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Ethereum Community Splits After Security Fix

Friday, August 19th, 2016

The community behind the Ethereum blockchain – a system that depends on consensus – has split in two after action was taken to fix a theft.

In June, a hacker stole millions of dollars of value. Ethereum developers decided, through an informal vote, to take a “hard fork,” which involved resetting the Ethereum blockchain to its status immediately before the heist.

Those who disagreed with the hard fork in principle because they believe the blockchain must remain immutable have stayed with the old currency, which has been renamed Ethereum Classic (ETC). Those who took the hard fork are on Ethereum Core (ETH).

– Explained: What is the blockchain?

Some ETC proponents have written a declaration of independence based on principle, and say that the old, unchanged version can compete with the forked platform. “Only those communities that clearly define their values and stick to them, come hell or high water, will be successful,” says the lead organizer ‘Arvicco’.

On the other side, speaking for Core, supporters say that this kind of intervention to reverse hacks will probably be necessary again in the future. “Shit happens, and situations may arise where a fundamentalist attitude to hard forks is counterproductive,” says Jacob Eliosoff of Calibrated Markets LLC.

ETC is about 4,000 blocks behind ETH, and it’s not clear yet whether those in the non-interventionist camp will gain momentum or which side will ultimately become more legitimate.

This battle for the soul of Ethereum – and by extension, blockchain – goes down to the principle of whether problematic transactions like hacks can be reversed.


Banks appear to be keeping quiet about which side of this religious schism they back, but are likely grateful that this isn’t their problem yet. The financial industry, which has been experimenting with blockchain and smart contracts as a potential route to saving $20 billion a year in back-office costs, have watched proceedings with “curiosity”.

Yet while everybody argues, the original hacker has been active in laundering the value and it’s now possible they might be able to get away with at least $8.5 million worth of the cryptocurrency haul.

Without a consensus, the hacker might be the only winner.

AR Startup Skully Facing Lawsuit Alleging Fraud

Thursday, August 11th, 2016

📰 UPDATE 📰 Since we first published this story, Skully has been hit with a second lawsuit. This time from Flextronics, the manufacturer making the high-tech motorcycle helmets. It says Skully owes them more than $1 million. Read more about that story here.

Skully, a San Francisco startup that aimed to create an augmented reality motorcycle helmet with 180-degree vision, is facing a lawsuit alleging poor employee practices and “fraudulent” use of funds on last-minute plane tickets and strip clubs.

Former Skully executive assistant Isabelle Faithhauer, who undertook bookkeeping duties for Skully, said in the lawsuit that the two co-founders “intermingled personal funds with corporate funds and used the corporation as a tool to pay their personal expenses.”

These expenses included:

  • Personal groceries and restaurant bills
  • Lamborghini rental
  • Trips to Bermuda and then to Hawaii on 24 hours’ notice
  • $2,000 on a Déjà Vu strip club

The allegations stand out, even in a culture that celebrates zip lines over pools as a channel for coding creativity. If they’re true, Skully would be an egregious example of startup culture going awry after raising huge interest and funding; another being the rise and sudden decline of Zenefits.

The lawsuit also claims that Faithhauer was not paid due overtime, that one of the founders called her autistic son a “dog,” and that she was fired after taking one week’s approved vacation.

Skully received $2.45 million in crowdfunding from IndieGogo and $11.5 million in Series A funding from Intel and Walden Riverwood Ventures.

Skully now plans to file for Chapter 7 bankruptcy, according to CNN Money. Co-founder Marcus Weller said: “We plan to vigorously defend ourselves against these claims. We strongly believe we will be vindicated in the end.”

A full copy of the lawsuit is available on

Startup Culture Means More than Free Snacks

Tuesday, August 2nd, 2016

Forget the free snacks, games room and in-house masseuse. What attracts top talent to tech startups is an environment that will allow for unconventional approaches to problem solving.

In other words, a culture of creativity.

