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Tesla to cut workforce by 7% and focus on Model 3 production

Tesla is cutting 7 percent of its full-time workforce. The company disclosed the headcount reduction in an update emailed to all employees and also posted to its website.
In the email, CEO Elon Musk says the focus must be on delivering “at least the mid-range Model 3 variant in all markets.” He also warns those employees not set to be axed that there are “many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive.”
“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors,” he writes.
“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.”
Last October Musk tweeted that Tesla’s headcount was 45,000 — suggesting some 3,150 jobs are set to go.
The move follows a number of cost-cutting efforts at the electric car maker, including an announcement this week that a long-running buyer referral program will end this month. Musk said the program was adding too much cost to the cars.
Three months ago Tesla also announced a new, cheaper mid-range battery version of the car — starting at $45,000; though still not the $35,000 base-spec Model 3 (before incentives) that was originally promised.
His full note to employees is pasted below.
CNBC reports that Tesla shares fell almost 6 percent in premarket trading following the news.

Company Update

January 18, 2019

This morning, the following email was sent to all Tesla employees:
As we all experienced first-hand, last year was the most challenging in Tesla’s history. However, thanks to your efforts, 2018 was also the most successful year in Tesla’s history: we delivered almost as many cars as we did in all of 2017 in the last quarter alone and nearly as many cars last year as we did in all the prior years of Tesla’s existence combined! Model 3 also became the best-selling premium vehicle of 2018 in the US. This is truly remarkable and something that few thought possible just a short time ago.
Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels. While we have made great progress, our products are still too expensive for most people. Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors. The net effect is that Tesla must work much harder than other manufacturers to survive while building affordable, sustainable products.
In Q3 last year, we were able to make a 4% profit. While small by most standards, I would still consider this our first meaningful profit in the 15 years since we created Tesla. However, that was in part the result of preferentially selling higher priced Model 3 variants in North America. In Q4, preliminary, unaudited results indicate that we again made a GAAP profit, but less than Q3. This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit.
However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles. Moreover, we need to continue making progress towards lower priced variants of Model 3. Right now, our most affordable offering is the mid-range (264 mile) Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.
Sorry for all these numbers, but I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult. This is not new for us – we have always faced significant challenges – but it is the reality we face. There are many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive. Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.
As a result of the above, we unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors. Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.
To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you.
For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world. Full self-driving, Model Y, Semi, Truck and Roadster on the vehicle side and Powerwall/pack and Solar Roof on the energy side are only the start.
I am honored to work alongside you.
Thanks for everything,Elon

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Indonesian e-commerce unicorn Bukalapak raises $50M

Chances are you may be familiar with Tokopedia, especially after it commanded a $7 billion valuation last November when it raised $1.1 billion from investors like Alibaba and SoftBank’s Vision Fund. But fewer people outside of Indonesia are aware of another sizable local online retail unicorn: Bukalapak.
Smaller than Tokopedia in size, the company is valued at $1 billion — it became Indonesia’s fourth unicorn one year ago. The country, which is Southeast Asia’s largest economy and has a population of more than 260 million, also counts Tokopedia, Go-Jek and Traveloka in the billion-dollar club.
Founded in 2010, Bukalapak claims an impressive two million orders per day and 50 million registered users. On the seller side, it said its core e-commerce business covers products from four million SMEs, 500,000 kiosk vendors and 700,000 “independent” micro-businesses in Indonesia. Bukalapak means “open a stall” in Indonesia’s Bahasa language, and anyone can open a shopfront on the platform.
This week, Bukalapak landed another notable funding milestone after it raised a $50 million Series D round from the Mirae Asset-Naver Asia Growth Fund, a joint vehicle operated by Korean mutual fund Mirae Asset and Naver, the firm whose businesses include popular messaging service Line. This is the first time Bukalapak has disclosed the size of an investment in its business, although it did not give an updated valuation. The startup counts Alibaba’s Ant Financial, Indonesia telco Emtek, Sequoia India and Singaporean sovereign fund GIC among its existing backers.
Bukalapak is one of Indonesia’s leading online commerce platforms with four million registered users, a claimed two million daily transactions and a valuation of more than $1 billion
Bukalapak said it plans to use its new funds to grow opportunities for its SME retail partners and build out its tech platform, that’s likely to mean digital services such as insurance and a mobile wallet.
The company made a major push last year to partner with local “warung” kiosk store retailers — who sell items much like street vendors — in a bit to differentiate itself from Tokopedia, which is much like Alibaba’s Taobao service for Indonesia, and develop an offering for consumers.
Beyond its e-commerce marketplace, Bukalapak also offers streaming and fintech products.

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SimplyCook dishes up £4.5M Series A for its subscription-based flavourings and recipe service

