Tech Brew Ride Home - Fri. 08/23 – The Bolt Saga

Episode Date: August 23, 2024

Microsoft deprecating a feature that it launched back in 1985. There’s a pretty big loophole that is still letting China use H100 chips. The weird saga evolving over at Bolt. And, of course, the Weekend Longreads Suggestions. Links: Microsoft finally officially confirms it's killing Windows Control Panel sometime soon (Neowin) Exclusive: Chinese entities turn to Amazon cloud and its rivals to access high-end US chips, AI (Reuters) AI-powered coding pulls in almost $1bn of funding to claim ‘killer app’ status (Financial Times) Bolt investors baffled by massive new deal proposal (Axios) Ryan Breslow’s ‘Lead Investor’ Blindsided By $450 Million Bolt Fundraise: ‘We Were Never In This Deal’ (Forbes) Weekend Longreads Suggestions: New Breed of EV Promises 700 Miles per Charge (Just Add Gas) (Bloomberg) Popping the Bubble of Noise-Cancelling Headphones (The New Yorker) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme right home for Friday, August 23rd, 20204. I'm Brian McCullough today. Microsoft deprecating a feature that it launched back in 1985. There's a pretty big loophole that is still letting China use H-100 chips. The weird saga evolving over at Bolt, and of course, the weekend long read suggestions. Here's what you miss today in the world of tech.

Microsoft is confirming that the Windows Control Panel, which debuted in 1985 with Windows 1.0, is in the process of being deprecated in favor of the settings app. Quoting Neo-Wen. Similar to Paint 3D, which Microsoft had seemingly hoped to kill off sooner, the Windows control panel is a feature that the Tech Giant has been wanting to deprecate for a while. The first such reports started surfacing back in 2011 when a leaked Windows 8 screenshot suggested that Microsoft was looking to replace the control panel with PC settings. This settings option was made with touch-friendliness in mind, though the control

panel continued to coexist still. Later in 2015, it was rumored that the company may finally do away with it, as a senior Microsoft official confirmed that settings will eventually supersede control panel. However, the application continued to persist, still as some of the things had not been moved over. Although that was said by a Microsoft employee nearly a decade ago, the company itself never published anything such on its official site until just a few days ago. On a new support page about the various native Windows configuration tools that have been covered in detail in this dedicated article. Microsoft has finally stated that the control panel is, quote, in the process of being deprecated in favor of the settings app, end quote. Reuters has seen documents

suggesting that state-linked Chinese entities are using cloud services from AWS or its rivals to access advanced U.S. chips and AI models they cannot otherwise acquire, which, yeah, kind of defeats the purpose of a tech ban, right? Quote, the U.S. government has restricted the export of high-end AI chips to China over the past two years, citing the need to limit the Chinese military's capabilities. Providing access to such chips or advanced AI models through the cloud, however, is not a violation of U.S. regulations since only exports or transfers of a commodity, software, or technology are regulated. A Reuters review of more than 50 tender documents posted over the past year on publicly available Chinese databases showed that at least 11 Chinese

entities have sought access to restricted U.S. technologies or cloud services. Among these, four explicitly named Amazon Web Services as a cloud service provider, though they access the services through Chinese intermediary companies rather than from AWS directly. The tender documents which Reuters is the first report on show the breadth of strategies Chinese entities are employing to secure advanced computing power and access generative AI models. They also underscore how U.S. companies are capitalizing on China's growing demand for computing power. AWS complies with all applicable U.S. laws, including trade laws, regarding the provision of AI services inside and outside of China, a spokesperson for Amazon's cloud business said.

AWS controls nearly a third of the global cloud infrastructure market, according to research firm Canales. In China, AWS is the sixth largest cloud service provider, according to research firm IDC. Shenjin University spent $200,000, or $27,000, on AWS accounts to, to gain access to cloud servers powered by Nvidia A-100 and H-100 chips for an unspecified project, according to a March tender document. It got the service via an intermediary Yunda Technology limited, the document showed. Exports to China of the two Nvidia chips, which are used to power large language models such as OpenAIs chat GPT, are banned by the U.S.

