Category: Tech news

As COVID-19 infections surge in parts of the U.S., many workplaces remain empty or are operating with skeleton crews.

Most agree that the decision to return to the office should involve a combination of business, government and medical officials and scientists who have a deep understanding of COVID-19 and infectious disease in general. The exact timing will depend on many factors, including the government’s willingness to open up, the experts’ view of current conditions, business leadership’s tolerance for risk (or how reasonable it is to run the business remotely), where your business happens to be and the current conditions there.

That doesn’t mean every business that can open will, but if and when they get a green light, they can at least begin bringing some percentage of employees back. But what that could look like is clouded in great uncertainty around commutes, office population density and distancing, the use of elevators, how much you can reasonably deep clean, what it could mean to have a mask on for eight hours a day, and many other factors.

To get a sense of how tech companies are looking at this, we spoke to a number of executives to get their perspective. Most couldn’t see returning to the office beyond a small percentage of employees this year. But to get a more complete picture, we also spoke to a physician specializing in infectious diseases and a government official to get their perspectives on the matter.

Taking it slowly

While there are some guidelines out there to help companies, most of the executives we spoke to found that while they missed in-person interactions, they were happy to take things slow and were more worried about putting staff at risk than being in a hurry to return to normal operations.

Iman Abuzeid, CEO and co-founder at Incredible Health, a startup that helps hospitals find and hire nurses, said her company was half-remote even before COVID-19 hit, but since then, the team is now completely remote. Whenever San Francisco’s mayor gives the go-ahead, she says she will reopen the office, but the company’s 30 employees will have the option to keep working remotely.

She points out that for some employees, working at home has proven very challenging. “I do want to highlight two groups that are pretty important that need to be highlighted in this narrative. First, we have employees with very young kids, and the schools are closed so working at home forever or even for the rest of this year is not really an option, and then the second group is employees who are in smaller apartments, and they’ve got roommates and it’s not comfortable to work at home,” Abuzeid explained.

Those folks will need to go to the office whenever that’s allowed, she said. For Lindsay Grenawalt, chief people officer at Cockroach Labs, an 80-person database startup in NYC, said there has to be a highly compelling reason to bring people back to the office at this point.

Lordstown Motors, the one-year-old Ohio electric automaker that revealed a pickup truck prototype in June, has reached a deal to merge with special-purpose acquisition company DiamondPeak Holdings Corp., with a market value of $1.6 billion.

The agreement marks the latest company — and electric automaker — to become a publicly traded company through a merger agreement with a SPAC, or blank-check company. Electric automakers Nikola Motor and Fisker Inc. have also become public companies through a SPAC over the past two months. Shift Technologies, an online used car marketplace and sensor company Velodyne Lidar, also went public via a SPAC, sidestepping the traditional IPO path.

In this latest SPAC, the combined company will remain on the Nasdaq under a new ticker symbol, RIDE. DiamondPeak Holdings Corp. was listed on the exchange under the ticker DPHC.

The company said it was able to raise $500 million in private investment in public equity, or PIPE, including a $75 million investment by General Motors. Other institutional investors that joined include Fidelity Management & Research Company, Wellington Management Company, Federated Hermes Kaufmann Small Cap Fund and funds and accounts managed by BlackRock.

The transaction is expected to close in the fourth quarter of 2020. The new combined company’s board will include Steve Burns, the founder and CEO of Lordstown, and David Hamamoto, chairman and CEO of DiamondPeak.

SPACs have been around for decades and have gone by different names, including “blind pools” and “clean shell companies” and “blank-check companies.” A SPAC is a corporation that has no defined business plan or purpose other than to raise money from public markets to acquire a private company. The SPAC has seen a resurgence in 2020, particularly in the second and now third quarters.

Lordstown has an interesting history for such a young company. Lordstown Motors is an offshoot of Burns’ other company, Workhorse Group, a battery-electric transportation technology company that is also a publicly traded company. Workhorse is a small company that was founded in 1998 and has struggled financially at various points. Its offshoot, Lordstown Motors, revealed a prototype of an electric pickup truck called Endurance that is aimed at contractors and other buyers in the commercial market.

The plan is to produce 20,000 of these electric commercial trucks annually, starting in the second half of 2021, at the former GM Assembly Plant in Lordstown, Ohio. Lordstown Motors acquired in November the 6.2 million-square-foot factory from GM.

The combined company plans to use about $675 million of gross proceeds from the SPAC transaction to  fund production of the Endurance. Since the truck’s unveiling, the company has secured pre-orders valued at $1.4 billion (or about 27,000 total pre-orders), according to Burns.

