The Big Story

Where bitcoin scams go, the internet follows

Porn had a good run, helping usher in high-definition video and faster data connections and online subscription services. But now there's a new weird thing that you need to pay attention to before it shapes the internet before your very eyes: the bitcoin scam.

Last week, we had the Twitter hack, which is already reshaping the whole debate over how messaging works online. Especially now that Twitter admitted that of the 130 targeted accounts, 36 had their DM inbox accessed, and eight had their entire account downloaded.

• This is going to change the way we talk about encrypted messaging, about how employees and algorithms access user data, and more.
• Are you going to think twice before you send super-sensitive DMs, knowing a surprising number of Twitter employees can see them? Me, too. And Twitter has to figure out how to win that trust back.

And now it's Susan Wojcicki's turn to squirm, because Steve Wozniak and a number of other folks have sued YouTube, alleging that the company "has been unapologetically hosting, promoting and directly profiting from similar scams" for several months. Basically, scammers used videos and pictures of Wozniak to create what looks like a live broadcast, put a Bitcoin wallet address next to it, and raked in the cash.

• The lawsuit actually paints Twitter in a good light. "In stark contrast to YouTube, when faced with this attack, Twitter took swift and decisive action to protect its users, shutting down the hijacked accounts until Twitter regained control." (I'd take that, Jack; "swift and decisive" aren't words usually used in the same sentence as Twitter.)
• Still, Wojcicki can probably sleep soundly: YouTube is likely on safe Section 230 grounds. But when you get sued by the co-founder of Apple you tend to notice, and YouTube's now going to have to rethink how it handles this kind of content.
• Plus, think about what comes next, especially as deepfakes get more sophisticated. Impersonation on the internet is only going to become more pernicious and harder to spot. And not just in the name of bitcoin scams.

Whether you're an IT director or a security researcher, these scammers are who I'd be tracking. Because it's not just Twitter and YouTube: Bitcoin scams have taken the form of Facebook ads, malware, phishing and the rest of your internet-security bingo card. And what first gets exploited for money can eventually get exploited for something scarier.

Everybody thought bitcoin and blockchain were going to go legit and change the internet forever. Turns out the scams might do it first.

Quantum

The US wants to build a new, better internet

Here's an idea: Instead of worrying about fixing the internet, why don't we just build a new one? That's what the Department of Energy is proposing, anyway: It unveiled a long-term research plan Thursday designed to result in a nationwide, quantum-based internet. Imaginatively named … Quantum Internet.

• Actually, the Quantum Internet isn't designed to necessarily replace the current system, just to augment it. The DOE's Paul Dabbar called it "a parallel internet to the digital internet," meant especially for the transfer of sensitive financial and government information.
• Dozens of organizations have been working on this plan with the DOE, and their report stems from a workshop in February.

The "plan" is really more like a plan to do research in order to make a plan, and kind of an acknowledgement that there's a ton of work to do to build a quantum internet. But it's an important step out of labs and into the world.

• "While DOE already has been conducting research in the overall quantum network arena," the report says, "it now has reached the point where it can consider moving from small-scale experiments toward a first nationwide quantum internet facility."

But the big takeaway is you should be staffing a quantum team, because the technology is set to become part of the fabric of the internet, maybe sooner than you think. And as the University of Chicago's David Awschalom pointed out, "When you ask tech companies what is their number one concern with quantum information technology, the number one concern by far is the workforce."

By the way: Want to know way more about all things quantum? I've got a Protocol Manual you really ought to read.

Startups

How to (kinda sorta) value a company overnight

Shakeel Hashim writes: Clearbanc, the VC-alternative that built a business off a "20-minute term sheet," has a new tool for founders: A product that gives your startup a "valuation" in 24 hours. Kind of.

Valuation, now in beta, compiles data from a company's financial information — such as its payment processor, bank account and ad spending — and uses it to forecast future revenue and growth. The tool then finds comparable companies in the startup's sector to generate a valuation range that shows founders what their business is worth.

The aim is to help overcome the "huge information disadvantage" that Clearbanc co-founder Andrew D'Souza says founders face when talking to investors.

• While most founders only raise capital a few times, he explained, investors think about it every day. Having a rough idea of what their company is worth can help level the playing field — and at least offers a number for founders to track.
• "Probably the most relevant analogy is when Credit Karma made personal credit scores free," co-founder Michele Romanow said. "It just gave consumers so much more information. In this case, it's giving businesses so much information on how they're tracking on a week-to-week basis."

