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Former Twitter India head joins Times Internet to lead its global partnerships business
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Jon Russell
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Well that was quick. , where he was head of its India business, Rishi Jaitly has revealed that he will take up the position of CEO at ‘s global business. Jaitly spent four years with Twitter and is one of a number of executives, including , to leave the U.S. firm’s Asia operations over the past month. Now he will lead Times Global Partners, the division of the media firm that works with international partners that want to expand into the Indian market. Times Internet, itself a digital subsidiary of the The Times Group, India’s largest media conglomerate, includes , , , and the among its global partners who have tapped its resources to move into India’s nascent internet space, which is primed for significant growth. The country currently has , that’s less than 25 percent of the population and or so. “My mission has always been to harness the power of technology and media to ensure we fully realize the untapped potential of people, communities and markets. Joining The Times Group as CEO of Times Global Partners advances my mission and the work of building bridges to and within India,” Jaitly, who will be based in New Delhi, said in a statement.
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“Anti-smartphone” Light Phone runs into delays
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Haje Jan Kamps
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For people who feel that we are a little bit connected these days, Kickstarter project was promising a respite. It was scheduled to ship in May this year, but has seen a number of setbacks. This week, the company issued . It says that while it missed its goal, it hopes to start shipping later this month. Light Phone’s goal was . Including a SIM card and the ability to take and make calls only, the phone aimed to have three weeks worth of battery life on a single charge. Tiny, pretty and with a three-week battery life. What’s not to love? The company suggests “A few limitations in our initial user experience goals due to some iOS restrictions” is the reason the device is shipping late, but the company has received some criticism for how it has handled its Kickstarter campaign, too. , instead opting to post updates exclusively to its campaign backers. Not a big problem for backers, of course, but a bit iffy to those of us who were following the company’s progress from the sidelines. The company came under fire for only offering a dated cell technology for the telephony side of the phone, suggesting that relying on 2G may have been a poor solution. In some countries, the 2G network is scheduled to be switched off soon. “Australian 2G is being switched off on 1st December 2016,” one backer writes, referring to the first round of switch-flicking during down under. The Light Phone company, in turn, offered to refund backers in countries where the phones would no longer be usable. When the Light Phone was first announced about 18 months ago, it seemed like a novel and interesting idea. At $100 per device, it’s undoubtedly cool, but the device is also entering a spectacularly competitive space. You can pick up for a seventh of the price, and most carriers will let you turn off SMS functionality altogether, if you feel passionate about only receiving phone calls. That raises the question; who is the Light Phone actually ? I look forward to trying the Light Phone and learning what it feels like to live a life without fending off the barrage of social media notifications. Realistically, however, if this was a problem someone was passionate about solving, they’d have found a way of turning off the notifications or get a no-features burner phone already. Don’t get me wrong, I love the design and the general concept, but it can’t be denied that creating a phone is a complicated process. On top of that, the types of radios used in mobile phones is heavily regulated throughout the world. The icing on the “hmm, is this gonna work” cookie: in telecoms R&D and manufacturing, a $400K budget (the amount the company raised from Kickstarter) to bring a product to market is an incredibly daunting prospect. Either way, Light Phone is an incredibly inspiring company; it takes some serious focus and dedication to bring a complex product in this space from cocktail napkin to brick-and-mortar shops. The company is bringing a fresh pair of eyes to the humble mobile phone, and I’ll be cheering them on from the sidelines.
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Crunch Report | Facebook’s Fake News Problem
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Khaled "Tito" Hamze
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Tito Hamze, John Mannes
Tito Hamze
Joe Zolnoski
Joe Zolnoski TechCrunch C/O Tito Hamze
410 Townsend street
Suite 100
San Francisco Ca. 94107
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Logz.io raises $16 million so folks can better understand and monitor their networks
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Jonathan Shieber
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It may not be the most compelling technology for consumers, but for businesses, it’s important to know what’s going on in a network. That’s why Logz.io has managed to raise $16 million in a new round of financing from investors led by OpenView Venture Partners with participation from the company’s previous investors 83North and Giza Venture Capital. As a result of the investment, OpenView’s Jim Baum, a venture partner with the firm will take a seat on the Logz.io board of directors. The former chief executive of Netezza and current chairman of Dyn ), Baum said that OpenView’s investment was, in part, a function of the traction that Logz.io has in the market. The company services roughly 1,000 companies from 80 different countries and has grown to prominence in just two years. Logz.io couldn’t have prevented the outage that shut down Dyn and crippled the Internet last month, but it did enable the company to bounce back quickly. “Dyn relies on Logz.io service in our global network operations team every day,” said Baum in a statement. “Being actively involved with Dyn, I saw first had how instrumental Logz.io was in our ability to quickly respond to and mitigate the recent unprecedented DDoS attacks we experienced, helping us assess the source, target, and protocols used.” Since its launch in 2014, Logz.io raised $8 million in financing from venture capital firms and developed and launched an artificial intelligence service. Combining machine learning with human insights, the company is able to automate processes in developer and infrastructure operations so that coders and systems administrators can work together more effectively on product development.
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This is why Snapchat didn’t give Spectacles to techies
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Josh Constine
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If you want to make something cool, don’t give it to geeks first. Google Glass learned that the hard way. Despite Snapchat’s best efforts, Robert Scoble still got a hold of a pair of the . He’s the enthusiastic tech blogger above who shot a nude selfie wearing Google Glass in the shower that came to embody the gadget’s cursed brand. He even admits to me that it was smart that Snap Inc didn’t send him a pair. A SpectaScobles selfie was the exact opposite of Snapchat’s plan. That’s why it didn’t deliver any review units of Spectacles to bloggers, or send them to tech celebrities who usually get early beta access to new products. If it did, that would have forged a perception of Spectacles as a serious device meant to be painstakingly reviewed instead of casually played with as they should be. And it would have positioned them for serious adults and early adopters, instead of the typical teens that make up Snapchat’s core user base. So instead, it suddenly dropped a full of Spectacles on a beach boardwalk in LA, near a national park in Big Sur, California, and a roadside tourist trap off Route 61 near Tulsa, Oklahoma. Snapchat lovers scrambled to get there quick and in hopes of scoring a pair. There are several reasons this was brilliant: – People love exclusivity, but with an air of egalitarianism. By not openly selling them online or in a permanent brick-and-mortar store, and instead making their availability extremely limited, somewhat random, and only for those willing to stand in line, their perceived value skyrocketed. Sure, people are selling them on eBay for huge markups at $800 to $2000 dollars. But the point was anyone with $130 and some luck could don the glasses. – Snapchat itself blew up in LA high schools, becoming a hit with a densely interconnected group of teens long before the press picked up on the phenomenon. Facebook actually started quite similarly, only being available at a few elite colleges like Harvard, Columbia, and Stanford. Spectacles were also launched like this. Beyond making everyone else a bit jealous, it limited the chance of someone being the only person in their area using the product. For Snapchat and Facebook, that meant people actually had friends to use the app with. And for Spectacles, it means there will still be hype left to exploit when they hit the east coast and abroad. – When was the last time the acquisition of a product felt as momentous as owning the product itself, and that moment wasn’t annoying? Sure lots of people stayed up late to order their Apple Watch and tweet what configuration they got, though I wouldn’t call that fun. People got excited about their place in the waitlist to use the Mailbox email app, yet the eventual rollout was anti-climactic. But the googly-eyed Snapbot vending machine, dropped in scenic locations, with an augmented reality try-on screen, got almost as much coverage as the videos you make with Spectacles. Snapchat isn’t the only one realizing big, flashy press conferences and early access for journalists aren’t the only way to release a product. Facebook cut back on glitzy launch events following one it threw for Facebook Home, which immediately flopped. And after Sean Parker’s video app Airtime bumbled its 2012 launch extravaganza with broken demos featuring celebrities like Jim Carrey, its 2016 relaunch had no event attached. Snap Inc CEO wearing Spectacles, shot by famous photographer Karl Lagerfeld for the And poor Google Glass. It tried to normalize wearing a computer on your face by handing it to the least fashionable people around, bloggers and app makers. It needed people to look cool wearing it, or at least not super weird, before anyone cared what the reviews said and the apps did. That’s why the first memorable photos of Spectacles weren’t shot by Scoble, but by famous fashion photographer Karl Lagerfeld. Scoble concludes that the Spectacles Snapbots “make a lot more sense than the way Google rolled out Google Glass to developers and nerds.”
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Firefly takes $5.6M Series A for its online learning tool for schools
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Natasha Lomas
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, a London-based edtech company that launched its SaaS teaching and learning support platform for schools back in 2009, has taken its first VC investment as it looks to accelerate growth of its user base — announcing a £4.5 million Series A today. Lead investor in the round is , which has put in £3 million. Beringea is also investing, with the caveat that their investment remains “subject to closing conditions” at this point — owing to it being a U.K. venture capital trust, and needing to gain confirmation from HMRC the investment qualifies (a formality at this point, says Firefly). Its cloud-based support platform lets teachers set homework assignments, track pupils’ progress, provide feedback and share learning resources. For students it’s positioning it as a hub for accessing and organizing learning resources and homework assignments. And for parents the idea is the ability to be looped in to kids’ school work progress automatically — by letting them view homework assignments, timetables and so on, without adding to teachers’ workloads. Its overall pitch for the platform is it makes learning more transparent, helps parents be more engaged and involved, helps teachers be more efficient and raises kids’ attainment levels by facilitating “joined-up conversation.” The platform has mobile and desktop apps; integrates with Google Apps and Office 365; and Firefly also has its own API for education software providers to plug in their content. While there’s no shortage of players hoping to take a slice of the edtech market — schools in the U.K. spend some £900 million a year on education technology — Firefly reckons it can stand out in a crowded and competitive space by focusing on usability/ease of use; and by having a feature set that caters to schools’ specific needs rather than trying to repurpose a feature-laden business or university learning platform for the schools market (as they argue some rivals do). But it’s worth noting that tech giants such as , so competition is only likely to step up. At this point Firefly has 480 schools as paying subscribers for its platform, with a reach of around 400,000 pupils. Adoption has so far skewed toward public schools, with 59 percent of its users being independent schools versus 26 percent state schools, although it says it is seeing its best growth in the U.K. state sector. It also has 15 percent international schools. Pricing is based on student numbers — ranging from £7 to £12 per student per year. While the founders say the platform has taken revenue and been profitable since launch, the new funding is aimed at accelerating growth in the U.K. and abroad — with a plan to expand its office and operations in Australia. They’re intending to double the size of the company during this funding phase — currently the team is 50-strong. As well as expanding their sales and marketing activity to fire up on the growth front, the funding will also be spent on R&D to continue developing the platform. Commenting on the funding in a statement, Simon Calver, founding partner at BGF Ventures, said: “Firefly is already an international business operating in over thirty countries and we think this product has the potential to be the foremost platform in the global Edtech space.” “There are lots of apps and platforms for schools out there but Firefly has created a complete platform that integrates reminders, messaging, homework setting activities and learning resources. It is easy for teachers, pupils and parents to use the platform and can transform the way schools are run, so that everyone is using their time fruitfully to improve education results for pupils,” he added.
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Levie on what Trump could mean for tech
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Katie Roof
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Indiegogo enlists MicroVentures for a new investment platform
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Brian Heater
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For sites like , supporting a project generally means a pat on the back, a t-shirt or, best-case scenario, an early delivery of whatever it is that company is selling. Leveraging a recently passed securities rule signed into law by President Obama some six months back (part of the 2012 JOBS Act) that lowers the bar on personal investments, Indiegogo is launching Equity Crowdfunding, a platform aimed at giving small-scale investors a stake in the companies they back. The platform was launched today in collaboration with investment bank MicroVentures. The investment opportunities are listed on both companies’ sites, though MicroVentures will be handling transactions through its own platform. At launch, the service will offer investments in a quartet of startups, including ArtCraft Entertainment’s already well-crowdfunded game Crowfall, sports sensor Play Impossible, music social media platform BeatStars and the DC-based distillery Republic Restoratives. While it’s not the first platform to offer this sort of take on the investment process, Indiegogo remains one of the best-known names in the crowdfunding world; as such, this move could help mainstream this manner of small-stakes equity offering, particularly with MicroVentures doing a lot of the heavy lifting. The page is , featuring the aforementioned four projects. Individual investments start at $100 and are open to anyone age 18 and up. Pricing will be set by the companies, which are also required to show investors how they will use the money and offer periodic updates on the health of their business.
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Happy 20th birthday, ICQ!
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Devin Coldewey
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Uh-oh! It’s 20 years to the day since the introduction of one of the internet’s most well-remembered chat apps: ICQ. It was pretty barebones in its first form, released by its Israeli student creators in November 1996, but over the next year had versions available for Windows 95, 3.1 (not everyone wanted to upgrade) and Macs (presumably System 7). Remember this noise? The online chat world was a simpler one at the time, at least in terms of the market and technology used. ICQ was simple and unencrypted, and every user was assigned a number — six digits at first, more later — for ease of operation. You could message anyone whose number you had, and you could gather them by fair means or foul, on IRC, BBS or AOL — or at school, of course, the way you’d exchange phone numbers. At first, contact lists and other info were even kept client-side, making it an early success of peer-to-peer as well as messaging. And a relatively open architecture meant it could be cloned and forked. Who can forget the little status icons, the sense of discovery and independence, the possibilities of a platform like this? It was popular among nerds of the day (source: was one), but this type of chat app quickly outgrew its humble beginnings. AOL Instant Messenger got its standalone in mid-1997, building on the concept and making it an easy transition from millions of AOL subscribers. Along with MSN Messenger, that pretty much blew the lid off the chat market, and prefigured today’s fractured ecosystem. (Disclosure: AOL owns TechCrunch — it was rather a different company back then, though.) Mirabilis, the company formed around ICQ and its technologies, was bought shortly thereafter by AOL for $407 million ($287M down and $120M more contingent on performance) — an eye-popping number at the time, though we’ve gotten used to such things in the two decades since. In 2001, it had more than 100 million users. I’m the wrong person to go into all the changes since then — the many forward-thinking features added, the sale in 2008 to what would later become the Mail.ru group, its enduring popularity in Russia and so on. . , and although it’s hard to say why you should choose it over the many other offerings today, it’s sort of comforting to think that the brand and basic function of something like ICQ can endure for so long in so chaotic an environment. Oh, and the desktop version is . Happy 20th, ICQ! Many happy returns.