And creativity shouldn’t be limited to a startup’s founders or designers. Richard Florida, who popularized the idea of the “creative class,” says creativity should reach into the ranks of developers.  

“A large share of programmers are being paid to think – to a higher degree than what people in non-creative jobs are,” Florida and Professor Charlotta Mellander at the Martin Prosperity Institute said in an emailed response to questions. Math and programming make up eight percent of the creative class – “a relatively small (but yet important) share,” they added.

As the money backing startups shifts to artificial intelligence and machine learning, developers will need to be more integrated into the problem-solving schematic rather than being mere taskmasters.

TechPortfolio_Twitter_Quote-Aug2---4 (1)

According to TechTarget, startup culture is a “workplace environment that values creative problem solving, open communication and a flat hierarchy,” which contrasts with the top-down approach and rigid mission statements of traditional corporate culture.

So how does a startup attract the subset of creative developers who thrive in this kind of environment? Many look for the right staff not by competing with highly-paid big-name employers such as Facebook or Google, but by enticing candidates with an inside look at their organizations’ people and practices.

The Ryerson Digital Media Zone (DMZ), a Toronto-based co-working and accelerator space for digital media startups, helps to build culture in the companies it hosts through creative activities, mentorship and collaboration.

“Our culture very much revolves around a labour of love,” Abdullah Snobar, executive director of the Ryerson DMZ, told TechPORTFOLIO. “Time and time again, we’ve actually said no to companies who came on who had unbelievable products and services, and horrible teams. We want to make sure that we bring on people that complement the culture.”

NYC startup Squarespace, named by Crain’s as one of the best places to work in New York City, describes its culture as “flat, open, and creative.” The company’s recruitment puts the work environment front and center, describing employees as “white hat hackers, sponsored skateboarders, bluegrass musicians, trained chefs.”

“One of the things I work on is trying to be clear about company culture and job roles,” Squarespace founder Anthony Casalena told TechRepublic.

It’s no surprise then that Squarespace has grown to more than 500 employees and has raised more than $78 million in venture capital funding.

And Qumolo, a growing and successful Seattle-based data storage startup, takes this one step further. To recruit, it flies in graduating system developers from the University of Illinois at Urbana-Champaign for a catered company tour, product demos, and a guided city break. As recruiting manager Emily Rosok told the Seattle Times: “Really, we are very culture-centric.”

In the 14 years since Florida developed his thesis about the creative class, talk about the importance of foosball tables and other fun distractions have persisted, and problems can become particularly acute when everything is just for show.

TechPortfolio_Twitter_Quote-Aug2---5 (1)

Dan Lyons’ book Disrupted describes a perspective from inside CRM and sales software company HubSpot. Lyons paints a picture of a Montessori preschool office where newly hired developers are taught “aspirational” but vague mantras like “1 + 1 = 3.”

The founders created “a mythology that attempts to make the work seem meaningful,” says Lyons. The nerf gun fights and a nap room appear to belie the actual culture, which Lyons reports as being sweatshop-like, and prone to random acts of arson and sex. (Lyons is now a writer for the HBO show Silicon Valley.)

To be genuine, culture has to be aligned with executive values. “If you’re trying to figure out what a company’s values really are,” explains Rand Fishkin, CEO and founder of Moz, “look at the decisions management makes when lots of money, risk, or loss of face for executives is at odds with the stated values.”

In a startup, hiring team members counts as a critically important decision. “I think culture always starts with people,” says Snobar. “It’s always the kind of people that you bring on, and that you have around you.”

And culture can make or break productivity, the driver of success. “When you love something you’re always going to do it no matter how, how difficult it is, or how hard it is. You’re always going to put more energy into it because you’re passionate about it,” says Snobar.

Ethereum Blockchain Hack Reversed

Friday, July 22nd, 2016

A hack that diverted millions of dollars of value from the Ethereum blockchain into a false account is being fixed by a “hard fork,” forcing the return of the funds to a replacement ‘recovery contract’ validated by users, (or “miners”), on the network. The theft and fix have raised questions about the security of a technology at the center of fintech innovation.

