Disrupt Berlin 2018’s two program-packed days of startup mania kicks into high gear tomorrow, 29 November. And that, dear readers, can mean only one thing. This is your absolute last chance to buy a pass and attend Europe’s top tech conference for early-stage startups.
We’re looking at all of you last-minute decision makers, put-off procrastinators, all-around wafflers and anyone else in the startup scene who suddenly realized they can’t afford to miss out on this opportunity. Late registration savings ends today at midnight CET, 28 November. It’s last call. Go buy your pass to Disrupt Berlin right now.
Beat the late registration deadline and you’ll enjoy everything Disrupt Berlin has to offer. Starting with an amazing array of early-stage startups exhibiting in Startup Alley — a group that also includes our extraordinary TC Top Picks.
You’ll hear top movers and shakers in the tech, startup and investment world speaking from the Main Stage and during Q&A Sessions — smaller, moderated discussions where the speakers take questions from the audience.
Take a look at the full conference agenda.
Grab a seat — and sit on the edge of it — to watch the Startup Battlefield. Exceptional startup founders compete for the coveted Disrupt Cup and a $50,000 non-equity cash prize. In the process, they receive invaluable — and possibly life-changing — media and investor exposure.
And of course, networking at Disrupt Berlin is practically an Olympic event. It’s a world-class opportunity to make the crucial connections you need to build your startup empire. Making those connections is easier than ever this year because we’re making CrunchMatch, our free business-matching service, available to all attendees. It’ll save you valuable time and help you find the needle in the early-startup haystack.
As the old saying goes, all good things must come to an end. This is your last chance to attend Disrupt Berlin 2018 on 29-30 November and save up to €350. Late registration closes today at midnight CET. Buy your pass now and join us in Berlin.
We already know Alexa had a good Christmas — the app shot to the top of the App Store over the holidays, and the Alexa service even briefly crashed from all the new users. But Alexa, along with other smart speaker devices like Google Home, didn’t just have a good holiday — they had a great year, too. The smart speaker market reached critical mass in 2018, with around 41 percent of U.S. consumers now owning a voice-activated speaker, up from 21.5 percent in 2017.
According to a series of reports from RBC Capital Markets analysts released in December, the near doubling of the adoption rate for smart speakers in the U.S. was driven by growth in both Alexa and Google Home devices, while Apple’s HomePod played only a small role.
The firm found that U.S. penetration of Alexa-enabled devices reached 31 percent this year, compared with 41 percent overall for smart speakers.
It also forecast that Alexa would generate $18 billion to $19 billion in total revenue by 2021 — or ~5 percent of Amazon’s revenue — through a combination of device sales, incremental voice shopping sales and other platform revenues. In the U.S., there are now more than 100 million Alexa-enabled devices installed — a key milestone for Alexa to become a “critical mass platform,” the report noted.
RBC additionally called out Amazon’s progress with Alexa’s development, with launches like Alexa Guard, which listens for break-ins and smoke detector alarms; plus new features like local voice control for when the internet is down; location-based reminders; advanced routines; email integrations; expanded calling options; and many others.
Alexa’s third-party app ecosystem also grew in 2018, with 150 percent year-over-year growth in skills to reach over 60,000 total Alexa skills by year-end. That’s up from 40,000 skills in May; 25,000 in Q3 2017; and just 5,000 two years ago.
Google Home also gained traction in 2018, with U.S. penetration for Google devices growing to 23 percent, up from 8 percent in 2017. Each household owns around 1.7 devices, which leads a Google Home install base of around 43 million in the U.S., and around 9 million in other Google Home markets, the forecast said.
However, the report doesn’t see as much revenue coming in from Google Home over the next few years, compared with Alexa. Instead, it estimates that Google Home generated $3.4 billion in revenue this year, and will grow that to $8.2 billion by 2021.
But combined with Google’s other hardware products like Pixel, Nest and Chromecast, the hardware suite will have generated approximately $8.8 billion in 2018, and will grow to $19.6 billion in 2021.
This is the first year the analysts asked about Apple’s HomePod in the consumer survey, and they found its share of the U.S. smart speaker market remains small. Amazon has a 66 percent share to Google’s 29 percent. HomePod had 5 percent, it said.
Lidar technology developer AEye will scale its operations globally through manufacturing partnerships after raising a $40 million Series B. The round was led by Taiwania Capital, the investment firm created and backed by Taiwan’s National Development Council, and includes returning investors Kleiner Perkins, Intel Capital, Airbus Ventures and Tychee Partners.
This brings the California-based startup’s total funding so far to about $61 million. In a press statement, founder and CEO Luis Dussan said Taiwania’s investment is a strategic one and will give AEye more access to manufacturing, logistics and tech resources in Asia. AEye also plans to launch a new product at CES in January.
