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Here are the startups Goldman Sachs is wooing in Las Vegas next week

2017-11-07T23:48:00-05:00

It’s not a startup, but it’s SoftBank that will capture much of the bankers’ attention next week.

Goldman Sachs’ annual conference in Las Vegas serves as an effective hot list for which tech startups are worth the giant investment bank’s interest each November.

Goldman is on the hunt for the tech companies that will bring them a windfall when they go public, so the roster of startups they invite to the Bellagio is always a window into which young companies are viewed as the creme da la creme by Wall Street.

This year’s buzziest name? Perhaps Houzz, the home remodeling website, which has an evening slot all to itself, according to the schedule first obtained here by Recode.

A few other high-flying companies are scheduled to make the rounds at one-on-one meetings, even if they’re not formally presenting to the Goldman community: Slack, Opendoor and Wish, for instance. There is no one single “wow” name invited.

Much of the attention this year will actually be captured not by a startup but by a fund investing at gigantic valuations: SoftBank’s Vision Fund is slated to present, with CEO Rajeev Misra speaking alongside Goldman Sachs tech dealmaker Dan Dees.

SoftBank is the belle of the ball in banking these days, with some firms assigning teams solely to recruit and land deals involving the $100 billion mega tech fund. And so it’s little surprise that Goldman Sachs is seeking an opportunity to impress the Japanese conglomerate.

Here’s the full agenda for next week, followed by the companies invited:

Invitees:

Adyen
Anaplan
AngelList
Away
Benchmark
Cadre
Capital World Investors
Carbon
Cerebras
Coinbase
Convoy
GoEuro
Green Chef
Headspace
Houzz
Hotel Tonight
Instacart
Internet Association
Ionic Security
Namely
Nubank
Opendoor
Qualtrics
Roblox Corporation
Slack Technologies, Inc.
SoftBank Vision Fund
Squarespace
SurveyMonkey
Symphony
ThirdLove
thredUP
Tulip Retail
Turo
Unity
Vapor IO
VIPKID
Wish
Within
Zola

Snap CEO Evan Spiegel is redesigning Snapchat because it’s too hard to use

2017-11-07T17:06:17-05:00

This is a big deal.

Snap CEO Evan Spiegel wants to redesign Snapchat.

Why? Because Spiegel admits that the app, which is popular with teenagers, might be too hard to use.

“One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback,” Spiegel wrote in prepared remarks for Tuesday’s Q3 earnings call. “As a result, we are currently redesigning our application to make it easier to use.”

This is a big deal. Companies redesign and restructure their products all the time to try and increase engagement or use. But Snapchat — and Spiegel in particular — have always held a mindset that users either understand Snapchat, or they don’t. Spiegel did not want to have to explain Snapchat to people, and he didn’t want to hold anybody’s hand to help them figure it out.

Now, though, he’s admitting that Snap may need a redesign in order to appeal to a broader audience. Snap added just 4.5 million new users last quarter, much fewer than analysts expected.

“There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behavior of our community will change when they begin to use our updated application,” Spiegel continued. “We’re willing to take that risk for what we believe are substantial longterm benefits to our business.”

At least one part of the change sounds like it will rely on software algorithms like the ones Facebook and Twitter use to prioritize which posts people see first in their feeds. Spiegel suggested that Snapchat might use something like that for its Stories feature.

“As part of the redesign I mentioned earlier, we are going to make it easier to discover the vast quantity of content on our platform that goes undiscovered or unseen every day,” Spiegel wrote. “We think that there is a big opportunity to surface some of this content in a personalized and more relevant way ... We are developing a new solution that provides each of our 178 million Daily Active Users with their own Stories experience.”

Spiegel is famously tight-lipped about product updates and new features, and we may not hear many other details on what this redesign might look like. But Spiegel will take questions from analysts on the company’s earnings call at 5 pm ET today, and we’ll update here if he shares any more details.

Update: As expected, Spiegel declined to share details about when the update will go live. “We’ll look forward to surprising you with the redesign,” he said.

