Signalling that privacy is coming to DeFi, Sienna Network raises $11.2M for its platform

Last week we saw some major backing of the Secret Network blockchain, as significant blockchain players Arrington Capital and Blocktower Capital invested in the privacy-first smart contract platform. What this is signaling is the rise of privacy-oriented financial blockchain projects, which are crucial if “DeFi” (decentralized finance) is to have any kind of future. We have come to expect privacy in our ’normal’ financial lives, so we will expect it in the blockchain world.

Today there’s a new signal that this privacy movement in DeFi is taking off with the announcement from privacy decentralized finance company Sienna Network that it has raised $11.2 million from institutional investors and its public supporters. Of that raise, the private token sale raised $10 million from investors including NGC, Inclusion Capital, Lotus Capital, FBG, Skyvision Capital and others. It also raised $1.2 million on the DaoMaker and Polkastarter exchanges.

Sienna Network is built on the afore-mentioned Secret Network, and pitches itself as a privacy-first and cross-chain decentralized finance platform allowing asset holders to switch to privacy-oriented tokens.

Sienna is one of an increasing number of blockchain startups tackling the industry-wide problem of ‘front-running’. This – says Sienna – is where bad actors hijack future trades on public DeFi blockchains.

Monty Munford, chief evangelist and core contributor to Sienna Network said: “Sienna helps access to the privacy-preserving blockchain in a user-friendly way due to the blockchain’s inherent privacy design. Sienna saves no login information, no wallet data, no transaction data, or anything else. It does not even track its website or give any information to any Third Party.”

Here’s how a front-running scam works: A transaction on Ethereum can be preempted by someone else simply by them paying a higher transaction fee. It’s the close equivalent in the real world of trumping a trade on the stock market, just because you paid a higher fee to a broker. In other words, it’s a disaster if it continues to happen, and the entire infrastructure of decentralized finance is threatened because of this threat.

Commenting, Tor Bair, CEO Secret Network said: “We believe Sienna will be a key pillar of Secret DeFi and help drive mass adoption of a more secure decentralized financial ecosystem.”

How Robert Reffkin went from being a C-average student to the founder of Compass

In April, real estate tech company Compass forged ahead with its initial public offering and is now valued at nearly $6.4 billion.

At that time, TechCrunch Senior Editor Alex Wilhelm caught up with founder and CEO Robert Reffkin to chat about his company’s debut in the market’s suddenly choppy waters for tech and tech-enabled debuts.

This week, I caught up with Reffkin on a whole other topic: his path to entrepreneurship as a child raised by a disowned single mother whose father had died homeless. Reffkin is so passionate about inspiring others from nontraditional backgrounds to pursue their dreams that he wrote a book about it.

In our discussion, Reffkin shared what he believes are the secrets to his success (hint: one of them involves lots of listening) and his advice for his young entrepreneurs, especially those from non-privileged backgrounds.

This interview has been edited for brevity and clarity.

TC: As the mother of a teen who is already trying to start his own business, I’m intrigued by your DJing as a teenager. What finally got you motivated to care about school and how did you manage to graduate in such a short amount of time?

Reffkin: Well, I think your son might just be on the right track! Please give him a word of encouragement from me, from one entrepreneur to another.

My mom says that a lot of other parents thought she was crazy for letting me launch my DJ business. But starting a successful DJ business in high school helped me learn about myself and my passion for entrepreneurship — and it ultimately helped me get into Columbia, forming the core of both my personal statement and the relationships I built with several members of the admissions team.

I believe the first step is always to dream big. For me, my big dreams for my college future started on a trip to New York City. I toured Columbia and fell in love with it, but I knew it was going to be hard for me to get in. In fact, my high school guidance counselor said, “Don’t even apply. It wouldn’t be worth your time and money on the application fee.” In that moment, my desire to go to Columbia went from strong to absolute, because suddenly it felt like it was about something larger than myself — not just where I went to school, but about a broader struggle for opportunity for people like me. So I poured myself into my SAT prep to show that even though I had a C average, I had what it took to keep up at a top school. And thankfully, it paid off. 

In high school and college, I was a C-student in part because I didn’t see how studying calculus or Western Civilization related to my life or my dreams. I knew that excelling in school wasn’t going to be the way I was going to distinguish myself in the world. At the same time, I was energized by my entrepreneurial efforts and my summer internships. I moved as quickly as I could to get through school and have my real life begin, because the real world made so much more sense to me.