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Context is key for valuations
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Jennifer Swanson Lowe
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For most of the past five years, investors in private and public software companies prized revenue growth above all else. Investors were more than willing to overlook near-term profitability (or lack thereof) in favor of an acute focus on growth. As a result, entrepreneurs were encouraged to invest in building massive sales teams as quickly as possible to accelerate revenue growth, regardless of the cost. In late 2015 and early 2016, stock market volatility reverberated through private markets. Investors refocused on profits as they worried about the financial strength of portfolio companies, and entrepreneurs feared the loss of access to additional capital. Consequently, we saw significant downward pressure on valuations for many unprofitable businesses, even ones that still displayed attractive revenue growth. Today, investors and entrepreneurs are feeling more optimistic following a number of recent successful technology IPOs, including , , and . However, we believe profitability will remain a critical part of the valuation discussion going forward, as most of today’s public markets investors favor companies that strike the optimal balance between growth and profits. We analyzed more than 80 publicly traded software companies and concluded that growth alone is no longer a strong predictor of company valuation. Instead, profitability and growth both influence the price investors are willing to pay. This relationship is captured by looking at the sum of revenue growth and cash flow profitability, a new metric we call “Profit-Adjusted Growth” or PAG. Our analysis shows that today, PAG is a better predictor of software valuations than growth alone, and we expect this to continue as investors refocus on businesses best conditioned for long-term success. Software companies commanding the best valuations today are ones that use capital efficiently, maximizing growth while minimizing losses. In some cases, this may be a high-growth company that is burning cash, but less cash than similarly growing peers. In other cases, this may be a company growing revenue at a moderate pace, but yielding high cash flow in the process. The key is context: evaluating a company’s revenue growth rate in light of how much money the company spends to support that growth. Here’s an overview: The post-financial-crisis era for software companies has been marked by two coincident phenomena: (1) relatively easy access to capital; and (2) upward pressure on valuations for the highest-growth businesses. These factors have influenced both investor and company behavior. The fastest-growing companies attracted the most capital, and companies were encouraged to plow that capital into growth initiatives with the promise of even higher valuations and more capital ahead. This relationship was quantifiable in the public markets, as high-growth companies were consistently rewarded with the biggest multiples. On the other hand, company profitability had little-to-no impact on revenue multiples. As a result, companies had lots of incentive to grow as fast as possible, and little incentive to focus on profits. The laser focus on growth had an observable effect on company behavior, as well. Many companies decided to push out profitability and accelerate hiring plans, particularly in sales. For our sample group of public software companies, the average projected free cash flow margin dropped from 20 percent in 2012 and 2013 to only 14 percent in 2014 and 2015 as growth efforts took center stage. However, the ultimate benefit from these investments was debatable. The average expected revenue growth rate of the public software group showed little change, from 16 percent projected growth in 2012 and 2013 to 17 percent projected growth in 2014 and 2015. From 2010 to mid-2015, investors rewarded software companies for revenue growth with little attention to how much those companies spent to deliver that growth. Based on the data, there has been a quantifiable shift in investor thinking in private markets and public markets over the past year. The correlation between revenue multiples and revenue growth has steadily weakened since the stock market volatility in mid-2015. Investors are less willing to value companies based on revenue growth alone, and are less willing to pay a sizeable premium for the highest-growth companies. Source: Geodesic Capital. Analysis based on 82 publicly traded software companies. The stock market has returned to record highs over the past year, and a recent string of successful tech IPOs is an encouraging sign for private company investors and entrepreneurs. However, despite the market recovery, the relationship between revenue growth and valuation remains weak. While the market sell-off in 2015 proved temporary, we believe a more conservative mindset will continue as investors question high rates of cash burn and are less willing to fund companies that use capital inefficiently. The stock market has returned to record highs, but investors have not returned to a growth-at-any-cost mentality for software companies. Growth alone is no longer a reliable predictor of valuation. In the second half of 2015, revenue growth declined as a driver of public software company valuations, while in the first half of 2016, profitability increased as a driver. Today, both factors carry importance — however, the best and most consistent predictor of valuation seems to be a combination of growth and profitability. To capture and quantify this, we focused on Profit-Adjusted Growth (PAG) metric, which is the sum of a company’s projected revenue growth rate and free cash flow margin. This approach aims to value growth in the context of company profitability. The current market is paying the highest multiples for companies delivering the most attractive balance between growth and profits, while discounting companies that exhibit high growth but at an outsized cost, or that aren’t generating sufficient profitability at lower rates of growth. Source: Geodesic Capital. Analysis based on 82 publicly traded software companies. Growth still matters, but profitability matters, as well. Companies delivering the best growth relative to company profitability will be rewarded with the best valuations. What does this mean for entrepreneurs today? For entrepreneurs, the message is to still invest in the business, but ensure that those investments are generating measurable business impact. If spending on sales doesn’t have the desired impact, the best answer may not be just to spend more, but rather evaluate whether there are better ways to spend. A business showing moderate growth but exceptional profitability may be just as valuable as a company growing faster than its peers but burning massive amounts of cash to achieve this. We believe the market today is in a healthier place, as investors reward entrepreneurs that use capital wisely and build for long-term success rather than short-term returns.
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Chinese scientists CRISPR a human for the first time
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Sarah Buhr
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A group of Chinese scientists injected a human being with cells genetically edited using CRISPR-Cas9 technology. This is the first time CRISPR has been used on a fully formed adult human and it’s encouraged a biomedical battle between China and the United States. The scientists from China are hoping the genetically edited cells will help their patient fend off a virulent type of lung cancer in hopes it might work on other cancer patients who have not responded to chemotherapy, radiation and other treatments. However, another group of scientists in the U.S. proposed a similar study in June of this year. The $250 million study funded by Sean Parker’s new cancer institute is slated to take place at the University of Pennsylvania. The National Institutes of Health (NIH) has already given the research a thumbs up, but it’s still awaiting approval from the Food and Drug Administration (FDA). Scientists have already tried to test to treat human diseases. One method taking on HIV proved effective but CRISPR offers a much simpler path to healing by using an enzyme to snip out an unwanted genetic code. Using CRISPR-Cas9 technology, scientists could take out all the genes ready to grow a genetically inherited cancer in a person before that cancer starts. In theory, they could also wipe out the disease by removing the genes causing the disease after it has already started wreaking havoc on the body. This is what both the Chinese and U.S. scientists hope to discover, but it looks like China already has its foot in the door. The U.S. has a much more stringent medical regulatory system than many parts of the world and though the trial here is small and only intended for those patients with no other options it still must go through a process before we start altering human genetic code. The first U.S. trial isn’t meant to see whether or not the treatment is effective, however. Instead, it’s merely to test its safety. CRISPR isn’t fool-proof. Sometimes the Cas9 technology and can actually cause cancer. Meanwhile, Editas Biotechnology has running a CRISPR trial by 2017 for genes causing blindness in humans. Stanford also in the works for a human CRISPR trial to repair genes causing sickle cell anemia. But China’s early steps should be used as a cautionary tale for this new technology. Another group of Chinese scientists already ran CRISPR experiments on human embryos that — at least two-thirds of the embryos were found to have genetic mutations and only a fraction of the 28 surviving embryos (out of 86 total tested) contained the replacement genetic material. So it seems as though China has beat the U.S. to being first, we still have a long way to go in determining whether or not the technology is even safe enough at its current iteration to use for currently incurable diseases.
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Darrell Etherington
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AMC Networks backs Funny or Die
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Anthony Ha
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Comedy site has sold a minority stake to AMC Networks. The deal is intended to strengthen the ties between Funny or Die and AMC’s IFC channel, , with IFC President Jennifer Caserta joining the site’s board of directors. (Funny or Die already produced the IFC series and the upcoming series .) Funny or Die was founded by Will Ferrell, Adam McKay and Chris Henchy in 2007 and launched such popular series as and . Earlier this year, President of Production Mike Farah was . A few months later, , saying the company needed to focus on producing comedy content. This actually isn’t the first time Funny or Die has taken money from a larger media company — .
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AI-powered virtual assistant, Mezi, pivots to focus on travel
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Lora Kolodny
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A startup that originally launched as an , Mezi, has pivoted to focus on travel only. And why not? There’s little to do online that’s more annoying than booking flights, hotels and everything else you need just to take a break, or be somewhere for work. allows users to find and book flights and hotels and make restaurant reservations wherever they want to travel by simply typing a bit about what they’re looking for into a messaging-style interface, or chatbot. Rather than relying on AI from the likes of , Mezi has built its own deep learning and natural language processing systems to make its app able to converse with users, and to filter out three options that meet their needs each time they make a request. Travel apps, from big players like and to growing startups like or , already help users plan trips or find great deals on flights, hotels and more. But most require users to link to additional sites to complete their purchases. Mezi handles not just “discovery,” for its users, but also transactions. Users only have to set up their payments and personal info one time. And each time they ask Mezi to book them a trip, they have to confirm the whole itinerary before booking and purchases are complete. According to CEO Swapnil Shinde, the average travel order placed through Mezi in its 10 months of existence as an all-purpose, personal assistant app was $505. Travel requests grew three times faster than personal shopping, retail-related requests on Mezi, which had a much lower average dollar amount spent per order, he added. That’s what fueled the company’s decision to specialize around travel. Mezi is presenting at the travel industry conference this afternoon. The CEO will be speaking about how artificial intelligence is poised to transform online travel agencies, airlines, hotels and even local activities businesses. Shinde said his startup aims to help all of the existing players, whether they’re airlines, hotels or “OTAs” (online travel agencies) begin to benefit immediately from AI. “What AI does,” he said, “is to allow travel providers to give customers a concierge or white glove service, instead of telling them to DIY online.” Because Mezi stores information from each interaction with its users, the app learns a travelers’ preferences and requirements over time, and applies this knowledge to future conversations and to the decisions it makes about which itineraries will prove most appealing for the user.
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Intel announces $250 million for autonomous driving tech
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Kristen Hall-Geisler
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When decided to take a crack at its first keynote at an automotive event, it swung for the fences. The company’s CEO, Brian Krzanich, took the stage at the ‘s Automobility event this morning to announce that Intel Capital would be investing $250 million in autonomous driving over the next two years. Technologies that will benefit from the investment include connectivity, context awareness, deep learning and security. The goal of autonomous cars is to improve safety by removing as much human error as possible, which requires the vehicles and their data to be safe and reliable. Intel’s processing power itself comes into play with the amount of data required for autonomous driving. Krzanich pointed out that cars are already equipped with a variety of sensors, cameras and controllers that create, gather and transmit data. He said the automotive industry needs to be prepared for 4 terabytes of data being generated by every car every day. The fact that Intel chose to make this announcement at the LA Auto Show’s press days highlights the massive crossover that’s happening between technology and transportation. Representatives of every major car manufacturer were at CES 2016, one of the biggest shows for consumer electronics. The North American Auto Show will debut , its tech-focused event in January 2017. And this is the first year of Automobility, the rebranded tech event at the LA Auto Show. As cars become devices that we drive (or not) and devices become more integrated with our transportation experience across modes, including bike sharing and public transit, cross-pollination between tech companies and auto manufacturers is becoming more than the norm — it’s becoming a necessity.
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Google’s AI Experiments help you understand neural networks by playing with them
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Devin Coldewey
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Google’s work in and artificial intelligence is often interesting, but it can be a bit academic. People like to get their hands on these things — as much as you can, anyway, with something intangible. To that end, Google is collecting a bunch of little demonstrations of this emerging category of tech in its . The idea is simply to let people fool around with examples of machine learning, or download the code themselves to see how it works. Right now there are eight items available to look at, four of which are immediately available to interact with on the web: (best on mobile), which identifies objects seen by the device’s camera and hypes them up in a rhyming fashion. Trap airhorn warning. Basically has you playing Pictionary with a sketch recognition engine. You’ll be contributing to its training by drawing barns, school buses, lamps, etc. has sounds gathered by similarity, which you can select and sequence. Shuffle actually produces some pretty hot beats reminiscent of Matmos or Mira Calix. Maybe this is how do it. (Warning, alarming din when you drag around.) Does what it says on the tin. Bird calls organized by AI based on things like rhythm, tone and so on. Probably won’t help you find that one you always hear outside your window, but it’s better than the bird guides that literally just spell it out. (Sounds like ?) Others you can download or just watch examples of — I like the idea of the AI duet, for instance, which attempts to mimic and extend your style of keyboard playing. And the Thing Translator, which identifies and gives the translated word for whatever you show it, looks practical. , and check back later as well — it’s , so more will likely appear over time.
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Google’s Wifi router is now up for pre-order
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Brian Heater
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Perhaps you missed the news about . Wouldn’t have been hard. The company announced the thing at the same event it debuted the Pixel and its Daydream headset, so no one spent all that much time talking about the new home networking hardware. If you weren’t privy to the news, by way of refresher, the simply named Wifi is Google’s take on devices like Eero or Luma, designed to improve the wireless signal throughout a home by being scattered out around the abode. As such, the system will be available as a standalone or in a pack of three — though there’s some benefit to simply having one around. In fact, the company only recommends multiples for space over 1,500 square feet. Aside from creating a mesh network, the little devices also feature software designed to limit congestion by switching between channels and optimizing speeds by toggling through the 2.4 and 5GHz bands based on location. Google Wifi is now at $129 for a single device and $299 for a three-fer. It’s expected to release December 6.
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DJI debuts a monitor add-on for its controllers
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Brian Heater
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Along with the debut of two drones at what we assume will be DJI’s last big news of the year, the company showed off a new display add-on for its controller, aimed to take the place of a smartphone. The CrystalSky comes in 5.5 (920×1080) or 7.85-inch( 2048 x 1536) configurations, offering an ultra-bright screen designed for daylight settings that the company claims is up to four times brighter than a standard handset at 2000 cd/m². The screen ships with DJI’s Go app embedded, decoding video in real time from the on-board camera with minimal latency, so the pilot can use it to navigate the drone around — particularly useful in the case of the newly announced Inspire 2, which adds a second camera to capture first-person flight video. The monitor has two SD slots, an HDMI port for video output and built-in dual band Wi-Fi — or users can plug-in a MiFi dongle via the on-board USB-A port. The system is compatible with the company’s Mavic, Phantom, Inspire and Matrice lines.
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Snapchat has reportedly filed confidentially for its massive IPO
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Matthew Lynley
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Snapchat appears to be moving forward in its plans to go public early next year with the company filing confidentially for its IPO, . In recent years, companies have begun filing confidentially for their initial public offerings well ahead of revealing their financial guts in the formal IPO process. That gives a time window between the SEC getting the documents and them becoming available for public scrutiny, both from industry watchers and potential investors. It doesn’t mean that an IPO is absolutely imminent — the company could go public as early as March, as previously reported — but it does mean that the company is going through the motions to get out there. Companies with less than $1 billion in annual revenue can file confidentially with the SEC under the JOBS act. With that, it looks like the anticipation for Snapchat’s IPO is coming in about as much as expected. The company has 150 million daily active users and has rapidly become one of the most enticing new advertising platforms for marketers. Snapchat also has an opportunity to steal momentum from Facebook and other platforms that are now following the presidential election. Snapchat is already targeting as much as $1 billion in revenue for 2017, . It’s estimating between $250 million and $350 million this year, according to those documents. At the same time, platforms like , and Facebook is telling investors that it is . All this means Snapchat has an opportunity to snap up advertising dollars, making it even more valuable in the eyes of investors. , Snapchat filed the papers before the presidential election. But given the news that’s come following the election, it may be that Snapchat looks even more appealing to investors if it can hold onto the trust of its user base and be able to steal users away from existing networks. It’s expected to be valued between $20 billion and $25 billion, according to that report. It was earlier reported that Snapchat was looking to . That could be as much as double its previous valuation, when it raised $1.8 billion in a financing round in May earlier this year. All these discussions are generally tactics to gauge interest from investors and drum up excitement for the company, though now it appears things are starting to get more formal. A representative from Snapchat declined to comment.