SimplyCook, the recipe kit service that focuses on flavour ingredients, has closed £4.5 million in Series A funding. The round is led by Octopus Investments.
Unlike other recipe or meal kits, such as HelloFresh, Gousto and Marley Spoon, U.K.-based SimplyCook doesn’t send all of the fresh ingredients required to turn its recipes into food on your table. Instead, the subscription service consists of recipe cards and what SimplyCook calls “ingredients kits,” which are herbs, spices, sauces and other extras needed to cook each meal.
It’s not only a product that potentially has better margins than fresh food recipe kits — by negating the need to manage such perishable goods — SimplyCook founder and CEO Oli Ashness argues that SimplyCook’s flavour kits have broader mass-market appeal, too.
“Flavour products are used by over 50 percent of consumers weekly,” he says. “Whereas fresh food delivery still caters for maybe 0.25-0.5 percent of evening meals in the UK. Flavour already works as a way to get people cooking. Fresh Meal Kits are fairly unproven.”
“I am actually a fan of how some fresh food players are run and their founders; however, I am still not convinced fresh food meal kits will ever be mass market like us due to the level of monthly commitment. Getting people to spend [less than] £10 per month is much easier than asking them to spend £120-£200 per month, in my opinion. It’s going to be much easier for us to build a big base in customer numbers.”
He also makes the valid point that SimplyCook builds on the success of traditional flavour brands, such as Old El Paso, Dolmio, Knorr and Schwartz, “[that] have got millions cooking.”
Related to this, as well as selling subscriptions online, the company has launched SimplyCook recipe kits in physical retail stores. This is seeing it pursue a hybrid online/offline model that Ashness likens to healthy snack company Graze. (Notably, HelloFresh tried selling into grocery stores in the U.K., before cooling on the idea.)
Meanwhile, SimplyCook says its Series A funding will be used to invest in technology and sales & marketing, in order to drive continued growth across the U.K. and beyond.
“We also expect this funding round to fuel international launches,” adds the SimplyCook CEO, “[and to] provide working capital for the retail business and allow us to invest in technology to aid our operations. These investments we’ll make over the next 2 years.”

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Flash, the stealthy e-scooter and ‘micro-mobility’ startup from Delivery Hero founder, raises €55M Series A

Flash, the stealthy mobility startup from Delivery Hero and Team Europe founder Lukasz Gadowski, is de-cloaking today, with news that the Berlin-based company has raised a whopping €55 million in Series A funding.
Despite rumours that multiple VC firms would be involved, the bulk of the new funding comes from Target Global via its mobility fund, which led this round and was already an existing backer of Flash. Others participating in Flash’s Series A include Idinvest Partners, Signals Venture Capital and a number of unnamed angel investors.
Notably, Gadowski is listed as an Entrepreneur in Residence at Target Global, and has been broadly working in the mobility space for the past two years. Rather quietly, he is also an investor in Grin, the Mexico City-based electric scooter company backed by Y Combinator.
In a call with Gadowski, he filled in many of the blanks relating to his new venture, including positioning Flash as a “micro-mobility” company that wants to solve the last-mile transportation problem. The startup is initially entering the e-scooter rental space, but this is just the beginning, he says. More broadly, the way he and his team think about Flash is that it is “unbundling” the car, with new forms of transport.
“In a few years time, micro-mobility will look very different from today,” says Gadowski, revealing that before founding Flash last year, he also took a hard look at new forms of aviation.
Even though it is still very early days for Flash, the startup already boasts a current team of more than 50 full-time employees, recruited from the likes of Uber, Amazon, and Airbnb. Alongside Gadowski, the other Flash co-founders are Carlos Bhola (Corp. Development) and Tim Rucquoi-Berger (Supply & Operations).
“This is not a scooter” – Flash branding in stealth mode
Notably — and definitely quietly — Flash is already operating in Switzerland and Portugal, with plans to launch into France, Italy and Spain in spring 2019, and in the rest of Europe in summer 2019.
The existing launches have been soft-launches, to say the least, with Flash e-scooters not initially carrying the company’s branding, instead sporting the label “This is not a scooter,” part in-house word play, part a statement of intent. Not just another scooter company might be an even more apt label if Gadowski’s longer-term ambitions are realised.
Perhaps more of a product-market-fit trial than anything else, Flash has initially used off-the-shelf e-scooters at launch, whilst simultaneously developing its own hardware and technology. The startup is headquartered in Berlin, but Gadowski tells me the team was first posted in China, establishing a supply chain and other partnerships that he believes can help give Flash the edge.
I put to him a common belief amongst some VCs that the e-scooter space in Europe is heading for a bloodbath that will continue to see a huge amount of venture capital pumped into the space, and subsequently many losers and a lot of money lost.
Recent raises by European e-scooter startups include Wind Mobility ($22 million), VOI ($50 million and Tier (€25 million). Meanwhile, Taxify has also announced its entrance into e-scooter rentals, and Bird and Lime have received substantial investment from three of Europe’s top venture capital firms. Index and Accel have backed Bird, and Atomico has backed Lime.
Gadowski appears for the most part unfazed by the swelling of competition coffers, although he does concede that the current “land grab” is forcing Flash to move slightly faster than it might have done otherwise. In some ways, he would have preferred to continue a more staggered, cautious roll-out, describing the startup as “product-first and multi-vehicle,” and says its customers are not just users of the service but local residents more broadly and the authorities with which it needs to coordinate. “Mistakes can be a lot more serious than at Delivery Hero, safety is involved,” he cautions.
The size of recent funding rounds in the space has also surprised him. However, he doesn’t think this is a “Facebook scenario,” where there will only be a single winner. Several micro-mobility companies can happily co-exist, he says, and the early movers are helping to pave the way for others, including Flash.
I suggest that the e-scooter land grab at its current pace also has a high chance of provoking a backlash amongst consumers and/or authorities, perhaps after a more serious safety accident or other source of reputational damage. Gadowski concedes this is definitely a “short-term” risk, but says there is so much determination by governments and local authorities to solve congestion and the last-mile problem, he doesn’t believe it will be a long-term one.
Finally, I asked Gadowski if he is considering acquiring smaller e-scooter startups in Europe (or perhaps elsewhere), as part of a roll-up strategy that would help the company leapfrog competitors. He declined to rule out acquisitions entirely — Delivery Hero was very effective in this regard — but said it doesn’t make much sense right now as hype in the space has pushed valuations way up. A more likely scenario, he says, is investing in or acquiring startups that can help with other aspects of the business, such as in the supply chain.

