All posts in “Operating System”

What CISOs need to learn from WannaCry

In 2017 — for the first time in over a decade — a computer worm ran rampage across the internet, threatening to disrupt businesses, industries, governments and national infrastructure across several continents.

The WannaCry ransomware attack became the biggest threat to the internet since the Mydoom worm in 2004. On May 12, 2017, the worm infected millions of computers, encrypting their files and holding them hostage to a bitcoin payment.

Train stations, government departments, and Fortune 500 companies were hit by the surprise attack. The U.K.’s National Health Service (NHS) was one of the biggest organizations hit, forcing doctors to turn patients away and emergency rooms to close.

Earlier this week we reported a deep-dive story into the 2017 cyberattack that’s never been told before.

British security researchers — Marcus Hutchins and Jamie Hankins — registered a domain name found in WannaCry’s code in order to track the infection. It took them three hours to realize they had inadvertently stopped the attack dead in its tracks. That domain became the now-infamous “kill switch” that instantly stopped the spread of the ransomware.

As long as the kill switch remains online, no computer infected with WannaCry would have its files encrypted.

But the attack was far from over.

In the days following, the researchers were attacked from an angry botnet operator pummeling the domain with junk traffic to try to knock it offline and two of their servers were seized by police in France thinking they were contributing to the spread of the ransomware.

Worse, their exhaustion and lack of sleep threatened to derail the operation. The kill switch was later moved to Cloudflare, which has the technical and infrastructure support to keep it alive.

Hankins described it as the “most stressful thing” he’s ever experienced. “The last thing you need is the idea of the entire NHS on fire,” he told TechCrunch.

Although the kill switch is in good hands, the internet is just one domain failure away from another massive WannaCry outbreak. Just last month two Cloudflare failures threatened to bring the kill switch domain offline. Thankfully, it stayed up without a hitch.

CISOs and CSOs take note: here’s what you need to know.

The next service marketplace wave: Vertical market-networks

The last few decades have produced many successful marketplaces. We went from goods marketplace pioneers such as eBay and Amazon to simple service marketplaces such as Uber, Lyft, Doordash, Upwork, Thumbtack, TaskRabbit, and Fiverr. But why haven’t we seen many successful B2B service marketplaces?

Table of Contents


Why Many B2B Service Marketplaces Failed

Some would argue that companies such as Upwork, Thumbtack, Fiverr, or TaskRabbit are horizontal B2B marketplaces in the sense that they provide access to suppliers of different services. But while businesses do indeed transact with freelancers on such “horizontal” marketplaces, for most service verticals these are limited-value, one-off transactions. They fail to enable long-term business collaborations.

So, such marketplaces haven’t delivered more valuable services nor introduced a new paradigm for how businesses buy specific services at scale and on an on-going basis. Why is that?

Horizontal marketplaces are stuck at the discovery process

Horizontal services marketplaces don’t provide much value beyond matching clients with quality service providers. In other words, they don’t facilitate collaboration between buyers and suppliers, never mind provide ways for the two parties to collaborate more efficiently over time as they engage in follow-on projects.

In essence, the model these marketplaces were built around is not much different from the likes of Craigslist, which put a convenient UX on traditional classified advertisements.

Complex B2B services require workflow and collaboration tools

In their article “What’s Next for Marketplace Startups?,” Andrew Chen and Li Jin found that there aren’t many successful service marketplaces because those offerings are complex, diverse, and difficult to evaluate. It’s challenging to define a successful transaction in a service marketplace because it’s harder to quantify success.

One reason is that several service providers must often work together to complete a single job for a buyer, requiring a complex workflow from end to end. As a result, it’s difficult for marketplaces to not only mediate service delivery but also make it significantly more efficient for buyers and suppliers. If both the buyer and suppliers don’t see a significant efficiency gain other than being initially matched, why would they continue using the marketplace?

(Image via Getty Images / Lidiia Moor)

The $50 billion translation industry is a prime example of complex B2B services marketplaces. On the supply side are roughly 50,000 small agencies around the globe responsible for more than 85% of this $50 billion industry. (Note we are referring to agencies here as suppliers, though they play on both sides.)

On the demand side are businesses that need to translate text from one language into another. Plus about 1,500,000 freelance linguists work in this industry, many of whom are more specialized than professionals in other industries.

Anyone can find and hire a translator on Fiverr or Upwork. Both provide a vast selection of language translators. However, the quality and cost of the translation depends on the translation tools available to the translator as well as their subject expertise.

Neither Fiverr nor Upwork provide computer-aided translation (CAT) and collaborative workflow solutions for users of their platforms. Additionally, neither provides an effective way for all parties to collaborate and continuously improve the efficiency and quality.

But the problem with traditional marketplaces goes even further: Multiple translators and reviewers are usually needed to complete a single job for a customer. Multi-language translation projects are even more complicated. Such projects require multiple service providers and cost estimates, in addition to project management tools.

This is why building a B2B service marketplace is difficult. Service marketplaces must not only connect buyers and suppliers, but also provide tools to enable an efficient and collaborative workflow that reduces wasted time and effort.

