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Yahoo spins out Vespa, its search tech, into an independent company

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Yahoo, otherwise known as the company that pays my salary (full disclosure: Yahoo owns TC), today announced that it’s spinning off Vespa, the big data serving engine, into an independent venture.

Jon Bratseth, previously a VP architect in the big data and AI group at Yahoo and one of the main contributors to Vespa, has been appointed CEO.

Yahoo says it’ll continue to invest in Vespa (with cash) and remain its largest customer following the spin-out. Yahoo will also own a stake in Vespa and hold a seat on the spun-out firm’s board of directors.

Yahoo created Vespa back in 2005 after acquiring paid search service provider Overture, and, through it, a Norwegian search engine called AlltheWeb.com. Working with the e-commerce division within Yahoo, the AllTheWeb team of roughly 30 people retooled their search tech into a more general-purpose tool that Yahoo developers could use internally to compute over large-scale data sets in real time

Over the next decade or so, Yahoo expanded Vespa along several directions, enabling the tool to handle input beyond text strings, personalize content based on users’ click-through histories and take direction from machine learning algorithms. Then, in 2017, Yahoo open-sourced Vespa, hoping to rally developer support behind the software — and foster something of an ecosystem both internally and externally.

It was arguably Yahoo’s biggest open source software release since Hadoop in 2006, involving a substantial rewrite of the Vespa codebase by the Vespa group, still based in Norway. And it evidently paid off. Today, Vespa drives searches and related-article recommendations on Yahoo-owned sites like Flickr, and performs ad targeting on Yahoo-branded web properties such as Yahoo Sports, Yahoo Finance, Yahoo News and Yahoo’s advertising network.

Yahoo claims that it’s using around 150 apps created with Vespa, and that these apps collectively serve a user base of a billion people — processing 800,000 queries per second.

Outside of Yahoo, thousands of brands, including Spotify, OkCupid and Wix, now use either the open source release of Vespa or the cloud-hosted, fully managed version sold by Yahoo, Vespa Cloud. And Vespa’s open source package has been downloaded over 10 million times.

While there’s a number of open source alternatives to Vespa available, including Solr and ElasticSearch, Yahoo makes the case that Vespa goes “several steps further” than what’s on the market.

“The biggest differentiator stems from our vision of providing for the complete needs of any application that combines data and AI at scale online,” Bratseth told me via email. “We have a very experienced team who are all working on improving Vespa to this vision, and a culture of continuously shipping improvements, and — from what I can see — we’re still moving much faster than any others.”

So why spin Vespa out into its own company? Capacity, Bratseth says.

“A growing number of companies are asking to deploy their applications to our cloud service, and we’ll have more capacity to build out this functionality as a standalone,” he told me.

I wonder whether Yahoo’s plan to return to the public markets had something to do with the move, too. But neither Bratseth nor Lara Davis, Yahoo’s chief strategy officer, would confirm or deny this. (I tried to reach Yahoo CEO Jim Lanzone for comment through a Yahoo spokesperson, but was told he was traveling.)

“Since 2017, Vespa has been helping customers perform a variety of AI-powered tasks: searching millions of documents within a global organization, serving better data-driven online ads or allowing AI-based language apps the ability to scale,” Davis said. “We know Vespa is the market-leading technology for doing that at scale, so the opportunity for Yahoo to continue as both an investor and customer, continuing to root for their success, is a phenomenal outcome for everyone. As part of the deal we are migrating key proprietary and battle-tested platform technology to Vespa and will continue to support many of their systems as they transition to an independent company.”

Lazone did give a canned statement more or less echoing what Davis said:

“Vespa has been a critical component to Yahoo’s AI and machine learning capabilities across all of our properties for many years,” he said in a press release. “While remaining Vespa’s biggest customer and a key investor, we’ll continue to leverage all that Vespa has to offer while simultaneously creating a new business opportunity that allows other companies to harness its technology as an independent entity.”



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Affirm launches in the UK, as ‘buy now, pay later’ market faces regulatory overhaul

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Buy now, pay later (BNPL) giant Affirm is launching in the U.K., its first market outside North America.

Its long-anticipated arrival comes as U.K. lawmakers mull new rules to bring BNPL firms into line with other traditional consumer credit services, though such laws aren’t expected to come into effect until at least 2026 — long enough for Affirm to build traction, and curry favor with consumers and regulators alike.

Founded in 2012, Affirm emerged from a startup incubator called HVF, setup by PayPal co-founder Max Levchin (pictured above) who eventually took the reins at Affirm in 2014 to drive its commercial push. The company expanded beyond the U.S. and into Canada in 2022, and it has struck lucrative partnerships with major ecommerce companies through the years — Affirm has been Shopify’s major financing partner for close to a decade, not to mention Walmart, and Amazon, which tapped Affirm as Amazon Pay’s first BNPL partner in the U.S. last year. More recently, Affirm also secured the mighty Apple as a customer.