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FBI will receive ‘limited’ Twitter firehose access through Dataminr, but has to watch its step
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Devin Coldewey
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The FBI has publicly to get at the “mission critical” Twitter firehose through third party monitoring service Dataminr. But Twitter, which has a 5 percent stake in Dataminr and of course has sovereign control over the firehose, recently told the company to . So what’s happening here? TechCrunch was told that the service being provided to the FBI is different from that requested by the CIA, which was turned away before. The FBI would receive “a limited version of our breaking news alerting product” starting December 1, according to a Dataminr statement. (“Dataminr is not a product that enables surveillance,” it concluded. Not knowingly, perhaps.) Indeed, the FBI cites staying up to date as the reason for wanting access in a justifying the cost and provider of the contract: The FBI has a need to obtain information about relevant breaking news and events in real-time. Twitter is a platform where news first breaks on terrorist attacks, military actions, epidemiological events, and natural disasters, among other topics. Sounds reasonable. And it doesn’t seem to fall afoul of what we know about Twitter’s reluctance to sell data (directly or indirectly) to the intelligence community. Now, Twitter’s ban on intelligence agencies could be argued as good PR — a service that touts itself as a platform for free speech doesn’t want to appear to be too cozy with the likes of the FBI. Or it could just be enforcing its : You will not knowingly: 1) display, distribute, or otherwise make available Content to any entity to investigate, track or surveil Twitter’s users or their Content, or to obtain information on Twitter users or their Content, in a manner that would require a subpoena, court order, or other valid legal process or that would otherwise have the potential to be inconsistent with our users’ reasonable expectations of privacy; It makes sense either way. And as far as allowing the FBI access to Dataminr, over which Twitter clearly exerts serious and specific influence, nothing raises a red flag so far. But a from the FBI filing somewhat adulterates the pure intentions of news-gathering set out above: Twitter is used extensively by terrorist organizations and other criminals to communicate, recruit, and raise funds for illegal activity… Consequently, the FBI needs near real time access to the full universe of tweets on a daily basis in order to obtain the most current information available in furtherance of its law enforcement and intelligence missions. This is less clear-cut. If Twitter prohibits them from investigating, tracking, or surveilling Twitter users, that limitation and the FBI’s stated goals seem at odds with one another. Presumably everyone involved knows this, and the FBI is probably walking a straight and narrow path in return for access to what real-time data it can get. If it’s as needful as they say it is, they won’t mind siloing it off from other operations — but if they try to cut corners, there’s every chance that Twitter and Dataminr are prepared to drop them like a rock to make a point and earn some credibility in the public eye.
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Data Ethics — The New Competitive Advantage
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Gry Hasselbalch
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We are living in an era defined and shaped by data. Data makes the world go round. It is politics, it is culture, it is everyday life and it is business. Our data-flooded era is one of technological progress, with tides rising at a never seen before pace. Roles, rights and responsibilities are reorganized and new ethical questions posed. Data ethics must and will be a new compass to guide us. Two decades ago, environmental reporting was something quite new, and many companies did not take being “green” very seriously. There was growing concern among good-intentioned citizens, but many didn’t know how to act on it. Today, those same worried individuals can sort their garbage, eat organic foods, take warm, solar-powered showers and drive electric cars. Companies also take the environment seriously. Not only because those with a direct effect on the environment are required to report to the authorities, but because green business practices are sound business practices. Being eco-friendly has become an investor demand, a legal requirement, a thriving market and a clear competitive advantage. Data ethics will develop similarly — just much faster. Data leaks, hacks, surveillance scandals and, especially, social media users’ “digital hangovers” have kick-started a movement. Individuals and consumers aren’t simply concerned about a lack of control over their personal data (their privacy), they’re starting to take action on it and react with protests, ad blockers and encrypted services. In Europe, a new data protection regulatory framework which encourages the development of a privacy by default infrastructure has been implemented. Across the globe, we’re seeing a data ethics paradigm shift take the shape of a social movement, a cultural shift and a technological and legal development that increasingly places humans at the center. Businesses are starting to feel this shift. Not as an “either/or;” either we use data or we don’t, but rather they’re gaining awareness about data from an ethical perspective, gradually moving away from an overbearing focus on big data and embracing sustainable data use. Visionary companies are already positioning themselves within this movement and investments in companies with data ethics are on the rise. We’re seeing an increasing number of businesses take the development of privacy technology as a direct point of departure, along with the value of individual data control. Ethical companies in today’s big data era are doing more than just complying with data protection legislation. They also follow the spirit and vision of the legislation by listening closely to their customers. They’re implementing credible and clear transparency policies for data management. They’re only processing necessary data and developing privacy-aware corporate cultures and organizational structures. Some are developing products and services using Privacy by Design. A data-ethical company sustains ethical values relating to data, asking: Is this something I myself would accept as a consumer? Is this something I want my children to grow up with? A company’s degree of “data ethics awareness” is not only crucial for survival in a market where consumers progressively set the bar, it’s also necessary for society as a whole. It plays a similar role as a company’s environmental conscience — essential for company survival, but also for the planet’s welfare. Yet there isn’t a one-size-fits-all solution, perfect for every ethical dilemma. We’re in an age of experimentation where laws, technology and, perhaps most importantly, our limits as individuals are tested and negotiated on a daily basis. In the wake of today’s rapid technological development, human and ethical dilemmas emerge. Data is transforming society — some call it the Fourth Industrial Revolution. The first industrial revolution was based on water and steam, the next on electricity and the third on information and digitalization. In the fourth, the boundaries between the physical-biological and digital worlds are being eliminated — fueled by data. Data, personal data included, can have many positive uses and outcomes, but there are also many risks in a data-driven business process. Gartner, Inc. has that by 2018, 50 percent of business ethics violations will occur because of improper use of big data. Data is an asset, but it’s also a risk. Today, the most prominent perils are data exhaust and unsustainable data practices, and a process to negotiate global standards, roles, rights and responsibilities to handle such risks has been initiated. This also means that tensions and clashes between laws and cultural values are amplified. Throughout history, societies have always somehow managed to mitigate man-made risks produced by different periods of industrialization (e.g. pollution, atomic weapons and health hazards in food production) through new regulations, global standards, formal verification systems which consumers trust and slow but steady cultural adaptation — including new levels of awareness, education, literacy and ethics. Industry has had to adapt to these requirements not only with targeted risk assessment and management, but by innovating and evolving in new ways. It will have to do the same in a data-saturated environment, with data ethics as a guide. Data Ethics — The New Competitive Advantage is an analysis of trends through which we map a new field by looking at a few constructive solutions. This also means we address the forces at play in general, that is: the societal power structures, interests and relationships underpinning the field. It’s fundamentally important to us to make the invisible visible and, as such, provide the right tools to build something new: data-ethical services, businesses and products based on a paradigm shift in the way we approach digital data. The book combines broad trend analyses with more than 50 cases of companies that use data ethics to varying degrees, such as German toy maker , Australian personal data store , French insurance group , the new Swiss privacy-focused ‘skype’ , and the U.S. search engine . Most of the companies mentioned are still in a beta phase in the data ethics field, and not one has yet found the optimal solution. Every beginning takes time, just as it did with the products and companies that arose from the first inkling of environmental awareness.
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Secret is coming back
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Sarah Buhr
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Secret, the anonymous sharing app developed by David Byttow and Chrys Bader-Wechseler, looks to be on its way to resurrection. The app was part of a wave of anonymous apps like Whisper and YikYak but after facing a lot of criticism over privacy and cyberbullying. Secret allowed anyone to post snippets of text like a rumor or piece of gossip on an anonymous basis. Many of these texts contained detailed information only certain individuals would know and, though one’s name wouldn’t appear next to their post, other details like their location might show up, making it easier to deduce who leaked the information. But the startup behind the app really unraveled when several key team members, including Bader-Wechseler, abruptly left the company. Though Secret had raised $35 million, it had cut its staff in half and sources close to TechCrunch confirmed it was basically in maintenance mode before stopping altogether. However, Byttow has given some hope that there’s a second version coming soon. The former co-founder posted to his personal profile on Facebook late Saturday evening, “Secret V2 is coming. It’s too important not to exist.” Byttow spoke with us immediately after about that cryptic post and tells us the recent presidential election has emboldened him to bring the app back. “The downsides of current social media products MUST be addressed, and this is currently the way that I know how,” Byttow told TechCrunch. Social media played a big role in this election — President-elect Donald Trump it for pushing him over the top for the win — and Facebook, in particular, has been accused of spreading fake news and misinformation to unsuspecting citizens throughout the election cycle, thus of the election. Some also say social media is to blame for presenting biased news, thus further dividing our nation and widening the canyon between conservative and liberal ideologies, something Byttow wishes to address in the new Secret. “People don’t have a good space to be their most authentic selves, especially to people they know,” Byttow said. “There is too much fear, and there is too little self-awareness. We need more self-awareness, starting with Silicon Valley. We are in a bubble. Fuck the bubble. The truth wants to be set free. Only then can we begin to understand and only then can we heal and work together.” Though Byttow says he is “treading lightly” and wants to build the right thing this second time around — starting by talking to a lot of people to get it right. He also added that if and when he does release the new and improved version he wouldn’t be doing it for the money. He says he’d go it alone instead of taking VC investments this time and that any money made by the app would go largely to charities he believes in such as the ACLU and Planned Parenthood, which has been threatened under a Trump presidency. “If it’s to exist, it must be self-sustainable, and it must be free of any conflicts of interest,” he said. While Byttow didn’t want to elaborate for us just how the app would generate an income or come together without investment, one can assume he’ll bootstrap the business based on other endeavors. Byttow an enterprise content startup called Bold. But he says his main priority is and will remain Bold and that the new Secret would not be his handy work, but would be built by another team under his supervision. “One thing I know for sure: It’s going to be good,” Byttow added. We’ll be sure to let you know when we hear of a more concrete timeframe for Secret’s comeback. In the meantime, we’ll just have to post openly as our deplorable selves on social media.
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Facebook needs accountability to win back advertisers’ trust
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James G. Brooks, Jr
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The advertising industry let out a collective groan in September when Facebook a “discrepancy” in its reporting that led it to overstate how much time, on average, viewers were watching video. Because the error was huge — numbers were inflated as much as for two years — and in Facebook’s favor, some were quick to ascribe sinister motives. At the very least, it showcased the folly of trusting a media company to provide its own metrics. “We have also been calling for a long time for media owners like Facebook and Google not to mark their own homework and release data to comScore to enable independent evaluation,” Martin Sorrell, chief executive officer of WPP, . “The referee and player cannot be the same person.” (It should be noted that WPP has invested in the research from comScore.) Advertisers buy Facebook video on a cost-per-view basis that counts a view at three seconds or more, so marketers didn’t pay extra for the error. The stats did, however, foster the impression that Facebook videos were more effective than they actually were, which likely prompted marketers to spend more than they had planned. For marketers, this once again illustrates the monopolistic position of Facebook and Google. Barring a Microsoft-like government intervention, it’s FaceGoogle’s world now, and we must all adapt. Assuming, however, that Facebook wants to create goodwill in the market, here are five ways marketers can push the social network to do the right thing: The reality is, no one really knows if Facebook was being devious here or merely sloppy. Either way, many brands were deceived into thinking their ads were working better than they were. That shouldn’t happen. Marketers have enough to worry about without trying to figure out who’s telling the truth and who has their finger on the scale.
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We are on the verge of a consumer M&A avalanche
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Ryan Caldbeck
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If you believe in the mantra “innovate or die,” you might conclude that the largest and retail brands are terminally ill. Giants like Kraft and Clorox all seem to be too slow and enslaved to shareholders to innovate. At the same time, they may be too large to perish… at least for now. What have here is the perfect storm for mergers and acquisitions ( ) . Big packaged goods (CPG) companies are struggling to sell their products to new generation of shoppers. quick look at sales across various product sectors shows steady downward slide for big brands. In the past five years, large brands lost market share to small brands in 42 of the top 54 most relevant food categories, according to . Erosion is happening in nearly every category. As increasingly crave unique, authentic brands that meet personal preferences, marketing and distribution costs are falling dramatically. are researching and seeking out products rather than responding to advertising. Source: CircleUp Major CPG companies are losing billions in market share. And they aren’t doing much about it. When was the last time large brand introduced an innovative product that anybody noticed? Research and development (R&D) should be more important — but is less emphasized — than ever. At CircleUp, recently pulled some data illustrating just how bad the R&D problem has become. found that, average, the biggest packaged goods companies spend less than 2 percent of revenue R&D, and close to 15 percent marketing and advertising. In technology, where innovation is front and center, the spending is nearly reversed: about 13 percent R&D and 2 percent marketing and advertising. Source: CircleUp Big brands aren’t oblivious to the challenges they’re facing. So why aren’t they investing more in new product development? For decades, large brands have been protected by the high cost of entry into the CPG market. The pre-social media, pre-Amazon era made it extremely expensive for small companies to get distribution and advertise their products. Demand for innovation was extremely low because were so accustomed to seeing the same products the shelf. The path to innovation — developing and testing new products and weighing market responses — is flat-out risky. It could lead to quarterly and yearly losses and the future revenue takes years to kick in (if it does at all). Brand managers responsible for R&D decisions often have short-term incentives to not take risks. Should meet our quarterly numbers or should innovate new product that likely won’t show top-line impact until years after I’m transferred to run another division? There have been so few incentives to change for so many years that most big brands don’t have robust R&D teams or experience. These behemoths just aren’t well-equipped to test the water and make great new products. These companies are decades old, sometimes century, and they aren’t used to change. The image of your grandfather the dance floor comes to mind. As does Clay Christensen’s “The Innovator’s Dilemma,” which . Big brands spend so much effort selling their existing products that they fail to plan for the future, then struggle shifting to solve for problem they weren’t born into. Source: CircleUp Mergers and acquisitions are, effectively, big brands’ substitute for R&D. And with drastically shrinking market share, slow growth and big cash war chests their balance sheets, ’ll be sure to see lot more of it. And lot more early-stage investing, as well, so they can participate in more of the growth, earlier in brand’s life. Unilever spent mere 1.9 percent its R&D last year, but it hasn’t been shy about hedging bets elsewhere, snatching up and ). Unable to outflank startup brands, big brands are as way to outsource R&D and leave the risk of innovation to the startups that do it best. This trend has already taken hold in the pharmaceutical industry. The conglomerates there skip R&D almost entirely, acquire new formulas like crazy, then plug those products into their vast distribution pipes while they focus advertising and regulatory issues. Big brands are the same path. But the deciding factor, and what ’ve yet to see, is how well these big brands preserve the quality and authenticity of their newly acquired products. People increasingly demand personalized offerings, be it organic, environmentally sustainable, fair-trade, of an ethnic variety — the list goes . Now, the seemingly simple act of selecting household cleaning solution is an act of self-expression. If big brands don’t preserve the uniqueness, they’ll be back where they started. The forces behind an have been building for several years. Last year alone the , almost twice the size of in tech. The signals are there, and they’re only growing stronger. Get ready for the ride.