In a press statement, Taiwania Capital’s managing partner Huang Lee said “We see AEye as the foremost innovator in this space, whose systems deliver highly precise, actionable information at speeds and distances never seen in commercially available lidar sensors. We look forward to working closely with AEye’s team to explore and pursue growth opportunities in this burgeoning space.”
The point cloud created by AEye’s iDAR
Along with its funding, AEye also claimed it has set a new record for the distance from which a lidar system is able to detect and track a moving object. (Lidar stands for “light detection and ranging” and is used to create “point clouds,” or three-dimensional maps made of coordinates from laser pulses. Lidar has many applications, but a lot of attention is being paid to how it is used by autonomous vehicles and drones).
In tests monitored and validated by VSI Labs, a research company that focuses on autonomous-vehicle technology, AEye said that its iDAR sensor, which was launched earlier this year and combines a solid-state lidar and high-resolution camera in one device, was able to detect and track a moving truck from one kilometer away. AEye claims that this is four to five times the distance other current lidar systems can detect and is possible because iDAR is better able to mimic the way human brains process visual information. In a press statement, AEye chief of staff Blair LaCorte said the company believes iDAR can potentially track moving objects, including trucks and drones, from five kilometers to 10 kilometers away.
At an event in Brazil this morning, Lenovo announced the latest addition to its line of modular handsets. The Moto Z3 doesn’t represent a big leap for the line, but it does introduce a slight change in approach for a company hoping to make a bigger splash on the modular side of the question.
Like its predecessor, the Z3 Play will be priced at an extremely reasonable $499. That includes some upgrades, such as a slight redesign with a glass back (Gorilla Glass 3 on both sides) and a screen that’s been extended to six inches (a 2160 x 1080 resolution at 18:9), courtesy of thinner bezels and fingerprint reader that’s been moved around to the side of the devices.
That’s a 79 percent screen-to-body ratio, by Motorola’s count, but no embrace yet of the nearly ubiquitous top notch. The company, it seems, is saving that for the upcoming Motorola Power One, its upcoming iPhone X-like flagship. The Z3 Play, for all of the flashiness of modularity, is still a mid-tier handset, as evidenced by (among other things), the octa-core Snapdragon 636 inside.
One of the key differentiators here, however, is how the company is selling the device. Bundles make a lot of sense with a device for which accessories are a key selling point. A number of third parties have offered some version of this, discounting mods with the purchase of the phone. Now, however, the bundles are being offered from the get-go, included as part of that $499 price point.
The Z3 will ship with either Motorola’s first-party speaker or battery pack. Availability will depend on the country. Here in the States, for example, it seems we’ll only be getting access to the battery version, which augments the handset’s solid 3000 mAh “all day” battery. It is, understandably, the best-selling Moto Mod — the speaker, meanwhile, is in second place. The availability of said bundles will be dependent on the popularity of those devices in a given location.
Motorola’s given out these numbers before, but they bear repeating: one-third of those who purchase a Moto Z device end up picking up a Mod. Roughly 60 percent of that number, meanwhile, buy two or more. Those numbers are surprisingly low, given that Mods seems like such a central selling point for the product.
After all, the company has made some sacrifices for such modularity. Chief among these are the fact that there’s really not a lot of wiggle room with regard to device footprint. As long as the company wants to continue making the devices backward-compatible with Mods, the phones are going to have remain roughly the same size.
Motorola squeezes a little more screen out of the device through the above-mentioned methods, and while it tells me that it’s confident there’s still space to work with on future devices, it does seem to have painted itself in a corner here. For all of Essential’s seeming struggles, the device’s connector allowed for a broader range of sizes and shapes.
The company’s no doubt hoping these bundles will kickstart interest in Mods. Until one comes along that really excites the fan base, however, it’s easy to see how making the two most popular Mods available essentially for free could ultimately eat into potential sales.
Meantime, the device will be arriving at Best Buy, Walmart, Target, Fry’s and B&H Photo this summer. It will also be available through Amazon’s Prime Exclusive program.
Five-minute meditation app Simple Habit announced today that it has raised a $10 million Series A, led by Foundation Capital. The round brings the developer’s total funding up to $12.5 million, following a $2.5 million seed last year.
The Shark Tank alum has been kicking since 2016, the result of CEO and co-founder Yunha Kim’s attempt to build a kind of “Spotify for Meditation.” The startup graduated Y Combinator in April of last year and has made a large push to increase available content.
The company has received praise for its focus on helping users incorporate short meditation sessions into their busy lives. And certainly the time is pretty ideal if you happen to be a mindfulness app in search of some serious VC.
Most of the reception has been positive, and according to numbers provided to TechCrunch by SensorTower, Simple Habit was the third most popular meditation app in the iOS App Store for Q3 2018. The app trails only Calm and Headspace in terms of both downloads and revenue.
While the press and public may have been denied a dramatic raise-your-right-hand moment in Congress this week, Facebook’s chief executive is still under legal obligation to tell the truth.
