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Tensions Rise in Silicon Valley Over Sales of Start-Up Stocks

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Sohail Prasad, an entrepreneur, launched a fund in March called the Destiny Tech100. The fund owns shares in hot tech start-ups like the payments firm Stripe, the rocket maker SpaceX and the artificial intelligence company OpenAI.

Few people get the chance to invest in these privately held companies since their shares are not openly traded. Mr. Prasad’s intention with Destiny was to let the rest of the world get a piece of them through his fund.

But soon after Destiny debuted, two tech start-ups — Stripe and Plaid, a banking service — said the fund did not legally own their shares. A competitor criticized Destiny as “too good to be true.” Robinhood, the stock trading app, stopped letting investors buy into the fund, saying it had been added to its app by mistake.

Mr. Prasad was not surprised by the uproar. It was a sign of “a true cultural movement in which DXYZ is at the forefront,” he said, referring to Destiny by its ticker symbol.

Tensions over the shadowy and often enigmatic market of private company stocks have reached a boiling point, just as the buying and selling of such shares has grown bigger than ever. At its center is an age-old debate: Should everyone have access to the riches and risks of investing in Silicon Valley start-ups?

The market for private company stocks, also known as the secondary market, is on track to hit a record $64 billion this year, up 40 percent from last year, according to Sacra, a research firm focused on private investments. A decade ago, the private company stock market was roughly $16 billion, according to Industry Ventures, a firm focused on secondary transactions.

As the appetite for private company shares has soared, so have the headaches. If a company is publicly traded, like Apple or Amazon, anyone can easily buy and sell its stock. But privately owned tech start-ups like Stripe typically have a small circle of owners, such as their founders and employees, as well as the wealthy individuals and venture capital firms that provided financing for the companies to grow. The companies’ stocks do not usually change hands.

Now, as these start-ups mature and don’t appear to be in a rush to go public, a wider range of investors are becoming eager to own their stock. New online marketplaces that match sellers of start-up stock with interested buyers have sprung up.

And funds like Destiny have appeared. Destiny is among the only options for retail investors, since most other funds and marketplaces are restricted to “accredited” investors with high incomes or net worth.

The activity has increasingly rattled some start-ups, which have long resisted letting their shares freely change hands. The more people who own their stock, the more unwieldy the number of shareholders, which can lead to difficulties complying with securities laws, among other complications. While some start-ups are allowing some trading of their stock, other trades are happening without permission.

“We’re coming to a point where something has to give,” said Noel Moldvai, the chief executive of Augment, a marketplace for private start-up shares.

Among the online marketplaces for buying and selling private company stocks is Hiive, which started in 2022. It is currently offering customers shares in Anthropic, a hot artificial intelligence start-up.

Hiive bought $50 million of Anthropic stock and is letting investors buy chunks as small as $25,000, said Sim Desai, the company’s chief executive. The site oversees an average of around $20 million in deals a week.

At Augment, which opened last year, investors interested in owning shares in Stripe can peruse four “sell orders,” or people trying to sell Stripe shares. Augment did more than $20 million of transactions in March, Mr. Moldvai said.

Some investment funds — including Stack Capital, Fundrise, Private Shares Fund and ARK Invest’s ARK Venture Fund — are also pitching the ability to own a piece of private start-ups. Destiny, which trades on the New York Stock Exchange and contains shares in 23 start-ups worth around $53 million, is one of a few options that are publicly traded.

The activity has alarmed some start-ups. Stripe, valued at $65 billion in the private market, has issued a strongly worded statement about offers to buy its stock. Any offer to invest in its shares that does not come from the company is “very likely a scam,” it said. Stripe has encouraged shareholders to report such offers to law enforcement.

Stripe and Anthropic declined to comment for this article.

Even so, people remain eager to get shares of the start-ups, said Jeff Parks, chief executive of Stack Capital, which offers investors access to companies including SpaceX and Canva, a design software start-up.

“You want to be on the golf course like, ‘Hey, I own some SpaceX,’” he said.

Private stock sales go back more than a decade — and have always felt a bit like the Wild West.

Before Facebook went public in 2012, its privately held shares changed hands on marketplaces such as SharesPost and SecondMarket. The Securities and Exchange Commission warned that such marketplaces were risky “for even savvy investors” and fined SharesPost $80,000 for not registering as a broker-dealer.