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Here’s where seed investors are scaling up
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Joanna Glasner
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Gillmor Gang: Optimizzle
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Steve Gillmor
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The Gillmor Gang — Keith Teare, Frank Radice, and Steve Gillmor. Recorded live Friday, November 11, 2016. McLuhan said the medium is the message. Our next President agreed, and decided Twitter is the medium. Plus the latest G3 (below) with Halley Suitt Tucker, Mary Hodder, Elisa Camahort Page, and Tina Chase Gillmor. @stevegillmor, @kteare, @fradice Produced and directed by Tina Chase Gillmor @tinagillmor [ustream id=92734252 hwaccel=1 version=3 width=480 height=302]
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Pro-Trump CEO gets booted from Y Combinator over harassment concerns
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Anthony Ha
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Andrew Torba, founder of conservative social network , has been removed from Y Combinator’s alumni network. To be clear, Gab.ai isn’t a part of YC — instead, Torba participated in the incubator through his previous startup, (now known as ). However, his login to YC’s private social network, Bookface, has now been disabled. “Once you’re purged from the network, you’ve lost all the ability to interact and network and post job listings and connect with different founders,” Torba said. While Torba paints this as a free speech issue, that he was kicked out for “for speaking in a threatening, harassing way toward other YC founders” — particularly in this Facebook comment: All of you: fuck off. Take your morally superior, elitist, virtue signaling bullshit and shove it. I call it like I see it, and I helped meme a President into office, cucks. In Torba’s telling, this was just the culmination of a longer process of disenchantment with Silicon Valley liberalism in general and YC in particular. He described himself as a lifelong “conservative Republican Christian,” a fact he said he hid at first because he worried “it would be a hindrance to my career — which proved to be true.” Torba became more open about his beliefs six months ago, which he said immediately led other YC founders to “all start piling on” and “call me a racist, a bigot.” Torba also began to tweet at YC President Sam Altman (who ), eventually prompting Altman to block him this past week — after that, in Torba’s view, Altman was looking for “any way to purge me from the Y Combinator network.” “Y Combinator clearly has chosen their side,” he said. “They’re pandering to immigrants [rather than] American entrepreneurs. They clearly do not welcome Trump supporters.” Sure, YC , but Torba said the difference is that he’s not rich and powerful like Thiel. Torba had also tweeted a screenshot of another founder’s Facebook comment (the founder’s name was removed) that “being a black, Muslim or woman in the USA is going to be very scary” with his own comment: “Build the wall.” Then, in another thread, a YC alum alluded to Torba’s behavior without mentioning him by name, prompting him to jump in: “Say my name when you talk about me, coward. Build the wall.” Now all of that might make it sound like Torba was working pretty aggressively to burn bridges at YC, but he insisted that’s not the case. “Here’s what it was: There were the two or three founders that jumped in harassing me on my posts trying to get me in a gotcha moment, trying to test my understanding of immigration law, trying to make me look like an idiot,” he said. So by saying “fuck off,” in his view, he was just telling them, “I don’t owe you anything, I’m done with this.” “I wasn’t trying to burn the bridge or anything,” he added. [Hat tip to for spotting the story and pulling the quotes from Facebook.] In an email, YC Partner Kat Manalac emphasized that Torba was removed because of his behavior, not because he supports Trump: The main thing I want to get across here is: we believe that everyone is entitled to their political beliefs and they are welcome to support the political candidates of their choosing. Having an honest, rational dialogue between all parts of the political spectrum is going to be important for us as a country moving forward. But under no circumstances do we tolerate harassing or threatening other founders (or anyone for that matter). Regardless of what you believe, if you act in a hostile way that makes the community feel unsafe, you will be ejected from the YC community. Manalac added there have been “very few instances” where someone has been removed in the past, and YC hasn’t commented publicly, “But this time we’re saying something because Andrew has been very vocal, and he’s been spreading lies about why he’s been removed.” Lastly, you can .
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Trump surveillance fears could lift privacy tech in Europe
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Natasha Lomas
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The full ramifications of Donald Trump being the next president of the United States of America will not be known for months — perhaps years. Given he’s a man of many conflicting words it’s near impossible to know which of his pledges and pronouncements he will keep or act upon, likely until his administration is up and running and showing its true colors. Yet uncertainty can itself be a motivator — and the risk of an authoritarian leader as commander-in-chief of the US’ government’s mass surveillance apparatus has caused many to sound alarm bells already. https://twitter.com/zackwhittaker/status/796242699825319937 Obama: you have 3 months to shut down as much of the unaccountable secret surveillance state you've built as possible before Trump runs it — Evan Greer (@evan_greer) Suddenly, the same liberals who didn't give a shit about Patriot Act, police militarization, mass surveillance are.. worried about Trump? — Crystal M'baku Fleming (@alwaystheself) Trump has previously said he supports legislation allowing the NSA to hold bulk metadata, albeit with a court authorizing access — telling back in May 2015 that a new oversight court should be created which is “available any time on any day… to issue individual rulings on when this metadata can be accessed.” He has also previously talked about giving the NSA “as much leeway as possible” to use surveillance to fight terrorism. Yet in the same interview he emphasized the need to balance Constitutional protections with national security considerations, telling in October 2015 that “Congress should continue to be the arbiter of that balance”. Wherever Trump’s own line lies, one thing is clear: with Republicans set to control both houses of Congress, the new president and his party will have sweeping power to shape US surveillance powers as they see fit. Back in 2013, speaking to documentary maker Laura Poitras, Edward Snowden warned of the US’ mass surveillance infrastructure enabling what he dubbed “turnkey tyranny”. After the election result this week Snowden pointedly retweeted this warning… — Edward Snowden (@Snowden) Covering fears over how Trump will approach encryption and surveillance policy, quotes Hank Thomas, COO of cyber security-focused investment fund Strategic Cyber Ventures, arguing that Trump is “probably going to mandate back doors”. Probably is not definitely, because again there’s no way to be sure right now, but even the existence of a perceived risk is clearly enough for some — Swiss-based encrypted email provider ProtonMail tells TechCrunch it saw an immediate 80 per cent increase in the number of people signing up for its service the day after the US election. And . Perfect timing to switch to Europe-based encrypted email server, i.e. such as — RomainStuder (@RomainStuder) Now is a good time for Americans to get on board with e2e encryption. Seriously. — keyzer (@penetrate_io) switching from Gmail to would be a good idea too — Kuba Suder (@kuba_suder) ProtonMail does not track the location of signs ups, but co-founder Andy Yen is sure of the trigger. “This could only be caused by the election,” he says. “I think a lot of Americans woke up and realised that starting next year, Trump controls the NSA.” discussing the implications of Trump’s election for privacy Yen also writes: “Today, we are seeing an influx of liberal users, but ProtonMail has also long been popular with the political right, who were truly worried about big government spying, and the Obama administration having access to their communications. Now the tables have turned.” Another startup seeing uplift in the wake of a Trump election is Europe-based messaging app Telegram, which has an end-to-end encrypted messaging ‘secret chats’ feature — and has frequently been seeking to access comms. It also says it saw a bump in global signups the day after the US election. Although no significant spike from the US itself, according to co-founder Pavel Durov. “We did notice more users than usual signing up for Telegram globally (about 650,000 new sign-ups just today [Thursday], which is significantly higher than our daily average),” he tells TechCrunch. Back in Telegram was reporting an average of 350,000 daily signups. Following Trump’s election, Durov tweeted that trusting a US-based tech company for secure communications from here on in is “pure madness”. Trusting a US-based company for secure communication was naive before today. But starting today, it is pure madness — Pavel Durov (@durov) During a livestreamed interview on Thursday, Snowden was asked directly for his thoughts about the risk of Trump inheriting a hugely powerful surveillance infrastructure. And while he cautioned against putting too much “faith or fear in elected officials” — pointing out that Obama, far from ripping up mass surveillance, had embraced and deepened it — he did express concern about what he called “a dark moment in our nation’s history”, urging his audience to work together to build pro-privacy tech alternatives. He went on to reiterate some , warning that tech companies whose business models are based on data-mining their users inevitably put personal data at risk of access by state agents — name checking Google as a problem company, and conversely singling out end-to-end encrypted messaging app Signal as an example of good practice, noting that when it was subpoenaed it had almost no data to hand over. Drawing a clear contrast with products created by Google — Snowden emphasized at one point that “everything you type into that Google prompt is being saved forever” — he went on to argue: “The best way to defend against [surveillance apparatus] is to make sure you do not collect information, as a business, that you do not need.” Yet the big huge problem with the vast majority of US-based consumer tech services, is that they collect personal data as payment for the (‘free’) service. And therefore at risk of being co-opted by overreaching state surveillance apparatus. Indeed, we know this already. The Snowden disclosures of 2013 revealed the — with its long list of mainstream US tech giants that had agreed to hand over user data to the NSA. Point is, if a US tech service can access data, a US tech service can be made to divulge data to an authoritarian US government. So if Trump decides to use the surveillance state to drive an agenda of social division by, for instance, creating a database of all Muslims in the US, he can — and Silicon Valley tech giants will be forced to help him. And that’s just the tip of the iceberg. It recently emerged that Yahoo went further than Prisma — agreeing, in 2015, to a custom US government order to for certain keywords. That arrangement, which only came to light last month, has now about the robustness of the shiny new personal data transfer mechanism that was put in place between the EU and the US this summer to try to keep greasing the wheels of the data-powered digital economy… Aka the EU-US Privacy Shield. Privacy Shield’s predecessor, after a legal challenge which had pivoted on Prism and the US government’s mass surveillance program — leaving thousands of business in limbo about the legality of their EU-to-US data flows. tl;dr European data protection laws and secret US government data access do not go hand in hand. The Privacy Shield had of prior to Trump becoming president-elect. And is facing its . Throw in uncertainty over what Trump means for the future of the US surveillance state and obituaries are already being written for the new deal… https://twitter.com/maxschrems/status/796356382085758976 If Privacy Shield goes down there will be guaranteed uncertainty for US businesses wanting to process EU citizens’ data in the US. And for EU tech users it will also mean a perception of increased risk to their personal information should they agree to hand it over to US-based consumer tech services — service which might in turn be forced to hand it over to Trump’s NSA. So maybe more of those European tech users will start to think twice about using mainstream US tech services — and seek out local alternatives instead. How Trump will use and expand the powers of the surveillance state remains to be seen. But the possibility that he could abuse these powers is not being discounted in the eyes of very many right-minded people. To some it’s clearly a possibility that already feesl like an inevitability. And that perception, should it persist and sharpen into active protest, could drive an exodus of concerned individuals away from US-based tech services. Especially from those digital products that do not offer the peace of mind of a zero access infrastructure. Nor code that’s open sourced for auditing against any Trump-mandated backdoors. There really would need to be a wholesale and radical reconfiguring of Silicon Valley business models to securely batten down the hatches… May seem trivial, but its my corner: tech companies should immediately go to end-to-end encryption and ponder alternative financial models. — zeynep tufekci (@zeynep) On the surface, EU-based pro-privacy tech services look generally well positioned to gain from the perceived risk of a Trump presidency — and from the reality of a Trump presidency, depending on how it plays out. (And on how Silicon Valley reacts.) Data-mining business as usual under president Trump won’t be a good look, howsoever you try to spin it. With the caveat that UK-US intelligence sharing links, and set to come into force in the country this year, don’t provide any guarantees to justify fleeing to a UK-based tech alternative. (Some other EU countries have also been .) Asked whether the election of Trump presents an opportunity for European tech startups vs the traditional Silicon Valley-based players, ProtonMail’s Yen suggests the fact of Trump’s election could raise the profile of tech’s privacy problem for a whole new group of users — users who previously have not worried about putting their entire life on Facebook. And their entire schedule in Google. “I think that opportunity has always been there. All Trump does is put a new face on the existing privacy problem, so now it concerns a segment of the population that previously didn’t care as much,” he responds. “In general, Silicon Valley is a liberal bubble, so this wasn’t something liberals in SV or elsewhere really thought about. “But now, they are terrified by the idea of the Trump led NSA snooping on communications, especially given Trump’s rocky relationship with the media. This really hits home when their beloved tech companies, Google, Facebook, etc, can be forced to become complicit in this spying. This really demonstrates that privacy isn’t just a liberal or conservative issue, it is something that we all need to champion, regardless of our political leanings.” “This combination of privacy concerns along with existing security concerns however, could be a potent trigger to accelerate the development of Europe’s tech sector and decrease our tech dependence on the US,” he adds. Sure it may be wishful thinking for ProtonMail to anticipate a steady flow of US signups in the coming years. Or it may not. Even the looming prospect of Trump becoming the figurehead of a vast surveillance empire is proving a scary enough to convince thousands of web users to investigate alternative digital services that offer greater protection for their personal data. Depending on how things play out with president Trump, an initial upsurge of interest in pro-privacy alternatives in the wake of his election could turn into a major movement — as mainstream liberals wake up to the dark side of data-mining. As Yen puts it: “The only way to protect our freedom is to build technologies, such as end-to-end encryption, which cannot be abused for mass surveillance. Governments can change, but the laws of mathematics upon which encryption is based, are much harder to change.”
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I refuse to review Snapchat Spectacles — but I’m glad to have my hands back
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Matthew Panzarino
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don’t think these things — especially as a gadget. More of a hybrid marketing/consumer research experiment than an actual product launch, Snap, née Snapchat, Spectacles are one of the coolest, most fun bits of hardware I’ve used lately and I just . But they’re not a full rollout of a hardware product. Reviewing these would be tantamount to reviewing one of those pop out pairs of 3D glasses that come inside a Blu-Ray case for some tentpole flick. Not that the hardware isn’t interesting or well designed in its own way, but they’re being dropped out by dribs and drabs in the few thousands of pairs and are a limited edition product. This product and the marketing effort around it will establish Snap as a company that exists outside of Snapchat, its software product — and it will tell Snap how people use them and what for, exactly. But they’re still worth examining, for the same reasons I mentioned above. As an establishing force, the Spectacles are a solid win. There was huge hype over their release in a vending machine designed to look like a character out of Snap’s ‘universe’ — a cartoony eyeball sporting Minion box with a clever Augmented Reality try-on screen and whimsical details like a rainbow printed receipt with a binary code message at the bottom. You can read more about the experience of using the . , including this one, are good. With huge lines in its first location (it’s ) in Venice Beach, CA near Snap HQ, the buzz was instant and fierce. Pairs of Snap glasses are going for thousands on eBay because the demand far outstrips the supply. Already, this limited rollout pays dividends as it avoids pairs sitting on shelves somewhere and creates a marketing event around even their appearance. Snap avoided sending the glasses to gadget or tech sites for review, which I’ve already said I think is a great idea. That’s not where these things will be sold — that will be accomplished via the hype and their output, which exists only on Snapchat in the form of clever circular video. It’s a product that produces content for its exact intended purchasing audience. This is an incredibly difficult feat to pull off. Even Apple, with its incredible history of great iPhone cameras has to appeal to a wide audience of potential buyers that may be using photos or videos on dozens of different platforms. Snap has inverted the hardware funnel here in a way that I haven’t seen since the Flip camera (RIP, dead before your time). The glasses themselves are a Ray-Ban analogue but with some design twists that remind me more of my favorite pair from Ksubi, . Size wise they are – big on the face but not out of trend. The two yellow circles for camera and LED ‘recording’ light balance out the front, making the camera a design element rather than letting it fall into the realm of ‘technical necessity’. The four circles of the two lenses and the two yellow circles give the glasses a radically distinct look that is recognizable from a distance — another hallmark of great marketing design. The packaging and accessories are, more than anything, disarming. It’s the egg foam that cuts that heavy pour New York Sour. The sweet cream that makes that acidy store bought cold brew palatable. A fun foamy case that charges the glasses to full four times and can sync snaps over to your phone with a button. A cleaning cloth cut into the shape of the Snap ghost. A multicolored USB cable wrapped in bright yellow packaging. All of it tucked into a plastic canister that feels like it could hold tennis balls or an inflatable coozie. The whole thing evokes sun, croakies, beaches, sunblock, activewear and fun. It’s a vibe that is going to work for everyone, some will probably feel put off by the casualness of it all. But not Snap’s core demo. And more than anything it will get attention and is completely recognizable as a Snap product. It’s a packaging design coup that makes ‘unboxing’ feel fun again — something I haven’t felt in a long time even from the undisputed masters of packaging design like Apple. The glasses even pair in a logical way for a Snap product. You just flip them open and snap a picture of your Snap code on the screen of your phone. This is both easy and logically aligned with Snap’s ‘universe’. To record, you tap once for 10 seconds and twice more to extend the recording up to 30 seconds. A rotating LED on the front indicates recording — which should help reduce the creep factor just as much as the highly recognizable yellow rings and manual gesture to start recording. The experience isn’t without its glitches. The glasses did drop Bluetooth connection at very short ranges and the transfer of snaps is too slow. Even the WiFi mode, manually enabled, for transferring ‘HD’ snaps is not all that zippy. But overall, it works as advertised. The image quality is snap quality. More than anything else here, though, the circular video is a revelation. When shot with Spectacles and displayed in your camera roll, it’s a circular disc. When viewed in Snapchat, the video fills the screen and as you rotate your device you get a smooth transition from vertical to horizontal, allowing you to see more of the image than if you’d just done one or the other. I only tried this on iPhone though it is available on Android as well. There is a sort of rethinking here of what video is and is used for. The choice between vertical and horizontal stills became a moot point when video became common, then flared up again when mobile phones rolled around. With their default vertical orientation the holy war between vertical video and horizontal video shooters was born. I’ve never been particularly religious about it but almost always preferred horizontal because the intended viewing point of those videos was either a TV or a computer. Snapchat, of course, changes that because of its video is intended to be viewed vertically. Allowing the viewer to choose what they see and when they want to see it is a great little hack that side steps the entire debate and feels mobile native at first go. It also lends itself to repeat viewings, because there may be something you missed there. Here is an illustration of the Snap mechanic — Matthew Panzarino (@panzer) There is also the matter of hands. When Snapchat released its marketing video I remarked on how many hands were in the frame in all of the shots they chose to use. And in use I’ve come to value the way that they free up my hands from fumbling with a phone or placing that phone in between me and my kids or dogs. I had similar experiences with Google Glass, RIP as well. Having your hands free to manipulate or hold or touch or help while you’re taking a snap is so great. It also greatly increases the sense of ‘place’ that you get out of it. I spent some time yesterday talking about how point-of-view photography is going to change the space, I’ll just quote that here: There is another whole discussion in how POV, which encourages eye contact (something that you get with Spectacles) is an enormous break in narrative technique from centuries of film and photography. Traditionally, eye contact with the camera was considered something to be avoided as it breaks immersion. With POV cameras, however, you’re placed into the narrative and have to come to grips with the fact that you’re a character. And hands are going to increase that sense of immersion and place ten fold, just as they do once you include them in a VR experience. As with Vine and other hyper-specific formats, I expect art to come out of this as people figure out how to use the whole ‘circle’ to provide unique viewing experiences. If you put text ‘off the screen’ to the right, for instance, it will show up only if you rotate the phone. Keep an eye out for adaption to format among Snapchat creators here. So to sum up, the Spectacles are an amazing packaging and marketing exercise. This is not a ‘gadget launch’ as we’ve come to expect it, but it is one that is completely aligned with the company’s audience and efforts to become something more. And the circular video is a true blue technical innovation that came out of left field yet feels perfectly obvious — which is how all of the best ideas feel. This is a toe dipped in the waters of hardware for Snap, but so far the water is warm.