If it feels like Zuckerberg is bending the truth, know that making a false statement to Congress might be difficult to prove given the slippery nature of congressional testimony, but it’s still illegal.
Since some corners of the internet appear to be floating a conspiracy theory that Zuckerberg can get away with lying because he did not take the oath, we clarified that point with the offices of some of the committee members questioning him.
“Lying to Congress is always a crime,” a representative for Senator Dianne Feinstein clarified to TechCrunch. “You don’t need to be sworn in.”
A witness who is not under oath cannot face perjury charges but they could face charges pertaining to making “false statements,” a broader statute that is not specific to lying under oath.
As Lawfare clarifies:
By far the broadest federal statute criminalizing lying is 18 U.S.C. § 1001, which makes it a crime to “knowingly and willfully . . . make any materially false, fictitious, or fraudulent statement or representation” in the course of “any matter within the jurisdiction of the executive, legislative, or judicial branch” of the federal government. There’s no requirement that the statement be under oath.
Committees handle the matter of swearing-in a witness a number of different ways, and there are three committees involved in Zuckerberg’s testimony this week: the Senate Committee on the Judiciary, the Senate Committee on Commerce, Science, and Transportation and the House Energy and Commerce Committee. The Senate committees banded together to form a joint hearing on Tuesday.
As a Republican Commerce committee aide told CNN, “By tradition, the Commerce Committee does not swear-in witnesses.”
As Slate reported in a piece exploring the tradition of the oath, “the judiciary committee requires an oath only sometimes, according to the procedural guidelines of the Senate select committee on ethics.” Where it is not required, the decision to require the oath can be made at the discretion of the committee chairman and that decision takes place during the hearing’s planning stage.
“Witnesses aren’t always sworn in before voluntarily providing testimony,” Chuck Grassley’s Senate Judiciary Committee press secretary told TechCrunch.
Still, it isn’t exactly random. It’s possible that Facebook stipulated that Zuckerberg not be made to take the oath as a condition of his appearance before Congress. The optics of Facebook’s founder with his right hand raised would likely be anathema to the feverishly PR-conscious company.
An aide to a prominent Senator not questioning Zuckerberg this week confirmed to TechCrunch that such a negotiation would be unusual but not impossible. Facebook did not respond to our questions on the topic.
While no one can legally outright lie in responding to Congress — under oath or not — witnesses go to great lengths to temper their speech so they don’t get into hot water. During his first Congressional testimony, Zuckerberg spoke in an extremely disciplined, well-practiced way that adhered closely to safe talking points established in advance.
A number of Zuckerberg’s statements could certainly be interpreted as lying by omission in an informal sense, but legally his testimony remains strategically vague enough to stay well within legal bounds.
Responding to criticism from his recent trip to Myanmar, Twitter CEO Jack Dorsey said he’s keen to learn about the country’s racial tension and human rights atrocities, but it has emerged that both he and Twitter’s public policy team ignored an opportunity to connect with a key civic group in the country.
A loose group of six companies in Myanmar has engaged with Facebook in a bid to help improve the situation around usage of its services in the country — often with frustrating results — and key members of that alliance, including Omidyar-backed accelerator firm Phandeeyar, contacted Dorsey via Twitter DM and emailed the company’s public policy contacts when they learned that the CEO was visiting Myanmar.
The plan was to arrange a forum to discuss the social media concerns in Myanmar to help Dorsey gain an understanding of life on the ground in one of the world’s fastest-growing internet markets.
“The Myanmar tech community was all excited, and wondering where he was going,” Jes Kaliebe Petersen, the Phandeeyar CEO, told TechCrunch in an interview. “We wondered: ‘Can we get him in a room, maybe at a public event, and talk about technology in Myanmar or social media, whatever he is happy with?'”
The DMs went unread. In a response to the email, a Twitter staff member told the group that Dorsey was visiting the country strictly on personal time with no plans for business. The Myanmar-based group responded with an offer to set up a remote, phone-based briefing for Twitter’s public policy team with the ultimate goal of getting information to Dorsey and key executives, but that email went unanswered.
When we contacted Twitter, a spokesperson initially pointed us to a tweet from Dorsey in which he said: “I had no conversations with the government or NGOs during my trip.”
We know we can’t do this alone, and continue to welcome conversation with and help from civil society and NGOs within the region. I had no conversations with the government or NGOs during my trip. We’re always open to feedback on how to best improve.
— jack (@jack) December 11, 2018
However, within two hours of our inquiry, a member of Twitter’s team responded to the group’s email in an effort to restart the conversation and set up a phone meeting in January.
“We’ve been in discussions with the group prior to your outreach,” a Twitter spokesperson told TechCrunch in a subsequent email exchange.
That statement is incorrect.
Still, on the bright side, it appears that the group may get an opportunity to brief Twitter on its concerns on social media usage in the country after all.