– Explained: What is the blockchain?

Ethereum has been hailed as a potential basis for “smart contracts,” where valuable information or documents can be exchanged automatically with full security. It can also form the basis of “decentralized autonomous organizations,” or DAOs: a set of rules that could theoretically act in the same way as a company. The hack was carried out through a malicious DAO.

Commentators on Ethereum have expressed some concern that making a hard fork would do damage to the blockchain’s reputation as being unchangeable. Some even argued the hacker should keep the money. Meanwhile, banks that are experimenting with the blockchain are watching very closely, although with “interest, rather than fear”, according to CoinDesk.

The hard fork was executed through an informal vote among members of the Ethereum community, which shows how the transparency and communal nature of blockchain transactions might be more important than the now-questionable claims that blockchains are immutable.

In any case, given that blockchain adoption is still in the experimental stage for most financial institutions, incidents that led to the hard fork allow for a better understanding of blockchain vulnerabilities.

There’s some precedent for a technical protocol going awry in the early days. The protocols around e-mail, SMTP, proved open to abuse and spam when use became popular, though upgraded authentication and greylisting are fixing the issues.

Such situations are needed to address weaknesses, the only way to create more confidence. Ethereum and the blockchain concept may have needed this hack to happen right now in order for the product to mature.

Developer POV


Startupfest Stories About The Past, Present and Future

Thursday, July 21st, 2016

For every startup launch that leads to funding, there is a unique story. Startupfest Montréal, which ran from July 14-15, showcased some of the best stories from speakers and audience alike.

The heat and humidity – and later, torrential rain – did nothing to dampen the enthusiasm around pitches given to a panel of investor judges, who offered a $200,000 prize for those with the best proposals.

Competition was so fierce that the judges kicked more into the prize pot, and split the funds three ways: $160,000 to Toronto cinemagraph startup Flixel, (which TechPORTFOLIO profiled earlier this year), $50,000 to “cannabis tech startup” Hello MD and $35,000 to 18-year-old Shaun Maclellan of YouCollab

“We had so many pitches that we liked but the spirit of this additional kid made us put in more money,” Startupfest founder Phillipe Telio told Montreal in Technology.

Speakers shared stories about the future and the past. Alexis Ohanian, Co-founder of Reddit spoke about his experiences with online communities and pseudonymity while growing up in the early stages of the Internet – which contributed to the site’s unique ecosystem.

And Tim O’Reilly offered a hopeful prediction of the future where automation would give humans more meaningful work. “We’re going to do new kinds of work you couldn’t imagine,” he said. “Work on stuff that matters.”


Startup stories captured

TechPORTFOLIO talked to an investor about the importance of starting with a global perspective…


two brothers from a family of entrepreneurs…


a founder who discovered the excitement of adding value to his customers’ lives…

…and the funder who turned down Hotmail nearly 20 years ago. (In 1997, Microsoft acquired it for $460 million.)

More insights from Startupfest:

Artificial Intelligence Funding Latest Silicon Valley Gold Rush
Recode Co-Founder Calls Out Silicon Valley Indifference to Social Issues
At Startupfest, Shopify Leaders Praise Canada’s Startup Environment
500 Startups’ Dave McClure Advises Founders At Startupfest

Artificial Intelligence Funding Latest Silicon Valley Gold Rush

Tuesday, July 19th, 2016

Silicon Valley will be producing fewer “like” buttons following a funding shift away from social media to deep learning and artificial intelligence.

VCs’ interest in deep learning is surging. CB Insights predicts that funding of AI-enabled startups will reach $1.2 billion in 2016, compared with only $145 million in 2011, when social media startup funding peaked at $2.4 billion. This year so far, the figure stands at $6.9 million.