Spiegel did offer a few hints as to what may be included. It sounds like Snapchat’s Maps feature, which is currently hidden behind its main camera and requires users to pinch the screen to see it, may be easier to find. “We look forward to elevating the map in our product so that more people can find it easily,” Spiegel said.

One of the analysts asked Spiegel if Snapchat should add a News Feed to the app, or a never-ending stream of posts and updates, instead of just Snap Stories, where users may eventually get to the end of the line. (I have just 12 Stories live in my feed at the moment, for example.)

“I don’t think we would add a news feed, per se, but I definitely think there are ways to improve ad performance on our service,” Spiegel replied. “As part of the redesign, I do think there will be new monetization opportunities. Again, too early to tell there, but we’re excited about it.”

Part of Snap’s struggles are probably due to Instagram, which has copied some of Snapchat’s best features, and seems to have stolen some of Snapchat’s users as a result. Instagram’s version of Stories, for example, has 300 million daily users. Snap’s entire app has just 178 million.

Snap stock is down big after reporting less revenue — and fewer users — than Wall Street expected

2017-11-07T16:43:30-05:00

That’s the third straight bad quarter for Snap.

Snap has disappointed Wall Street. Again.

The media and messaging company reported Q3 earnings on Tuesday, and the numbers were well below the modest expectations analysts had set.

Snap reported revenue of about $208 million, roughly 12 percent less than the $237 million analysts were hoping for. Snap also reported a net loss of $443 million on the quarter.

Snapchat also reported disappointing user growth. The company added just 4.5 million new daily users; analysts were expecting closer to eight million new users. It now has 178 million total daily users.

Snap stock was down more than 18 percent in early after-hours trading.

It’s the third straight disappointing quarter for Snap, which hasn’t been able to get its business or user base growing as fast as many expected when it completed a high-profile IPO in March. Some Snap investors and insiders thought that Snap would be a $1 billion business in 2017, and some outsiders agreed. Goodwater Capital, for example, pegged Snap’s 2017 revenue at $1.1. billion back in February.

Through the first nine months of the year, Snap has brought in just $539 million in revenue.

It’s not entirely clear why the company’s business hasn’t lived up to early expectations, though the general consensus is that Snap’s transition to automated advertising sales — where advertisers can buy ads through software programs — is just taking longer than expected to ramp up.

In Snap’s prepared remarks for its Tuesday earnings call, the company admitted as much. Snap claims that it has five times as many advertisers buying ads through its automated auction, which sells ad inventory to the highest bidder, than it did at the beginning of the year.

But it also claims that selling via the auction versus selling directly to an advertiser through a human sales team has also “dramatically reduced pricing,” CEO Evan Spiegel wrote. “Our auction has a lower price-point than our reserved business because there is no fixed rate card,” Spiegel continued.

Simply put: Advertisers can get the same ads for cheaper when buying through the auction than if they bought them via Snap’s sales team. Spiegel says this is just temporary. “As we onboard more advertisers and multiple advertisers compete for the same ad impression, we should see higher pricing,” he wrote.

Average revenue per user rose 39 percent to $1.17.

Snap also cautioned on its last earnings call that Q3 revenue in particular might be smaller than expected because the company wouldn’t have major world events like the Olympics and a U.S. presidential election to help boost spending like it did in 2016.

Spiegel and other Snap execs will take questions from investors during an earnings call at 5 pm ET Tuesday. We will update here or at Recode with anything interesting.

Update: More bad news from the company’s call: Snap says it “misjudged” the popularity of its video-recording sunglasses, called Spectacles, and says it’s adding a one-time, $40 million expense to its balance sheet because of “excess inventory and purchase commitment cancellations,” which means Snap thought it had $40 million worth of glasses, but now it doesn’t.

“Ultimately we made the wrong decision,” Spiegel said. “We’re learning from it.”

Spiegel also announced that Snap is redesigning its app in the hopes of making it easier to use for a broader subset of people.

Twitter is giving everyone longer tweets, but you probably won’t use them

2017-11-07T16:00:02-05:00

Those 280-character tweets are here to stay.

The test is over — 280-character tweets are here for good.