In the aftermath, start-ups tried restricting sales of their stock. But middlemen including Forge Global, then known as Equidate, found ways around it. They popularized “forward contracts,” which paid start-up employees cash if they pledged to transfer their company shares to an investor in the future.

Forward contracts caught on at start-ups like Airbnb. When Airbnb publicly listed its stock in 2020, Forge oversaw the transfer of $475 million of shares pledged by the vacation rental site’s employees to more than 100 investors.

“It was an administrative nightmare,” said Kelly Rodriques, Forge’s chief executive. Forge has since built technology to handle that process and no longer strikes forward contracts.

Some companies that have stayed private the longest, including Stripe, which is 14 years old, and SpaceX, which is 22 years old, have begun offering regular opportunities for employees to sell a portion of their stock at a set price.

Even though companies historically resisted the trading of their private stock, more are coming around to the idea, Mr. Rodriques said.

“The market has never been more accepting of secondary liquidity than it is now,” he said.

Mr. Prasad, a co-founder of Forge, left in 2019 to create Destiny. He raised $94 million in 2021 to buy stakes in start-ups with the plan of taking the fund public.

Mr. Prasad said his goal was to give more investors access to private start-up shares. “We’re trying to drive a world where it becomes less binary from being private to being public,” he said. Change, he added, “can make people uncomfortable at first.”

To obtain private company shares for the fund, he used forward contracts to buy $1.7 million of stock in Stripe and Plaid.

Both companies have bristled at Destiny’s claim to the shares. Such deals would violate its rules, Plaid said in a statement last month, and it “does not recognize shares acquired in this manner.”

Stripe also published a notice on its website. “We have become aware of certain investment funds that do not own any Stripe stock claiming to offer retail investors access to Stripe,” it said, warning that “their investments may have no value at all.” Stripe forbids forward contracts and has said such deals are void.

Mr. Prasad said he was confident that Destiny’s shares were legal.

Last month, Destiny’s share price soared, with the fund hitting a market capitalization of over $1 billion. A subsidiary of Ark Invest, the firm led by the well-known investor Cathie Wood, posted on social media that Destiny’s strategy was flawed because its market capitalization was so much higher than the value of its start-up investments. Ark offers a competing fund, the Ark Venture Fund, which is structured differently.

Ark declined to comment beyond a blog post in which it argued that its fund provided better access to private companies than funds like Destiny’s.

In response, Mr. Prasad posted an image of the “distracted boyfriend” meme, implying Ark was jealous of his fund, and the “waiting” meme from the Netflix show “Narcos,” implying Ark investors would take many years to liquidate their investments.

On April 16, Robinhood removed the ability to buy Destiny’s stock from its app. A Robinhood spokesman said that it did not allow closed-end funds, the type of investment fund used by Destiny, and that Destiny’s fund had been mistakenly labeled by one of its vendors as a stock.

Mr. Prasad revealed plans to raise more money to “accelerate our momentum.” But Destiny’s share price crashed. On Friday, it was trading at a market capitalization of $141 million.





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Inside OpenAI’s Library – The New York Times

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The two-story library has Oriental rugs, shaded lamps dotting its desks and rows of hardbacks lining its walls. It is the architectural centerpiece of the offices of OpenAI, the start-up whose online chatbot, ChatGPT, showed the world that machines can instantly generate their own poetry and prose.

The building, which was once a mayonnaise factory, looks like a typical tech office, with its communal work spaces, well-stocked micro-kitchens and private nap rooms spread across three floors in San Francisco’s Mission District.

But then there is that library, with the ambience of a Victorian Era reading room. Its shelves offer everything from Homer’s “The Iliad” to David Deutsch’s “The Beginning of Infinity,” a favorite of Sam Altman, OpenAI’s chief executive.

Built at Mr. Altman’s request and stocked with titles suggested by his staff, the OpenAI library is an apt metaphor for the world’s hottest tech company, whose success was fueled by language — lots and lots of language. OpenAI’s chatbot was not built like the average internet app. ChatGPT learned its skills by analyzing huge amounts of text that was written, edited and curated by humans, including encyclopedia articles, news stories, poetry and, yes, books.