The micro-blogging service isn’t as well-used in Myanmar as Facebook, which has some 20 million monthly users and is practically the de facto internet, but there have been concerns in Myanmar. For one thing, there has been the development of a somewhat sinister bot army in Myanmar and other parts of Southeast Asia, while it remains a key platform for influencers and thought-leaders.
“[Dorsey is] the head of a social media company and, given the massive issues here in Myanmar, I think it’s irresponsible of him to not address that,” Petersen told TechCrunch.
“Twitter isn’t as widely used as Facebook but that doesn’t mean it doesn’t have concerns happening with it,” he added. “As we’d tell Facebook or any large tech company with a prominent presence in Myanmar, it’s important to spend time on the ground like they’d do in any other market where they have a substantial presence.”
The UN has concluded that Facebook plays a “determining” role in accelerating ethnic violence in Myanmar. While Facebook has tried to address the issues, it hasn’t committed to opening an office in the country and it released a key report on the situation on the eve of the U.S. mid-term elections, a strategy that appeared designed to deflect attention from the findings. All of which suggests that it isn’t really serious about Myanmar.
Apple’s HomePod is a distant third behind Amazon and Google when it comes to market share for smart speakers that double up as home hubs, with less than 5 percent share of the market for these devices in the U.S., according to one recent survey. And its flagship personal assistant, Siri, has also been determined to lag behind Google when it comes to comprehension and precision. But there are signs that the company is intent on doubling down on AI, putting it at the center of its next generation of products, and it’s using acquisitions to help it do so.
The Information reports that Apple has quietly acquired Silk Labs, a startup based out of San Francisco that had worked on AI-based personal assistant technology both for home hubs and mobile devices.
There are two notable things about Silk’s platform that set it apart from that of other assistants: it was able to modify its behavior as it learned more about its users over time (both using sound and vision), and it was designed to work on-device — a nod to privacy and concerns about “always on” speakers listening to you, improved processing on devices and the constraints of the cloud and networking technology.
Apple has not returned requests for comment, but we’ve found that at least some of Silk Labs’ employees appear already to be working for Apple (LinkedIn lists nine employees for Silk Labs, all with engineering backgrounds).
That means it’s not clear if this is a full acquisition or an acqui-hire — as we learn more we will update this post — but bringing on the team (and potentially the technology) speaks to Apple’s need and interest in doubling down to build products that are not mere repeats of what we already have on the market.
Silk Labs first emerged in February 2016, the brainchild of Andreas Gal, the former CTO of Mozilla, who had also created the company’s ill-fated mobile platform, Firefox OS; and Michael Vines, who came from Qualcomm. (Vines, incidentally, moved on in June 2018 to become the principal engineer for a blockchain startup, Solana.)
Its first product was originally conceived as integrated software and hardware: the company raised just under $165,000 in a Kickstarter to build and ship Sense, a smart speaker that would provide a way to control connected home devices and answer questions, and — with a camera integrated into the device — be able to monitor rooms and learn to recognize people and their actions.
Just four months later, Silk Labs announced that it would shelve the Sense hardware to focus specifically on the software, called Silk, after it said it started to receive inquiries from OEMs interested in getting a version of the platform to run on their own devices (it also raised money outside of Kickstarter, around $4 million).
Potentially, Silk could give those OEMs a way of differentiating from the plethora of devices that are already on the market. In addition to products from the likes of Google and Amazon, there are also a number of speakers powered by those assistants, along with devices using Cortana from Microsoft.
When Silk Labs announced that it was halting hardware development, it noted that it was in talks for some commercial partnerships (while at the same time open sourcing a basic version of the Silk platform for creating communications with IoT devices).
Silk Labs never disclosed the names of those partners, but buying and shutting down the company would be one way of making sure that the technology stays with just one company.
It’s tempting to match up what Silk Labs has built up to now with Apple’s efforts specifically in its own smart speaker, the HomePod.
Specifically, it could provide it with a smarter engine that learns about users, operates even if internet is down and secures user privacy, and crucially becomes a linchpin for how you might operate everything else in your connected life.
That would make for a mix of features that would clearly separate it from the market leader of the moment, and play into aspects — specifically privacy — that people are increasingly starting to value more.
But if you consider that spectrum of hardware and services that Apple is now involved in, you can see that the Silk team, and potentially the IP, also may end up having a wider impact.
Apple has had a mixed run when it comes to AI. The company was an early mover when it first put its Siri voice assistant into its iPhone 4S in 2011, and for a long time people would always mention it in conjunction with Amazon and Google (less so Microsoft) when they would lament about how a select few technology companies were snapping up all the AI talent, leaving little room for other companies to get a look in to building products or having a stake in how it was being developed on a larger scale.