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Facebook wants to make you secure no matter how hard you make it
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Ron Miller
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When you have a billion people using your service, you have an obligation to keep your users secure, even when they behave in unsafe ways. Alex Stamos, Chief Security Officer (CSO) at Facebook, speaking at last week, told a quick story to show what his company was up against when it came to security. “The family car was not designed to be driven into a wall at 100 kilometers an hour. We call that user error,” he joked. Car companies try to take reasonable safety scenarios into account when building cars, and then attempt to make them as safe as possible based on the information they have. Facebook, he said, doesn’t have that luxury. For example, Stamos said that he was in Nigeria recently and he met with young people, many of whom were using a $50 Android smartphone as their device of choice. The trouble with the phone, which was one these young people liked and could afford, was that it ran an older, much less secure version of Android — one which they weren’t likely to update. He can’t force people to upgrade their devices, so they have to accept the fact that these users are coming onto Facebook with devices, which very likely have malware running on them. “If we are going to connect the world, we also need to connect the world safely. In situations where it’s negative, we still look at it with open eyes and do everything we can to mitigate it,” he explained. He went on to differentiate between safety and security. You can develop your code as a company in a secure way, meaning you try to fill security holes and make it as difficult as possible for hackers to compromise the software. He says that every company should be duty-bound to prevent these types of weaknesses to the extent possible. Keeping your users safe is another matter. It’s about setting up systems in such a way that you have safety built into the structure of the service, regardless of how much or how little the end user is willing to participate in those safety mechanisms. For example, Facebook knows that users running two-factor identification are going to be inherently much safer than those running on a simple user name and password. Yet unlike your employer, Facebook can’t force you to use two-factor identification, even though it knows you would be safer if you did. That forces the social media giant to find other ways to build in safety for you. He says, the company actually monitors black market password databases, looking for password matches against its user base, and warning people when they find compromised ones. Facebook knows it can’t possibly control every variable, or even impose reasonable safety measures onto its users, so it uses as many creative ways as it can consider to keep as much of its user base safe as is within the company’s control. Stamos says the company has built a safety-oriented culture that enables the company to iterate quickly on changing safety and security issues, regardless of user behavior. “It is still our responsibility to protect the people who choose not to use [advanced safety features the company has built],” Stamos explained. In other words, they are going to make every effort to try and keep you safe whether you participate or not.
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Is Netflix Disney’s next big buy and is Reed Hastings its next CEO?
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Peter Csathy
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Last month, and surprisingly spry international subscriber growth. But, make no mistake, it’s all-out war in our Internet-driven and increasingly mobile-first Media 2.0 world of OTT premium video. And, Netflix is directly in the line of sight and vulnerable both short and long-term. AT&T, , just dropped its bombshell $85 billion acquisition of traditional media institution Time Warner. The telecom company ultimately (Warner Bros., HBO, Turner) in new ways in its soon-to-launch $35 per month DirecTV Now service that will showcase live linear premium television channels that Netflix doesn’t have. AT&T will also exert control over its newly-bought and highly strategic content to restrict and even withhold that content from others. Content is king, after all, and the ever-growing, seemingly endless list of tech-driven OTT distribution platforms increasingly use exclusive premium content as the primary hook to break through the noise and lure us in (and then keep us in, in a world of no long-term contracts and switching costs). , which recently announced a goal of 50% of its content consisting of exclusive originals. And, that goes for all major behemoths and OTT “wannabes” vying to unseat Netflix — including Hulu, Amazon Video, Verizon go90, YouTube’s “Unplugged” service (reported to launch early 2017), and both Apple’s and Facebook’s inevitable premium OTT video services. All of these OTT gorillas (and soon-to-be-gorillas) have ramped up their own exclusives and “Originals” strategies (a la HBO “back in the day”) to beat Netflix at its own exclusive premium programming game. The Time Warner Inc. Center is seen in New York on October 23, 2016. (Photo: KENA BETANCUR/AFP/Getty Images) And, just like Netflix and the others are DOA without differentiated, compelling premium content, premium content owners desperately need those OTT players to reach their audience at scale, wherever they may be. And, that audience — particularly the must-have millennials — is increasingly consuming on non-traditional Media 2.0 platforms. That presents a fundamental — downright existential — monetization challenge for the major media and entertainment companies. Hence Time Warner’s sale to AT&T. And, hence deal that the most magic content kingdom of them all — Disney — is eyeing Netflix amidst declining ESPN subscriber numbers and now-undeniable cord-cutting (not to mention the rise of an entirely new generation of cord-nevers). As active as those rumors were then, they — and other content-driven OTT mega-M&A opportunities — are even riper now that AT&T’s Time Warner gloves are off. Telcos, and tech titans in general, are increasingly media companies. And, media companies increasingly need to get technical. Stakes are massively high. All eyes — and piles of cash — are focused on this content-driven premium OTT video space. Right now. In Netflix, Disney would get the mother of them all – the largest global OTT video footprint (by an order of a magnitude) and the one premium OTT brand that is universal. Oh yeah, don’t forget to sprinkle in Netflix’s invaluable data platform (and the smarts to use it) that remain a complete mystery to virtually all traditional media execs. Even mighty Disney, on its own, can’t build that package. And, despite its rosy Q3 numbers, Netflix ultimately needs a buyer. As I , Netflix faces fundamental long-term existential business challenges of its own. Its singular content-focused subscription-based business model can’t compete with the complex multi-faceted, multi revenue-streamed business models of AT&T, Amazon, YouTube (Google), Verizon, Apple and Amazon. And, Netflix’s COGS will only rise significantly as it tries to meet its 50% original content goal amidst competitors who drive up those costs higher, faster (and can use their OTT services as loss leaders). Netflix conceded as much when it . So, Disney and Netflix are logical dance partners. And, just as we saw with the 50/50 cash and stock financial engineering that enabled AT&T to buy Time Warner, ever-creative Disney undoubtedly has the talent to pull it off. It also has a market cap that is roughly 3X Netflix’s. Here’s one more tantalizing strategic reason for Disney to do the Netflix deal. Reed Hastings. Disney CEO Bob Iger is set to retire in 2018 (and already has postponed that move more than once). So, all eyes in the media and entertainment world closely follow the Happiest-Place-on-Earth’s succession plan. It’s no secret that Disney’s board has been in search mode for quite some time, but with no clarity in sight. Hastings – Media 2.0’s CEO poster child – could step into that role and complete Disney’s Media 2.0 transformation. In one fell swoop, Netflix-land would give Disney an undeniable and daunting lead in the OTT video game that signals to the world that it is here to play in the brave new digital world. Disney’s content library — the envy of the world — would be tough for any competitor (no matter what size) to beat if featured exclusively on a Disney-owned Netflix service. And, Disney’s global multi-platform marketing machine is second to none and holds the unique power to promote Netflix’s already near-ubiquitous brand in a borderless world. In Disney’s hands, Netflix also would demonstrate to both investors and the Street that Disney has the tech-driven DNA necessary to drive the machine and succeed in our new Media 2.0 world. Enter Reed Hastings, the Mouse House’s new big cheese. Yes, Hastings founded Netflix in the tech world of Silicon Valley. But, let’s not forget that Netflix is no stranger to premium content and the creative process anymore. It’s Reed Hastings who increasingly holds the Emmys on awards night for Netflix’s own original premium programming slate. Data-driven Netflix is now very much a leading Hollywood player with whom A-list creative talent likes to work. Hastings personifies the very idea of convergence.
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Samsung is buying Harman for $8B to further its connected car push
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Jon Russell
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Samsung is increasing its focus on the connected car after the Korean firm plans to buy auto and audio product maker in an all cash deal worth $8 billion. You may best associate the name with audio equipment, but Harman is big on cars, too. The acquisition is Samsung’s largest to date and a big deal for its automotive ambitions. Around 65 percent of Harman’s sales — which totaled $7 billion over the last year — were for car-related products. Samsung added that Harman products, which included connected car devices and audio systems, are installed in an estimated 30 million vehicles worldwide. Samsung lags Google and Apple on in-car entertainment and software systems (Android Auto and Apple CarPlay, respectively) so this deal will give it the kind of reach that could allow it to compete more evenly with its rivals inside the car. “Harman perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time,” Oh-Hyun Kwon, Vice Chairman and Chief Executive Officer of Samsung Electronics, said in a statement. Terms of the deal will see Samsung pay $112.00 per share. That’s a healthy premium on Harman’s current share price of $87.65, and it gives the deal a total value of approximately $8 billion. The transaction is expected to close by mid-2017, at which time Harman will become a standalone subsidiary of Samsung. Dinesh Paliwal will continue to lead the firm as its Chairman, President and CEO, both Harman and Samsung said. “Samsung is an ideal partner for Harman and this transaction will provide tremendous benefits to our automotive customers and consumers around the world,” Paliwal added via canned comment. With Google rapidly advancing its automotive technology and Apple reportedly ( ), it is perhaps not surprising that Samsung has made ground on automotive itself in 2016. This summer, , which includes Warren Buffett’s Berkshire Hathaway Inc. among its investor base. suggested that the Korean giant was also eyeing up a bid for Magneti Marelli, a manufacturing subsidiary of Fiat Chrysler. This investment will go beyond automotive, though, according to Samsung. The firm said it plans to marry its own electronics division and expertise with that of Harman for audio — both on the consumer and professional side of business — and connected devices, aka the internet of things, or IOT for short. IOT is still very much a buzzword, but Samsung said it plans to utilize Harman’s 8,000 developers to “deliver the next generation of cloud-based consumer and enterprise experiences, as well as end-to-end services for the automotive market through the convergence of design, data and devices.” Other notable acquisitions from Samsung of late include , a highly regarded virtual assistant from the creators of Apple’s Siri service, and .
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Naver to launch $43M fund to seek out investments for its Snow and Webtoon services
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Jon Russell
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Naver, the company behind U.S.-Japan-listed chat app Line, has teamed up with SoftBank to launch a global investment fund worth $43 million to help two of its promising services push on. The “SB Next Media Innovation Fund” is designed to invest in startups and technologies that have synergies with Snow — a Snapchat clone that last month — and , a digital comic company that’s also run by Naver. The scope of investments will be international and not just limited to Korea, which is where SoftBank’s network will come into play. , and Korean web giant Naver has marked Snow and Webtoon down as its next promising ventures. This fund, which will include Snow CEO Chang-Wook Kim and Webtoon CEO Jun-Koo Kim as advisors, is principally looking for investments in content creation startups and technology-based companies, in particular in the field of AR and VR, the companies said in a statement. The idea of employing a fund in this way isn’t new for Naver-run companies. Back in September, to help unlock overseas growth. It also has a funds to support and has invested in games companies. That global focus is hugely important to Line. Although it has an impressive 218 million active users, its growth has slowed massively over the past year. That said, it is significantly larger than one-year-old Snow, which we understand has 80 million downloads and sees 10 million new installs per month. ( in September at a valuation of $180 million in a bid to increase synergies.) Webtoon offers a Netflix-like service for online cartoons which is available on the web or in apps for iOS and Android apps. It too uses Line, in its case to help reach new users, although it isn’t known how many subscribers that the service currently has. On the financial side of things, the aim is to close the 50 billion KRW fund before the end of the year. Of that capital, Naver will provide a 40 billion KRW majority, with SoftBank Ventures — the VC firm attached to SoftBank — putting in 4.5 billion. Korea Venture Investment, another VC firm, will add 0.5 billion KRW, with the remaining 5 billion KRW to come from third parties.
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Snapchat Spectacles vending machine page starts 24-hour countdown to next location
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Darrell Etherington
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Snapchat’s going to be selling Spectacles at another location in just under 24 hours as of Saturday morning, as the company’s started a 24 hour countdown timer as of 7 AM PT (10 AM ET). The sleeping bot on Snap’s Spectacles locator page will presumably be replaced by an updated map when the countdown runs out, showing you were the adorable vending machine will next appear to sell the video capturing sunglasses. Spectacles went on sale this past week with no real advance notice, via a single vending machine that popped up at Venice Beach near Snapchat’s original HQ. The single machine dispensed $130 Spectacles to shoppers who made their way down, and went through multiple reloads (trucks came in and refilled the box every 100 pairs or so), with long lines forming throughout the day. Early impressions from users of both and of themselves are good, and Spectacles are being resold on eBay for as much as $2,300. More inventory in a new city might help drop those inflated aftermarket prices, but that will depend on how many of these things Snapchat actually has to sell and how many places they visit with the Snapbot, along with how quickly hype continues to grow.