Virgin Orbit’s first attempt at an orbital launch demo may not have gone entirely to plan (the LauncherOne rocket released as planned but its flight was cut short just after that), but it has booked a payload for its next try — 11 science satellites selected by NASA and primarily designed and built by U.S. universities. Virgin says that it will fly this second launch demo, complete with its cargo, sometime “before the end of the year.”

After the first attempt was cut short prior to the planned conclusion of the rocket, which was aiming to accomplish a more sustained flight of the empty LauncherOne rocket, potentially even to orbital altitude, the Virgin Orbit team conducted a comprehensive investigation of the cause of the issue encountered. That investigation is now nearly complete, the company says, and in a blog post they note the cause of the mission-ending failure — a broken high-pressure line that supplies LauncherOne’s rocket engine with liquid oxygen, a required component for the combustion that drives thrust.

Virgin notes that it still has some work to do before the investigation is technically complete, but the small satellite space launch company says it’s confident it knows what technical fixes are needed to prevent the same thing from happening in the future, and it’s already in the process of implementing those.

NASA was one of Virgin Orbit’s first customers, and naturally after Launch Demo 1 didn’t go quite to plan, Virgin told the agency they’d have to bump their upcoming payload launch down the line, since Demo 2 would need to be another test without risking any payloads on board to try to achieve the goals of the flubbed first flight. NASA, however, said they’d be comfortable flying payloads on the next attempt regardless.

That shows a tremendous amount of confidence in Virgin Orbit and their program. That end of year target launch time frame is also highly ambitious by any standards in the space launch industry, but the company says it’s still going to aim for that while at the same time focusing on making sure everything is up to standards in terms of technical details and issue resolution.

Virgin Orbit hopes to be offering regular operational launches of its system soon. The company’s approach involves flying a rocket attached to a modified 747 carrier aircraft to an altitude around where large passenger jets fly, whereupon the rocket separates from the plane and ignites its own engine to carry small payloads the rest of the way to space.

I wanted to write an essay about Microsoft and TikTok today, because I was effectively a full-time reporter covering the software giant when it hired Satya Nadella in 2014. But, everyone else has already done that and, frankly, there’s a more pressing financial topic for us to parse.

Let’s take a minute to take stock of SPAC (special purpose acquisition companies), which have risen sharply to fresh prominence in recent months. Also known as blank-check companies, SPACS are firms that are sent public with a bunch of cash and the reputation of their backers. Then, they combine with a private company, effectively allowing yet-private firms to go public with far less hassle than with a traditional IPO.

The Exchange explores startups, markets and money. You can read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

And less scrutiny, which is why historically SPACs haven’t been the path forward for companies of the highest-quality; a look at the historical data doesn’t paint a great picture of post-IPO performance.

But that historical stigma isn’t stopping a flow of SPACs taking private companies public this year. A host of SPACs have already happened, something we should have remarked on more in Q1 and Q2.

Still, better late than never. This morning, let’s peek at two new pieces of SPAC news: electric truck company Lordstown Motors merging with a SPAC to go public, and fintech company Paya going public via FinTech III, another SPAC.

We’ll see that in hot sectors there’s ample capital hunting for deals of any stripe. How the boom in alt-liquidity will fare long-term isn’t clear, but what is plain today is that where caution is lacking, yield-hunting is more than willing to step in.

Electric vehicles as SPAC nirvana

The boom in the value of Tesla shares has lifted all electric vehicle (EV) boats. The value of historically struggling public EV companies like NIO have come back, and private companies in the space have been hot for SPACs as a way to go public in a hurry and cash in on investor interest.

In the wake of last week’s report that the U.S. Department of Homeland Security compiled “-intelligence reports” on journalists who published leaked documents, I’m concerned about all the DHS agents who might now be afraid of retaliation for being a whistleblower — perhaps one who legally leaks information such as, let’s say, unclassified information about government activities related to immigration. Not that you’re thinking of doing that, of course.

Assuming the disclosure of the information to a journalist is legal (for which I would suggest it would be prudent to consult an attorney who is well-versed in national security law, freedom of speech constitutional claims and government accountability), there are several steps that someone — not you, of course, but someone — might want to take to avoid retaliation for this completely legal act.

Assuming disclosure is legal and there are no criminal consequences that could be faced, one might also want to address whether the leak could result in employment-based discipline or retaliation. For this reason, seeking proper legal counsel and ensuring anonymity would probably be in the best interest of a would-be whistleblower, who is totally, definitely, not you or any of your colleagues.