Twitter announced on Tuesday that it’s rolling out longer tweets to virtually* all of its users, doubling the traditional 140-character limit to 280 characters. Twitter has been testing longer tweets since September, and claims the test proved out the company’s theory — that giving more people room to tweet results in more engagement.

“People who had more room to Tweet received more engagement (Likes, Retweets, @mentions), got more followers, and spent more time on Twitter,” the company wrote in a blog post. Twitter has been testing longer tweets with “tens of millions” of users, according to company spokesperson Will Stickney.

Twitter has been thinking about longer tweets for years, but got cold feet the last time it considered expanding the limit in early 2016. When Twitter first announced that it was testing longer tweets this fall, the service’s users freaked out, worried that giving people more room to write would ruin the brevity that makes Twitter Twitter.

Shockingly, it looks like that reaction was overblown. Twitter says that just 5 percent of tweets sent by users in the test group were longer than the traditional 140-character limit. Only 1 percent of those tweets actually used all 280 characters.

Again, here’s how Twitter explained it in a blog post:

“Since we saw Tweets hit the character limit less often, we believe people spent less time editing their Tweets in the composer. This shows that more space makes it easier for people to fit thoughts in a Tweet, so they could say what they want to say, and send Tweets faster than before.”

So, whether you like it or not, Twitter thinks longer tweets are better for business. And they’re here to stay.

* People who use Twitter in Korean, Japanese or Chinese will still get just 140 characters. Twitter says this is because you can convey a lot more meaning in a lot fewer characters with those languages.

Sorry, Jeff Bezos. Amazon Key won’t get online retailers through the front door.

2017-11-07T14:50:02-05:00

The key to in-home commerce is more trust, not more tech.

On Wednesday, in 37 U.S. cities, Amazon will begin piloting a new service that enables delivery people to enter your home while you’re not there using a camera-assisted, remote-operated lock. Given the collective shudder that greeted the announcement of Amazon Key, Americans aren’t exactly comfortable with the idea of an Internet giant letting “a random human” (or worse) range freely in their homes.

Whether you see it as a well-meaning extension of the company’s commitment to convenience or its latest attempt to invade and commercialize our most private spaces, Amazon Key is emblematic of the broader e-commerce industry’s quest to enter our homes. Having battled over the last mile of distribution, online retailers are now focused on the last meter of fulfillment, begging the question: Will delivery make it past the front door?

I believe the answer is unequivocally yes. As CEO of Hello Alfred, the only company in the market that has earned the privilege of entering people’s homes to deliver goods and services — logging more than one million visits across five cities in three years — I believe deeply in the premise that the future of retail is in the home. And I believe more and more households will regard in-home commerce not as an unwelcome incursion but an organically integrated amenity that ensures that groceries go directly into the fridge, dry cleaning into the closet and toiletries are replenished without having to think about them. It’s already happening.

But we will not get to this frictionless convenience where our homes anticipate us through smart locks and cameras that monitor couriers the way a Dropcam watches a dog. Amazon Key and similar app-and-hardware solutions will not get online retailers past the threshold. That’s because no company is welcome through my front door without first doing the hard work to earn my trust.

Although it’s hard to remember now, there was a time when the Amazon smile, the iconic Apple and Google’s quartet of primary colors inspired loyalty and engendered a sense of trust. As we happily traded away the hours in the day for more screen time and personal data for more convenience, we welcomed tech companies to claim more and more surface area in our lives. But it becomes clearer every day that these companies’ sense of stewardship and accountability did not scale up with their market caps.

Well before Google, Facebook and Twitter were summoned before Congress amid a growing backlash against Silicon Valley arrogance and negligence, tech platforms and online retailers — not to mention credit reporting agencies — had already given us ample reason to regret putting our faith in them. We are tired of having our every move tracked, extracted and monetized. We’re done with having no choice but to click “Agree” on terms and conditions that obfuscate what we all know to be true: That we are the product.

In any relationship, once you erode trust, it's nearly impossible to earn it back. But tech giants and online retailers will need to try their very best if they want the right to enter our most personal physical spaces — and it will take more than free shipping and a smart lock.