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Trendspotting
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Jon Evans
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Brexit and Trump; applied CRISPR and the Gigafactory; the rise of self-driving vehicles, the fall of pollsters; the global saturation of smartphones, the first mass-market VR headsets; the first drone-delivered terror bomb, the first drone drug mule; Signal and the Secure Enclave; Ethereum and the DAO; AI and SpaceX — we can all agree, I hope, that this has been one hell of a year. This election week also happens the six-year anniversary of . (I like to imagine that it set the tone, in that a) in retrospect I was 100% correct, b) I got angry hate mail for writing it. Remember when people still cared about BlackBerry? Those crazy days.) I’ve been writing a column every week, rain or shine, ever since. No one is more surprised about this than me. Most years I mark this anniversary with a where-I-went-wrong piece discussing my predictions of the previous year… but this momentous year, I think it makes more sense to go back further, look at the broader themes I’ve been writing about for six years, and see how they’ve changed, and whether I was right about them: An often : I hereby coin Evans's Law: Technology + Politics = Facepalm. — Jon Evans (@rezendi) …but I’ll claim some credit for asking, four years ago, “ ?” Sure seems like we’re . To quote 538, “In the average state won by Trump, the polls missed by an average of 7.4 percentage points.” That’s a polling error — and the American presidential election is just another in a long series of polling failures over the last few years. It doesn’t help that political journalists, like most journalists, don’t understand anything about technology, and , whether we like it or not. Consider Clinton’s emails; Trump’s “secret Russian server”; Wikileaks. Six years ago, the American security establishment was . Whose avowed target then and now was the so-called and the . Those were the days, eh? I’ve also speculated about , voters or tech, and, most out-there of all, the notion that the entire global system of power division among nation-states . Which sounds a little less crazy now that serious tech figures are talking about . A lot of this seemed highly speculative and faintly paranoid even to me, at the time! It seems a lot less so now. By day I sling code for a living, so while I’m no expert, I’m more comfortable with the subtleties of security and encryption than most — and, sadly, apparently much more so than much of the security establishment, viz. “ ” and “ ” It has seemed clear to me that government attempts to , , and seek “ ” for encryption have been, not to put too fine a point on it, , and that Edward Snowden deserves but a . Maybe most relevant: I keep arguing that no matter how much , from Apple to Google to Microsoft, claim you can trust them, you can’t. Governments can and will intervene, and ultimately they’re answerable to them, not you. , because, well, just imagine if the below were to have happened. . So glad Democrats institutionalized a vast and unaccountable national security apparatus that will soon be controlled by a madman. — Trevor Timm (@trevortimm) I write a lot about surveillance, both , and I feel a bit like Cassandra: for years I have been , and and , that ubiquitous sensors (ie the ) plus machine learning means that soon enough out in the world will be tracked and monitored. We need to save online privacy because it’s the ; we need to give people either guarantees of data anonymization or legal control over their data; we should have root access to the devices we “own” (because otherwise we don’t actually own them); the services we use , but we can’t labor under the that Apple can save us from intrusive governments, so eventually they need to be , too; and the powerful need to be as accountable as the poor. Otherwise privacy. Am I right? Pretty sure I am. Does that actually matter? Sadly, probably not. We have a moral responsibility in the tech community to protect people from the surveillance apparatus we’ve built around them. It’s urgent — Pinboard (@Pinboard) I know you’re probably thinking I’m vastly overrating my own analyses. Won’t pretend I’m not biased to do so! But here’s an ongoing outright prediction failure on my part. I that will drones to untraceable . (I’m clearly biased by having written a about just this way back in 2009.) And despite some desultory drone use by Daesh and Mexican cartels, the reality is that I keep being completely wrong. At least so far. Also: one of my favorite pastimes appears to be . Six years ago Fred Wilson “Facebook is not an unstoppable juggernaut.” I . Then I ( ) about Facebook Comments and , lambasted them for doing anything interesting and being , conceded that they are only vulnerable to a … but then speculated that, as people realize that machine learning can that they from , their popularity may greatly diminish. Was I all wrong? No. Was I particularly prophetic? I was not. I’ve been writing about Bitcoin and its descendants for more than five years, and I’m pleased to say that my Bitcoin pieces, in which I conclude it’s a developed-world sideshow but a potential developing-world breakthrough, remain not completely . It wasn’t until I dug into the cryptocurrency’s technical details, though, and began to understand the implications of its distributed-consensus solution, that I . Which I remain to this day — though I still think we’ll need to wait for , eg , before we see real breakthroughs that go beyond true believers. True, there’s been a lot of , , and in the cryptocurrency space: but that’s how new tech . Between sidechains, the Lightning Network, , , etc., the world of cryptocurrencies is bursting with possibilities. I still believe they are a very big deal — but I concede I can’t actually point to a breakthrough application. Yet. All that said, though, my chief interest in Bitcoin is that it’s a of wildly successful . A shocking amount of our online activities — which means, in these ultra-wired times, our lives — is mediated and controlled by what Bruce Sterling calls “the Stacks”: Alphabet, Amazon, Apple, Facebook, and Microsoft. The Internet was built to be decentralized and independent; . We our email, our messaging, our social networks. I’ve even speculated that and a could supplant (parts of) capitalism as we know it. That’s more pie-in-the-sky, but there are green shoots of decentralization out there. I hope to keep writing about that a lot. I’ve actually been beating the drums for for years now, because since 2011 — at least a ahead of the curve, I think — I’ve been suggesting that technology is . I wrote piece after piece about this — , , , “ “, and — — well, at best, I was premature, and at worst, I was . Technology is destroying jobs faster than it’s creating them, at least not yet. Now, a lot of people believe that it will, soon enough! Elon Musk, , and Bill Gates, to name a few. But in the present day, I’ve come up with a more nuanced view: technology will jobs, make workers — think Uber drivers and other on-demand economy gigs — and software will drive the world into , wherein , while the other 80% struggle to get by as part of , with no careers and no security. Whether that or fully automated technological unemployment is the future, though, I believe we will to replace the expectation of near-universal full-time employment with a . And I think the last five years back me up on this. Now on to the next six years…
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WTF is computer vision?
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Devin Coldewey
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room throws you a ball and you catch it. Simple, right? What actually happens is roughly this: the image of the ball passes through your eye and strikes your retina, which does some elementary analysis and sends it along to the brain, where the visual cortex more thoroughly analyzes the image. It then sends it out to the rest of the cortex, which compares it to everything it already knows, classifies the objects and dimensions, and finally decides on something to do: raise your hand and catch the ball (having predicted its path). This takes place in a tiny fraction of a second, with almost no conscious effort, and almost never fails. So recreating human vision isn’t just a hard problem, it’s a set of them, each of which relies on the other. Well, no one ever said this would be easy. Except, perhaps, AI pioneer Marvin Minsky, who famously instructed a graduate student in 1966 to “connect a camera to a computer and have it describe what it sees.” Pity the kid: 50 years later, we’re still working on it. Serious research began in the 50s and started along three distinct lines: replicating the eye (difficult); replicating the visual cortex (very difficult); and replicating the rest of the brain (arguably the most difficult problem ever attempted). Reinventing the eye is the area where we’ve had the most success. Over the past few decades, we have created sensors and image processors that match and in some ways exceed the human eye’s capabilities. With larger, more optically perfect lenses and semiconductor subpixels fabricated at nanometer scales, the precision and sensitivity of modern cameras is nothing short of incredible. Cameras can also record thousands of images per second and detect distances with great precision. An image sensor one might find in a digital camera. Yet despite the high fidelity of their outputs, these devices are in many ways no better than a pinhole camera from the 19th century: They merely record the distribution of photons coming in a given direction. The best camera sensor ever made couldn’t recognize a ball — much less be able to catch it. The hardware, in other words, is severely limited without the software — which, it turns out, is by far the greater problem to solve. But modern camera technology does provide a rich and flexible platform on which to work. This isn’t the place for a complete course on visual neuroanatomy, but suffice it to say that our brains are built from the ground up with seeing in mind, so to speak. More of the brain is dedicated to vision than any other task, and that specialization goes all the way down to the cells themselves. Billions of them work together to extract patterns from the noisy, disorganized signal from the retina. Sets of neurons excite one another if there’s contrast along a line at a certain angle, say, or rapid motion in a certain direction. Higher-level networks aggregate these patterns into meta-patterns: a circle, moving upwards. Another network chimes in: the circle is white, with red lines. Another: it is growing in size. A picture begins to emerge from these crude but complementary descriptions. A “histogram of oriented gradients,” finding edges and other features using a technique like that found in the brain’s visual areas. Early research into computer vision, considering these networks as being unfathomably complex, took a different approach: For a few objects in controlled situations, this worked well, but imagine trying to describe every object around you, from every angle, with variations for lighting and motion and a hundred other things. It became clear that to achieve even toddler-like levels of recognition would require impractically large sets of data. A “bottom-up” approach mimicking what is found in the brain is more promising. A computer can apply a series of transformations to an image and discover edges, the objects they imply, perspective and movement when presented with multiple pictures, and so on. The processes involve a great deal of math and statistics, but they amount to the computer trying to match the shapes it sees with shapes it has been trained to recognize — trained on other images, the way our brains were. What an image like this one above (from Purdue University’s ) is showing is the computer displaying that, by its calculations, the objects highlighted look and act like other examples of that object, to a certain level of statistical certainty. Proponents of bottom-up architecture might have said “I told you so.” Except that until recent years, the creation and operation of artificial neural networks was impractical because of the immense amount of computation they require. Advances in parallel computing have eroded those barriers, and the last few years have seen an explosion of research into and using systems that imitate — still very approximately — the ones in our brain. The process of pattern recognition has been sped up by orders of magnitude, and we’re making more progress every day. Of course, you could build a system that recognizes every variety of apple, from every angle, in any situation, at rest or in motion, with bites taken out of it, anything — and it wouldn’t be able to recognize an orange. For that matter, it couldn’t even tell you what an apple is, whether it’s edible, how big it is or what they’re used for. The problem is that even good hardware and software aren’t much use without an operating system. For us, that’s the rest of our minds: short and long term memory, input from our other senses, attention and cognition, a billion lessons learned from a trillion interactions with the world, written with methods we barely understand to a network of interconnected neurons more complex than anything we’ve ever encountered. This is where the frontiers of computer science and more general artificial intelligence converge — and where we’re currently spinning our wheels. Between computer scientists, engineers, psychologists, neuroscientists and philosophers, we can barely come up with a working definition of how our minds work, much less how to simulate it. That doesn’t mean we’re at a dead end. The future of computer vision is in integrating the powerful but specific systems we’ve created with broader ones that are focused on concepts that are a bit harder to pin down: context, attention, intention. That said, computer vision even in its nascent stage is still incredibly useful. It’s in our cameras, recognizing faces and smiles. It’s in self-driving cars, reading traffic signs and watching for pedestrians. It’s in factory robots, monitoring for problems and navigating around human co-workers. There’s still a long way to go before they see like we do — if it’s even possible — but considering the scale of the task at hand, it’s amazing that they see at all.
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Frederic Lardinois
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Driving the Midwest
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John Biggs
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L ast September, in the depths of high summer, my wife and I wanted to see the Midwest again. It’s not a very common desire, this one, to drive hours between small Midwestern cities with nothing but cornfields and rest stops in between. But it was a good trip. We began in Brooklyn and drove across the Verrazano, a bridge so long and well-engineered that its makers took into consideration the curvature of the Earth when they designed it. This spit us out out onto Staten Island, once New York’s ash heap and now a bustling bedroom community surrounded on all sides by water. It’s the Midwest in miniature, with more hills, and it’s the place to go if you don’t want to be crowded and want a little bit of a yard. From there we plowed into New Jersey, the smoky fog giving away as we rode onto the mainland. It isn’t until the further edge of New Jersey, however, that you feel you’re leaving the city and entering the country, when the trees and towns give way to fields and the worn teeth of the Alleghenies fall away on the thin strip of West Virginia that pokes up like a cast-iron griddle handle. America sinks to sea level as you roll into the Ohio Valley. In Pittsburgh you meet the twin rivers, Allegheny and Monongahela, where they flow into the Ohio, down the border with West Virginia, and onto Cairo, Illinois where you can hop a freight or boat going south or west. It was on this westward flowing river that settlers first came to the mythical territories – sometimes waylaid by river pirates like Samuel Mason of Cave-In-Rock, Illinois – and set up the great trading cities. It was on this river that steel flowed from the mountains into the plains and built Chicago and all points West. And it is this river, placid in appearance as it snakes along the southern border of Ohio, that brought immigrants like my paternal grandfather Julius Nagy nee Big nee Biggs to Martins Ferry, Ohio where he worked in the mines until he got black lung and died in California searching for a cure. The Eastern edge of the Midwest is neither beautiful nor ugly. This border is a psychological one because, from the highway, you don’t see the built-up cities that flank the girding roadways, the hidden malls behind the trees, the small towns once brightly lit and jumping with music and people and commerce but, in the 1940s, bypassed by the interstate. Ours was a path driven by soldiers and truckers and beats and hippies and jitney drivers and families for most of the last century and now, depending on who you talk to, the drive to return to the heartland is either foolhardy or full of sense. I’m a New Yorker now. I was from Ohio. I didn’t want to go back to stay but I wanted to bear witness, to remember where I once lived and what I once loved. It’s like visiting an old friend. Both of you are older, both of you are changed, but you still have a common language, common experience. You may feel superior in some way. Maybe they never left home, maybe they got married early and suffered for it. Maybe they never finished college. But that superiority soon washes away when the reality of your meeting sets in, the way your bones are born of the same minerals, your brains born of the same education and mindset. You are linked and superiority or inferiority is forgotten because there’s love. The Midwest of my 1970s childhood was a country full of promise. Movies set in the Midwest showed stately mansions on the edge of Chicago, waving fields of wheat, or scrappy auto workers in Detroit. The East Coast cities were all grit and broken glass and fear while the West Coast cities were dry and alien. The Midwest had secret woods and calming gardens and homes that were safe and welcoming. The dreamer is stirring. The story was simple: The Midwest was our best hope. The day Detroit rumbled to life and did Henry Ford’s bidding was the day our role as kingmaker was cemented. The mercantile exchanges and markets fed the nation, cows from the Chicago stockyards and wheat from Ohio making the burgers that fueled late night drives from the East to the West, families and teachers and factory workers and migrants rolling in long caravans into the promise of the Rockies and the Pacific. Immigrants came because of the good jobs. They walked out of their houses, into the union hall, and came out with a pension. The Midwest was a cradle, a place to settle down, to learn a new language and a new way of life. I’m reminded of a story a friend’s grandfather told us about his mother. She came over from Poland with her father and older sisters in the late 1800s and settled in the Ohio Valley. The father looked for work but was sickly and failed to find it and one day, without preparation or explanation, he left to go back to the motherland, leaving the girls – 15, 12 and eight – alone in an apartment they could not afford. The oldest girl began to work as a seamstress while the youngest ones went to school and they made extra money doing laundry and sewing. The three girls thrived in this new land, despite the odds and despite their father. They never saw their parents again. Like seeds sown on good ground men and women who came to the Midwest did well for themselves. The Midwest was a cradle of greatness. It kept genius safe at its beautiful old schools and it nurtured creativity in its cheap garrets and vibrant streets. It taught millions the right way to live, to read, and to work. And, for a while, it looked like it could change the world. That’s no longer the case. Divorce is endemic. The than anything else. The smaller cities are at once segregated and gutted, creating pockets of poor families in the city center and a ring of rich families past the interstate escaping the blight. How did the old saying used to go? “New York is great to visit but I wouldn’t want to live there.” The same is now true of Topeka, of Grand Rapids, of St. Louis. I worried about this. I wanted to see it again, to see what was happening in the states no one visits except to drop in on relatives at Christmas. The common narrative is that these