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AR startup Meta’s assets sold to a mystery ‘known name’ that will support existing headsets

Augmented reality technology enables us to see things in places where they may not actually exist. And sometimes, that paradigm might also apply to augmented reality startups themselves. Meta, the AR startup that was incubated at Y Combinator and became the first to ship a set of “end-to-end” AR glasses (including hardware, software, direct tracking optics and SDK) to the market, raising a lot of money and high hopes in the process, crashed into insolvency recently as it ran out of money to fund the costly business of building hardware as well as options to raise more. Now it looks like there is another chapter.
Meron Gribetz, Meta’s founder and CEO, told TechCrunch in an interview earlier today that the company’s assets have been acquired by a mystery buyer. The buyer’s name and even its industry are not being disclosed, said Gribetz, except he did hint that it is a “known name” that might be revealed soon.
(We’ve asked a number of investors in the company if they know more and it seems none so far do. Even the lead at the agency that has been handling Meta’s PR — Spiralgroup, which specialises in crisis communications and other tricky situations — described the buyer’s name as a “black box,” no information whatsoever.)
There is only one firm detail on the future that Gribetz said he could share. The new buyer, he said, has already committed to supporting hardware that is already out on the market, but with little specific information on what will come next. “Our assets have a good future, and I’m encouraged by that fact,” he said. He added that about 85-90 percent of the company’s inventory of its latest (last) model, the Meta 2, had sold.
Otherwise, all Gribetz could say was that it was an asset sale, for “less than the bank was owed,” in reference to the company’s debts.
Among the other details that are unclear are whether Meta talent will be joining the new owner. It sounds like that, at least, is still under negotiation for some of them — Gribetz included — which implies there are plans for using the IP and other assets the buyer has acquired, either on their own or in combination with other IP. (Notably, one of the assets that was acquired was the Meta brand, although that could easily have been also to protect it from being used by others.)
These latest developments cap off a hectic several months for Meta.
After a scrappy start — I first met the company at CES in Las Vegas years ago, when five engineers and Gribetz all slept in one hotel room that was also where they showed off product demos — the company landed in the elite Y Combinator incubator and started to attract the attention of big investors, and eventually became the first company to ship a complete AR solution, including hardware and software to make it work. That led to more investment and ambitions to target China.
But the Meta 2, the second version of its eyewear, was to be its last. The Silicon Valley startup fell onto hard times in September 2018 after a fundraise of $20 million, critical to its survival, which it had secured from an unnamed Chinese investor, was blocked by China over trade tensions between it and the U.S. Around that time, the company laid off a number of staff, and those remaining were furloughed in hopes of better times ahead.
That didn’t turn out to be the case. Gribetz told TechCrunch that in subsequent months, he’d received small investments from individuals to help temporarily pay some of the employees who were still with the company, but “no one stepped in” to definitely close the funding gap. “Maybe it was the furlough that scared them off,” he said.
In the meantime, things got even tougher. Meta was served with patent suits — which may still follow the IP wherever it goes (although it’s not clear at all yet whether the suits are legit or without merit). And that seemed to be the final straw that led to the insolvency and subsequent asset sale.
There is a lot of potential speculation about who might be interested in Meta’s assets, and why the buyer is keeping quiet.
If it’s a big company, that makes it an obvious target for a patent litigation chaser. If it’s a company from a country like China, it could raise questions and cause problems given the current climate and trade tensions. If it’s interested in AR in a public way, it doesn’t want to reveal its hand. If it’s trying to prepare an entry into the market, it wouldn’t want to be known, either. If it’s a completely new entrant to AR, it may not want anyone to pre-judge based on Meta’s failure.
Meta had raised nearly $83 million, reaching a valuation of as much as $300 million, with investors including strategics like hardware giant Lenovo, internet giant Tencent, Dolby, Comcast and some 24 others (a mix of VCs and individuals). Those strategics also might be considered buyers — although so far we’ve confirmed that at least one, Lenovo, is not it.
Whoever has made the purchase, two words of advice: caveat emptor.
Although AR and VR startups reached a high watermark of $3 billion in funding in 2017, and for all the promise of various companies in the field, the bigger picture for AR and its sister technology, virtual reality, has not been as bright in more recent times.
Gribetz said he believes that one day every company will be an AR company, but for now, we are far from that. Headsets and glasses — a primary component of many services — are still clunky, we haven’t seen the “killer app” yet that will bring a mass market running to buy products and it’s not even clear that there may ever be. If you think of how much of the AR content you get already comes by way of your smartphone, then it may turn out just to be an additional feature, not a major step change after all.
All of that is leading to many AR and VR efforts feeling the pinch. Some, like ODG and Blippar, have collapsed entirely. Others like Magic Leap have failed to live up to their impossible hype. And others are rethinking their strategies for the longer haul, shelving some of their ambitions in the process.
In that context, Gribetz is even a little sanguine about Meta’s crash landing.
“It’s a bittersweet happiness,” he said when asked about how he feels about the sale. “This is not the way I would have wanted things to precipitate, obviously. On the other hand, when I look at the competitive landscape and the companies that are completely flaming out — and there are a lot — and their products disappear from the world never to be seen again, I can only express my personal hopes, because Meta is now inside of a new home — and it’s a good home — I can only express my hopes that these products have a future.”