They can start by remembering that the ultimate purpose of technology is not to scale business models without regard for their consequences, but to scale human potential and empower us by restoring our most precious resource: Time. They can do this by putting people at the center of the operating systems they construct around us and relinquishing claims to our data and privacy.

And they would do well to recognize that they are the incumbents now. If they can’t earn the right to walk through our front doors, there’s a new generation of truly consumer-centric companies that value our rights and our safety, care deeply about improving our lives, and do the work to earn our trust.

Marcela Sapone is the co-founder and CEO of Hello Alfred, the first in-home commerce platform. Reach her @MsSapone.

The big media moguls are selling out. Who wants to replace them?

2017-11-07T14:38:10-05:00

Scripps, Time Warner and maybe Fox are calling it quits. (Or at least kind-of quits.) Buyer beware.

There’s lots we don’t know about the Disney-Fox non-deal that popped up yesterday:

How serious did the non-deal talks get? Is the non-deal really dead, or just pining for the fjords? Does the non-deal really make sense for Fox? What about for Disney?

But here’s one thing we do know: Rupert Murdoch and his sons, James and Lachlan, are willing to sell at least a very big part of their media empire.

If they hadn’t been thinking about selling, you would most certainly have heard that from them and their proxies, and we haven’t heard a peep. And if they were willing to sell at least some of the company to Disney, then they are willing to sell at least some of the company — and possibly more of the company* — to Verizon or SoftBank or John Malone or someone in Silicon Valley.

Another thing we know: Time Warner CEO Jeff Bewkes is selling all of his media empire, provided the Trump Justice Department lets him. Another thing we know: Scripps CEO Ken Lowe already sold his media empire for $12 billion this summer.

Scripps, Time Warner and the 21st Century Fox not-a-deal-yet are all very different transactions. But they’re also the same: Managers of giant media properties have looked around and decided that it’s time to sell. Tl;dr: Blame the internet.

It does seem worth asking why someone would want to be on the other side of the trade: If Jeff Bewkes and Rupert Murdoch want to get out, why do you want to get in?

Again, with the three transactions we’re talking about, the reasons vary to some degree: Discovery thinks its odds improve if it has more cable channels to bundle together, and AT&T insists that adding content will somehow improve its distribution business.

Disney, depending on who’s making the argument, thinks Fox’s library of TV shows and movies will help it launch a digital video service in 2019; or it likes Fox’s strength outside of the U.S. market, or it wants the X-Men to join the cast of its Marvel movies.

You can believe the logic in all of those deals if you want. But you have to weigh the fact that some of the world’s most successful media companies have concluded that they can’t do any better than they’re already doing.

So the people who think that they can do better must be very confident. How confident are you that they’re right?

* The not-a-deal that Disney and Fox discussed would have left Fox with assets like its sports and news networks, along with its broadcast TV operations. But Disney couldn’t have bought most of those assets, because of antitrust rules; what happens if a buyer who doesn’t already own, say, its own broadcast TV operations or its own sports channel shows up and wants to buy the whole thing?

Former Yahoo CEO Marissa Mayer has been subpoenaed to testify to Congress about the company’s 2013 security breach

2017-11-07T14:14:47-05:00

So she’ll testify at a Tuesday hearing after all!

Senate lawmakers quietly subpoenaed former Yahoo CEO Marissa Mayer in October in order to compel her to testify before a key committee that’s investigating a 2013 security breach at the tech giant that has affected three billion of its users.

Initially, Mayer’s representatives declined to make her available to appear before the powerful Senate Commerce Committee, which is set to convene a hearing on Tuesday that explores the attack on Yahoo as well as a separate, later 2017 incident at credit-monitoring agency Equifax, which affected more than 145 million Americans.

Both the panel’s chairman, Republican Sen. John Thune, and its top Democratic lawmaker, Sen. Bill Nelson, agreed on the subpoena, according to a panel spokesman. In response, Mayer told the committee she would testify at the hearing, the spokesman said, but the subpoena remains in effect.

The Hill first reported on details of the subpoena. Spokespeople for Nelson as well as Mayer, Verizon and Yahoo’s new entity, Oath, did not immediately respond to emails from Recode seeking comment.