The U.S. government is now trying to tighten regulations to restrict access through the cloud. This loophole has been a concern of mine for years, and we are long overdue to address it, Michael McCall, Chair of the U.S. House of Representatives Foreign Affairs Committee, told Reuters in a statement referring to the remote access of advanced U.S. computing through the cloud by foreign entities. Legislation was introduced in Congress in April to empower the Commerce Department to regulate remote access of U.S. technology, but it is not clear if and when it will be passed, end quote. So far, aside from purveyors of large language models themselves, the big winners of the AI race so far, at least as measured by venture investment dollars, seems to be coding assistance.

Quoting the Financial Times, AI-driven coding assistants have amassed nearly $1 billion of funding since the start of last year. A signal that software engineering is becoming the first killer app for generative artificial intelligence. Companies such as Replit, Anisphere, Magic, Augment, Super Maven, and Poolside AI raised $433 million so far this year alone, bringing the total since January, $203 to $906 million, according to deal room. The rush to pour money into AI coding assistance is an indication that computer programming is the first job function to be transformed by the latest wave of AI tech. Today, software engineering and coding is the number one area impacted by AI, said Hottie Partovi, chief executive of education, non-profit organization code.org, and a longtime Silicon Valley investor and advisor to Airbnb, Uber, Dropbox, and Facebook. At this point, software engineering without AI is a little bit like writing without a word processor, he said.

Growing conviction in Silicon Valley of the benefits of AI coding stands in contrast to questions among some investors about the economic benefits of generative AI and likely returns on big tech's projected trillion dollar investment into computing infrastructure to support the technology over the coming years. Hannah Seale, a partner at Index Ventures, which has invested in Startup Augment alongside Eric Schmidt and others, said it was, quote, much easier to monetize AI if you can embed your product into an existing workflow and make the benefit instantly visible, end quote. For AI tools to make money, the questions for SEAL are, what is the time to value, and how meaningful is that value add? While she added that quote with coding co-pilots, the answer is

very clear, end quote. Ongoing story to catch you up on. Remember Bolt, that high-flying FinTech once valued as high as $11 billion. Then Bolt had issues, including founder Ryan Breslo stepping down and subsequent lawsuits accusing Breslo of saddling the company with his personal debt. But then, word that Bult was finalizing a $450 million series F round at a $14 billion valuation. Not only that, but founder Breslo is apparently coming back to the CEO role as part of the deal, if the deal goes through. So is this a whole redemption arc going on? Well, quoting Axios, investors in checkout tech company Bolt Financial have until the end of next week to say if they plan to participate in a massive

new funding round that would include the return of controversial company founder Ryan Breslow as CEO. The intrigue, they aren't being told the lead investors identity. I've never seen anything like this, said one of Bolt's larger venture backers, who adds that he's not even convinced that the new money is legit. Bolt, which previously raised nearly $1 billion from VCs despite meager revenue, this week emailed investors to inform them of a pending $200 million Series F investment at a $14 billion valuation. That's the same valuation that Bolt tried and failed to get a couple years ago after having previously raised at $11 billion. There's also more hair on this deal than a barbershop dumpster, as reported by newcomer. For example, it includes a pay-to-play provision that could cram down

existing shareholders, despite it being an upround, and $250 million in influencer marketing credits by something called the London Fund. But the coup de grace is what's given to Breslo, a $2 million bonus for becoming CEO, $1 million in purported back pay, lots of new stock options, a generous travel stipend, and an indemnification agreement, which matters since investors have sued over Breslo not repaying a company loan. Bolt would also invest in another Breslo company called Love and also into the London Fund, where Bresselow would join the board. In short, he seems to be fashioning himself as a mini-elon, viewing his separate businesses as a de facto conglomerate. But back to that investor, the letter included a signature line for Brad Pam Nanny, who is

