Technology

➚ MOVE FAST: Going separate ways. Sequoia Capital downplayed the role that geopolitics played in its decision to split into three separate firms focused on China, Southeast Asia, and the U.S./Europe. The storied venture capital outfit looks like it’s responding to Washington pressure about its China investments, but the move essentially formalizes how the firm is already set up.

➘ BREAK THINGS: Finding connections. A Kenyan judge ruled that Facebook was the primary employer of content moderators suing the social network for wrongful dismissal. Social media platforms have tried to distance themselves from the controversial work of content moderation by outsourcing it to contractors, but that’s becoming increasingly difficult.

A designer in the Netherlands created a “camera” that combines generative AI with location data to convert text into photos. The device, which Bjørn Karmann dubbed Paragraphica, takes into consideration the weather, time of day, and nearby scenery. An example prompt notes that the picture was taken in De Noorderlaaik, near a beach and nature reserve. The resulting image resembles a 19th century landscape painting. “The photos do capture some reminiscent moods and emotions from the place but in an uncanny way, as the photos never really look exactly like where I am,” Karmann writes.

Are AI startups too easy to copy?

THE SCENE

On a recent afternoon in San Francisco, I chatted with a prominent venture capitalist who is bullish on AI. But he wouldn’t tell me which companies he’s investing in. They’re all in “stealth” mode, he said. Why? The ideas are too easy to copy.

In the mad rush to ride the AI boom, one of the main concerns keeping investors up at night is a single word: defensibility. The ease with which startups can leverage AI may transform industries, but it also means there’s little barrier to entry, making even the best ideas prone to imitation.

A related fear that has reverberated in Silicon Valley is that AI startups may require significantly fewer resources than in the past. There is talk of one-person companies worth more than a billion dollars. (Though really, it’s looking more like trios: A coder, a salesperson, and a designer.)

That could leave venture capitalists flush with capital and not enough attractive places to spend it. Worse, that means the most successful startups can be challenged by the smallest of competitors.

Some venture capitalists even worry their own profession may go away. One point of view shared with me is that much of the process could be automated by AI itself, removing the middleman that stands between big institutional investors and sovereign wealth funds, and entrepreneurs themselves.

Social Capital’s Chamath Palihapitiya tried something like this roughly six years ago. Today, he says he doesn’t believe AI can totally automate what VCs do, but it could do a lot. “I would think an AI can ingest the entire corpus of operational data of a company and spit out a rank of how that company is doing and a relatively accurate sense of how other companies like it have done in the 1-3 years from that point. This would help VCs figure out what to pay for a deal,” he wrote in an email to Semafor.

James Currier, general partner at the VC firm NFX, said AI and large language models, in particular, will level the playing field in tech investing. “So much of what a venture capitalist does — reading, summarizing, and ranking — is also what LLMs already do well,” he said. “Making the investment decision and winning the deal will be more of what a VC will do. This will happen very quickly.”

To develop their investing theses, startup backers are turning to tried and true ideas, like network effects, the phenomenon in which a product or service becomes more valuable as more people use it. They’re looking for proprietary datasets and products with first-mover advantage that gain traction so quickly that they become entrenched in the industries they serve.

For Reed’s View and the rest of the story, read here.

The amount Amazon is considering charging Prime customers for a nationwide mobile phone service. The e-commerce giant is in talks with Verizon, T-Mobile, and Dish Network about the idea, which could help boost customer loyalty, according to Bloomberg. Amazon’s Prime subscription service costs $139 a year, while unlimited cell phone plans at the major carriers start at roughly $60 a month. That means even if Amazon ends up charging a few bucks a month for its mobile service, it would still be a great deal.

Former product manager Frances Haugen leaked thousands of internal Facebook documents to journalists and regulators in 2021. She is the author of the new book, The Power of One: How I Found the Strength to Tell the Truth and Why I Blew the Whistle on Facebook. Read the full conversation here.

Addressing the goggles in the room: Apple finally announced its much-anticipated virtual reality headset, and when it comes out, it’ll be the most advanced one on the market. It will also be the most expensive in the category — by a mile. And it’s not overpriced. All of that cash goes to do one thing that no other headset manufacturer has accomplished: Make it comfortable to use for long periods of time. Tricking the vestibular system into thinking the microscopic lightbulbs millimeters from your eyeballs are the real world has never been easy.

The Vision Pro has customized foam that fits your face perfectly, tailored lenses to match your prescription, and tiny infrared cameras that watch your eyes and adjust accordingly. And for $3,500, you better wear this headset all day long. (The battery lasts two hours, but it can be plugged in.)

In that sense, Apple is making a bold bet. Companies like Meta have invested billions of dollars into making some pretty good products. But they aren’t all-day devices, and customers tend to put them in the closet and stop using them. Maybe what was missing was a device that feels more natural and, of course, integrates seamlessly with other Apple products.

Apple is betting that offices will one day be filled with people wearing goggles. The family movie becomes everyone sitting on the couch, each enveloped in headsets. Our personal walled gardens inside Apple’s walled garden. The thought of that makes me want to walk outside and look at the real world.

— Reed

The easy money of last decade’s software boom saw the decline in comparably “hard” hardware investments. Config, an ambitious attempt to bring practically all aspects of hardware development into a single software platform, hopes to change that. Config’s founder, James Proud, was a hardware founder himself whose company, Hello, failed in part because there weren’t services like Config around at the time, he told Semafor. Config’s customers already include the two buzziest hardware startups around: Humane and Mill.

— Reed

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• FTX’s bankers are looking to sell the collapsed crypto exchange’s valuable stake in a hot AI startup to pay back investors, Liz Hoffman and Reed scooped. They’re discussing whether they should sell it all now or bet that AI valuations keep soaring.