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Tesla to recall 14,000 Model S cars in China over faulty Takata airbags

China’s top market regulator said on Friday that Tesla will recall a total of 14,123 imported Model S vehicles in the country over potentially deadly airbags.
The recall is part of an industry-wide crackdown on Takata-made front passenger airbags, which involves roughly 37 million vehicles including more mainstream brands such as Toyota and Ford, as noted by the United States Department of Transportation. These defective airbags use a propellant that might rupture the airbag and cause serious injuries, or even deaths.
Tesla has begun a worldwide recall of its sedans that use Takata airbags, the firm said on its Support blog. It noted that the airbags only become defective based on certain factors, such as age. The recall does not affect later Model S vehicles, Roadster, Model X or its more affordable Model 3.
The China recall involves Model S cars manufactured between February 2014 and December 2016, shows a notice posted on the website of China’s State Administration for Market Regulation. TechCrunch has reached out to Tesla for comments and will update the article once more information is available.
The setback comes as Tesla is making a big push into the world’s largest auto market and tapping on Beijing’s effort to phase out fossil-fuel cars for China. The company recently reached an agreement with the Shanghai government to build its first Gigafactory outside the U.S., which will focus on making Model 3 cars for Chinese consumers. There is no target date for the factory to become fully operational yet.
Despite being an alluring market, China has been a major source of Tesla’s concerns over the past months due to escalating trade tensions and the rollback of government subsidies for green vehicles. Tesla responded by slashing its Model 3 price by 7.6 percent for China to neutralize heavy tariffs on imported cars.
The Palo Alto-based company previously recalled 8,898 Model S vehicles in China over corroding bolts, which it claimed at the time had not led to any accidents or injuries.

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Coinstar machines will start selling Bitcoin at the grocery store

You know those machines at the grocery store that transform your gallon jug of spare change into more usable currency? They’re about to start selling Bitcoin .
To make this impulse shopping dream come true, Coinstar, the company behind those ubiquitous change-counting kiosks, has partnered with Coinme, a startup that operates a small network of cryptocurrency-dispensing ATMs around the country.
“Coinstar is always looking for new ways to offer value to our consumers when they visit our kiosks, and Coinme’s innovative delivery mechanism along with Coinstar’s flexible platform makes it possible for consumers to easily purchase Bitcoin with cash,” Coinstar CEO Jim Gaherity said in the announcement, first reported by GeekWire.
With 20,000 machines around the world, Coinstar operates a pretty huge network that could be enabled to dispense digital currency. As the company’s announcement states, there are “thousands in the U.S. market that can be enabled to accept Bitcoin transactions,” though we’d guess it won’t hit those numbers for a while.
Coinme has digital currency ATMs in 11 states, including multiple locations in Texas, Washington and California, among others. While it’s not initially clear exactly how many machines will become Bitcoin-ready, Coinme’s site also states that the partnership will result in “thousands of places to buy Bitcoin.”
The Coinstar Bitcoin locator tool wouldn’t point us to any local kiosks when we tried, but if you can track one down, buying Bitcoin from the updated machines sounds pretty easy. It’s worth noting that you’ll need cash for the exchange — you won’t be able to trade digital money or credit for cryptocurrency here.
After sticking your paper money into one of the machines, the newfangled kiosk will dispense a voucher for a Bitcoin redemption code that points you to Coinme. The limit is $2,500 and you’ll need to link a phone number to the transaction, though it’s not clear if you can just make one up to get around that kind of questionable requirement.
After last year’s wild highs and painful if inevitable lows, cryptocurrency’s cool-off period might be here a while — particularly if the stock market keeps everyone battening down the hatches. Given that, the kiosks would have been met with more interest during the most feverish moments of early 2018 when everyone was trying to navigate the sometimes complex process of buying their first cryptocurrency. Still, given Coinstar’s ubiquity, the Bitcoin kiosks might pique the interest of some shoppers who just cashed out 30 bucks of nickels.

As Bitcoin sinks, industry startups are forced to cut back

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Nike’s auto-laced future

Why does the world need a self-lacing shoe?
Haven’t you heard of Velcro?
How will you tie your shoes when the Wi-Fi is down?
That’s the gist of the instant response I got when I mentioned the new Adapt BB, a shoe from Nike with, yes, powered laces that tighten to a wearer’s foot automatically. The shoe is an evolution of the Nike HyperAdapt 1.0, which is itself a commercialization of the Air Mag — a self-lacing vanity project that realized the self-lacing shoes mocked up for Back to the Future II.
When I tweeted about the Adapt and its companion smartphone app that allows for remote control of each shoe’s lace tightness, the immediate response was, in summary, “why?”
A sentiment followed up quickly with callouts to the Twitter account @internetofshit, which highlights devices that are unnecessarily burdened with wirelessly connected bloatware features. To be fair, this response is exactly the same one that Nike’s first self-lacing model received. But this time, the announcement also came right on the heels of CES, the natural home of needless electronic gadgets. People are so burned out by smart toilets that they were not ready to hear about shoes gaining a connected hardware component.
And, honestly, I get it. It’s a hard sell to say that the solution to a laceless design is to add about half of the hardware that goes into your smartphone and the ability to talk to your shoes with your phone.
But the Adapt BB is really working on two levels, and to tease out whether there is a there there when it comes to connected shoes, you have to consider the context.