More recently, though, it appears that the likes of Amazon — with its Alexa-powered portfolio of devices — and Google have stolen a march when it comes to consumer products built with AI technologies at their core, and as their primary interface with their users. (Siri, if anything, sometimes feels like a nuisance when I accidentally call it into action by pressing the Touch Bar or the home button on my older model iPhone.)
But it’s almost certainly wrong to guess Apple — one of the world’s biggest companies, known for playing its hand close to its chest — has lost its way in this area.
There have been a few indications, though, that it’s getting serious and rethinking how it is doing things.
A few months ago, it reorganized its AI teams under ex-Googler John Giannandrea, losing some talent in the process but more significantly setting the pace for how its Siri and Core ML teams would work together and across different projects at the company, from developer tools to mapping and more.
Apple has also made dozens of smaller and bigger acquisitions in the last several years that speak to it picking up more talent and IP in the quest to build out its AI muscle across different areas, from augmented reality and computer vision through to big data processing at the back end. It’s even acquired other startups, such as VocalIQ in England, that focus on voice interfaces and “learn” from interactions.
To be sure, the company has started to see a deceleration of iPhone unit sales (if not revenues: prices are higher than ever), and that will mean a focus on newer devices, and ever more weight put on the services that run on these devices. Services can be augmented and expanded, and they represent recurring income — two big reasons why Apple will shift to putting more investment into them.
Expect to see that AI net covering not just the iPhone, but computers, Apple’s smart watch, its own smart speaker, the HomePod, Apple Music, Health and your whole digital life.
Every couple of months, I talk to an entrepreneur who is interested in building a marketplace for buying and selling app businesses (i.e. the actual IP and ownership of an app or other piece of software). These markets always seem to suffer from a lack of liquidity, and one reason why is that it’s really hard to know how much technical debt is latent in a codebase.
First, the developer behind the codebase may not even be aware of the technical debt they have piled on. Second, until a software engineer really understands a codebase, they are almost certainly not in a position to answer a question on technical debt authoritatively. That makes it hard to get third-party opinions on anything but the most simple codebases.
This opaqueness isn’t unique to software though. We lack tools for understanding the maintenance quality of assets — physical or digital — across our economy. Even when we do perform maintenance or hire someone to do it for us, it can be hard to verify that the work was performed well. How long does it take for an auto mechanic to truly evaluate the maintenance of a used car?
I was thinking about this challenge of evaluating maintenance when I read this deep dive into the economics of old housing by Akron’s head of planning, Jason Segedy:
It has been suggested to me, on more than one occasion, that indebted, college-educated Millennials could be lured back to the city by selling them these old, poorly-maintained houses for $1.00, and having them “fix up the house.”
People who say this do not have a realistic idea of what “fixing up” an old house entails—neither in terms of the scope of the rehabilitation work that would be required, nor in terms of the level of skill, time, and/or money needed to do the work.
Even in a low cost-of-living market like ours, $40,000 houses are generally not a “good deal.” They are almost always a liability. They are a ticking time bomb of deferred maintenance. They are an albatross.
In his own case:
All told, I have spent $93,400 on improvements to this house over the past 15 years. This works out to an additional $502 per month, above what I was paying in mortgage, taxes, and insurance. When you add all of that together, the total monthly cost works out to $1,439.
The total monthly cost for the brand-new house? $1,444. Which comes out to exactly $5.00 per month more than my 72-year-old house.
Maintenance is the secret challenge of any asset, physical or digital. We have been talking about the Tappan Zee bridge here a bit this week, and maintenance played an outsized role in forcing New York to spend even more money on a new bridge. From Phil Plotch’s book Politics Across the Hudson:
However, he also recognized that the Authority probably put less money into the bridge after it decided to replace it. “When maintenance folks know that a capital project is under design and will soon deal with the problems they have been battling for years,” he said. “They often back down a bit and turn their attention and resources to other areas.”
That didn’t work out so well:
One of the reasons the Thruway Authority wanted to build a new bridge in the late 1990s was to avoid replacing the bridge’s deck. However, the environmental review process took so long that the authority had to spend $300 million dollars to do exactly that anyway — after five-foot-wide holes started opening up along the length of the bridge.
Back in the software world, we have gotten much better about quantifying test coverage over the years, but we still seem to lack any means by which to evaluate technical debt. And yet, technical debt from my limited experience is hugely determinative on how fast product features can be launched.
It would be hugely helpful to have some sort of reasonably accurate grading system that said “this codebase is really up-to-date and clean” versus “this codebase is radioactive and run away from it.” Right now, so much of product engineering seems to be making decisions in the dark and discovering software quagmires. There has to be a better way.
Why we can’t build anything? (Part 5?)
Image from Honolulu Authority for Rapid Transit
Written by Arman Tabatabai
We’ve been obsessed with the infrastructure crisis in the U.S. lately and the question of “Why can’t we build anything?” In case you thought the California HSR shitshow was an isolated incident, think again.
