profile attacks targeting big-name tech companies, from Olympus to Fujitsu and Panasonic.

It was also the year that hackers seized global attention by targeting critical infrastructure, hacking American oil pipeline system Colonial Pipeline, meat-processing giant JBS and Iowa New Cooperative, an alliance of farmers that sells corn and soy, to name just a few.

After the attacks led to prolonged shutdowns, inflated oil prices and ran the risk of food shortages, the U.S. government began to take notice — after years of inaction — and scored some rare wins in what once seemed like an unwinnable battle against the ransomware epidemic.

It began in April when the Department of Justice formed the Ransomware and Digital Extortion Task Force. The move, which followed what the DOJ described as the “worst year” for ransomware attacks, aimed to prioritize the “disruption, investigation, and prosecution of ransomware and digital extortion activity.” The task force declared its first victory two months later when the DOJ announced it had arrested 55-year-old Latvian national Alla Witte and charged her for her role in “a transnational cybercrime organization” that was behind TrickBot, one of the most well-known and widely used banking trojans and ransomware tools.

An even bigger win came just days later when the DOJ announced it had seized $2.3 million in bitcoin that Colonial Pipeline paid to the DarkSide ransomware gang to reclaim its data. Since then, the U.S. government has offered a reward of up to $10 million for information that helps identify or track down leaders of the notorious ransomware group.

At the same time, the Treasury Department announced sanctions against the Chatex cryptocurrency exchange for facilitating ransom transactions, just weeks after taking similar action against the Suex crypto exchange.

The biggest win for the Task Force came in October with its disruption of the notorious REvil ransomware gang. Prosecutors announced they had charged a 22-year-old Ukrainian national linked to the gang that orchestrated the July ransomware attack against Kaseya, and said it had seized more than $6 million in ransom tied to another member of the notorious ransomware group.

The U.S. government’s efforts to target ransomware groups this year were applauded by many, particularly for its tactic of following the money. Chainalysis, a provider of blockchain transaction analysis software, lauded the Treasury’s action against Suex as a “big win” against ransomware operators, telling TechCrunch that dismantling the mechanisms for ransomware groups to cash out their cryptocurrency would be vital in slowing them down. Morgan Wright, chief security advisor at SentinelOne, said that without removing the main incentive — financial gain — ransomware gangs will continue to operate and expand.

Read more on TechCrunch

• Ransomware recovery can be costly, and not just because of the ransom
• US says Iran-backed hackers are now targeting organizations with ransomware
• FBI says ransomware groups are using private financial information to further extort victims
• US government offers $10M bounty for DarkSide ransomware hackers

“Attackers will always have the advantage because they don’t have to follow the rules or the law. However, there are two approaches that could seriously impact the ability of transitional ransomware gangs to achieve their goals — removing the ability to use cryptocurrency for ransoms and machine speed responses to machine speed attacks,” said Wright.

The U.S. government also offered rewards for information on ransomware tactics, like the $10 million bounty for information on DarkSide, and the subsequent reward for intel on REvil. “With rewards this large, there’s a substantial incentive for these criminals to turn on one another. This action undermines trust across the ransomware as a service affiliate model,” Jake Williams, CTO at BreachQuest, told TechCrunch.

But some believe that while the government’s actions have undoubtedly scared off some, it’s unlikely to disincentive ransomware gangs that continue to reap the financial rewards.

“While I applaud law enforcement efforts to bring those responsible for ransomware attacks to justice, the likelihood of apprehension and jail time simply does not outweigh the large sums of money being made by these criminal groups,” said Jonathan Trull at Qualys, an IT security company. “Unfortunately, the battle against ransomware is an asymmetric one, meaning there simply is not enough law enforcement resources globally to deal with the volumes and complexity of investigations needed.”

Wright agreed, and was less than impressed by the U.S. government’s activity so far: “Arresting two people and recovering a few million dollars isn’t a victory over ransomware. This is more of a political statement to ’show’ something is being done about ransomware. $2.3 million isn’t even worthy of a rounding error when you look at the billions of dollars already lost.”

Similarly, many believe that these tactics will unlikely be enough to fend off the growing threat of ransomware as we enter the new year, particularly as threat actors adapt their own. Experts believe that the ransomware-as-a-service (RaaS) model — in which operators lease out their ransomware infrastructure to others in return for a percentage of the ransom proceeds — will continue to thrive in 2022, making it more difficult for law enforcement to track down operators.

Others expect multi-staged attack chains — the breaches that start with a phish and lead to data theft and eventually ransomware — to become more prevalent, which could enable hackers to infiltrate even the most well-protected network infrastructures.

The latter will likely lead to the U.S. government collaborating more closely with the private sector in 2022, according to Trull. “Law enforcement alone is not going to turn the tide, in my opinion. It will need to be a combination of enforcement actions paired with dedicated efforts to harden systems, develop, and operationalize backups of key data and systems, and effective response from the private sector.”

While it’s clear that more action is needed, the U.S. government is making progress. While a handful of prosecutions has been mocked by some, it’s clearly had an impact — particularly on ransomware groups’ ability to advertise and recruit potential partners. In the wake of this unwanted attention, ransomware was banned from several popular hacking forums, leading to one hacking group setting up a fake company to lure unwitting IT specialists into supporting its continued expansion into the lucrative ransomware industry.

“Ransomware gangs are less welcome on certain cybercrime forums than they once were,” said Brett Callow, a ransomware expert and threat analyst at Emsisoft.

6 things in cybersecurity we didn’t know last year

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