TC: How do you think being raised by a single mother without privilege helped shape you as a man, and entrepreneur? How would you say being a person of color impacted your path?

Reffkin: Growing up, it was just me and my mom. She’s an Israeli immigrant, disowned by her parents because I was Black. My father abandoned us and died, homeless, when I was young. What shaped me most as an entrepreneur was learning from my mother. She embodied the entrepreneurial spirit and taught me one of the most important principles: every time you get knocked down, you’ve got to bounce back with passion. I saw her face bad relationships, bankruptcy and the stream of daily rejections that comes from being an agent. And she always bounced back. So when the world told me I couldn’t do something or that I was destined to fail, I was ready for them. Thanks to my mom, I already knew how to bounce back.

Image Credits: CEO Robert Reffkin & mother, Ruth / Compass

Being Black and Jewish, I’ve felt out of place my entire life. In most classes in Hosch school and college, I was the only Black person. In almost every meeting early in my career, I was the only Black person. When I was raising capital for Compass, I almost never saw someone Black on the other side of the table. But I’ve been very fortunate. I’ve been lucky to get terrific advice along the way from so many Black mentors, from the late Vernon Jordan, to Ken Chenault, the former CEO of American Express, to Bayo Ogunlesi, who is lead director for Goldman Sachs. There’s a really strong community of people who’ve all supported each other.

TC: You’ve had some impressive mentors over the years. How did those relationships develop? How have they been valuable besides the obvious? 

Reffkin: Growing up, I was hungry for advice. Coming from a single-parent home, I looked for guidance and wisdom on how to create a better life wherever I could find it. My mom connected me to several nonprofits when I was in high school that helped open my eyes to how much opportunity and support there was out there in the world. 

The most important lesson I’ve learned in my life is that feedback is a gift. Even when it’s hard to hear, feedback is a gift. My relationships with many of my mentors deepened because I started asking them for really tough, candid feedback — the sort of things they thought other people wouldn’t tell me. And then, I’d actually take their advice, apply it in my life and let them know how it had helped me. That did two things: First, it led to more honest and practical advice that helped me get better faster. Second, it made the people who had given me advice feel far more invested in my success and the success of what I was working on.

The other thing my mentors gave me was the sense that even though the world was telling me I couldn’t be successful, I could be. Meeting someone like Vernon Jordan who advised presidents and CEOs alike, had a profound impact on me. He was a father figure to me. I met him when I was 23 years old, and at that time, it wasn’t clear to me that you could be successful in the business world as a Black man. I just hadn’t seen it before. When I started at Lazard, Vernon Jordan was the only other Black investment banker there. He was not just a senior partner, he was a legend, widely known for serving on more Fortune 500 boards than anyone in history. He took a strong interest in me, and with his support and advice, he made me feel like I belonged and helped me see a path where I could be as successful as I wanted to be. 

I founded a nonprofit in my twenties called America Needs You that has provided mentorship, career development and college support to thousands of students. I wrote my new book, “No One Succeeds Alone,” as a way to pay it forward by making the lessons I’ve been fortunate enough to learn from so many remarkable people available to everyone — and it’s why I’m donating all of my proceeds to nonprofits that help young people realize their dreams.

TC: What advice would you give to young, aspiring entrepreneurs, especially those from non-privileged backgrounds?

Reffkin: Here’s the advice I’d give to someone from an underrepresented group who just graduated college and is in their first job:

1) Don’t let anyone get in the way of your dream. Not society, not your colleagues, not even yourself. Whenever anyone tells you to slow down, speed up.

2) Spend the next 10 years learning as much as you can from the smartest people you can. Find mentors in your job and outside that will give you the honest feedback that others won’t. Feedback is a gift. It’ll be hard for you to hear, but it’s actually even harder for them to give it to you. So you may have to ask for it directly and let people know that you can take it.

3) Learn how to turn negativity into positive energy that fuels you. There will always be skeptics, doubters and haters telling you that you can’t do something or that you don’t belong. 

TC: What’s next after Compass?

Reffkin: I believe that to be truly successful, you can’t have a Plan B. As a CEO, you have to be all-in, and that’s what I am for Compass: 100% dedicated to our 23,000 agents and employees. One of my mentors told me about the “shower test” once — that if you’re not excited enough about your job to think about it in the shower, you’re probably not in the right job. And I’ll tell you: I’m so passionate about the company we’re building that I’m still thinking about Compass in the shower. At Compass, we’ve accomplished much in the past eight years, but we’re truly just getting started. 