That brouhaha could result in an especially uncomfortable grilling for Mayer at the Senate’s data security hearing. Thune initially called the session after Yahoo, now part of Verizon, revealed that a 2013 cyber attack on the company affected three billion of its users — three times its initial estimate.

Lawmakers’ other target is Equifax: The Senate Commerce Committee is focused on a 2017 incident at the credit-monitoring agency in which malefactors stole 145 million Americans’ sensitive data, including their home addresses and even some credit card numbers.

For some on the panel, though, the added issue with Equifax is its slow, widely criticized response to the security breach, not to mention later revelations that Equifax’s own consumer-help websites had been affected by malware.

In a statement this October, Thune stressed the hearing would give “the public the opportunity to hear from those in charge, at the time major breaches occurred and during the subsequent response efforts, at two large companies who lost personal consumer data to nefarious actors.”

Some lawmakers, however, are sure to use the hearing to call for greater regulation — not only in the way that companies collect and secure data but also the means by which they inform and help consumers in the event of a security breach. In recent months, Equifax and its peers in the industry have ramped up their lobbying efforts in Washington, D.C. to stave off such rules and restrictions.

Here’s one of Uber CEO Dara Khosrowshahi’s new rules of the road: ‘We do the right thing. Period.’

2017-11-07T13:45:02-05:00

It’s just one of the updated cultural norms for the long-troubled car-hailing giant.

In one of many efforts to reset the company’s much-bent-and-very-banged-up values, Uber’s new CEO Dara Khosrowshahi presented new rules of the road to the staff today at an all-hands meeting.

It included the most obvious of bromides: “We do the right thing. Period.”

It’s a subtle swipe at previous management under ousted CEO Travis Kalanick, of course, which most definitely grew the car-hailing company into a giant. But it — and I also include the Uber board in this group — also drove Uber smack into an even bigger wall that has included ugly regulatory and toxic cultural crack-ups.

And it’s been up to former Expedia CEO Khosrowshahi, the adult brought in to clean up the mess earlier this year — he’s calling those disasters “firefights,” by the way — and to define what’s next for Uber. That includes scripting a new set of what are being called “cultural norms,” crafted from suggestions solicited from the entire company.

Along with almost two dozen focus groups of employees, more than 1,200 ideas were submitted and were voted on 22,000 times. The focus of what was distilled is on customers, drivers and more.

An example: “We celebrate differences. We stand apart from the average. We ensure people of diverse backgrounds feel welcome. We encourage different opinions and approaches to be heard, and then we come together and build.”

Such rules — often called “values” — are not uncommon at companies (see Google’s “Don’t be evil” motto), although past ones at Uber have focused largely on aggression and growth.

One from the Kalanick regime involved encouraging stepping on toes, which pretty much resulted in a lot of broken bones. In another memo before a company gathering, he told employees that beer-keg-throwing off roofs and vomiting was a no-no, which was correct but begged the question of how bad the behavior was that he had to make that salient point.

Khosrowshahi addressed that need for a shift in attitude in a post to staffers. “Our values define who we are and how we work, but I had heard from many employees that some of them simply didn’t represent the kind of company we want to be,” he wrote. “For instance, ‘toe-stepping’ was meant to encourage employees to share their ideas regardless of their seniority or position in the company, but too often it was used an excuse for being an asshole.”

(Hey, he said it — I didn’t, although I wholly agree with that last part about assholes!)

In any case, these are just words in the end and it will require firm leadership to enforce them and make employees take them to heart. But, at least in the case of Uber, they probably mean a lot more.

For those interested, here’s the whole list of new rules:

Uber’s Cultural Norms

We build globally, we live locally. We harness the power and scale of our global operations to deeply connect with the cities, communities, drivers and riders that we serve, every day.

We are customer obsessed. We work tirelessly to earn our customers’ trust and business by solving their problems, maximizing their earnings or lowering their costs. We surprise and delight them. We make short-term sacrifices for a lifetime of loyalty.

We celebrate differences. We stand apart from the average. We ensure people of diverse backgrounds feel welcome. We encourage different opinions and approaches to be heard, and then we come together and build.