Laceless
For a while now, the Holy Grail of shoe design has been the hunt for a truly “laceless lockdown” shoe for basketball applications. Not just a lack of laces, but enhanced lockdown — a fit that borders on custom-molded, preventing a player’s foot from moving around inside a shoe even in extreme cut or stop-short situations. Think cornering ability in a car coupled with adjustable seats — it doesn’t matter how hard the car can turn if it throws you all around the cabin.
Nike’s approach to this effectively uses a single cord and a motor to replace a traditional set of laces.
Nike rival Adidas is pursuing the goal in a different way, using interwoven textiles and self-tightening weaves in its N3XT L3V3L basketball shoe.
Regardless of approach, there are genuine, real benefits to trying to eliminate or evolve laces. The casual observer crapping on auto lacing may not realize that lacing and lockdown are actually an enormous problem for many pro players. The typical player has their shoes laced in the locker room and then leaves them laced that way the whole game unless they come off the court for some reason and have them adjusted. At times, they even have a coach take care of lacing for them, because it’s impossible to get enough torsion on their own to achieve full lockdown in their game shoes.

Then, that level of tightness is kept for hours as they play the game, allowing for no relief even on the sidelines. Not the best for players that already have bone weakness, and, honestly, not good for anyone, as blood flow aids recovery and prevents injury.
Nike says it commissioned an independent university study on the effectiveness of the Adapt BB system on lockdown that showed a 40 percent improvement and has testimonials from a host of (admittedly Nike-solicited or sponsored) athletes who have had a chance to try them. They all say the same thing: These shoes really do help achieve better lockdown, and the convenience of being able to set one or many pre-set lacing tightnesses and then choose to engage or disengage at will is a real benefit.
We’ll get into the long-term plans, but it’s important to remember that the market for this first model of Adapt is professional and semi-pro athletes. Though many consumers will buy them, Nike’s plans for casual shoes on the Adapt platform are down the road and these aren’t it, chief.
Still, those long-term plans are what make the whole thing more exciting than, hey, here’s a new pro tool for pros.
First, though, let’s talk about the hardware.
Hardware
The core of the Adapt BB and the device that makes Nike’s use of the much-maligned platform buzzword possible is a plastic rectangle that sits under the arch of the foot inside the shoes. Branded with the traditional swoosh, it contains a worm drive engine with back stop protection that coils the laces to the desired tightness then locks them mechanically to prevent slippage during play.
This, and the single wire that tracks through a maze of anchors over and up the foot falls under the umbrella of what Nike is calling FitAdapt tech. It’s the auto-fit component of the smart shoe stuff that Adapt BB can do.
There is, of course, a battery as well and a coil to enable induction charging from the shoe’s charging plate. And yes, a Bluetooth module to allow it to communicate with your phone.

The other stuff inside this box is fascinating, though, and is completely un-used at the shoe’s launch. But let’s dance around that for a minute.
The midsole is made of Nike’s Cushlon foam, a denser foam that doesn’t compress as much as some of its newer offerings like Zoom. This allows the module to sit under foot, recessed a few millimeters under the sole insert and invisible to a wearer’s foot. The insole is also made of a new sockliner foam, which focuses on impact distribution, spreading any point impacts from the box in the midsole over the surface of the foot.
Simply put: you can’t feel the motor.
Narissa Chang, Lead Mechanical Engineer and Jordan Rice, Senior Director of Smart Systems Engineering at Nike, explained that they conducted a massive amount of testing to make sure that the module continued to work in damp, high-impact conditions. The spec I was given was that the motor should easily outlast the shoe, so it shouldn’t be the point of failure.
The outsole is grippy, with great traction behavior and sharp cornering. I was able to wear test the shoe on two consecutive days and played a pickup game with other media folks on day two in them. The details of my performance will remain undisclosed, but the shoes performed admirably.

Here’s how the system works. You slip your foot into the shoe. If you’ve already set up a lace tightness, a new magnetic system (no longer pressure-based like the first Adapt) senses your foot’s presence and tightens them. That’s it.
If it’s your first run, you pair the shoes to the Adapt BB app, which will be on the App Store and Google Play Store. When you pair, you’re linking your shoes directly to your Nike+ account, so there is no chance of anyone either connecting to or controlling your shoes. No log-in, no control via the app.

Once the app is paired you’re able to choose a color to identify your shoes, which will appear in the LEDs that back the control buttons on the lateral side of the midsole, just aft of the mild outrigger.
The LEDs serve to ID your shoes and offer customizability but also to identify which of your lacing profiles are set. The app, in a feature that is launching in a couple of weeks, allows you to set up multiple tightness levels that you can switch between with a tap.
If, however, you want to use the shoes free of the app you can. If your foot is in the shoe you can single tap to jump to desired tightness or tap and hold a button to bump them back to “wide open.” You can also make micro adjustments by tapping the buttons. If your foot remains in the shoe it will eventually tighten back down due to the auto-lacing mechanic sensing your foot is still inside, but I’m hoping you can change that behavior for rest periods.
This means that if an athlete is on the court, they can adjust their shoes by button on the go.
This is one of those fundamental things that a lot of the Twitter Snark brigade was missing — this was essentially an impossibility for players up until this point. Precisely adjusting the lacing all the way up to full lockdown was something that typically required a coach to do. This isn’t hurriedly re-lacing to finish out a period, it’s getting the exact fit for right now on the court.