Less than 24 hours to save $100 to TC Sessions: Mobility 2021

Calling all frazzled procrastinators, feet-draggers, lollygaggers and last-minute decision makers. The best price on passes to TC Sessions: Mobility 2021, which takes place on June 9, disappears in mere hours.

It’s now o’clock, baby. Shift your EV into gear, hail a robotaxi or tell Mr. Scott to beam you up — whatever it takes to buy your pass before the early bird deadline expires tonight, May 6, at 11:59 pm (PT).

TC Sessions: Mobility 2021 gathers the very best people in the mobility startup ecosystem to discuss the rapidly evolving trends, opportunities and challenges that come from inventing new ways to move populations — and all their stuff — around the planet and beyond.

This one-day deep dive will help you drive your startup forward, understand emerging trends and gain insight on what investors want and where they’re placing bets. Engage in hyper-focused networking and discover opportunities anywhere in the world.

We have a great line up, and here are just a few examples of the interviews, inter-active panel discussions and breakout sessions waiting for you. Don’t forget to check out the event agenda here.

Mobility’s Robotic Future: Automotive manufacturers are looking to robotics as the future of mobility, from manufacturing to autonomy and beyond. We’ll be speaking with James Kuffner, CEO, Toyota Research Institute – Advanced Development, the head of robotics initiatives at one of the world’s largest automakers, to find out how the technology is set to transform the industry.

The Rise of Robotaxis in China: Silicon Valley has long been viewed as a hub for autonomous vehicle development. But another country is also leading the charge. Executives from three leading Chinese robotaxi companies (that also have operations in Europe or the U.S.) will join us to provide insight into the unique challenges of developing and deploying the technology in China and how it compares to other countries.

Will Venture Capital Drive the Future of Mobility? Clara Brenner (Urban Innovation Fund), Quin Garcia (Autotech Ventures) and Rachel Holt (Construct Capital) will discuss how the pandemic changed their investment strategies, the hottest sectors within the mobility industry, the rise of SPACs as a financial instrument and where they plan to put their capital in 2021 and beyond.

What are you waiting for? It’s now o’clock and time to save $100 — but only if you purchase your pass to Mobility 2021 before the price increase goes into effect tonight, May 6 at 11:59 pm (PT). Let the learning, networking and scaling begin!

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2021? Contact our sponsorship sales team by filling out this form.

Personal skin problems leads founder to launch skincare startup Nøie, raises $12M Series A

Inspired by his own problems with skin ailments, tech founder Daniel Jensen decided there had to be a better way. So, using an in-house tech platform, his Copenhagen-based startup Nøie developed its own database of skin profiles, to better care for sensitive skin.

Nøie has now raised $12m in a Series A funding round led by Talis Capital, with participation from Inventure, as well as existing investors including Thomas Ryge Mikkelsen, former CMO of Pandora, and Kristian Schrøder Hart-Hansen, former CEO of LEO Pharma’s Innovation Lab.

Nøie’s customized skincare products target sensitive skin conditions including acne, psoriasis and eczema. Using its own R&D, Nøie says it screens thousands of skincare products on the market, selects what it thinks are the best, and uses an algorithm to assign customers to their ‘skin family’. Customers then get recommendations for customized products to suit their skin.

Skin+Me is probably the best-known perceived competitor, but this is a prescription provider. Noie is non-prescription.

Jensen said: “We firmly believe that the biggest competition is the broader skincare industry and the consumer behavior that comes with it. I truly believe that in 2030 we’ll be surprised that we ever went into a store and picked up a one-size-fits-all product to combat our skincare issues, based on what has the nicest packaging or the best marketing. In a sense, any new company that emerges in this space are peers to us: we’re all working together to intrinsically change how people choose skincare products. We’re all demonstrating to people that they can now receive highly-personalized products based on their own skin’s specific needs.”

Of his own problems to find the right skincare provider, he said: “It’s just extremely difficult to find something that works. When you look at technology, online, and all our apps and everything, we got so smart in so many areas, but not when it comes to consumer skin products. I believe that in five or 10 years down the line, you’ll be laughing that we really used to just go in and pick up products just off the shelf, without knowing what we’re supposed to be using. I think everything we will be using in the bathroom will be customized.”