Construction Dive provided some more details around the DOJ’s subpoena of the Honolulu High-Speed Rail Project (Honolulu Rail Transit) last week, which ordered the project leads to open up their books. Just like in California, after decades of debate, Hawaii’s project has been plagued by delays and cost overruns. Today, the project holds an estimated cost of around $9-10 billion, compared to initial estimates of $3-4 billion, and some academics and industry specialists are even saying that number is more like $13 billion-plus. The court order came just after a state-led audit found that much of the cost overruns could be tied to poor contracting, planning and management practices — just as in California.
Given the similarities here, it’s possible we could see the federal government try and pull back the $1.6 billion it had earmarked for the project if it doesn’t like what it sees. Despite calls for infrastructure improvement, the feds seem to be taking a tougher stance on the use of fed funds for these projects.
Construction Dive also highlighted that the $650 million renovation of Denver International Airport’s Jeppesen Terminal was delayed indefinitely after operators found structural deficiencies in the concrete. Sound familiar? Maybe it’s because in just the last year we’ve seen “structural deficiencies” mar SF’s Transbay Terminal project and DC’s Metrorail extension. Denver’s reclamation project is expected to cost $1.8 billion in its entirety and is a year behind schedule after breaking ground less than nine months ago.
India’s general election might also determine Facebook’s future in the region
Westend61 via Getty Images
Written by Arman Tabatabai
India’s Parliamentary Committee on Information Technology announced it would be meeting with Facebook in early March to discuss “safeguarding citizens’ rights on social or online news media platforms.” The government has approached social media with a cautious eye ahead of the country’s huge upcoming elections, as concern over the use and misuse of social and messaging platforms in global elections becomes a hot-button issue.
The topic came up in our recent conversation with The Billionaire Raj author James Crabtree. He believes the election will be a hugely important period for social platforms in India. Having experienced a number of major historical scandals, India’s citizenry has a fairly harsh — albeit somewhat selective — view on corruption, and Crabtree believes that if Facebook or others were to face blame for any alleged misconduct, the potential fallout from a political, regulatory and public opinion standpoint could be devastating.
The prospect of such an outcome becomes even more alarming for foreign social companies as India has ticked up focus on data localization and movements towards a “national champion” policy that will increasingly favor domestic firms over external players.
I love triangulation negotiation
The trade kerfuffle between China and the U.S. is sort of just continuing at a glacial pace. Literally glaciers, because Greenland got involved over the past few months. Greenland power politics is very far afield of TC, but I wanted to point out one little nuance that offers a worthwhile lesson.
Greenland has wanted to upgrade its airports for some time (there are no roads between major cities in the sparsely populated but huge country). But Denmark, which Greenland is a constituent country, has rebuffed those requests; that is, until the Chinese got involved. From a WSJ article:
After Kalaallit Airports short-listed a Chinese construction firm to build the new airports, Denmark conveyed its alarm to the Pentagon. After Mr. Mattis got involved, Denmark’s government asked a consortium led by Danske Bank to help assemble an alternative financing package.
Officials in Greenland were pleasantly surprised by the terms. “Even Chinese funding is not as cheap as this,” Mr. Hansen said.
Plus this quote:
“He was not into it at all—until the Chinese showed interest,” said Aleqa Hammon, Greenland’s former prime minister, speaking of [Danish Prime Minister] Rasmussen.
This is how you negotiate! Get two larger adversaries lined up on either side of the line, and just start going back and forth between them. This works with Google and Facebook, Sequoia and Benchmark, or any other competitors. At some point, the game isn’t just a deal, it’s also the face-saving that comes from not losing to the competition.
Japan joining the trend of looser fundraising rules for growing companies
Written by Arman Tabatabai
Earlier this week, we talked about how security exchanges around the world were looking to loosen fundraising rules for young companies. The softening of these rules might be indicative of a wider trend, with Japan now proposing revised rules to make it easier for startups to fundraise through traditional brokerages and trade shares of listed companies. While the motivation here may not be to attract IPO deals like it seems to be in the U.S. and China, with the creation of more funding alternatives and with companies opting to stay out of the public markets for longer, national securities industries seem to be trying to brand themselves as the best venue for young companies to grow.
More discussion of megaprojects, infrastructure and “why can’t we build things?”
We are going to be talking India here, focused around the book “Billionaire Raj” by James Crabtree, who we just interviewed and will share more soon.
We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
Societal resilience and geoengineering are still top-of-mind.
Some more on metrics design and quantification.
To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to firstname.lastname@example.org.
This newsletter is written with the assistance of Arman Tabatabai from New York
Japanese messaging app company Line is pumping 20 billion JPY ($182 million) into its mobile payment business as it tries to turn things around following a challenging year in 2018.
The company announced the infusion into Line Pay, a subsidiary that it fully owns, in a filing that stated the new capital is “necessary funds for its future business operation.” No further details were provided.