Players, for example, will tell you that after about a half hour on the court, their feet will swell, sometimes up to a half size. This changes their comfort level significantly. So they have a choice: either play with their shoes too loose for 30 minutes or tighten them enough to be painful by halftime. Not with an adjustable shoe.
The buttons, it should be noted, are pretty much mandatory in the NBA where phones are outlawed on the bench.
The shoe and tech, however, is approved for court play and Jason Tatum debuted them last night in the Celtics/Raptors game.
But outside of the immediate benefits for athletes, the hardware also telegraphs an interesting future for Nike’s connected future. The other components of the lace engine include things that you’re probably already carrying including a 3D gyroscope and accelerometers that measure multiple axes. This shoe can, if it chooses, determine things like gait, foot strike pressure, pace and even in-air motion of your feet.
Imagine, if you will, a coach that tells you you’re putting a foot too far forward or back during a layup or launching too late, or leaning back too far. This is possible with the hardware Nike already has on board.
And it is telling that none of it is enabled up front. Though it can do all of these things, it’s not doing them now. Nike feels that the solid benefit to pros of an adjustable lacing system that can achieve industry-standard-or-better lockdown is enough to launch this.
Everything else it can do is gravy and scene-setting for Nike’s future plans. Though they are predictably pretty reluctant to state future plans, plenty of hints are dropped at more connected shoes, clothing that connects to them and devices like smart watches and headphones that can work in concert to give you feedback about how your body is performing.
“When we think of it as a platform, we started with fit,” says Nike VP of Design Innovation, Eric Avar. “We quoted Bill Bowerman — he believed fit was the foundation of all of it. If you don’t have fit then other performance attributes of the product could be compromised.”

One other core component that Avar notes could become a focus of Adapt is cushioning.
“You can imagine adaptive cushioning in the future, obviously. So when we say platform we’re thinking holistically about the performance attributes of footwear and also starting to think about apparel.
Some brief notes that you might be wondering about:

Nike says battery life clocks in at between 10-14 days with multiple adjustments per day.
The shoe always reserves 5 percent battery to unlace the shoes to get you out.
Charging takes under three hours with the wireless charging mat to full.
There is currently no Apple Watch app, but Nike says they’ve been thinking about it.

Design and comfort
I was able to wear test the Adapt BB over two days in New York, including doing some warmup and playing a pickup game with media at the National Basketball Player’s Association court. The comfort level, I’m pleased to say, is well within bounds for a performance shoe. I’ve worn easily north of 1,000 different pairs of sneakers in just the past couple of years and I would have no problem wearing these off the court as well as on. It’s absolutely a ‘pro fit’, with a grippy, enclosed feel that facilitates cutting and cornering.
This shoe does not have the comfort level of a casual or lifestyle sneaker, by design, but Nike says it is bringing Adapt to those categories in 2019 as well. I’m happy to say that these shoes are just wearable, period, even for someone with a wide foot and high instep. The Adapt 1.0, by comparison, were heavy, stiff and rough to wear for feet outside the norm.

Aside from the Cushlon we mentioned and the crispy clear outsole, there are a few interesting design details worth mentioning. To me, the shoe is designed to evoke designs of Nike basketball past. The overall silhouette evokes the Kobe AD, which makes sense given Nike vice president and creative director of innovation Eric Avar’s work with Kobe and his line of shoes.
I also notice a shiny heel segment that throws off hints of the Jordan 11’s patent leather support band.
Avar also calls out the swoosh within a swoosh, saying that it’s meant to evoke the human within the shoe, being enhanced by the Adapt system.
It’s a good looking shoe. Intentionally designed to give off Nike basketball vibes, while still holding appeal for a set of early adopter enthusiasts that will likely wear them on and off the court.

Enabling technology
One of the most exciting ancillary effects of a self-lacing shoe is assistance that it can give people with fine motor skills or mobility issues. Having a shoe that can tie itself goes right from a first-world problem to a genuinely life-enhancing feature when you look at it through the lens of accessibility.
First up, no, I don’t think that the entire Adapt project is some sort of accessibility Trojan horse and that they’re doing all of this to let people who can’t tie their shoes for reasons out of their control wear dope kicks. But it’s absolutely bound to be a result of the platform, including its self-lacing feature, trickling down through the lifestyle and casual categories. Yes, this first pair is $350, but that’s already down from $750 from the Adapt 1.0. That’s quite the curve and it will continue to bottom out with scale.
I asked Chang and Rice specifically about whether accessibility was a part of their design and engineering conversation. They said that the Adapt 1.0 was just an experiment to see if they could commercialize this laceless design but that the moment it hit the public they got tons of feedback about how great this could be for accessibility. And the engineering team works directly next to the department inside Nike that works on athletes of all levels of ability and enablement.
So, while this is not the purpose of Adapt, I’m hoping that it will be an awesome effect of it succeeding. Provided it does, of course.
Pitfalls and potentialities
Performance benefits of a connected suite of Nike and Nike-compatible devices are, frankly, a safe bet. Nike is in the envied position of being an established purveyor of performance gear and sees a future in being able to offer some value here that will sell a lot of product.
But I think even this unrealized future of a connected performance suite is too narrow. I’ve written before about Apple’s position in the market and the potential it has to turn its devices into biometric enablers of identity.
Imagine a shoe that automatically pays as you cross the boundary of a toll booth or bus door. A bike that locks unless your cleats are in it. A shirt that can have an opt-in chat with your health app of choice and give a real window into hydration.
Nike is billing the Adapt BB as the first shoe that’s software upgradeable. Though there have been other electronically enabled shoes in the past, this is the first time that you could conceivably see one of these being able to get better before the natural course of time and wear makes them get worse. Pro athletes change their shoes sometimes as quick as one pair per game. The pro-am category though, could conceivably see a shoe they wear for a year or more gain features and abilities over time.