‘Normalizing debt’

The BNPL model is simple: customers are invited to purchase goods on credit, repaying the debt in several interest-free instalments, with the BNPL provider monetizing through merchant fees. Or, where the customer may require a longer repayment period, the loan may include interest, too.

The BNPL market has long been on the U.K. regulatory radar, with incumbents such as Klarna and Clearpay often criticized for encouraging impulse buying and normalizing debt. The U.K.’s Financial Conduct Authority (FCA) has hitherto had some power to keep BNPL providers in check, but there are key exemptions, such as services that involve interest-free credit, where fixed-sum agreements stipulate that debts be repaid within 12 months.

But new rules in the works could bring BNPL companies fully in line with other consumer credit companies. The Labour government last month announced a fresh BNPL consultation, with plans to introduce regulation to “ensure people using BNPL products receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise.”

It’s clear that Affirm is already pushing to position itself favorably both with patrons and the the powers-that be. Indeed, the company notes for the U.K. launch that its interest-bearing payment options won’t involve compound interest — instead, interest will be fixed, and calculated entirely on the original amount borrowed.

It’s also worth noting that Klarna started charging late fees in the U.K. last year, and this is one area where Affirm is setting out to differentiate — it says it won’t be charging late fees or any other “hidden charges.”

Head-to-head

It has been a bumpy few years for the BNPL sector. Klarna was valued at more than $45 billion in 2021, a figure that swiftly plummeted by 85% to $6.5 billion following the great post-pandemic “correction” many companies endured — however, news emerged last week that Klarna’s valuation has risen again to $14.6 billion. It has been a similar turbulent time for Affirm, whose ups and downs have followed a trajectory reminiscent of its European rival.

Following its 2021 IPO, Affirm saw its market cap hit the giddy heights of $47 billion, but its stock took a giant hit, with its market capitalization dropping below $3 billion last year. However, Affirm’s shares have surged to more than $13 billion in 2024, with the NASDAQ-listed company recently reporting a Q4 year-on-year revenue jump of 48%, and losses dropping from $206 million to $45 million. Levchin also predicted profitability in 2025.

We’ve known for some time that the U.K. was likely going to be Affirm’s next port-of-call outside the U.S. and Canada, with the firm’s chief revenue officer Wayne Pommen going on record to say that it would be targeting markets where some of its largest existing partners already have a presence.

For its U.K. launch, there aren’t any of the same big-name brands it has domestically, but the fact that it counts the likes of Amazon, Shopify, and Apple as customers in the U.S. means that it wouldn’t be a huge stretch to expand such commercial partnerships to the U.K. For now, though, Affirm is going to market with the like of flight booking site Alternative Airlines and payments processor Fexco, with “additional UK and international brands expected to follow.”

In the build up to today’s launch, Affirm told TechCrunch that it has already hired in the region of 30 employees, including Ruth Spratt who’s leading the local charge, while it’s also looking to add to its headcount through the remainder of the year. And similar to its remote-first ethos elsewhere, workers aren’t tethered to a particular physical hub.

The company wouldn’t confirm its next plans for growth in Europe or elsewhere, though it said that it would be “taking the same disciplined approach” that it has always done to any future expansion.



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OpenAI has hired the co-founder of Twitter challenger Pebble

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Gabor Cselle, the former CEO and co-founder of X challenger Pebble, has joined OpenAI to work on a secretive project.

Cselle, who according to LinkedIn has been employed at OpenAI since October, announced the news in a post on X yesterday. “Will share more about what I’m working on in due time,” he wrote. “Learning a lot already.”

Cselle is a repeat founder who sold his first company, the Y Combinator-based mobile email startup reMail, to Google. His second company, the native advertising startup Namo Media, he sold to Twitter before Elon Musk purchased the social network and rebranded it to X.

Nearly a decade ago, Cselle worked at Twitter as a group product manager, focusing on the home timeline, user onboarding, and logged-out experiences. Cselle left Twitter in 2016 for Google, where he was director at the tech giant’s Area 120 incubator for spin-offs.

Cselle began working on Pebble, originally called T2, in 2022 with Michael Greer, Discord’s ex-engineering head. Pebble, whose microblogging service emphasized safety and moderation, grew to a small but engaged community and raised funding from angles including Android co-founder Rich Miner.

Ultimately, though, Pebble struggled to maintain meaningful growth. The company shut down last October, reemerging as a Mastodon instance in November.

In May, Cselle joined the accelerator South Park Commons, where he worked on a range of generative AI prototypes including an homage to the viral HQ Trivia.

Csell’s hiring reveal comes the same weekend as OpenAI rival Anthropic gains its own high-profile recruit: Embark founder Alex Rodrigues. Rodrigues, who led autonomous trucking firm Embark through a SPAC merger in 2021 (and subsequent fire sale to Applied Intuition in 2023), said on Friday that he’d be joining Anthropic as an AI safety researcher.