Clearbanc is very clear that this number isn't an official 409a valuation, and any VC will happily tell you there's more to a startup's valuation than the metrics feeding Clearbanc's algorithm. But D'Souza said that in cases where the tool has facilitated investments, those have been done "in the valuation range that we presented."

• Already, he said, a range of VCs and private equity investors, including Bessemer, Founders Fund and Indie VC, have asked Clearbanc to send them startups that fulfill certain criteria on Valuation.
• Clearblanc also wants to use the info to sell services to improve startups' valuations. "We can recommend either our own products or partner products that would help them accelerate or increase their valuation," D'Souza said.

A MESSAGE FROM ALIXPARTNERS

Join us: Protocol's transformation editor Mike Murphy will lead a discussion on how businesses have long "gone digital" even if they didn't start that way. We are joined by New Balance CEO Joe Preston, WW CEO Mindy Grossman, and Honeywell Chief Digital Technology Officer Sheila Jordan. This event is presented by AlixPartners.

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People Are Talking

Jack Dorsey said Twitter's thinking about a subscription model and has a lot of work to do on internal security in the wake of the hack:

• "Security doesn't have an end point. It's a constant iteration to stay steps ahead of adversaries. We fell behind, both in our protections against social engineering of our employees and restrictions on our internal tools."

Mira raised more money for its AR gear, and COO Matt Stern took a shot at Magic Leap in the process:

• "We have literally onboarded more customers to our platform that are using our device every single day than companies like Magic Leap that have raised literally hundreds of times our funding."

Max Wang, a Facebook employee, posted a video on his last day with a harsh note about his employer:

• "I think Facebook is hurting people at scale. If you think so, too, maybe give this a watch."
• This was part of an excellent BuzzFeed investigation into Facebook's culture, which is really worth a read.

Making Moves

Aaron Zamost is leaving Square. He spent nearly a decade as the company's head of comms, policy and people, and said a bunch of nice things about Jack Dorsey on his way out.

In Other News

• On Protocol: Monday's CEO tech hearing will likely be postponed. But whenever it does happen, we have a rundown of what they're going to have to answer for.
• Amazon copied startups it invested in, reports The Wall Street Journal. The founder of DefinedCrowd claims Amazon used its investment in the startup to get access to its data and launch a competing product on AWS.
• On Protocol: Intel said its 7-nanometer chips will be delayed until at least late 2022. That puts Intel way behind the competition, because some companies are already shipping 7nm products.
• A tale of two TV services: AT&T lost another 954,000 cable subscribers last quarter, but signed up 4 million people to HBO Max. The future of TV is coming fast.
• A former user research lead at Google sued the company. Chelsea Glasson claims that the company discriminated against her for being pregnant.
• The EU told Google it can't use Fitbit data to improve search, according to the Financial Times. If Google doesn't agree, it could mean a lengthy investigation into the acquisition.
• Apple is being investigated by multiple states for deceptive sales practices. Texas' AG may sue the company, according to documents shared with Axios.
• Amazon is reportedly in talks to buy a 9.9% stake in Reliance Retail. The deal would reportedly give Amazon preferential access to JioMart, its new ecommerce venture.
• Paris gave Lime, Tier and Dott scooter contracts. A notable omission: Bird, which was planning to hire 1,000 people in the city.
• Mukund Mohan, CTO of BuildDirect.com, was charged with PPP fraud. He is alleged to have fraudulently applied for more than $5.5 million in loans. And in perhaps the most tech-bro move ever, he laundered the money through his Robinhood account.

One More Thing

An unshatterable phone, finally?

I dare you to watch this video — of phones being scratched, dropped from high up and hit — and stay calm. But if Corning's for real, you won't have to worry anymore. Its new Gorilla Glass Victus can supposedly handle falls, scratches, pressure, and the rest of your life's daily rigors without shattering so badly that your fingers bleed from touching the screen of your phone. If it's true, it'd be a huge deal for the entire electronics industry, but I've been hurt by these promises before. And so has my phone.

A MESSAGE FROM ALIXPARTNERS

Join us: Protocol's transformation editor Mike Murphy will lead a discussion on how businesses have long "gone digital" even if they didn't start that way. We are joined by New Balance CEO Joe Preston, WW CEO Mindy Grossman, and Honeywell Chief Digital Technology Officer Sheila Jordan. This event is presented by AlixPartners.

RSVP today.