identified as working for investment bank Silver Bear Capital. But Pam Nanny tells me it was a misunderstanding that Silver Bear isn't involved. Instead, Pam Nanny says that he also works. works for a Cayman Island-based private equity firm that has done, quote, over 65 deals, but he wouldn't share the firm's name. He explained that the Cayman's firm is a limited partner in an SPV form to raise the $200 million for Bolt, but that it will be managed by a new private equity fund in the United Arab Emirates that hasn't yet received government approval for registration in that country. Pemnani also declined to provide the names of anyone on that new UAE team except for himself and said that there is a risk that registration

doesn't come, which could scuttle the entire deal, end quote. Which brings us to Silver Bear coming out and saying it was, quote, never in this deal, as some investors consider legal action against Bolt, picking up on just that valuation part again, quoting Forbes. It's a shocking price tag for a business that made less than $30 million of revenue last year and had offered to buyback shares at just a $300 million valuation months earlier. Bolt investors told Forbes they were enraged by Byzantine terms that would enrich Breslo, as well as an apparent 48-hour ultimatum to invest in the company or see 70% of their shares effectively wiped out. But stranger still is that one of the lead backers cited in official documents told Forbes

that they had no knowledge of the deal and wholly refuted their involvement. We have never had a conversation with Bolt, said Peter Chun, founder and managing partner of Seychelles-based investment bank Silver Bear Capital. Investor materials viewed by Forbes identified Silver Bear and partner Brad Pamnini as steering the deal which would see the bank invest $200 million into the payment startup. We were never in this deal, end quote. For Breslow to return to Bolt as CEO, a majority of preferred shareholders will have to agree to invest in the round, and the financial documents detailing the deal say they have a month to decide. But according to Groom's letter to shareholders, they only had until Wednesday to make a call or see the $1 billion they had collectively poured

into the company effectively wiped out, leading to a full-on mad dash among investors. Now several shareholders told Forbes that they're boycotting the round entirely and considering legal action against Bolt. Bolt did not respond to a comment request. Forbes called Breslow, who responded by text, quote, unfortunately, I cannot opine until our first closing, end quote. If the deal goes through, Breslo will receive a $2 million closing bonus, a 33% lifetime net revenue share from deals he refers to Bolt. indemnity from shareholder legal action, reimbursement for several years of legal and other bolt-related expenses up to $750,000, and an $80,000 monthly tab for travel and security fees.

As Forbes previously reported, Breslow had earlier sought to expense seven-figure travel and security bills to Bolt, which the company's former board members rejected, end quote. For the long reads this week, I've got two new tech products to turn you on to, or at least they're new to me. These are not paid advertisements or anything like that. There's just two things that I didn't know existed that I found cool. First one might be obvious to those of you listening that are more car people than I am, but have you heard about this new breed of electric car that can get 700 miles of range per charge? It's called an EREV or extended range EV, and they're coming to the states soon.

Quoting Bloomberg, Extended range EVs have become the fastest growing propulsion system for cars in China, the world's largest market for pure battery electric vehicles. Sales of EREVs more than doubled there over the past year and now account for 30% of the country's plug-in hybrid sales, according to Research Service Bloomberg New Energy Finance. They will begin arriving in America next year when Chrysler parent Stalantis and V rolls out the RAM charger in EREV version of its RAM-500 pickup truck that it says will have a 690-mile driving range and is being, quote, built to pull an entire skeptical demographic into the electric age. As automakers worldwide struggle to persuade mainstream

car buyers to go electric, ER EVVs are emerging as a solution to the two biggest roadblocks to EV acceptance, price and range anxiety. An EREV can be charged by plugging in, like a conventional EV, but it can also be filled with gas to power a small gasoline engine that charges the battery as the car rolls along, dramatically extending how far it can go, rather than power. the wheels the way it does for a conventional automobile or hybrid. The ER EVVs gas engine acts only as an onboard generator. This means extended range EVs require a battery only about half the size of a traditional EV, which lops about $4,000 off the price of an EREV versus a pure electric vehicle. And with the engine automatically topping up the battery, long trips don't

have to be interrupted by stops to plug in to roadside charging stations. It has a smaller battery, 95% of the trips are going to be all electric. And then you don't have range anxiety, Jim Farley Chief Executive Officer of Ford Motor said in late May after returning from a trip to China where ER EVs wowed him, we really like that solution, he said. Automotive experts say the technology could be ideal for powering the models Americans love most SUVs and pickup trucks. Because an extended range vehicle requires a smaller battery, the single most costly component of an EV, both the vehicle's weight and price can come down while it's driving. driving time is extended, and the technology doesn't require any battery breakthroughs.