For the sake of argument, however, let’s say someone actually were to be interested in bringing to light an egregious misdeed ordered by the federal government that goes against the freedoms the United States was founded on. In that situation, someone — not me, of course, but someone — might point them toward organizations that exist for those considering taking whistleblowing action. Organizations like Whistleblower Aid, which offers free aid and alternatives to illicit leaks, and Whistleblower.org, which has been engaging in whistleblower advocacy, education and litigation since 1977. Not to say that YOU would use these resources, per se, but it might be fun to take a look at them in a hypothetical, “Haha what if I were to expose gross injustices being perpetuated by my department?” kind of way. Probably not on a work computer, though — not that it matters, of course! (I’m sure it’s of no interest to you, but one interested in understanding how the disclosure of information can come to light might be interested in checking out the information that can be found here: How to Organize Your Workplace Without Getting Caught.)

Now, I know what you’re thinking: Sophie, if there is such a need to protect whistleblowers with this sensitive information, doesn’t that suggest there are systemic issues at play? Would someone (who isn’t you) even recommend that a DHS employee (who isn’t me) partake in this historically necessary and honorable action?

Such a person, if they were to read this article, might feel proud of the fact that since the leak, DHS has ceased compiling these “intelligence reports” and ordered an inquiry:

UPDATE: After we published our story on DHS compiling intelligence reports about journalists’ articles, the acting secretary, Chad Wolf, has halted the practice and ordered an inquiry. Statement from DHS spokesman: pic.twitter.com/RDMB90feVn

— Shane Harris (@shaneharris) July 31, 2020

In times such as these, times in which children in custody at the border are again at risk of being separated from parents during the COVID-19 pandemic; when the freedoms this country was built on seem to be under attack from within; when an employee of the DHS might find themselves handling the fragile responsibility of truth at the crossroads of powerlessness and obligation — in times like these, sometimes drastic actions must be undertaken to ensure that America is a country we can believe in.

This is the onus on someone — not you, of course, but some someone — who has a whistle to blow, and perhaps an identity to protect.

Snapchat is taking aim at TikTok. The company announced today it will begin testing a new feature that lets Snapchat users set their Snaps to music, similar to TikTok’s app. The feature may allow Snapchat to capitalize on the fracturing of the TikTok audience, who have been exploring alternative apps as the Trump administration weighs a ban on Chinese tech companies over data privacy concerns.

Already, apps like Byte, Triller, Dubsmash, Likee and others have climbed the app stores’ charts as TikTok users hedged their bets. Instagram also launched a music-powered feature called Reels to cater to the TikTok crowd.

In Snapchat’s case, users will be able to add music either pre or post-capture from what the company promises will be a “robust” catalog of music. This is made possible by way of Snap’s deals with music industry partners, including Warner Music Group, Warner Chappell, Universal Music Publishing Group, NMPA publisher members, Merlin and others, which have licensed their music for use in Snapchat’s app.

When friends receive one of the new Snaps with music, they’ll be able to swipe up to view the album art, song title and artist name. A “Play This Song” link will also be available. When clicked, it will open a web view to Linkfire that will allow users to listen to the full song — not a snippet — on their preferred music streaming platform, like Spotify, Apple Music or SoundCloud.

This aspect differentiates Snapchat’s implementation from TikTok, where clicking on a video clip’s “sound” link only takes users to a page featuring other clips that have used the same sound. But even though TikTok today lacks a feature that fully connects a user to the artist behind a popular music clip, much less the full song, TikTok’s power has continued to launch breakout hits as users hunted down their favorite TikTok artists across streaming services.

Snapchat says its music feature, however, will allow fans to form deeper connections with artists and music. It also spoke to its strength in being a tool for close friends, which gives it more influence — largely because of how its younger user base values friend-to-friend recommendations. Today, Snapchat reaches 90% of all 13 to 24-year-olds in the U.S., more than Facebook, Instagram and Messenger combined, the company says. It also reaches 75% of 13 to 34-year-olds. And though TikTok has a large international base, Snapchat claims it reaches more U.S. users than Twitter and TikTok combined, based on publicly available data.

“We’re constantly building on our relationships within the music industry, and making sure the entire music ecosystem — artists, labels, songwriters, publishers and streaming services — are seeing value in our partnerships,” a company spokesperson said, with regard to the new feature.

Snapchat says it will roll out the new feature across English-language markets this fall.

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