John Shoch, a VC at Alloy Ventures in Palo Alto, told the New York Times that new approaches in the space, such as those from Facebook head of AI Yann LeCun, have led to more investors rushing to fund the AI space: “You get a new set of tools that let you attack a new set of problems, which let you push the boundary out.”

Silicon Valley could have an opportunity to solve physical problems, instead of concentrating on social media-based apps like food delivery or dating that support “assisted living for millennials,” as Recode editor Kara Swisher alleges. Industries where new AI-enabled startups are working include radiology diagnostics, from Enlitic, and enterprise intelligence, from MetaMind, recently acquired by SalesForce.

An artificial intelligence research centre, OpenAI, was funded in December 2015 with the aim of focusing on a positive human impact, backed with $1 billion of funding. The organization’s mission is to extend “individual human wills and, in the spirit of liberty, [make AI] broadly and evenly distributed as possible.”

Still, the transition to AI in the startup space needs more depth in terms of resources.

Jana Eggers, NaraLogics, at StartupFest

Jana Eggers (above), CEO of AI-based personalized recommendation startup NaraLogics, says, for example, that there is still lack of diversity in the deep learning space. She told StartupFest Montreal that if only rich white males are programming AI, the technology can’t reach its full potential.

“We need people like you, and we need people not like you,” she told the audience.

Developer Hotfix

Recode Co-Founder Calls Out Silicon Valley Indifference to Social Issues

Friday, July 15th, 2016

Silicon Valley is making billions solving problems of convenience, such as instant food delivery, for “the 1%” while ignoring the social and economic problems of the urban ecosystem it depends on, Recode Co-Founder and Executive Editor Kara Swisher says.

Speaking on the second day of StartupFest in Montréal, Swisher called San Francisco “assisted living for millennials,” with conveniences such as instant food delivery provided through mobile apps by local startups working against a backdrop of homelessness and poverty.

She called on startups to break out of their “self-reinforcing” culture and affect the real world around them more positively.

This disconnect between Silicon Valley startups and San Francisco’s less fortunate residents gained global attention in 2014, when tech companies started providing buses to allow workers to commute to their campuses. The ease with which startup talent can commute has helped turn San Francisco into a “bedroom city.”

The social problems haven’t been completely ignored. A recent poll of San Francisco residents found that they identified homelessness as the number one social problem in the city. A startup founder who called the city’s homeless “grotesque” was excoriated for making his comments.

Swisher said she believes in the ability of startups and capitalism to solve social problems, a notion shared by fellow speaker Ari Gleisher. Gleisher, ex-of intelligence tech company Palantir, implored the audience to examine where they could do the most good in the world and aim their efforts carefully.

See all of TechPORTFOLIO’s up-to-date Startupfest coverage on social media by following us on Twitter, Facebook and LinkedIn – and now on Instagram.


Shopify Leaders Praise Canada’s Startup Environments

Thursday, July 14th, 2016

Canada is the best place for a startup to knuckle down and work on a product that they believe in, Shopify’s Tobias Lütke said on the first day of Montréal’s Startupfest.

Lütke, in an discussion with Re/code’s Kara Swisher, told the audience that Canada didn’t lend itself to explosive growth, but is a good place for a startup to build a growth culture: a sentiment shared by tech industry thought leader Tim O’Reilly:

Still, a more subdued environment isn’t an excuse for complacency.

It’s critically important to “keep connecting with the front line,” an effort that Blackberry didn’t make, Lütke said, referring to the once-dominant smartphone maker based in Waterloo, Ontario. “Stay hungry,” he warned.

To achieve this, bring people on your team that think as founders and builders, not just joiners, said Shopify COO Harley Finkelstein. It’s important to keep your team focused, which is why he worked to keep Shopify’s culture open despite its rapid growth.

“We’re a company that sets our philosophy around personal growth where people are comfortable with the uncomfortable,” he said.

TechPORTFOLIO is covering Startupfest until July 15. Get more of our insights by following us on Twitter, Facebook and LinkedIn – and now on Instagram.