Horizontal marketplaces suffer high attrition

In addition to the problems already outlined, traditional marketplaces experience another issue that prevents them from growing and retaining market participants: Buyer and supplier attrition.

Many business services are based on regularly recurring engagements. In some cases, a buyer and a service provider interact daily, requiring a different workflow than gig-marketplaces are built around.

Buyers and suppliers have little motivation to continue interacting on a platform with no workflow automation solutions. They lack a way to improve service efficiency and quality, automate collaboration, payment, paperwork, and other basic processes required for a business.

This is why many traditional marketplaces suffer from slow network effects and high attrition. (A network effect is what happens when a platform, product, or service delivers more value the more it is used.

Think Facebook, eBay, WhatsApp.) Why wouldn’t companies work directly with service providers outside of a marketplace after they were introduced? What incentives keep the service transaction on the marketplace? These are critical questions to answer when building a marketplace.

Traditional marketplaces target broad services, making it nearly impossible to provide workflow solutions for buyers and suppliers. Going forward, successful service marketplaces will be developed relying on an industry-specific SaaS workflow. This will focus buyers and suppliers on longer-term projects and interactions that serve the unique needs of collaborations and transactions in a specific vertical.

Image via Getty Images / OstapenkoOlena

What makes a successful service marketplace?

In “The next 10 Years Will Be About Market Networks,” James Currier, Managing Partner at NFX Ventures, defines a new era of service marketplaces, which he calls market networks.

A market network is a platform that combines elements of an n-sided marketplace, a network, and workflow solutions. An n-sided marketplace is one that requires coordination of multiple supply-side parties to provide a complex service for a single buyer.

Market networks enable multiple buyers and suppliers to interact, collaborate, and transact on the same platform. They provide users with industry-specific workflow solutions that enable efficient, ongoing collaboration on long-term projects. This reduces costs and leads to a higher quality of services and increased overall value for all users.

But how do you actually build a successful market-network platform? While the answer to that varies from company to company, here is our approach. We were able to build a market network for the translation industry that combines the components: network, marketplace, and workflow solution.

STEP 1: SaaS workflow platform unlocks high-value collaboration

The first step to building an effective complex market network is to develop a workflow that is easy for users to embrace. It might not seem like much, but this increases productivity by enabling teams to perform tasks that were previously impossible.

Huawei says US ban will cost it $30B in lost revenue

Following a string of trade restrictions from the U.S., China’s telecoms equipment and smartphone maker Huawei expects its revenues to drop $30 billion below forecast over the next two years, founder and chief executive Ren Zhengfei said Monday during a panel discussion at the company’s Shenzhen headquarters.

Huawei’s production will slow down in the next two years while revenues will hover around $100 billion this and next year, according to the executive. The firm’s overseas smartphone shipment is tipped to drop 40%, he said, confirming an earlier report from Bloomberg.

That said, Ren assured that Huawei’s output will be “rejuvenated” by the year 2021 after a period of adjustment.

Huawei’s challenges are multifaceted as the U.S. “entity list” bars it from procuring from American chip makers and using certain Android services among a list of other restrictions. In response, the Chinese behemoth recently announced it has been preparing for years its own backup chips and an alternative smartphone operating system.

“We didn’t expect the U.S. to attack Huawei with such intense and determined effort. We are not only banned from providing targeted components but also from joining a lot of international organizations, collaborating with many universities, using anything with American components or even connecting to networks that use American parts,” said Ren at the panel.

The founder said these adverse circumstances, though greater than what he expected, would not prevent the company from making strides. “We are like a damaged plane that protected only its heart and fuel tank but not its appendages. Huawei needs to be tested by making accommodation and through time. We will grow stronger as we make this step.”

huawei

“Heroes in any times go through great challenges,” reads a placard left on a table at a Huawei campus cafe, featuring the image of a damaged World War II aircraft. / Photo: TechCrunch

That image of the beaten aircraft holding out during hard times is sticking to employees’ minds through little motivational placards distributed across the Huawei campus. TechCrunch was among a small group of journalists who spoke to Huawei staff about the current U.S.-China situation, and many of them shared Ren’s upbeat, resilient attitude.

“I’m very confident about the current situation,” said an employee who has been working at Huawei for five years and who couldn’t reveal his name as he wasn’t authorized to speak to the press. “And my confidence stems from the way our boss understands and anticipates the future.”

More collaboration

74-year-old Ren had kept a quiet profile ever since founding Huawei, but he has recently appeared more in front of media as his company is thrown under growing scrutiny from the west. That includes efforts like the Monday panel, which was dubbed “A Coffee with Ren” and known to be Ren’s first such fireside chat.

Speaking alongside George Gilder, an American writer and speaker on technology, and Nicholas Negroponte, co-founder of the MIT Media Lab, Ren said he believed in a more collaborative and open economy, which can result in greater mutual gains between countries.

“The west was the first to bring up the concept of economic globalization. It’s the right move. But there will be big waves rising from the process, and we must handle them with correct rather than radical measures,” said Ren.