are places that are now hollowed out and hopeless. I was reminded often of J.D. Vance’s fascinating work, , a book that shows what is truly happening in places like his hometown, Middletown, Ohio. These are the places that newspapers either ignore, admonish, or laugh at. They are backwaters full of uncultured and unlettered men and women, or they’re a tragic victims of globalization. They have no coffee houses or art theaters because, as Vance notes, there’s no one left to drink the lattes. “Efforts to reinvent downtown Middletown always struck me as futile,” he wrote. “People didn’t leave because our downtown lacked trendy cultural amenities. The trendy cultural amenities left because there weren’t enough consumers in Middletown to support them.” Replace Middletown with any other Midwestern hamlet and you get the same result. Morgantown. Toledo. Ferguson. Crystal City. They’re all interchangeable but they’re all broken in their own way. Slowly, however, life is coming back and I wanted to see those shoots popping through the bare earth. The dreamer is stirring. To come here again, to give it some time, was important to me. So we drove west from the Eastern shore like so many before us. Our first stop was Columbus, Ohio, the city where I was born. Columbus is a college town and holds over 65,000 students on campus at Ohio State. It’s an engineering and agriculture hub but the school – and city – have a vibrant arts scene and a true startup culture. The perfect avatar of this cross between art and commerce is , a boutique investment fund situated at the mouth of the Short North Arts District. They pay lip service to investing in Columbus startups and they have invested in a few over the past years, but they are there to be poised for a renaissance, not catch a wave. In the 1980s the Short North was a haven for proto-hipsters and artists. Small storefronts held mini galleries and a monthly gallery hop was the thing to do for folks with a penchant for wine. The entire district – in fact the whole of High Street – received a full makeover in the intervening years culminating in the rise of multiple modern brick and steel buildings plunked down where dive bars and poetry bookshops used to be. The High Street of old, an amalgam of the aforementioned dives, convenience stores and head shops is gone, replaced by a modern walking mall. While I miss the stalwarts (the loss of Monkey’s Retreat, a comic book store, and Stache’s, the bar a friend and I played in at 16, are particularly saddening), I do enjoy the current crop of restaurants and coffee spots along with a massive and beautifully appointed student film center that shows first run and art films. The only place to get that fare used to be a few miles out of town at a theatre that had seen better days. I asked around and even held a meetup in a bar while I was in town in an effort to meet some of the local talent. There was plenty. Most of it appeared to be in the tech service industries but there were definitely a few oddballs. One team presented an electronic musical instrument that worked like a theremin cross with an air guitar. Another, called , focused on keeping gaming honest. Theirs was a culture that was built on serving big clients, akin to the Central European startups that grew out of software houses but it also has engineering talent that rolls in from the school. Further, many of the startups aren’t tech at all yet still follow the tech VC trajectory. The locals agree. Web Smith, for example, is a fixture in the Columbus scene. He’s an “e-commerce consultant” and is currently commuting between the heartland and New York. He’s seen innovation flourish in business that wouldn’t be considered startups in the technology world. “Columbus has a disproportionate number of companies that began as small businesses and developed into VC funded, P/E funded, or cash-flow positive, high-growth brands. Jeni’s, Rogue, Startups.co, Homage are but four examples. Hot Chicken Takeover is the next company to achieve a similar trajectory,” he said. “These are real businesses that have avoided incubators and the spoils of prototypical startup culture. This is what Columbus is great at fostering.” But all is not hot chicken and roses. Smith doesn’t recall a recent round of institutional funding. He estimates that most investors threw in “$100-200K” in the last few months while other companies have taken as part of a state-run project for small but growing startups. Ohio is also about to have a . Across the country, cities like Columbus are thriving while cities where manufacturing found purchase are failing. “The low cost of living along with the abundance of high-paying jobs is one great draw. I would also say that the city as a whole is truly trying to stay on the cutting edge,” said Dylan Gale, CTO Nuvestack. “There is apparently much more investment in Ohio than what I was aware of, although they are largely looking for fairly investor-heavy terms and many will have startups move out West if they become successful.” But he’s also worried. “I feel that the Midwest itself may be in for a bit of a downturn in the next 30 years. Some of the cities that were decimated as part of the rust belt have not returned to their former selves and may never do so. Many of the cities that did recover have grown with largely middle level IT jobs which are being automated and those are slowly going away,” he said. “I do actually worry that there is no direct path that many high-level engineers took in the IT world anymore. So many of my peers started out shaking the printer toner and worked their way up. I am not certain the middle-level jobs will always be around as stepping stones to get to higher levels. Too many things work the way they should from the start to require learning and innovation. It is also very difficult to take someone straight out of school and teach them higher level infrastructure knowledge without a solid understanding of the basics.” What is happening in Columbus is at once unique and commonplace. Across the country, cities like Columbus – college towns, towns anchored by a hospital or a military base or finance – are thriving while cities where manufacturing found purchase are failing. Columbus is on the upswing while traditional manufacturing towns are in a gully. A word on that. I tried for this piece to talk to some factory workers but they were hard to find. A friend’s son took a loading dock job because it paid well and imagines that his life could be different with a bachelor’s degree. Another man, a friendly carpenter who befriended my parents named Justin Giglio, sells and installs cabinetry now, a job that gives him great freedom, although he used to work in a cabinet factory. He says innovation without capital and support is sometimes foolish. “Innovation is tough. Example: I can make a template/jig for my carpentry work, but what is the break even point? Will I be further ahead if I just continued the work without the template/jig? And it’s not like I have a 5 year contract for my work, so I may make the jig and then the work dries up. Then I made a jig for nothing. “I have only lived in the Midwest, so I can’t compare and contrast,” he said. “Lots of people can build cabinets, but not a lot can sell them and prospect.” Sadly, the return of manufacturing to the heartland, at least the kind that once supplied the tens of thousands of Midwesterners a steady job, a home, a pension, and sometimes a fishing boat, is dangled in the press as a sort of panacea, as if Armco or Wheeling Steel would come rumbling back out of the hills to save the day. In Columbus the Marysville Honda plant supplies an estimated 4,200 jobs but most of those are skilled engineering jobs taken by OSU grads. That plant, a bright spot in the Midwestern manufacturing firmament, will soon be joined by a … in a massive data center. The good jobs, the union jobs that gave a high school graduate or a new immigrant a nice house with a picket fence and their kids a good education, will never return. But a new generation is driving down the road to Honda’s data center and getting all that and more. Don’t believe me? The best example is the tale of . This French company is one of the largest manufacturers of steel tubing used in oil and gas mining in the world and, in a generally feel-good effort, they opened a new plant in an abandoned mill near Youngstown. Instead of tens of thousands of jobs, however, the mill hired 400 to manage their automated factory and when gas prices fell in 2015 the company when demand for fracking materials fell. This cycle – boom and bust – is exhausting, and folks in Rust Belt towns remain hopeful. Youngstown Mayor John A. McNally, for his part, kept his chin up. “It better turn around,” McNally said in an . “It’s got to turn around so Vallourec can put people back to work. It’s just a matter of when.” Youngstown It’s a city of makers now, and micromanfacturing and 3D printing seem to be taking root in the town. It’s another rare bright spot in a seemingly cursed economic environment. But these years of confusion and insecurity are taking their toll in many ways. We drove on. My friend E (not her real name) lives outside of Toledo, Ohio. She and her husband own a huge house on a few acres of land and they keep a horse in the stables down the road. E is highly educated – she has a PhD and her husband works for a tech company and is on the road a lot. Their house is bucolic in the summer. Tall trees surround an empty field and the two-story dream home with a big garage and stocked wine cellar. You turn down a long, winding drive to get to their garage. When we pull up we can’t see the garden in the failing light, but the air is redolent of the scent of newly ripe tomatoes and fresh-cut grass. In the kitchen they have a mess of heirloom peppers that they are using to make homemade pizzas. They have the kind of house I dream of as a Brooklynite. Quiet, big, rambling, full of books and fun. Her husband brews his own beer and distills spirits. They have a well on the property and try to remain self-sufficient. Their daughter goes to the private school outside of the city. When we pull up to her door she takes us to the stables and then we sit down to talk for a bit. There is an undercurrent of unease. She tells us about her daughter’s school and the feeling of educational isolation she experiences. She’s a little afraid and I wonder why.
Much has been said about the slow death of the American Midwest. Swathes of beautiful, fertile land have been given horrible monikers – the Rust Belt, the Meth Belt, and, more innocuously but insidious in its own way, the Bible Belt. This is one of those places, suggested E, a rusty shell housing an angry populace. Toledo is one of those hollowed-out cities that you hear so much about. It was and is beautiful. Long avenues are lined with Victorian-style homes built when the Miami and Erie Canal began its meander along the lake. Later it was a stop on the New York-Chicago line, an artery of life and commerce that was shut when the highways bypassed the Northern Ohio cities and the railroads stopped carrying passengers to fill the city’s hotels, restaurants, and bars. Now it has a population of 285,000 and is renowned for its green energy efforts and artistic resurgence. But high-tech and art museums don’t turn a town around. These societal perks give citizens a leg up when their schools are already running properly. They offer internships and quiet retreats for study and contemplation. They offer a nice trip on a rainy day for a class already primed to appreciate a solar plant or a Gauguin painting. But when there is little impetus to visit them they lie dormant, like Christmas decorations waiting for a better season. Toledo’s public school systems are, by any standard, sub-standard. Except for outliers on the edges of town, most of the inner city test scores are poor, and suburban parents rarely send their kids into town to school. E’s daughter is one of them. “I think Toledo will turn around eventually. We need to have jobs for interesting people that will make them enough money to survive. The downtown is beautiful and starting to turn around. Unfortunately the University of Toledo is not doing well, so scholars don’t choose to come here easily,” she said. “There’s a lot of peace here, and they are good people, although our interests sometimes diverge. It’s intellectually lonely. It’s not just Toledo though. Had a conversation with a guy my age in Oklahoma City going through the same thing. He loves the area, but misses people who think big thoughts.” The educated feel isolated and afraid in the deep country where their neighbors might not share their citified views; those in small towns see danger in every tinted window and coastal license plate. Further she is afraid of the militias. Over the border Michigan the and makes the political conversations E has with neighbors often overtly conspiratorial. She’s called “elitist” for using three-syllable words. “Personally I think it’s going to get worse first. The divide between urban and rural will get even worse until we can have a major overhaul. I see the same thing in our education system. Until we completely reform it we are perpetuating our problems, and generations of people compare their own experiences to what is now and see change as bad.” “Change is hard and painful,” she said. There is a contrasting view of threats coming from cities to the country and vice versa. It’s the classic Deliverance/Clockwork Orange dichotomy. On one hand the educated feel isolated and afraid in the deep country where their neighbors might not share their citified views and, on the other hand, those in small towns see danger in every tinted window and coastal license plate. The dream of the city intellectual that was defined by the exodus from city to country after the Summer of Love is just that – a dream. Interesting many I talked to hoped that Google or Facebook or Uber held the answer. In many small towns what they wanted as a big Google campus. It could even be run by a few dozen people and because workers were cheap and utilities would be cheaper they could set up shop, churn out code or run servers, and maintain some of the economy through tax payments. It is a sort of economics by cargo plane. A big company swoops in, deposits its offices, and swoops out. For this to work, however, children like E’s daughter need to stay in the small towns after the graduate. E admits that that probably won’t happen. She stays in her community because her daughter can ride horses and go to a good private school. The rest of the intelligent teenager’s accoutrement – movie theaters, poetry readings, places to hang out – are missing. “Those that embrace that intellectual freedom?” said E. “They head to the bigger cities with the better jobs and the greater number of people who are like them.” That seems like the common sentiment among folks I talk to out here. The kids don’t want to stay and if they do there’s little for them to do. You have no opportunities in a very real sense. There is no opportunity to be educated, no opportunity to imagine a life outside of town. There is no opportunity to meet people with opposing viewpoints nor an opportunity to learn about alternative views. In the end, it’s a cul-de-sac masquerading as a town. E is happy where she is. She loves her family and she loves her home and the stables and the school. She wants more but she knows she’ll get it, eventually. Not many in her town can say the same. Two cities that we truly loved on our trip – and Cleveland – had undergone renaissances in the past decade that turned them from strange outposts on the road West to major cities in their own right. But there was a feeling in these beautiful towns of separation and segregation. Chicago is the colossus in this area and seems to have an outsize effect on the surrounding burgs. It draws young people out and away. You can grow up in Indianapolis but you work in Chicago or LA or New York. Your family still lives in Cleveland and you remember it fondly but you wake up in the fog of San Francisco. Places like Indianapolis can also bring them back, but only in rare cases. When we visited, the downtown area was full of young professionals working at Chase and living in converted lofts in an old hotel. They had everything they needed, including a mall and plenty of places to drink. It’s a facsimile of nearly every minor metropolitan area I’ve ever visited: a place for the young professional to start in and then leave, a place where established folks can buy a house on the outskirts and live comfortably, disconnected from the urban core. wrote this about St. Louis but it is applicable in all of the cities I visited. “St. Louis isn’t perfect — the local style of pizza is horrendous, our NFL football team should not be playing in a dome, the airport is an embarrassment, and the traffic lights aren’t timed. More important, we still struggle to create, attract, and retain more skilled workers. It’s an old-time, Mississippi River-based manufacturing economy that’s yet to fully reinvent itself that last year lost 14 percent of its professional services companies (law firms, architects, ad agencies),” he said. “Without question, St. Louis does not suck. But with the exception of one very smart tourism campaign developed by the CVB, we typically do a terrible job of externally articulating what those offerings are. Perhaps by stepping out of our comfort zone, moving beyond silly turf battles, and developing a comprehensive approach to marketing the area, St. Louis can better promote a region that has much to offer.” Further, there is little connection between the young people at the city center and the older ones (with money) on the periphery. The networks have broken down and there is no version of the Palo Alto-San Francisco cash corridor in these smaller towns. The problem, wrote Robert Putnam in his , is old timey, back-scratching, aka reciprocity. Sometimes, as in these cases, reciprocity is specific: I’ll do this for you if you do that for me. Even more valuable, however, is a norm of generalized reciprocity: I’ll do this for you without expecting anything specific back from you, in the confident expectation that someone else will do something for me down the road. The Golden Rule is one formulation of generalized reciprocity. Equally instructive is the T-shirt slogan used by the Gold Beach, Oregon, Volunteer Fire Department to publicize their annual fund-raising effort: “Come to our breakfast, we’ll come to your fire.” “We act on a norm of specific reciprocity,” the firefighters seem to be saying, but onlookers smile because they recognize the underlying norm of generalized reciprocity— the firefighters will come even if you don’t. When Blanche DuBois depended on the kindness of strangers, she too was relying on generalized reciprocity. A society characterized by generalized reciprocity is more efficient than a distrustful society, for the same reason that money is more efficient than barter. If we don’t have to balance every exchange instantly, we can get a lot more accomplished. Trustworthiness lubricates social life. Frequent interaction among a diverse set of people tends to produce a norm of generalized reciprocity. Civic engagement and social capital entail mutual obligation and responsibility for action. As L. J. Hanifan and his successors recognized, social networks and norms of reciprocity can facilitate cooperation for mutual benefit. When economic and political dealing is embedded in dense networks of social interaction, incentives for opportunism and malfeasance are reduced. This is why the diamond trade, with its extreme possibilities for fraud, is concentrated within close-knit ethnic enclaves. Dense social ties facilitate gossip and other valuable ways of cultivating reputation— an essential foundation for trust in a complex society. This is exactly correct. There is no Midwestern network, not central spot where startups can gather. I’ve visited Chicago multiple times and, excepting a few rare examples, the startup ecosystem is closed and seemingly moribund. The same can be said of Columbus or Cleveland or St. Louis. To say this is tantamount to sacrilege and I know there are plenty of people in each of these cities trying hard to unify and create rather than separate. Each of these towns has its own incubator and accelerator, each has its own meetups. But there is little cross-pollination between cities, and when one company fails the only way out is back into corporate American from which many founders ran in the first place. These cities are desirable. They call to us urbanites. Flying over these cities on my way to some soiree in San Francisco or Seattle I wonder