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Women in AI: Sophia Velastegui believes AI is moving too fast

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As a part of TechCrunch’s ongoing Women in AI series, which seeks to give AI-focused women academics and others their well-deserved (and overdue) time in the spotlight, TechCrunch interviewed Sophia Velastegui. Velastegui is a member of the National Science Foundation’s (NSF) national AI advisory committee and the former chief AI officer at Microsoft’s business software division.

Velastegui didn’t plan on having a career in AI. She studied mechanical engineering as a Georgia Tech undergrad. But after a job at Apple in 2009, she became fascinated by apps — especially AI-powered ones.

“I started to recognize that AI-infused products resonated with customers, thanks to the feeling of personalization,” Velastegui told TechCrunch. “The possibilities seemed endless for developing AI that could make our lives better at small and large scale, and I wanted to be a part of that revolution. So I started seeking out AI-focused projects and took every opportunity to expand from there.”

AI-forward career

Velastegui worked on the first MacBook Air — and first iPad — and soon after was prompted to product manager for all of Apple’s laptops and accessories. A few years later, Velastegui moved into Apple’s special projects group, where she helped to develop CarPlay, iCloud, Apple Maps, and Apple’s data pipeline and AI systems.

In 2015, Velastegui joined Google as head of silicon architecture and director of the company’s Nest-branded product line. After a brief stint at audio tech company Doppler Labs, she accepted a job offer at Microsoft as general manager of AI products and search.

At Microsoft, where Velastegui eventually came to lead all business app-related AI initiatives, Velastegui guided teams to infuse products such as LinkedIn, Bing, PowerPoint, Outlook, and Azure with AI. She also spearheaded internal explorations and projects built with GPT-3, OpenAI’s text-generating model, to which Microsoft had recently acquired the exclusive license.

“My time at Microsoft truly stands out,” Velastegui said. “I joined the company when it was in the midst of huge changes under CEO Satya Nadella’s leadership. Mentors and peers advised me against making that jump in 2017 because they viewed Microsoft as lagging in the industry. But in a short window, Microsoft had started making real headway in AI, and I wanted in.”

Velastegui left Microsoft in 2022 to start a consulting firm and head product development at Aptiv, the automotive tech company. She joined the NSF’s AI committee, which collaborates with industry, academia, and government to support basic AI research, in 2023.

Navigating the industry

Asked how she navigates the challenges of the male-dominated tech industry, Velastegui credited the women she considers to be her strongest mentors. It’s important that women support each other, Velastegui says — and, perhaps more importantly, that men stand up for their female co-workers.

“For women in tech, if you’ve ever been part of a transformation, adoption, or change management, you have a right to be at the table, so don’t be afraid to take your seat there,” Velastegui said. “Raise your hand to take on more AI responsibilities, whether it’s part of your current job or a stretch project. The best managers will support you and encourage you to keep pushing ahead. But if that’s not feasible in your 9-5, seek out communities or university programs where you can be part of the AI team.”

A lack of diverse viewpoints in the workplace (i.e. AI teams made up mostly of men) can lead to groupthink, Velastegui notes, which is why she advocates that women share feedback as often as they can.

“I strongly encourage more women to get involved in AI so our voices, experiences, and points of view are included at this critical inception point where foundational AI technologies are being defined for now and the future,” she said. “It’s critical that women in every industry really lean into AI. When we join the conversation, we can help shape the industry and change that power imbalance.”

Velastegui says that her work now, with the NSF, focuses on tackling outstanding fundamental issues in AI, like a lack of what she calls “digital representation.” Biases and prejudices pervade today’s AI, she avers, in part due to the homogenous makeup of the companies developing it.

“AI is being trained on data from developers, but developers are mostly men with specific perspectives, and represent a very small subset of the 8 billion people in the world,” she said. “If we’re not including women as developers and if women aren’t providing feedback as users, then AI will not represent them at all.”

Balancing innovation and safety

Velastegui sees the AI industry’s breakneck pace as a “huge issue” — absent a common ethical safety framework, that is. Such a framework, were it ever to be widely embraced, could allow developers to build systems with speed without stifling innovation, she believes.

But she’s not counting on it.

“We’ve never seen technology this transformative evolve at such a relentless pace,” Velastegui said. “People, regulation, legacy systems … nothing has ever had to keep up at the current speed of AI. The challenge becomes how to stay informed, up-to-date, and forward-thinking, while also aware of the dangers if we move too fast.”

How can a company — or developer — create AI products responsibly today? Velastegui champions a “human-centered” approach with learning from past mistakes and prioritizing the well-being of users at its core.

“Companies should empower a diverse, cross-functional AI council that reviews issues and provides recommendations that reflect the current environment,” Velastegui said, “and create channels for regular feedback and oversight that will adapt as the AI system evolves. And there should be channels for regular feedback and oversight that will adapt as AI systems evolves.”



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