Beatrice Aliprandi, principal at Talis Capital, said: “For too long have both the dermatology sector and the skincare industry relied on the outdated ‘one-size-fits-all’ approach to addressing chronic skin conditions. By instead taking a data-driven and community feedback approach, Nøie is building the next generation of skincare by providing complete personalization for its customers at a massive scale, pioneering the next revolution in skincare.”

Turkey’s Ace Games raises $7M to develop ‘hyper casual’ games

Ace Games, a Turkish mobile gaming company founded by a former Peak Games co-founder, has raised a $7 million Seed funding round led by Actera Group. Co-investment has come from San Francisco’s NFX. Former gaming entrepreneurs Kristian Segerstrale, Alexis Bonte, and Kaan Gunay also participated. Firat Ileri is previous investors from the pre-seed round.

The company runs two studios, one focused on casual and one on ‘hyper-casual’ games.

Co-founded by CEO Hakan Bas, the former Co-Founder, and COO at Peak Games, Ace Games has had some success on the US iOS Store with its hyper-casual title, ‘Mix and Drink.’

In a statement, Bas said: “Ace’s main focus is actually the casual ‘hybrid puzzle’ game that we have been working on for a while now. However, our hyper-casual studio assists the main studio in many aspects like training talent, coming up with creative game mechanics and marketing ideas, generating cash, and creating user base.” Ace’s casual title is to be released late-summer this year and the global launch is expected in early 2022.

Peak Games, Gram Games and Rollic Games were alls acquired by Zynga, showing that Turkey is cable of producing decent exits for gaming startups.

VCs such as Index, Balderton, Makers and Griffin have all made M&A deals with Dream Games, Bigger Games and Spyke Games.

Diginex launches ESG reporting platform aimed at small businesses

As ESG reporting goes up the agenda for large companies, it’s also increasingly doing so for smaller companies as well. But right now, tracking things like your company’s CO2 emissions is mainly the preserve of large corporations. Now a startup hopes to address this.

Diginex Solutions has a self-guided tool which claims to generate ESG reports six times faster than competitors and comes in at a relatively affordable $99 per month.

The blockchain-enabled reporting tool also generates reports, giving companies the ability to demonstrate their ESG creds.

DiginexESG is certified by the GRI, an international independent standards organization and now operates in the US, UK, Luxembourg, Hong Kong, Singapore, and Chile. It is currently raising venture backing largely from strategic corporate investors.

Competitors include Turnkey Group, NASDAQ Onereport, Enablon (raised $15M) and World-favour.

Mark Blick, CEO at Diginex Solutions said, “The current landscape of ESG reporting is challenging for many organizations – particularly SMEs – requiring huge consultancy fees, time and resources that distracts from day-to-day activity. The DiginexESG platform quite simply takes away those challenges and does all the heavy lifting for them. It’s like Docusign, Dropbox, TurboTax or Slack hardcoded for ESG reporting.”

Could NFT auctions be moving away from Ethereum? One new group is betting they will

NFTs were arguably already taking off when Beeple sold his NFT artwork for $69m. But another crypto project attracted attention when it bought an original Banksy artwork for $95,000.

The group literally burnt the artwork and sold its NFT on the OpenSea platform for $400,000. Although the stunt was covered by CBS News, BBC News, The Guardian, and others, it did actually make a significant point.

By removing the physical piece, the group – calling itself “Burnt Banksy” – proved that the value of the piece wasn’t affected by being destroyed, given that the NFT went up so much in value.

Now that project is turning that stunt into an actual blockchain platform for art auctions.

Burnt Finance says it has raised $3 Million for a decentralized auction protocol built on the Solana blockchain.

The project is being incubated by Injective Protocol (which recently raised $10 from investors and Mark Cuban, as well as Multicoin, DeFiance, Alameda, Mechanism, Vessel Capital, Hashkey, Spartan, Do Kwon (CEO of Terra), Sandeep (COO of Polygon), and others.

The reason why it’s worth mentioning all this is that in trying to auction the painting, the Burnt Banksy group stumbled on an increasing problem in the world of NFTs: the rising congestion on the Ethereum network is leading to larger and larger gas fees. This is making both the creation and bidding on NFTs increasingly expensive, just from a baseline.

As a result, team decided to build the Burnt Finance NFT auction platform away from Etherum and hit upon the Solana blockchain, which has comparatively good speed, performance, and lower transaction costs. It will use ‘Solana Wormhole’ which connects ETH and ERC20 tokens to SPL Tokens.