“It’s the U.S. that will suffer from any effort to decouple,” argued Gilder. “I believe that we have a wonder entrepreneurial energy, wonderful creativity and wonderful technology, but it’s always thrived with collaboration with other countries.”

“The U.S. is making a terrible mistake, first of all, picking on a company,” snapped Negroponte. “I come from a world where the interest isn’t so much about the trade, commerce or stock. We value knowledge and we want to build on the people before us. The only way this works is that people are open at the beginning… It’s not a competitive world in the early stages of science. [The world] benefits from collaboration.”

“This is an age for win-win games,” said one of the anonymous employees TechCrunch spoke to. He drew the example of network operator China Mobile, which recently announced to buy not just from Huawei but also from non-Chinese suppliers Nokia and Ericsson after it secured one of the first commercial licenses to deploy 5G networks in the country.

“I think the most important thing is that we focus on our work,” said Ocean Sun, who is tasked with integrating network services for Huawei clients. He argued that as employees, their job is to “be professional and provide the best solutions” to customers.

“I think the commercial war between China and the U.S. damages both,” suggested Zheng Xining, an engineer working on Huawei’s network services for Switzerland. “Donald Trump should think twice [about his decisions].”

Xiaom Q4 sees strong growth in overseas shipment and internet services

Xiaomi, the Chinese company known for its cheap handsets and a vision to drive revenues by selling internet services, has come in ahead of analysts’ estimates in its fourth-quarter profit although revenues missed expectations.

The Hong Kong-listed company more than tripled its net profit to 1.85 billion yuan ($276 million), exceeding the 1.7 billion yuan average estimate, Reuters reported citing Refinitiv data. However, revenue from the quarter missed the 47.4 billion yuan expectation, rising 26.5 percent to 44.4 billion yuan ($6.62 billion).

Xiaomi singled out overseas markets in its latest earnings report as the segment grew 118.1 percent to make up 40 percent of its total revenue in the fourth quarter, compared with just 28 percent for the year-earlier period. Xiaomi has been particularly well-received in India, where it holds a leading position in smartphone shipments according to market researcher Canalys, and it’s seeing rapid growth in western Europe.

Unlike conventional smartphone makers that are fixated on selling hardware, Xiaomi runs what it calls a “triathlon” business model comprising of hardware, software and retail. To put it in layman’s terms, the company is selling hardware through its network of online and offline stores, upon which users will consume the app services and in-app ads that come with its smartphones, smartwatches, smart air purifiers and hundreds of other connected devices.

Xiaomi has repeatedly billed itself as an “internet” firm, though so far smartphones are still its main economic driver, accounting for 65.1 percent of overall revenue in Q4. Despite a sluggish year for smartphone brands around the world, Xiaomi handsets grew nearly 30 percent to 118.7 million units in sales last year. The company predicted back in October that it was on course to hit the 100 million sales mark that month.

25.1 percent of Xiaomi’s Q4 revenue went to smart devices (excluding phones) and lifestyle items, representing an 87 percent year-over-year growth. The latter category, which ranges from umbrellas and suitcases to clothes and shoes, is pivotal to Xiaomi’s goal to attract more female users, an effort that has seen the company team up with selfie app maker Meitu. 

Internet services remain as Xiaomi’s smallest segment, bringing in only 9.1 percent of total revenue and growing at 61 percent year-over-year. But the highly lucrative business is bound to carry more load in the future as Xiaomi has promised to keep profit margins for smartphones and hardware under 5 percent.

Gross profit margin from Xiaomi’s internet services increased to 64.4 percent in 2018, up from 60.2 percent in 2017 driven by a higher-margin advertising business. The number is well above the 6.2 percent profit margin for Xiaomi smartphones, and the firm can potentially generate more internet-based income if it’s able to step up monetization of the 242.1 million monthly users on its ecosystems apps.

Google will bring its Assistant to Android Messages

It’s only been a few weeks since Google brought the Assistant to Google Maps to help you reply to messages, play music and more. This feature first launched in English and will soon start rolling out to all Assistant phone languages. In addition, Google also today announced that the Assistant will come to Android Messages, the standard text messaging app on Google’s mobile operating system, in the coming months.

If you remember Allo, Google’s last failed messaging app, then a lot of this will sound familiar. For Allo, after all, Assistant support was one of the marquee features. The different, though, is that for the time being, Google is mostly using the Assistant as an additional layer of smarts in Messages while in Allo, you could have full conversations with a special Assistant bot.

In Messages, the Assistant will automatically pop up suggestion chips when you are having conversations with somebody about movies, restaurants and the weather. That’s a pretty limited feature set for now, though Google tells us that it plans to expand it over time.

What’s important here is that the suggestions are generated on your phone (and that may be why the machine learning model is limited, too, since it has to run locally). Google is clearly aware that people don’t want the company to get any information about their private text chats. Once you tap on one of the Assistant suggestions, though, Google obviously knows that you were talking about a specific topic, even though the content of the conversation itself is never sent to Google’s servers. The person you are chatting with will only see the additional information when you push it to them.