Brexit May Mean New European Bases For Fintech

Tuesday, July 12th, 2016

Where banks live, fintech grows, and London’s reputation as a global financial center is under threat following Brexit. Banks, funds, and government have banded together – explicitly mentioning fintech – and promised to protect the city’s reputation.

But questions remain over bank passporting, which allows UK-based banks entry to trade throughout the EU. Access to labor also remains uncertain; in fact, EU citizens’ post-Brexit status has become a political soccer ball.

So if not London, where should fintech startups look? Berlin has emerged as an early contender for the continent’s fintech centre. According to the FT, there is already an exciting fintech scene in the German capital. Two London-based fintech startups, TransferWise and Revolut, are on record as considering a move to Berlin.

Meanwhile, one German political party has mustered a billboard van and sent it roaming the British capital’s streets looking for first movers.

William McQuillan, partner at Frontline Ventures, says he doubts London will lose its central financial crown any time soon. “London still is a global city with a large consumer population, and many global companies are HQ’d there,” he said in an interview with TechPORTFOLIO.

There are top class universities, most of the startup accelerators in Europe, as well as a healthy angel investing environment. “All other cities in Europe are still building up those qualities and most will never have all of them.”

It’s more likely that many other European cities would collectively drain part of London’s power.

Dublin may be a better contender than Berlin in this regard, he says. “It would be the only English speaking country in both the EU and EuroZone, and 250 of the world’s leading financial firms – including half of the world’s top 50 banks – have internationally focused operations in Ireland.”

PayPal and Stripe are two major fintech companies already established in the Irish capital, and €1.8 trillion of funds are administered by organizations there.

If there’s one positive thing in fintech that Brexit may have caused, it was the surge in Bitcoin as a safe haven following GBP’s fall to a 30-year-low. The weak pound could also encourage foreign buyers and investors, according to the Telegraph.

The only certainty is that no one knows how much Brexit has damaged London’s status as a fintech center until the political turmoil resolves itself and decisions are finalized.

McQuillan says: “The longer the uncertainty lasts the worse the reputational damage for a city like London will be.”

Behind the Fintech Hype

Monday, July 4th, 2016

Fintech has been with us for years, starting with ATMs and then through online banking. But today’s fintech startups are doing more than ever before to reshape the financial services industry — changing the way consumers spend, save and invest through mobile and online applications.

To prevent becoming mere intermediaries in the financial services business, banks and other financial institutions are being forced to change how they interact with consumers, employees and their competition, to remain relevant in the modern day movement of money.

“We believe we are in the early innings of what will be a meaningful transformation across several elements of the financial services sector,” says Will Hutchins, director of Toronto-based capital funding solution company Espresso Capital. “We are seeing new companies emerge across Canada developing innovative solutions aimed at disrupting traditional business models and creating new ones.”

Yes, we’ve heard this before: That technology and startups will change our world. But how far with the fintech revolution take us?  To explore this, we’re delving into some common perceptions about the fintech industry — and the truths behind them.

YESIs fintech changing the way banks do business?

Banks have enormous resources, power, and customer data, but are only now marshalling their forces by creating spaces for technology to develop. We look at what how the power dynamic works.


Fintech story gauge MAYBE compressedWill blockchain revolutionize finance and contracts?

Blockchain is a secure distributed ledger that could change the way that valuable items are transferred. While the hype might be justified, it is not yet adopted and has, ironically, suffered recent hacking issues.


Fintech story gauge NO compressedWill fintech overturn financial institutions and regulations?

Even startups that have found a successful niche, or have scaled well, have to work within the regulatory environment and with existing players.


Investors still see big returns in fintech. Global investment in fintech ventures rose 75 per cent to $22.3 billion in 2015, and was up 67 per cent in the first quarter, reaching $5.3 billion.

With the right product, the right access to customers, and the right relationships with existing players, fintech has the potential to truly revolutionize the financial services sector.