Seeing a shoe get the benefits of a piece of upgradeable software defines, I believe, is a major shift in the way that we think about clothing as a consumable and “degrade only” category. Buying a piece of clothing that gets better with time isn’t new, obviously, as leather boots and other animal skin clothing tends to take some time to break in before it even fits right. But outside of animal products, it’s rare — and a first, as far as I’m concerned, in performance wear.
The caveats abound, of course. There is a lot of ground between here and there, and Nike could stumble at many points on execution, scale or just plain convincing people that more devices that collect and utilize data are what people want or “need.”
It’s imperative that they tell the story carefully, following the strategy of providing solid, real-world benefits that feel not just as good but better than the analogue alternative. It’s also mandatory that Nike takes its stewardship of user data seriously. It’s a good sign that they mentioned responsible data use a lot during formal presentations and my informal chats across the design, digital and engineering teams.
Apple’s philosophy toward data handling was mentioned — and it makes sense as Nike has a similar arrangement with customers. You may give them data but they’re providing you a product for profit. It does not benefit them to misuse or misrepresent the way they might use future data that they read from your shoes or clothing. Examining incentives is important in a world where we’re getting closer to a high-fidelity, portable, digital profile without having yet decided who owns that profile — us or the companies that gather data on it.
But you have to walk the walk. As Nike rolls out the Adapt platform, it will be important to keep an eye on whether they are good stewards of user data.

Culture
One advantage Nike could and should leverage in its pursuit of creating actually useful smart clothing is its conduit into culture. This conduit takes many shapes but includes sneakerheads, basketball fans, hip hop culture and art/fashion collaborators. There are dozens of examples of failed attempts to make wearable smart clothing cool, functional and adopted at scale. In most of those cases, however, the efforts have come from companies without the ability to connect culture and tech with a strong organic link.
The Culture, as an organism, has an incredibly strong BS detector. It doesn’t matter how good the tech is or how disruptive a company’s business model — if it’s trying to create a true shift in consumer behavior (that’s exactly what Nike is attempting) then it has to partner with culture. That can be via communities like the sneaker enthusiast early adopters or through institutions with rabid in-tune fan bases like the NBA or collaborators like fashion upstarts and artists who lend authenticity and a feeling of nowness to the product.
It’s one of the cardinal blind spots that remains in Silicon Valley, which views culture through the lens of engineering rather than art or fashion. It’s a huge reason why there are so many corpses of companies that have attempted this before. That and many of them did not have the advantage of a mature-to-the-point-of-saturation smartphone supply chain to take advantage of.
Positive and negative futures
Any time I write about passive connectivity I get a polarized response, not unlike the one people have had so far for the Adapt BB. It’s either a sign that we’re getting lazy, complacent or not paranoid enough, or it’s an amazing feat that points toward utopia. Neither one is likely to be totally true, though I would argue that we need to look at these things in a way that attempts to engage, discuss and influence them toward the positive end of the spectrum.
If the past decade has taught us anything, it’s that the future is going to happen, and if we don’t have the belief that it can be good, backed up with active participation in making it happen, then we’re doomed to more of the same.
In the near term, Nike has what it seems could be a lucrative opportunity to provide solid value for customers based on a portfolio of devices that enhance active lifestyles. In the long term, the company has a tougher but potentially much more impactful chance to outline a connected, wearable framework that rests on an honest relationship with customers and strong data stewardship.
There are only a handful of companies on earth that have the scale, execution ability and incentive structure to make this happen. Nike is one of them. This will be interesting.

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Here’s how SpaceX’s Crew Dragon capsule will look motoring in from sea

If you’re coming back from space at high speeds, it’s generally safer to descend over water than land, for a number of reasons. Certainly SpaceX’s Crew Dragon capsule will do so, and this is how it’ll look when it comes back to land aboard the GO Searcher retrieval ship. Expect a bit more of a hero’s welcome, though.
This isn’t the first time we’ve seen the GO Searcher; it got a bit of publicity late last year when it underwent some helicopter landing tests at sea.
See, the GO Searcher isn’t just a giant mitt like the boats that are intended to catch falling fairings; they not only have to collect a large, heavy capsule from the surface of the water but accommodate (and potentially administer medical aid to) anyone on board. So this is more of a mobile headquarters than a utility boat.
Dock lurkers at Port Canaveral in Florida (near the famous cape, naturally) spotted the ship returning from, presumably, some mock operations out at sea.

PRACTICE OFF THE PORT: @SpaceX's upgraded Go Searcher vessel returns to Port Canaveral on Wednesday with an apparent mock-up Crew Dragon capsule aboard after a sea trial. Go Searcher will recover Crew Dragon capsules that splash down in the Atlantic. pic.twitter.com/tL5WgvNrsg
— Port Canaveral (@PortCanaveral) January 17, 2019

That does appear to be a Crew Dragon capsule (not likely an actual production capsule but a full-scale mock-up or prototype) on the back, so they probably were practicing snatching it up out of the water and setting it down softly in the boot there.
Coming back into port after practice will likely look a lot like this, though depending on the distance and mission it’s also more than possible that the safe astronauts, cosmonauts and other spacefarers will expedite their return by means of helicopter. The landing pad on the roof will be crucial if anyone is injured, of course (though there are medical facilities on board), but depending on where splashdown takes place — not to mention the weather — it might be preferable to take to the air rather than ride a slow boat to shore.
Whatever the case, you can certainly expect to see ships like this one arriving with great regularity soon. I’ve asked SpaceX for more details on this particular operation and whether it is related to the company’s upcoming Crew Dragon test flights.

