Golden Age or bust? AI founders share ways to thrive despite a VC downturn; plus other tech news in cybersecurity, privacy and enterprise software.

Welcome to this week’s LinkedIn News Tech Stack. Click subscribe above to be notified of future editions and follow me on LinkedIn for other tech updates.

Tech Stack aims to bring you news and insights about the founders, investors, and companies on the cutting edge of emerging technology, with a specific focus on AI and machine learning; cybersecurity and privacy; and B2B SaaS software. 

As always, if you have ideas or feedback on something that could be a fit, I’m all ears. Let me know by sending me an InMail. And if you see a story that interests you, be sure to join the conversation. 

Zooming In

A deep-dive into one big theme or news story every week.

It was the perfect match.

Gordon Wilson and Jack Kendall knew they were onto something on Valentine’s Day in 2018, when within an hour of their first meeting, entrepreneur Sam Altman (then the president of startup accelerator Y Combinator ), committed to their seed round.

Four years later, their company has become an outlier of sorts in the AI startup landscape. 

Rain AI , which designs chips using artificial intelligence to mimic the brain, managed to nab $25 million in Series A funding earlier this year — at a time when AI funding has slowed by 44% year-over-year, and is declining at a faster clip than overall VC funding.

“I do think we’re in the golden decade of AI, it’s just that the kind of use cases that are getting attention have changed,” Wilson told me during a phone interview this week.

AI Investments now are being funneled either towards startups applying the technology to chips and hardware (like his own), or delivering “full-stack solutions” to narrow customer problems like AlphaFold with medical research, he said.

This is a marked shift from the early 2010s, when AI applications were playful and gimmicky like AI-powered chatbots or AI models that could beat people at board games. Today, AI is being applied to solve profound real-world problems and business challenges.

“Some startups are guilty of chasing the shiny, new thing and hyping up the technology, but now KPIs are what matter,” said Clem Delangue 🤗 , CEO of machine learning platform Hugging Face , which bagged $100 million in new funding in May. “You have to be able to demonstrate product-market fit, usage, revenue growth, or other proof points.”

In other words, even though the venture slowdown is here, AI startups can still stake a claim to the so-called “dry powder” — the record amounts of money that VC firms have raised but not deployed yet. 

“We’re seeing investors have a critical eye on verified business fundamentals and long-term market potential,” commented Gregg Johnson , CEO at cloud-based AI conversation intelligence company Invoca . 

For those currently fundraising, Delangue’s advice was to “resist the urge” to cast a wide net, and instead target venture capitalists that are known believers in the technology for funding. 

Even if times are hard now, the pendulum will eventually swing back, and companies and investors will continue to invest in software, said Umesh Sachdev , co-founder and CEO of conversational automation company Uniphore .

“With dry powder to cushion VC firms, the winners in this market are those that will continue to stand out and differentiate by turning unique capabilities into competitive advantage,” he said. “The current economic climate cannot take away the demand of every enterprise for three important trends that we’re seeing: cybersecurity, automation and transition to the cloud.”

Click here to catch up on the full conversation, and what other AI founders and investors are saying. 

TechTok

Catch up on the tech headlines you may have missed last week and what people are saying about them, and join valuable member conversations on LinkedIn.

• The Twitter saga continued this week, with Elon Musk subpoenaing Twitter whistleblower Peiter Zatko in his legal battle with the company. Musk wants to use Zatko's complaint in his countersuit against the company over pulling out of his $44 billion takeover deal.
• Speaking of lawsuits, the Federal Trade Commission sued data broker Kochava for selling geolocation data from millions of mobile devices, as privacy becomes a hot-button issue in the aftermath of the Supreme Court overturning Roe v. Wade.
• Enterprise dealmaking is seeing a slump, impacting companies including Salesforce , Zoom , and Workday , as clients scrutinize big line items such as business software more than ever.
• Another week, another big cyber attack. Hackers recently cracked LastPass — the world’s most popular password manager with 33 million users and 100,000 business customers — and stole source code and proprietary information.
• Robotics is on a roll, with sales up 25% from a year ago as companies turn to robots to fix labor shortages. But it’ll take a while for wider adoption.

Movers & Shakers

Here’s keeping tabs on key executives on the move and other big pivots in the tech industry. Please send me personnel moves within emerging tech.

• Y Combinator has named Garry Tan, the founder of Initialized Capital, as its next president and CEO. It’s a homecoming for Tan, who was a partner at the popular startup accelerator and venture fund before he left to launch Initialized Capital with Alexis Ohanian Sr. in 2012.
• SAP has named Lloyd Adams , a 24-year company vet, the president of SAP North America. He most recently served as managing director for the eastern U.S.
• Twitter’s VP of engineering Sandeep Pandey , who led much of its work on machine learning, is the latest executive to depart from the company.
• Venture firm Interplay has hired Christian Mark from Altitude Investment Management as its partner of investor relations. 
• Early stage venture firm Costanoa Ventures has promoted Tony Liu to partner.
• VC firm Flourish Ventures has hired Tyler Mann from Greenoaks Capital and John Onwualu from the U.S. International Development Finance Corporation as head of global legal and principal respectively.

This Week in Tech

A weekly advent calendar of tech history from the archives.

On August 29, 1831, British scientist Michael Faraday discovered electromagnetic induction, a seminal breakthrough which laid the groundwork for several important future inventions like electric motors, transformers, inductors, and generators.

ICYMI

Here are other top stories of the week from beyond LinkedIn in the broader world of tech.

• LastPass isn’t alone. Hackers also managed to get inside DoorDash, accessing customer data including phone numbers, emails and delivery addresses.
• There is a substantial gap between cybersecurity professionals' salaries in the private versus the public sector — a theme that professionals also raised in last week’s edition of Tech Stack.
• California this week passed the California Age-Appropriate Design Code Act, a sweeping children’s online safety bill that requires increased protections for children,  and could herald a shift in the way lawmakers regulate the tech industry.
• Augmented reality pioneer Snap Inc. laid off a fifth of its 6,400 employees on Wednesday. CEO Evan Spiegel said in a memo to employees Tuesday that the company underwent a major restructuring following disappointing sales growth in the last quarter.
• Elon Musk and T-Mobile CEO Mike Sievert late last week announced plans to start delivering satellite-based internet access on standard smartphones through SpaceX's Starlink by the end of next year in the U.S.

Thanks for reading. Please share Tech Stack if you like it! And if you have any news tips, find me on InMail or Signal on 646-702-2530.