The investment comes on the heels of Line’s latest financial report which saw it post a 5.79 billion JPY loss as revenue grew by 24 percent to reach 207.18 billion JPY in 2018. Line has long been a top money maker in the App Store, but its efforts to build out content around its messaging platform and games division have turned out to be expensive, with a job service, manga platform and e-commerce business among its ventures.
In addition to more content, payments are also seen as “glue” that can increase engagement within the Line ecosystem and its main messaging app.
The company is going after the cashless opportunity in Japan, where it is the dominant chat app with an estimated 50 million registered users. The country is notable for its continued use of cash, but the government is using the upcoming 2020 Olympic Games as an opportunity to move toward a digital future. Aside from its core Line Pay service, which sits inside the Line chat app, Line is introducing its own credit card with Visa and has gone after Chinese tourists through a tie-in with Tencent, the internet giant behind China’s top messaging app WeChat.
The service was launched more widely but it has shuttered in other markets, including Singapore where it was ended in February 2018.
Beyond payment, Line is also moving into banking and financial services. It is working to launch a digital bank in Japan and last year it announced plans to investigate the potential to roll out loans, insurance and other services backed by its own cryptocurrency. While it didn’t hold an ICO — its “Link” token is earned or can be bought on exchanges — Line did dive into crypto in a major way, opening its own exchange and starting a crypto investment fund, too. With the bear market in full effect, and token valuations dropping by 90 percent across the board, we haven’t heard too much more from Line regarding its crypto plans.
Roblox, which allows kids to create 3D worlds and games, has raised an additional $150 million in funding.
The company didn’t disclose its valuation in the announcement, but a source with knowledge of the deal told us that it valued Roblox at more than $2.5 billion — the price that Microsoft paid to acquire Minecraft four years ago.
“This is a big year for us that fortifies the dream,” said co-founder and CEO David Baszucki .
Earlier this year, Roblox announced that it had become cash-flow positive, and Baszucki told me the company remains “extremely profitable.” So why raise more money?
“First and foremost, the reason to fundraise is to have a war chest, to have a buffer, to have the opportunity to do acquisitions, to have a strong balance sheet as we grow internationally,” he said.
In order to support that growth, Baszucki said Roblox will be opening offices in some regions like China (“most likely with a partner that hasn’t been announced yet”), but it also requires building out infrastructure like local language and local payment support.
Roblox has now raised a total of $185 million in equity funding. The new round was led by Greylock Partners and Tiger Global, with participation from existing investors Altos Ventures, Index Ventures, Meritech Capital Partners and others.
Greylock’s David Sze has had big successes in both gaming and social media, having backed Facebook, LinkedIn, SGN and others. But he said Roblox is the first company he’s seen to “unify those two together on a platform in a magical kind of way.”
Apparently, Sze has known Baszucki for a long time — their kids went to the same school, and Sze remembered Baszucki bringing an early version of Roblox to the science fair. Gaming companies can be a risky investment, because their business relies on creating new hits, but Sze said Roblox is different.
“They aren’t making the games,” Sze said. “They’re letting the long tail of developers develop all the games on the platform, they’re let users decide what the successes are. It’s much more like a YouTube or much more like an Apple with the App Store.”
In a blog post about the funding, Sze even suggested that some of the next big gaming franchises could emerge from the Roblox platform, a prediction he repeated in our interview
“I’d be surprised if there aren’t some huge, high quality games that aren’t originated on Roblox in the next three-to-five years,” he said.
Roblox says it now has more than 70 million monthly active users, with more than 4 million creators who have built more than 40 million-plus experiences.
Of course, having a big platform with lots of user-generated content also creates risks — as illustrated in a recent incident where characters mimed gang raping a young girl’s avatar. (Roblox said a single server had been hacked, allowing users to upload code that violated the company’s rules.)
Asked whether these risks gave him any pause, Sze said, “User protection, user safety, all the aspects of having of having youth on your platform, it takes those things extremely seriously.”
“Are we perfect? No,” he said. “But I can tell you from inside the company that it’s an incredibly high priority. They’ve already done lots of things to help protect and make the user experience the best, and they have a list of stuff that they’re already working on.”
I’ll be interviewing Baszucki on-stage at Disrupt SF this afternoon, so stay tuned to TechCrunch (or come on out to the event!) for more on the funding and his future plans.
This story has been updated with the corrected amount for Roblox’s total funding.
How can Lime differentiate its scooters and bikes from the piles of Birds and Spins filling Los Angeles sidewalks? Apparently with a physical storefront where it can convince customers of the wonders of on-demand mobility. According to a job listing from Lime seeking a “Retail Store Manager,” the startup plans to open a “lifestyle brand store in Santa Monica”.
[Update: Following the publication of this article, Lime responded to our inquiry, telling TechCrunch “In the coming year, Lime will be opening brick & mortar storefronts in major US and international markets, starting with Santa Monica, California. Locations will place heavy importance on community engagement, rider education, and brand experience.”]
