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‘You Have Blood on Your Hands’ Senator Lindsay Graham Tells Mark Zuckerberg During Spirited Senate Hearing

We recommend you listen to the below story. The senators don’t hold back…

The Story: Yesterday, the U.S. senate held a lively hearing with top social media CEOs including Meta’s Mark Zuckerberg, TikTok’s Shou Zi Chew, and X’s Linda Yaccarino. The conversation with the tech leaders revolved around what they are doing to protect children from harmful content on their platforms.

Republican Senators Lindsay Graham, Josh Hawley, Ted Cruz, and Tom Cotton were among the loudest critics during the hearing.

Hawley combatively asked Zuckerberg about the Senate testimony of a former Meta senior executive whistleblower who testified under oath, attesting many alarming stats. The whistleblower claimed that 37% of girls between 13 and 15 years old reported that they had been exposed to unwanted nudity on Instagram in the last seven days. 24% said they had experienced unwanted sexual advances on the app in the last seven days. And 17% said they had encountered self-harm content in the last seven days.

After interrogating Zuckerberg about the dangers of social media use for kids, Senator Hawley asked him to apologize to the victims of Meta’s platforms. Zuckerberg stood up, faced the families, and robotically said: “It's terrible. No one should have to go through the things that your families have suffered.” He continued, “And this is why we invest so much and are going to continue doing industry-leading efforts to make sure that no one has to go through the things your families have had to suffer.”

The families Zuckerberg was facing and speaking to all had a family member whose online experiences on Meta’s platforms led to them being cyber-bullied, developing body dysmorphia, self-harming, or even committing suicide.

South Carolina Republican Senator Lindsay Graham didn’t pull any punches when it was his turn to berate Meta’s CEO. In a slow southern drawl, he said, “Mr. Zuckerberg… you have blood on your hands. You have a product that’s killing people.”

Graham likened the danger of social media to cigarettes, but made the point that when cigarettes were killing people, the US government “did something about it.” He lamented that “nothing can be done” about the harms of social media as he believes Zuckerberg “can’t be sued.”

Tik Tok’s CEO Shou Zi Chew didn’t escape the torrent of accusatory questions either. Arkansas Republican Senator Tom Cotton interrogated the Singaporean CEO for several minutes on his ties to the Chinese Communist Party, to which Chew replied multiple times, “I’m Singaporean.”

Although the leaders of the most popular social media platforms took a verbal beating during the Senate hearing yesterday, there’s likely little that will be done legislatively. No meaningful bills have been passed by the US Congress relating to requirements for the protection of children on social media platforms.

We recommend you listen to the above story. The senators don’t hold back…

Chicago Emerges as One of Venture’s Most Diverse Markets

The Story: Chicago:Blend, a nonprofit focused on promoting diversity, equity, and inclusion in Chicago’s venture capital and startup community, just released a five-year startup diversity report surveying how top American cities invest in and support diverse founders.

Since its founding in 2018, the nonprofit has published an annual report of data collection on Chicago and other major venture markets, which include New York, San Francisco, Austin, Boston, Los Angeles, Atlanta, Seattle, Miami, and Denver. The Chicago:Blend team are “big believers that you can’t improve what you don’t measure.”

Here are key findings from the Startup Diversity Report:

The share of venture-backed companies in Chicago founded by a diverse founder over the last five years:

• 36.5% had at least one woman founder—the highest percentage of any city included in the report.

• 24.4% had at least one founder of color—the second highest percentage of any city.

• 10.4% had at least one Black or African American founder—the second highest percentage of any city after only Atlanta.

• 8% had at least one Latine founder—the second highest percentage of any city after only Miami.

• 5.9% had at least one AAPI founder—the second highest percentage of any city after only San Francisco.

The share of VC funding raised by diverse founders in Chicago over the last five years:

• 44% went to companies founded by people of color – the second highest percentage of any city in this report.

• 14.9% went to companies founded by women in the last five years – the third lowest percentage of any city in this report.

• 27.6% went to companies founded by Latine founders in the last five years–the highest percentage of any city in this report.

• 14.1% went to companies founded by AAPI founders in the last five years–the third highest percentage of any city in this report.

• Just 2.4% went to companies founded by Black founders in the last five years–the fifth highest percentage of any city in this report.

Expert Take: Joey Mak, CEO of Chicago:Blend says, “We found that Chicago has outperformed several other cities in significant and meaningful ways that we should be proud of as a city, and this data proves that Chicago is increasingly becoming a great city for underrepresented founders and VCs to conduct business.”

But Mak isn’t satisfied with these results yet. He says, “That being said, other funding inequities persist, reminding us of the work that lies ahead on our shared journey toward building a more inclusive VC and startup ecosystem.”

The Hottest Investment in 2024: Vertical AI Applications

The Story: It’s no secret that artificial intelligence is the darling of venture capital investing.

According to PitchBook data, $29.1 billion dollars was invested across 691 generative AI deals in 2023—a 268% increase from the previous year. 2023 saw the artificial intelligence industry receive nearly $50 billion in funding, the second-highest figure in the market’s history.

Last year’s headlines mostly focused on what is known as horizontal AI, which is general-purpose, ubiquitous artificial intelligence that tends to look like large language models such as Chat GPT. These applications are usually a safe bet for venture capital, but investing into them is extremely expensive.

Notable companies to receive big checks include OpenAI ($10B), Anthropic ($7B), and Inflection ($1.3B). And as expected, the big AI startups were funded by the big investors. Microsoft, Amazon, and Google all led multi-billion dollar fundraises for these companies.

Naturally, venture capital firms with smaller budgets missed out on the best of the AI gold rush as their fund sizes couldn’t compete with the bigger players. But another AI opportunity has arisen for firms with fewer assets under management—startups focusing on vertical AI.

In an interview with PitchBook’s Leah Hodgson, Pender Ventures’s partner Isaac Souweine, explained that, “On the horizontal side, it’s an arms race…It’s insanely expensive, and a lot of investors don’t have the capital to place these huge bets. Vertical markets are easier to play in. You can still invest in the AI revolution, but you don’t have to come with a massive mega-fund to do it.”

As the sophistication of large language models increases, many new vertical AI applications are being tailor-made for specific industries. And startups that make them have become an enticing bet for 2024’s venture markets.

Expert Take: Parker McKee, principal at Pillar VC, thinks the specialized applications of vertical AI “is certainly one of” the biggest investment opportunities that will catch venture’s eye in 2024.

The affordability of vertical applications is what makes them enticing, according to McKee. He says, “The ticket size for a salary is so much larger, often an order of magnitude larger, than what you would just charge for a tool. I think because of that, you’re going to see some really interesting business opportunities emerge and I suspect that VCs will not miss out.”

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