A spokesperson for Burnt Finance, ‘Burnt Banksy’ told me: “Most auctions are Ethereum based, and currently the Ethereum gas fees are extremely high. It can cost you up to $70 to make an artwork, which doesn’t work if you’re selling an NFT for $50. We chose Solana mainly because of the ecosystem. It’s fast-growing, in addition to the technical aspect of it.”

There’s another reason why we may see other Crypto projects move away from Ethereum as ETH rises in price and as gas fees increase: the potential for bad faith actors in NFT auctions.

If a bad actor tries to leverage the congestion on Ethereum and manipulate the transaction fee, they might sway the results of an auction. This would be quite something, if the auction was for, say, $69 million…

How 4 New Jersey pools turned into a startup that just raised $10M

As the oldest of 12 children, Bunim Laskin spent much of his teen years looking for ways to help keep his siblings entertained. Noticing that a neighbor’s pool was often empty, Laskin reached out to ask if his family could use her pool. To make it worth her while, he suggested that they could help cover her expenses for maintaining the pool.

Soon after, five other families had made the same arrangement with her and the pool owner had six families covering 25% of her expenses. This meant that the neighbor was actually making money off her pool. The arrangement sparked a business idea in Laskin’s mind. At the age of 20, he founded Swimply, a marketplace for homeowners to rent out their underutilized pools to local swimmers, with Asher Weinberger.

The Cedarhurst, New York-based company launched a beta in 2018, starting with four pools in the New Jersey area. 

“We used Google Earth to find houses, and then knocked on 80 doors with a pool,” Laskin recalls. “We got to 100 pools organically. Word of mouth really helped us grow.” The site was pretty bare bones, he admits, with potential customers only able to view photos of the pools and connect with the pool owner by phone.

That year, Swimply did around 400 reservations and raised $1.2 million from friends and family.

In 2019, Swimply launched what he describes as a “proper” website and app with an automated platform. It grew “4 to 5 times” that year, again mostly organically. In an episode that aired in March 2020, the company appeared on Shark Tank but went home without a deal.

Then the COVID-19 pandemic hit. Swimply, Laskin said, pivoted right into the pandemic.

“We were the perfect solution for people when the world was falling on its head,” he said. The company restructured its offering to ensure that pool owners did not have to interact with guests. “It was the perfect, contact-free, self-serve experience to hang out and be with people you quarantined with.”

The CDC then came out to say that it was safe to swim because chlorine could help kill the virus, and that proved to be a big boon to its business.

“On one end, it was a way for people to have a normal day and on the other, it helped give owners a way to earn an income, at a time when many people were being affected financially,” Laskin told TechCrunch.

Business took off in 2020 with revenue growing 4,000% and now Swimply is announcing a $10 million Series A round. Norwest Venture Partners led the financing, which also included participation from Trust Ventures and a number of angel investors such as Poshmark founder and CEO Manish Chandra; Rob Chesnut, former general counsel and chief ethics officer at Airbnb; Ancestry.com CEO Deborah Liu and Michael Curtis. 

Swimply is now operating in a total of 125 U.S. markets, two markets in Canada and five markets in Australia. It plans to use its new capital in part to expand into new markets and toward product development.

Image Credits: Swimply

The way it works is pretty straightforward. Swimply simply connects homeowners that have underutilized backyard spaces and pools with those seeking a way to gather, cool off or exercise, for example. People or families can rent pools by the hour, ranging in price from $15 to $60 per hour (at an average of $45/hour) depending on the amenities. New markets that Swimply has recently expanded to include Portland, Oregon; Raleigh, NC and the California cities of Oakland, San Luis Obispo and Los Gatos. 

“The shifting mindset from younger generations about ownership is a huge contributor to increased growth of the Swimply marketplace,” said co-founder Weinberger, who serves as Swimply’s COO. “Swimming is the third most popular activity for adults and number one for children, and yet no other company has tackled the aquatic space to make swimming more affordable and accessible…until now.”

While the company declined to provide hard revenue figures, Laskin said Swimply was seeing “7 digits a month in revenue” and 15,000 to 20,000 reservations a month. Families represent the most popular reservation.

“People can book and pay through our platform, and only 20% of hosts ever meet their guests,” Laskin said. “We’re enabling a new kind of consumer behavior with what we’re doing.”

The company is planning to use its new capital to also rebuild much of its tech infrastructure and boost its customer support team to be more “readily available.”