We do the right thing. Period.

We act like owners. We seek out problems and we solve them. We help each other and those who matter to us.

We persevere. We believe in the power of grit. We don’t seek the easy path. We look for the toughest challenges and we push. Our collective resilience is our secret weapon.

We value ideas over hierarchy. We believe that the best ideas can come from anywhere, both inside and outside our company. Our job is to seek out those ideas, to shape and improve them through candid debate, and to take them from concept to action.

We make big bold bets. Sometimes we fail, but failure makes us smarter. We get back up, we make the next bet, and we GO!

Alphabet is finally taking the driver out of some of its driverless cars

2017-11-07T11:00:01-05:00

It’s limited to an experiment in Phoenix, but this move marks the beginnings of Waymo’s driverless future.

After almost a decade, Google’s parent company Alphabet is getting closer to fulfilling its promise of rolling out cars that can take anyone anywhere without a driver behind the wheel.

Alphabet’s self-driving car company, Waymo, is introducing truly driverless cars to public roads for the first time, the company’s CEO John Krafcik announced today at the Web Summit conference.

That means there won’t have to be a person sitting in the driver’s seat, waiting to take over, and that the car’s computer system will complete all parts of the driving task — though for now, only in some of the company’s cars in Phoenix, Ariz.

While this move is still geographically limited, it marks the beginnings of Alphabet’s driverless future finally becoming a reality. No other company has succeeded in operating a fleet of fully driverless cars on public roads.

Though the company has yet to commercialize its cars, learning how consumers interact with and want to use fully driverless cars — as well as any new data the car collects as it drives by itself on public roads — is incredibly valuable. It could give the company a significant leg up on its competitors, which include GM’s Cruise, Tesla, Ford’s Argo AI and startups like nuTonomy, which recently was acquired by Delphi.

Waymo is also signaling one of its potential business models for self-driving cars, in the form of a car-share service. Over the next few months, a few hundred of Waymo’s early test riders will be able to hail these completely driverless cars to take them to and from work and other locations on a daily basis.

These test riders, who began signing up for Waymo’s public trial in April, will hail the cars using an app Waymo developed in-house. It’s not exactly the Uber or Lyft model — the latter of which Waymo has partnered with — because riders will have the flexibility to use the cars for however long they want, whether it’s for a single ride, a day or a week.

But where Waymo may be lacking relative to its competitors is in its automaker relationships. Krafcik talked about having different types of vehicles available to its consumers as needed — some that may service a variety of experiences.

Unlike some other players with similar ambitions — its partner Lyft, for instance — Waymo has only announced a partnership with one automaker — Fiat Chrysler — which provided the Chrysler Pacifica minivans Waymo is using today.

It’s unclear how Waymo would develop a service that had a variety of vehicles tailored to its consumers’ needs without either a more robust automaker partnership wherein the companies work together on more than one car or multiple partnerships.

The company will initially introduce these truly driverless cars in a part of the Phoenix metro area called Chandler, which the company picked because it has a simpler road system than a busier city like, say, San Francisco. Eventually, Waymo will expand the area within which its cars will be able to operate without a driver to 600 square miles, then gradually into cities outside of Phoenix.

“Over time, we’ll expand to cover the entire Phoenix region, which is larger than Greater London,” Waymo CEO John Krafcik said in a speech at the Web Summit on Tuesday. “Our ultimate goal is to bring our fully self-driving technology to more cities in the U.S. and around the world.”

This is how most self-driving programs will roll out across the U.S. — from small geofenced areas with fewer complexities like suburbs to more congested cities.

That’s contrary to GM, arguably one of its biggest rivals in the space, which is testing its cars in cities like San Francisco and then New York by 2018, first with a safety driver.

As the company’s cars gather more data and then learn from it, Waymo will expand the initial geofence to parts of the city that have more variables, like higher-density city traffic.

That doesn’t mean that there won’t be cars operating outside of these geofenced areas with a safety driver behind the wheel or that Waymo has outright won the driverless car race. (The company declined to specify how many cars would be operating without a safety driver behind the wheel.) But it does mean Waymo’s promise of a driverless future is one step closer to being realized.