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Judge orders net neutrality lawsuit to go ahead despite shutdown

This week the possibility emerged that the ongoing government shutdown could delay net neutrality’s day in court — but the court was not sympathetic to the FCC’s request that the lawsuit be put off. Oral arguments for this major challenge to the agency’s rollback of 2015’s internet regulations will go ahead as planned on February 1.
During a shutdown, federal employees — including government lawyers — must have specific authorization to continue working, since it’s illegal for them to do so without pay. In this case a judge on the case must effectively make that authorization.
The FCC is among the many agencies and organizations affected by the shutdown, and many employees are stuck at home. As such it requested a postponement of an upcoming court date at which it and several companies and advocacy groups are scheduled to argue over its rollback of net neutrality.

Shutdown could delay challenge of FCC’s net neutrality rollback

A counter-argument filed immediately by industry group INCOMPAS pointed out that during previous shutdowns, the court had not granted such requests and should stick to that precedent.
The judges of the D.C. Circuit Appeals Court appear to agree with the latter argument; the FCC’s motion was denied and arguments will go forward as planned on February 1.

This is definitely not good news for the FCC. While it no doubt has its ducks in a row as far as defending its net neutrality rollback and new rules in court (it has done so before and will again), it’s far from ideal that the case will take place after a prolonged absence of all the pertinent experts from their posts. Briefing the lawyers, updating arguments, responding to industry concerns — it’s not easy to do when all your staff is sitting at home watching “Bandersnatch” over and over.
The lawsuit against the FCC has lots of good points to make about the rules it has established and the process by which it approved those rules, so this is no mere formality or frivolous suit. And net neutrality champions are likely happy to hear that they may very well catch the agency flat-footed.

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Tesla will end its buyer referral program for ‘adding too much cost’

At the end of the month, Tesla will end a long-running referral program that offered incentives for existing Tesla owners to help drive sales. In its recent iterations, the referral system gifted new buyers who found their way to a Tesla through a friend with six months of free charging at Supercharger stations.
Most recently, the referring friend would become eligible for a set of characteristically outlandish prizes, from launching a chosen photo into deep space orbit to a VIP invite to one of the company’s flashy unveiling events, depending on how many qualifying referrals were made. Tesla’s oft-chatty chief executive characteristically announced the news in a tweet.

The Tesla customer referral program will end on Feb 1. If you want to refer a friend to buy a Tesla & give them 6 months of free Supercharging, please do so before then.
— Elon Musk (@elonmusk) January 17, 2019

The referral program was a clever choice by a company with such intense loyalty, putting many Tesla acolytes to work by turning them into semi-compensated brand ambassadors. Unfortunately for them, it wasn’t sustainable.
In follow-up tweets, Musk added more insight to the decision to end the program, noting that the whole thing was “adding too much cost to the cars, especially Model 3.” He further clarified that the program wasn’t being replaced by something new. Instead, “the whole referral incentive system will end.”
Tesla owners will have until the end of the month to hustle for existing incentives. Tesla orders must be placed before February 1 to be eligible. How hard can it be to talk your acquaintances into impulse-buying a high-end all-electric status symbol within a month’s time?

Tesla unveils first home charging station that can be plugged into a wall outlet

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VC funding of cybersecurity companies hits record $5.3B in 2018

2018 wasn’t all bad. It turned out to be a record year for venture capital firms investing in cybersecurity companies.
According to new data out by Strategic Cyber Ventures, a cybersecurity-focused investment firm with a portfolio of four cybersecurity companies, more than $5.3 billion was funneled into companies focused on protecting networks, systems and data across the world, despite fewer deals done during the year.
That’s up from 20 percent — $4.4 billion — from 2017, and up from close to double on 2016.
Part of the reason was several “mega” funding rounds, according to the company. Last year saw some of the big eight companies getting bigger, amassing a total of $1.3 billion in funding last year. That includes Tanium’s combined $375 million investment, Anchorfree’s $295 million and CrowdStrike’s $200 million.
According to the report, North America leads the rest of the world with $4 billion in VC funding, with Europe and Asia neck-and-neck at around $550 million each, but growing year-over-year.
In fact, according to the data, California — where many of the big companies have their headquarters — accounts for nearly half of all VC funding in cybersecurity in 2018. By comparison, only about $300 million went to the “government” region — including Maryland, Virginia and Washington, DC, where many government-backed or focused companies are located.
“As DC residents, we have to think there is more the city could do to entice cybersecurity companies to establish their headquarters in the city,” the firm said. Virtru, an email encryption and data privacy firm, drove the only funding of cybersecurity investment in Washington, DC last year, they added.
“We’ve seen this trend in the broader tech ecosystem as well, with many, large international funds and investment outside of the U.S.,” the firm said. “Simply put, amazing and valuable technology companies are being created outside of the U.S.”
Looking ahead, Tanium and CrowdStrike are highly anticipated to IPO this year — so long as the markets hold stable.
“It’s still unclear what the public equity markets have in store in 2019,” the firm said. “A few weeks in and we’re already experiencing a government shutdown, trade wars with China, and expected slow down in global economic growth.”
“However, only time will tell what 2019 has in store,” the firm concluded.

Cybersecurity 101: Five simple security guides for protecting your privacy

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