Lime will rent vehicles directly from the store as well as charge them, with the full-time manager’s role including “monitoring inventory levels” as well as daily operations, and employee recruiting. They’ll also be throwing live events to build Lime’s hype. Given the company is calling this a lifestyle store, the focus will likely be on showing how Lime’s scooters and bikes can become part of people’s lives and enhance their happiness, rather than on maximizing rental volume.
A rendering of Lime’s new office it’s building in San Francisco. The design could hint at what Lime wants to do with its retail store branding.
TechCrunch has confirmed Lime’s plans for the store, and that the deal to build it came through Lime’s investor Fifth Wall Ventures that arranges partnerships between tech companies and real estate developers. As for what will happen at the store, Fifth Wall’s Adam Demuyakor tells me “There will be deployment of scooters, charging of scooters, and some sales of apparel and accessories that are related. There will be demos, tutorials, and presentations on how to be safe.” Growing Lime’s traction is critical to Fifth Wall, which led the startup’s $70 million Series B extension in February, and joined its $335 million Series C in July.
The big motive here is for Lime to repair relationships with the local community. Demuyakor tells me “when e-mobility companies appeared, some people really loved it, but some people said ‘you dropped a bunch of scooters on my sidewalk'” in what he called a “really irresponsible manner”. But with a physical store front, Lime will have human faces to push its side of the story. “Lime would have an opportunity to control the narrative, engage with the local community, and invest in Santa Monica. They can make it clear that they care about the constituency there . . . Educate them on the benefits, educate them on safety, and provide helmets.” That could counter the idea that scooters just get in the way and are an urban eye sore. “The narrative took on legs of its own” Demuyakor explains.
Fifth Wall worked on the Lime retail store deal with one of its core LPs, Macerich, the third-largest owner of shopping malls in the US. Lime will become the exclusive distributor of scooters at the Macerich-owned open-air mall Santa Monica place. The idea is that by linking up with Macerich, Lime will be able to deploy and charge scooters “where people are coming and going from the mall” Fifth Wall co-founder and managing partner Brendan Wallace tells TechCrunch. He explains that scooter companies have thought about expansion too purely from the standpoint of acheiving market saturation. “You have to partner with local organizations both public and private, and real estate organizations because real estate developers are typically the most politically influential.”]
The listing was first spotted by Nathan Pope, a transportation researcher for consultancy Steer, and later by Cheddar’s Alex Heath. We’ve reached out to Lime and will update if we hear back from the company. Glassdoor shows that the store manager job was posted more than 30 days ago, and the site estimates the potential salary at $41,000 to $74,000.
The sheer number of Lime scooters in Santa Monica where the store will arise is already staggering. Supply doesn’t seem to be bottlenecking as it is in some other cities. Instead, it’s the fierce competition from hometown startups like local favorite Bird that Lime wants to overcome through brick-and-mortar marketing. Often you’ll see scooters from Lime and Bird lined up right next to each other. And with similarly cheap pricing, the decision of which to use comes down to brand affinity. According to Apptopia, Bird’s monthly U.S. downloads surpassed Lime’s in July for the first time ever, despite Lime offering bikes as well as scooters.
There are plenty of people who still have never tried an on-demand electric scooter, and going through the process of renting, unlocking and riding them might be daunting to some. If employees at a physical store can teach people that it’s not too difficult to jump aboard, Lime could become their default scooter. This, of course, comes with risks too, as electric scooters can be dangerous to the novice or uncoordinated. More aggressive in-person marketing might pull in users who were apprehensive about scooting for the right reason — concerns about safety. And there’s also the issue of overhead costs. Beyond charging and repair facilities near its major markets, brick-and-mortar stores could crank up the burn rate on Lime’s $467 million in funding.
As cities figure out how to best regulate scooters, I hope we see a focus on uptime, aka how often the scooters actually function properly. It’s common in LA to rent a scooter, then discover the handlebar is loose or the acceleration is sluggish, end the ride and rent another scooter from the same brand or a competitor in hopes of getting one that works right. I ditched several Lime scooters like this while in LA last week.
Regulators should inquire about what percentage of scooter company fleets are broken and what percentage of rides end within 90 seconds of starting, which is typically due to a malfunctioning vehicle. Cities could then award permits to companies that keep their fleets running, rather than that litter the streets with massive paper weights, or worse, vehicles that could crash and hurt people. Scooters are fun, cheap and therefore accessible to more people than Ubers, and reduce traffic. But unless startups like Lime put a bigger focus on helmets and cautious riding behavior, we could trade congestion on the roads for congestion in the emergency room. Hopefully the retail store will drive closer ties between Lime and city governments to prioritize safety.
This article has been updated to include Lime’s statement as well as comments from Fifth Wall Ventures.