It is also now offering a complimentary up to $1 million worth of insurance per booking for liability as well as $10,000.

Swimply has a little over 20 employees, up 10 times from 2 people in December of 2020. It plans to double that number over the next few months.

The company’s model has proven quite lucrative for some owners, according to Laskin.

“Last year, there were some owners who earned $10,000 a month. One owner in Denver earned $50,000 last year and he had signed up toward the end of the summer. He should make over $100,000 this year,” Lasken projects.

Its only criteria is that owners offer a clean pool. Eighty five percent of hosts offer restrooms as well. If they don’t, they are limited to one-hour reservations with a max of five guests. Swimply has also partnered with local pool companies, and if they pay one of its owners a visit and certify that pool, that owner gets a badge on the site “so guests get an additional level of security,” Laskin said.

Ed Yip of Norwest Venture Partners admits that when he first heard of the concept of Swimply, he “didn’t know what to make of it.”

But the more he heard about it, the more excited he got.

“This is the holy grail for a consumer investor. We’re not changing consumer behavior, but rather productize the experience and make it safer and easier on both sides,” Yip told TechCrunch.

What also gets the investor excited is the potential for Swimply beyond just swimming pools in the future.

“We’re seeing a ton of demand from hosts wanting to list hot tubs and tennis courts, for example,” Yip said. “So this can turn into a marketplace for shared outdoor resources and that’s a huge market opportunity that adds value on both sides.”

Indeed, the concept of monetizing underutilized space is a growing concept. Earlier this year, we reported on Neighbor, which operates a self-storage marketplace, raising $53 million in a Series B round of funding. Neighbor’s unique model aims to repurpose under-utilized or vacant space — whether it be a person’s basement or the empty floor of an office building — and turn it into storage.

 

 

Sprout.ai raises $11m Series A led by Octopus Ventures to apply AI to insurance claims

It was way back in 2018 that Omni:us appeared to disrupt the insurance market by applying AI to this most legacy of all industries. It has now gone on to raise $44.1 million. In a similar vein, Shift Technology in France has raised $100 million.

Now a UK startup aims to do something similar, but this time it will be coming out of the key market of the UK, where the insurance industry is enormous.

Sprout.ai is an insurtech startup that use AI to help instance companies to settle claims within 24 hours. It’s now raised £8m/$11m Series A round led by Octopus Ventures. The round was joined by existing investors, Amadeus Capital Partners, Playfair Capital and Techstars. It was Seed funded buy Amadeus in 2020.

Sprout.ai supplies global insurers, such as Zurich, with a product that applies NLP and OCR to insurance claims (which might involve such as handwritten doctors’ notes for instance) to enable them to be resolved faster, in not a dissimilar fashion to Omni:us and SHift. Sprout.ai says it now has deployments in Europe, South America and APAC.

Niels Thoné, CEO of Sprout.ai, said in a statement: “Sprout.ai’s mission is to revolutionize customer service within global claims automation. Our innovative and industry-leading AI claims engine is poised to solve the current market inefficiencies, allowing insurers to focus on customers in their moments of need.”

Nick Sando, early-stage fintech investor at Octopus Ventures, said: “We are often at our most vulnerable when we submit insurance claims, and it doesn’t help when we then have to wait another month for it to be processed. Sprout.ai empowers insurers to process claims in a fraction of the time, creating much better outcomes for customers when they need it most.”

As we can see, the market is hotting up for this kind of service, so it will be interesting see if these startups end up ‘land-locked’ to their language markets or not. Certainly, I can see M&A opportunities for whoever starts to lead the pack.

For Trump and Facebook, judgment day is around the corner

Facebook unceremoniously confiscated Trump’s biggest social media megaphone months ago, but the former president might be poised to snatch it back.

Facebook’s Oversight Board, an external Supreme Court-like policy decision making group, will either restore Trump’s Facebook privileges or banish him forever on Wednesday. Whatever happens, it’s a huge moment for Facebook’s nascent experiment in outsourcing hard content moderation calls to an elite group of global thinkers, academics and political figures and allowing them to set precedents that could shape the world’s biggest social networks for years to come.

Facebook CEO Mark Zuckerberg announced Trump’s suspension from Facebook in the immediate aftermath of the Capitol attack. It was initially a temporary suspension, but two weeks later Facebook said that the decision would be sent to the Oversight Board. “We believe the risks of allowing the President to continue to use our service during this period are simply too great,” Facebook CEO Mark Zuckerberg wrote in January.