An EREV relies on existing technology that automakers already build, a traditional lithium-ion battery made it to an internal combustion engine. It just makes so much sense for the U.S. market because we like our big vehicles and we like to go at high speeds over long distances. Michael Dunn, a former General Motors Company executive in Asia, and now a consultant specializing in the Chinese market says, it's a lifeline to Detroit. They could adopt a practical power train, reduce costs, increase range, and keep their customers happy in their core segments, SUVs and trucks, end quote. And then finally, and maybe you need to look this product up to see how it's clearly different,

if you weren't aware of it, from the New Yorker. Say hello to a new style of high-end earphone, an earphone that doesn't even touch your ear. Quote, a new rather strange headphone design recently produced by the Japanese company NTT, Sonority, a spinoff of a major Japanese telecommunications corporation, attempts something different. The company's NWM-1 headphones, which cost $299 per pair, look like the denuded skeleton of the familiar Bose noise-canceling headphones. They feature no solid cup, just a plastic armature that allows a conical speaker to hover slightly off the tragus. The armature is supported by an empty ring, which is cushioned

for comfort around the ear. Thus, the ears of the person wearing it are exposed, a peekaboo that lends both the device and its user, a quality somewhere between futuristic and nerdy, or maybe both at once. You look like a robot, my wife said when she first saw me wearing them. But the open armature means that you can hear what is going on around you and listen to your preferred audio at the same time without resorting to a complex digital filter that decides what you can make out, as the aware or transparency modes on other headphones attempt to do. The pointed speaker are directional beaming sound straight into the user's ears so that it barely leaks. Only a person standing within inches of you can hear any noise, and even then, according to my informal test,

not more than a slight buzz. The device offers a technical solution to a problem caused in the first place by an excess of technology. The NWM1's tagline is, unmute the world, as if it were also not possible to do so simply by taking off your headphones. As I've been using the NWM1 in the past week, my exhibitionistically unveiled ears have earned me a number of bemused stairs. The archetypical design of personal technology these days are so well established that few products are as blatantly new-looking, but there is something of a throwback quality to the user experience, too. Wearing the NWM-1s feels a bit like having an invisible man follow you around with a tiny

stereo like John QSack and say anything that only you can hear. Without the added plastic and foam of typical over-ear headphones, the device is remarkably light. I often forgot I was wearing them. Noise-canceling headphones tend to create miniature saunas of oil and sweat, whereas these allow for plenty of airflow, making them much more comfortable in summer weather. But the biggest advantage I found is logistical. It's simply easier to navigate a city street when you can hear what's going on around you. The NWM-1 has been particularly useful for me while walking my dog.

I can listen on the headphones while still hearing when there's a cyclist coming up behind me on trails, making the kind of subtle sound that digital filters often block, or another dog owner trying to warn me to steer clear on the street. Walking through the woods, I found the noise of cicadas and rustling leaves a pleasant accompaniment to a podcast. I didn't mind the interpenetration, but I found that casual music listening is easier on the device than paying close attention to speaking voices, which can blend in with outside chatter. no matter how thoughtfully designed the pair of headphones, being in your own world and in the outside one simultaneously requires making tradeoffs, end quote.

I do have a bonus episode for you this weekend. As the whole crowd strike thing was going down, I got a bit of inside analysis from one of Ride Home Funds portfolio companies, Overmind, because Overmind, their whole business is making sure things like the CrowdStrike disaster can't happen, pushing things like config changes. as CrowdStrike did. Ahead of time, Overmind gives you visibility in terms of what you might break,

or as they put it, let you discover the blast radius of every change you make. So, now that CrowdStrike has started publishing post-mortems, I had the founder of Overmind

come on and give us his analysis of what exactly went wrong here. So think of this as a portfolio profile episode mixed with a news analysis episode. Enjoy that. Talk to you on Monday.