The library also represents the paradox at the heart of OpenAI’s technology. Authors and publishers, including The New York Times, are suing OpenAI, claiming the company illegally used their copyrighted content to build its A.I. systems. Many authors worry that the technology will ultimately take away their livelihood.

Many OpenAI employees, on the other hand, believe the company is using human creativity to fuel more human creativity. They believe their use of copyrighted works is “fair use” under the law, because they are transforming these works into something new.

“To say that this is a public debate right now is an understatement,” said Shannon Gaffney, co-founder and managing partner of SkB Architects, the architectural firm that renovated OpenAI’s headquarters and designed its library. “Though things might look like they are going in different directions, the library serves as a constant reminder of human creativity.”

When OpenAI hired Ms. Gaffney’s firm to renovate the building in 2019, Mr. Altman said he wanted a library with an academic aura.

He wanted it to be a reminder of the Green Library, a Romanesque library at Stanford University, where he was a student for two years before dropping out to build a social media app; the Rose Reading Room, a Beaux-Arts study hall on the top floor of the New York Public Library in Midtown Manhattan; and the library-like bar inside the now defunct Nomad Hotel, 15 blocks south of the Rose.

“My dining room and living room at home is inside a library — floor-to-ceiling books all the way around,” Mr. Altman said in an interview. “There is something about sitting in the middle of knowledge on the shelves at vast scale that I find interesting.”

Many titles, like “English Masterpieces, 700-1900” and “Ideas and Images in World Art,” seem like the weighty hardbacks that professional decorators place strategically inside hotel lobbies because they look the part. Still, the library is a reflection of the organization that built it.

On a recent afternoon, two paperbacks sat beside each other at eye-level: “Birds of Lake Merritt” (a field guide to the birds found in a wildlife refuge in Oakland, Calif.) and “Fake Birds of Lake Merritt” (a parody written by GPT-3, an early version of the technology that drives ChatGPT).

Some employees see the library as a quieter place to work. Long Ouyang, an A.I. researcher, keeps a rolling desk against the wall. Others see it as an unusually elegant break room. On weekends, Ryan Greene, another researcher, pumps his digital music through the audio speakers tucked among the hardbacks.

It is, other employees said, a far more inspiring place to work than a cubicle. “This is why so many people choose to work in the library,” Ms. Staudacher said.

Recently, Mr. Greene began feeding lists of his favorite books into ChatGPT and asking for new recommendations. At one point, the chatbot recommended “The Book of Disquiet,” a posthumously published autobiography from the Portuguese writer Fernando Pessoa. A friend, who knew his tastes well, had recommended that he read the same book.

“Given the trends and patterns in things that have happened in the past, the technology can suggest things for the future,” Mr. Greene said.

Ms. Gaffney, from OpenAI’s architectural firm, argued that this blend of the human and the machine will continue. Then she paused, before adding: “That, at least, is what I hope and feel.”



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Why TikTok Users Are Blocking Celebrities

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As protests over the war in Gaza unfolded blocks away, last week’s Met Gala was largely devoid of political statements on the red carpet. That the organizers of fashion’s most powerful annual spectacle (one for which tickets cost $75,000 this year) achieved this proved surprising to many observers. Less than two weeks later, though, a fast-growing online protest movement is taking shape. At least, it is on TikTok, the social media platform that was a sponsor of the Met event.

Blockout 2024, also referred to as Operation Blockout or Celebrity Block Party, targets high-profile figures who participants feel are not using their profiles and platforms to speak out about the Israel-Hamas war and wider humanitarian crises. Here’s what has happened so far, what supporters hope to achieve and why it all began.

The criticism began on May 6, when Haley Kalil (@haleyybaylee on social media), an influencer who was a host on E! News before the event, posted a TikTok video of herself wearing a lavish 18th-century-style floral gown and headdress with audio from Sofia Coppola’s 2006 film “Marie Antoinette,” in which Kirsten Dunst proclaims, “Let them eat cake!”

The clip (for which Ms. Kalil later apologized and which was deleted) was viewed widely. Given the current global conflicts and humanitarian crises, critics described it as “tone deaf.” Then posts emerged comparing ostentatious costumes worn by celebrities on the Met red carpet to scenes from “The Hunger Games,” in which affluent citizens in opulent outfits wine and dine while watching the suffering of the impoverished districts for sport.