Facebook’s VP of Global Affairs Nick Clegg, a former British politician, expressed hope that the board would back the company’s own conclusions, calling Trump’s suspension an “unprecedented set of events which called for unprecedented action.”

Trump inflamed tensions and incited violence on January 6, but that incident wasn’t without precedent. In the aftermath of the murder of George Floyd, an unarmed Black man killed by Minneapolis police, President Trump ominously declared on social media “when the looting starts, the shooting starts,” a threat of imminent violence with racist roots that Facebook declined to take action against, prompting internal protests at the company.

The former president skirted or crossed the line with Facebook any number of times over his four years in office, but the platform stood steadfastly behind a maxim that all speech was good speech, even as other social networks grew more squeamish.

In a dramatic address in late 2019, Zuckerberg evoked Martin Luther King Jr. as he defended Facebook’s anything goes approach. “In times of social turmoil, our impulse is often to pull back on free expression,” Zuckerberg said. “We want the progress that comes from free expression, but not the tension.” King’s daughter strenuously objected.

A little over a year later, with all of Facebook’s peers doing the same and Trump leaving office, Zuckerberg would shrink back from his grand free speech declarations.

In 2019 and well into 2020, Facebook was still a roiling hotbed of misinformation, conspiracies and extremism. The social network hosted thousands of armed militias organizing for violence and a sea of content amplifying QAnon, which moved from a fringe belief on the margins to a mainstream political phenomenon through Facebook.

Those same forces would converge at the U.S. Capitol on January 6 for a day of violence that Facebook executives characterized as spontaneous, even though it had been festering openly on the platform for months.

 

How the Oversight Board works

Facebook’s Oversight Board began reviewing its first cases last October. Facebook can refer cases to the board, like it did with Trump, but users can also appeal to the board to overturn policy decisions that affect them after they exhaust the normal Facebook or Instagram appeals process. A five member subset of its 20 total members evaluate whether content should be allowed to remain on the platform and then reach a decision, which the full board must approve by a majority vote. Initially, the Oversight Board was only empowered to reinstate content removed on Facebook and Instagram, but in mid-April began accepting requests to review controversial content that stayed up.

Last month, the Oversight Board replaced departing member Pamela Karlan, a Stanford professor and voting rights scholar critical of Trump, who left to join the Biden administration. Karlan’s replacement, PEN America CEO Susan Nossel, wrote an op-ed in the LA Times in late January arguing that extending a permanent ban on Trump “may feel good” but that decision would ultimately set a dangerous precedent. Nossel joined the board too late to participate in the Trump decision.

The Oversight Board’s earliest batch of decisions leaned in the direction of restoring content that’s been taken down — not upholding its removal. While the board’s other decisions are likely to touch on the full spectrum of frustration people have with Facebook’s content moderation preferences, they come with far less baggage than the Trump decision. In one instance, the Oversight Board voted to restore an image of a woman’s nipples used in the context of a breast cancer post. In another, the board decided that a quote from a famous Nazi didn’t merit removal because it wasn’t an endorsement of Nazi ideology. In all cases, the Oversight Board can issue policy recommendations, but Facebook isn’t obligated to implement them — just the decisions.

Befitting its DNA of global activists, political figures and academics, the Oversight Board’s might have ambitions well beyond one social network. Earlier this year, Oversight Board co-chair and former Prime Minister of Denmark Helle Thorning-Schmidt declared that other social media companies would be “welcome to join” the project, which is branded in a conspicuously Facebook-less way. (The group calls itself the “Oversight Board” though everyone calls it the “Facebook Oversight Board.”)

“For the first time in history, we actually have content moderation being done outside one of the big social media platforms,” Thorning-Schmidt declared, grandly. “That in itself… I don’t hesitate to call it historic.”

Facebook’s decision to outsource some major policy decisions is indeed an experimental one, but that experiment is just getting started. The Trump case will give Facebook’s miniaturized Supreme Court an opportunity to send a message, though whether the takeaway is that it’s powerful enough to keep a world leader muzzled or independent enough to strike out from its parent and reverse the biggest social media policy decision ever made remains to be seen.

If Trump comes back, the company can shrug its shoulders and shirk another PR firestorm, content that its experiment in external content moderation is legitimized. If the board doubles down on banishing Trump, Facebook will rest easy knowing that someone else can take the blowback this round in its most controversial content call to date. For Facebook, for once, it’s a win-win situation.