We’re starting to see the perils for startups that accept foreign cash

2017-11-07T10:53:05-05:00

Not all dollars are created equal. Some are mired in international drama.

Russian billionaire Yuri Milner and Saudi billionaire Prince Alwaleed bin Talal have little in common beyond being, well, billionaires.

But together they served as a cautionary tale this past weekend for U.S. startups gravitating toward the easy, few-strings-attached cash that comes by the bucketload from overseas and increasingly funds the excesses of Silicon Valley.

Not all money is created equal, as Milner’s and Alwaleed’s portfolio companies are already learning.

On Nov. 4, Alwaleed was arrested in a sweeping anti-corruption probe pushed by the rising crown prince Mohammad bin Salman, a jarring ouster from power that is sure to rattle the U.S. investors who see their next payday in the nation’s oil wealth.

Then, the following day, it was Milner’s time in the barrel after a New York Times report evaluated a newly disclosed trove of financial documents called the Paradise Papers. The story painted a damaging picture for Milner and cast a cloud over the Kremlin-tied companies that funded some of his landmark investments like Facebook and Twitter. The Russian-American had to quickly defend himself in a lengthy riposte unequivocally stating he was not working at the behest of the Russian government.

But now, the companies that have accepted their cash are under the microscope for how they used the money that is suddenly loaded with international intrigue. CEOs are now forced to answer whether they have any ethical qualms with taking on financing that, in the eyes of some, is tainted by foreign drama — even if Saudi purges or Russian hackings are completely outside of their control.

Take Ryan Petersen, the CEO of Flexport, which took $110 million in investment just last month from Milner’s venture capital firm, DST Global.

Petersen late Monday took to Facebook, unprompted, to defend his investor.

“I trust Yuri so until I’ve seen evidence that he’s done something wrong, I intend to stand by him,” Petersen wrote. “His feats as an investor are so extraordinary, and his behavior toward entrepreneurs so benevolent, that I find foolish the notion that this entire time he has been engaged in covert operations for a foreign government.”

Petersen’s defense of Milner, clocking in at 565 words, is thoughtful and well-considered, but it spotlights the hot seats that Milner’s CEOs firmly occupy underneath the klieg lights of media scrutiny.

Companies funded by Milner and Alwaleed are so far startled by the fast-turning storylines, though look for them to downplay their connections to the newly controversial investors in upcoming days. And given the profile of the companies that have taken on their financing — giants like Twitter, Airbnb and Slack — they will not be able to escape the questions for long.

One company funded by Milner, the fantasy sports site DraftKings, did defend Milner in a statement to Recode on Tuesday.

“DST has been investing in technology startups for a long time. Everyone in Silicon Valley knows them as a premium venture capital firm,” said DraftKings CEO Jason Robins. “The notion that they are investing for any purpose other than financial is far-fetched.”

This problem has legs, too. While foreign dollars have long backed venture capital funds, overseas investors are gingerly poking at directly investing in startups, too. Look no further than Saudi Arabia’s Public Investment Fund, which sits on the board of Uber after sinking billions of dollars into the company. Or Mubadala, the Abu Dhabi sovereign fund that just opened a venture office in San Francisco. Or the China Investment Corporation, which wants to do the same.

Tech investors caution that not all foreign capital is so stained. Even blue-blooded U.S. venture capital firms have international investors, and some of the technology sector’s most successful bets have been placed by men and women who live overseas but have a sophisticated understanding of future market opportunities.

Perhaps that describes SoftBank, the Japanese conglomerate which is upending Silicon Valley finance with checks that have a seemingly endless number of zeros. Almost half of SoftBank’s mammoth $100 billion Vision Fund comes courtesy of Saudi Arabia’s sovereign wealth fund — so any startup vying for SoftBank’s largesse is also indirectly clamoring for Saudi Arabia’s.

Prominent venture capitalists have in recent months raised hushed questions about the morals of taking on funding from a nation where, for instance, until recently women could not drive.

But when the money’s easy, it’s hard to turn down.