Images of Zendaya, a Met Gala co-chair, spliced with photographs of Palestinian children, incited the online masses. A rallying cry soon came from @ladyfromtheoutside, a TikTok creator who found inspiration in Ms. Kalil’s parroting of Marie Antoinette.

“It’s time for the people to conduct what I want to call a digital guillotine — a ‘digitine,’ if you will,” she said in a May 8 video post with two million views. “It’s time to block all the celebrities, influencers and wealthy socialites who are not using their resources to help those in dire need. We gave them their platforms. It’s time to take it back, take our views away, our likes, our comments, our money.”

“Block lists” of celebrities thought to be deserving of being blocked were published and widely shared online.

The movement is made up of pro-Palestinian supporters who have been assessing the actions and words of A-listers in order to decide if they have adequately responded to the conflict. If they have said nothing or not enough, the movement calls for those supporting Gaza to block that celebrity on social media. What constitutes sufficient action by the famous person — be it calls for a cease-fire, donations to aid charities or statements — appears unclear and can vary from celebrity to celebrity.

“Blockout” supporters argue that blocking is important because brands look at data on the followers and engagement of influencers and celebrities on social media before choosing whether to work with them to promote a product. Blocking someone on social media means you no longer see any posts from the person’s accounts, and it gives the blocker more control over who has access to their own updates and personal information. It can have more impact than unfollowing a celebrity account because many product deals thrive on targeted ads and views that can accumulate even if a user simply sees a post, without liking or sharing it.

If enough people block a content creator, it could reduce the creator’s ability to make money. Also, adherents of this thinking say, why follow someone whose values don’t align with yours?

Attendees with huge followings, like Zendaya, Kim Kardashian and Kylie Jenner, have been at the top of the chopping blocks. But so have celebrities who didn’t attend the gala this year, including Justin Bieber, Taylor Swift and Selena Gomez.

Vogue, which according to Puck News published 570 Met Gala stories on its platforms and recorded more than a billion video views of content from the night, has also been targeted because of its ties to the event.

“The Met Gala is by far and away Vogue’s biggest cash cow,” Elaina Bell, a former Vogue employee, said in a TikTok post with 850,000 views. She explained that the event sold sponsorships “based on the data of past events,” adding, “How the Met Gala is seen is so important to the bottom line of Vogue specifically but also to Condé Nast.”

It certainly raised some eyebrows. The dress code was “The Garden of Time,” inspired by the J.G. Ballard short story of the same name. It’s an allegorical tale about an aristocratic couple isolated in their estate of fading beauty harassed by an enormous crowd preparing to overrun and destroy the space. Rather on the nose.

Yes. Some posts say the blockout is a negative example of “cancel culture.” Others suggest that, like other social media-led movements, it is digital posturing that generates little meaningful change.

Some argue that celebrities do not have a duty (or the awareness) to speak out on complicated geopolitical issues, and they question why it matters what famous people think about those issues, anyway. Others feel the movement has blurred parameters, given that some A-listers, like Jennifer Lopez and Billie Eilish, have previously shown support for a cease-fire in Gaza but are being punished for not speaking up now.

Several stars on the widely circulated block lists, including Lizzo and the influencer Chris Olsen, posted their first public videos asking followers to donate in support of aid organizations serving Palestinians. Blockout supporters have also worked to “boost” celebrities who have recently spoken about the conflict, like Macklemore, Dua Lipa and The Weeknd.

According to metrics from the analytics company Social Blade, many names on block lists have lost tens or hundreds of thousand of followers per day since the “digitine” began. But murky claims that stars like Kim Kardashian have lost millions of followers are unsubstantiated.

Will more A-listers start speaking out on the red carpet as a result of the lists? It is too soon to tell. But for frequent users of TikTok, the brand aura of the Met Gala is being profoundly altered. And while social-media-led boycotts are by no means unprecedented, this latest movement is a clear example of the growing power of creators to redistribute or even weaponize ​platforms that are cornerstones of a modern celebrity-centric — and capitalist — system.





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Grand Theft Auto maker firms up GTA 6 release date

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The latest instalment of the hugely popular series will be released in autumn 2025, its publisher says.



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