what life is like down there in a little town nestled at a confluence of rivers surrounded by farms, grasses blooming emerald in the spring and turning auburn gold in the fall. I imagine broad sidewalks that all led to the well-stocked public library. I imagine streets empty after eight except for a car full of summer-tan teenagers joyriding past my grandmother’s house and a cloud of dust. I imagine the calm feeling of a little town where everything is in its right place, where the market and the toy store and the penny candy shop are all in walking distance. If the smart people in these cities got together and made it easy for Google or Microsoft or Facebook to open an office there, imagine the improvement to the downtown core. If a data center sprung up in a cornfield or a factory full of humans, and robots popped up in an old brewery, what could that change? For one it could bring back that promise of the Midwest in a way that we haven’t seen since 1975. It brings back the dream of a job, a pension, and a future. It’s not everyone’s future – you have to be educated to partake. That’s the hardest lesson to learn and the hardest part of this. To become educated in Toledo or Indianapolis is to see places outside of Toledo or Indianapolis. And those places give you more money and prestige and the old little towns are left barren. That has to change. In my dreams of Ohio it is always summer. Heat rises in the cicada-riven night and darkness falls as patchwork lights plink on across the Ohio Valley. The moon sails over the river and reflects off the dead glass of the Wheeling Steel plant. A lone car passes my grandmother’s house on 8th Street and sometimes I hear a loud radio playing – something country, something 1970s – blasting on a stock stereo system. Sometimes a bottle pops on the curb and someone howls, the howl dopplering away down the lane. Our street light turns on and I hear the next-door neighbor, a widow who drinks, singing loudly, her voice unintelligible. I dream of my grandparents. Sadie was a seamstress who worked at the glove factory in town. The glove factory is gone. Herman was a soldier who stormed the beach at Normandy and came back full of whiskey and quiet. He worked at the steel mill making galvanized buckets. That mill is gone. I dream of him on his old rocking chair listening to the ballgame on AM radio, late in the night. That AM radio is gone. His rocking chair still sits in my sister’s house. She smiles openly. Herman never smiled. In some of the dreams I’m talking with my grandmother about the future. I show her my Atari 800XL and she nods politely, unsure what I’m on about. She lives on a pension that lets her supply me with NES games and chicken patties and she has close friends up and down the block. That pension is gone. The friends are gone. I dream I’m heading back to Martins Ferry after visiting in Wheeling. I’m sitting in my father’s Ford Fairmont station wagon. The moon is riding along with us and I try to touch it with my finger. Then I dream I’m back there but it’s present day. I’m not young anymore. Everyone is gone. The only thing left on 8th Street today is the house and the streetlight. The relatives are gone. The warm feelings are gone. The streetlight reflects fear and forward motion and sadness and loss and gain. And out of this dream I wake blinking in a Brooklyn dawn longing for what was and what will be. But I can’t have what once was and neither can the Midwest. We must do better for the cradle of our union and it must do better for itself. It must start by dumping what it learned during its last boom. This information is dead, as dusty as the machinery that ground to a halt 40 years ago. It is not an era of the singular man in the arena. It is the era of the tribe. “I wish I could say that racism and prejudice were only distant memories. We must dissent from the indifference. We must dissent from the apathy. We must dissent from the fear, the hatred and the mistrust…We must dissent because America can do better, because America has no choice but to do better,” wrote Thurgood Marshall. While he spoke primarily for civil rights I think he speaks for America now. We must dissent from ignorance and anger and hate. We must dissent from forces that aim to pull us back and hitch our wagon to stars that pull us up. I’m reminded of this excellent . He, like me, grew up in rural Ohio and says what’s true: that the good old days are gone but new days are coming. “I have friends and acquaintances who are Trump supporters. They genuinely do not understand today’s shock, particularly from minorities. These Trump supporters do not understand that many minorities believe the people who voted for Trump endorse his racism and bigotry — that those voters care more about sending a message to the political establishment than they do about the rights and welfare of human beings,” he wrote. “And, of course, people on the coasts could stand to meet more rural and exurban people, to understand why they are anxious about a changing world and less economic opportunity. But rural and exurban people need to see more of America. People do not understand the depths of how little rural America travels and sees other people and cultures. I’m from the Midwest, and I love the Midwest, but it’s not representative of modern America. We cannot fetishize it as ‘real’ America. It’s part of America — a great, big, beautiful, messy republic — but just a part.” We are hurtling into a future of self-driving cars that will leave millions jobless. We are hurtling into a future where the only exploration will be interplanetary and we will need strong men and women who aren’t afraid to work as we leave this planet. We are hurtling into a future where we all have to get smarter, closer, and more-connected to win. It is not an era of the singular man in the arena. It is the era of the tribe. There are few compromises that can be made for the ill-prepared and few remedies for those who believe they deserve them. The dreamer is stirring. What will it see when it wakes?
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Defining our relationship with early AI
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Andrew Heikkila
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Artificial intelligence has fascinated mankind for more than half a century, with the first public mention of computer intelligence recorded during a London lecture by . More recently, the public has been exposed to headlines that have increasingly contained references to the growing power of , whether that’s been , or any other number of . Once a plot device for science-fiction tales, is becoming real — and human beings are going to have to define their with it sooner rather than later. Peter Diamandis, co-founder and vice-chairman at Human Longevity, Inc., touches on that in a post he authored on LinkedIn, titled “ .” Diamandis points to recent reports showing that the Japanese are , while a growing subset of men report that . “This is only the beginning,” he said. “As virtual reality (VR) becomes more widespread, one major application will inevitably be VR porn. It will be much more intense, vivid, and addictive — and as comes online, I believe there will be a proliferation in -powered avatar and robotic relationships, similar to those characters depicted in the movies Her and Ex Machina.” Let’s back up a minute. Did Diamandis really say that he thinks people will begin to form relationships with robots? It’s not that hard to believe, given the example of men who prefer virtual girlfriends to real ones — but how close are we to actually creating an avatar that loves you back? To answer this, first we have to understand what actually is, and what has come to represent to the public world. There are two basic types of : strong , and applied or “weak” (technically, cognitive simulation, or “CS,” is another type of , but we’ll be focusing on these first two for now). Strong is a work-in-progress, but the ultimate goal is to build a machine with intellectual ability indistinguishable from that of a normal human being. Joseph Weizenbaum of the MIT Laboratory “nothing less than to build a machine on the model of man, a robot that is to have its childhood, to learn language as a child does, to gain its knowledge of the world by sensing the world through its own organs, and ultimately to contemplate the whole domain of human thought.” Strong is also the type of that you hear about in the movies — the Skynet program that rebels against its human creators in the Terminator movies, or HAL 9000 of 2001: A Space Odyssey. It is predicted that if or when this type of superhuman intelligence is made possible and brought online, we will have . This type of is years away from completion, if its completion is even possible — many contest that we will ever reach this point. Weak/applied , on the other hand, is the type of thing you read about in the headlines. Anything with the adjective “smart” slapped onto it is generally relying on weak of some kind — any artificial form of intelligence that may “learn” and even figure out ways to write its own code, but that is limited in function to very few tasks. The programs that drive smart cars, the chatbots that guide us through customer service and even the previously mentioned AlphaGo are all examples of weak or applied . These systems exist within the boundaries of a “micro-world” that the has recognized, and may even be so advanced as to be considered “ .” These systems have no “common sense” or understanding of how their recommendations fit into a larger context, or the world beyond their micro-world. They are essentially complex input/output systems that specialize in one area, easily distinguishable from human intelligence based on these deficiencies. The focus on a human-like input/output system is what seems to capture much of society’s attention in terms of . There is no better measure of the illusion of human intelligence than the ability to converse with a human as a human would. This is evident in the fact that we’ve always put so much emphasis on the Turing test as a way to determine whether or not something is artificially intelligent. If the program can with one human and pass as another, bam: The average user would call that “ ” If it doesn’t pass the Turing test, even if it’s close, we know that what’s on the other side of that screen is fake, and the genuine nature of the conversation is lost. Yet, even if we do know that we’re talking to , and that is able to navigate a conversation deftly, we’re often amazed by how human the interaction can feel — so much so, that we can suspend disbelief and forget that we’re talking to a machine altogether. Unfortunately, even within whatever micro-world it’s designed to serve, often doesn’t pass muster in conversation. Chatbots are where we see this in action almost daily. With Microsoft and Facebook announcing chatbot offerings earlier this year, many companies began turning to said technology to — but even Salesforce, whose customer service and support outranked all others in the , is pointing out that chatbots simply . The only way, it seems, to solve the problem of the inefficient chatbot is to make these systems act more… well, human. So here’s where all of this culminates. Chatbots and the interfacing aspect of isn’t going anywhere. Look at Siri or Cortana, for example. These are, technically, chatbots that double as virtual assistants — and they’re only going to become more advanced as time goes on. As is, these and other chatbots don’t pass the Turing test — and even if they did, somehow, it could be said that these machines still are not “intelligent” or “sentient” in any way, because they possess no understanding of the actual conversation being had. They, like the Stanford communication programs named “Eliza” and “Parry,” rely on pre-programmed, canned responses to simulate conversation. To philosopher Ned Block, this makes these systems “ .” Nevertheless, at a certain point, we have to ask ourselves just how human we are willing to make weak appear? Without understanding the differences between weak and strong , what types of psychological effects could deployment of an indistinguishable-from-human chatbot have? Joseph Rauch, a writer for TalkSpace, a company that provides online messaging therapy, speaks on the need for verifying human-ness in his line of work. “We frequently hear from potential clients who want to be sure they are chatting with a therapist, not a chatbot,” . “All of therapists are licensed, flesh and blood humans, but we understand the concern. Whether it’s online therapy, social media or online dating, everyone deserves to chat with the humans they believe they are connecting with.” He mentions online dating, where chatbots have into joining affiliate sites, or even exist just to make the male:female ratio seem less tilted toward males. But what if these chatbots were used in business? Going back to the CRM example, a group called Legion Analytics is trying to sell its , which understands small talk, will bring topics back up that have been previously mentioned (such as a child’s soccer game), and has even been flirted with by a prospect. If bots like these become advanced enough, might people feel manipulated or even violated by machines that seemed to know them better than themselves? Especially if these bots truly are able to sell products to people better than the average human can? That’s obviously a long way off, but a chatbot well-versed in conversation and hooked up to a data warehouse with a complete psychological profile of you, the customer, might be able to make a sale using information synthesized with persuasive measures that a regular human just wouldn’t be able to tap into. Of course, the way to really personify weak would be to teach it emotion — or at least teach it to emulate emotion — which Koko, a company co-founded by Fraser Kelton, purports to do. , Kelton speaks on the need to provide a more human feel to chatbots: “We’re working toward providing empathy as a service to any voice or messaging platform,” he says. “We think that’s a critical user experience for a world in which you’re conversing with computers.” The article likens licensing an empathy API from Koko, which could be connected to virtually any chatbot, to sticking a heart into a robot. There are upsides to that understand subtle nuances in human emotion. A recent study from showed that smartphone assistants such as Siri performed extremely poorly when responding to users who complain about sensitive issues, even when asked for help with rape, sexual assault and sexual abuse. concerning the next 20 years in healthcare, Carl W. Nelson, associate professor at Northeastern University D’Amore-McKim School of Business, also points out that “Big Data does have its challenges in terms of confidentiality and things that you would be worried about — but [can be used] appropriately to guide decision-making, to make judgements…” and how complete would an automated medical diagnostic system be without proper knowledge of human emotion to guide it? So while there is a need for even weak to understand and emulate emotion, are we running the risk of creating a homunculus that feigns recognition of the human condition, and even may regurgitate cues to generate an emotional response in its user — even though these are “canned” responses. Will those with little-to-no knowledge of these bots begin to treat them as more than just a bot? As time goes on, it’s apparent that technology will continue to astound us. As we see more movies and TV shows with robots, we will, no doubt, stop seeing these things as elements of science fiction and begin to wonder when they will become real. While movies such as Blade Runner played with the question long ago, , in conjunction with new shows like Westworld, make us realize that perhaps we’ll be dealing with the ethics of sooner rather than later. The ethical question doesn’t center on whether or not these actually have feelings or rights or anything like that — but rather, what are the consequences to us as the humans who keep them? For example, how do you explain to a child that this indistinguishable-from-a-real-person butler is not and never was human, so it’s okay that you’re throwing him in the trash? Or that, à la Westworld, it’s alright to “kill” or “rape” them, because they’re not actually alive nor are they able to consent? When does emulation of life become just as important as life to a human? These are all questions we’ll have to tease out over time, and for which there are no easy answers. Ultimately, we’ll have to define with , and find the thin, blurry line that separates weak from strong , if the latter is even possible. Hopefully, as we look into the mirror at these humanoid creations we’re constructing, we’ll learn more about and strengthen own sense of humanity, instead of relinquishing it violently, or letting it wash away like in .
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How President Trump could abuse big data and the surveillance state
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Jon Stokes
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, gun-loving, white, male entrepreneur of some means, you might think I’m not feeling personally threatened by a Trump administration. You’d be wrong. You see, as one of the founders of and the guy who, for the first half of the site’s existence, , I have watched from up close as America’s executive branch, working hand-in-glove with the private sector, has assembled the most advanced global electronic surveillance apparatus the world has ever seen. And now, I look on aghast as our country hands over control of that awesome, terrible machinery to Donald Trump, a thin-skinned score settler with an authoritarian streak and an actively maintained enemies list. Trump may or may not be serious about delivering on his campaign promises to deport immigrants, build walls, restrict freedom of the press, and lock up his political opponents, but even the man’s most ardent supporters must admit that his petty vindictiveness is the one fixed star in the shifting firmament of his policy pronouncements. So while most of my social media feeds are freaking out about Trump getting his tiny hands on the , I’m actually far more worried about what he’ll do with access to unprecedented quantities of citizens’ personal data, the power of which rivals our nuclear arsenal in its capacity to bring about a dystopian future straight out Hollywood’s darkest imaginings. Photo courtesy of Getty Images/Saul Loeb The surveillance state that has been built up under Obama is fundamentally more powerful than anything our previous presidents, George W. Bush included, could’ve dreamed of. This step-function increase in power isn’t really because of the , though that’s a key part of it. No, I’m also talking a suite of relatively recent popular innovations that have exploded the amount of sensitive data collected by the private sector, data that is increasingly accessible to various three-letter agencies without even a rubber stamped warrant from a secret court. The past 8 years have seen the launch of the iPhone, the rollout of 4G cellular, the emergence of cloud computing as the dominant server model, and the rise of Facebook and the Internet of Things (IoT). Thus it is that in the age of Obama, citizens began carrying in their pockets and purses a bundle of networked sensors the likes of which a J. Edgar Hoover couldn’t even dream of. We also began to adorn private homes and public spaces with insecure “smart” devices that when we’re present and what we’re up to. Now, with the click of a mouse, agents in the bowels of an NSA data center somewhere in the Midwest can silently dip into the streams of location, audio, video, text, and other data that these unsleeping little spies constantly emit. Then there’s the data we consciously hand over to remote servers whenever we accept a friend request, upload a photo, share a meme, buy a product online or at a retail store, or send a message. All of this information is now being correlated with the aforementioned passive surveillance data by private companies, who build up a detailed digital portrait of the most intimate parts of our lives that they then sell to the highest bidder. If you think the NSA has laws and norms that prevent them from using the capabilities described above to spy on Americans, you’re sadly mistaken. As and , there haven’t been any meaningful legal or cultural checks on domestic spying since 9/11. Internal NSA audits have where agents unlawfully spied on Americans, and there have been zero repercussions for any of this criminality. The Fourth Amendment is effectively dead letter, and has been for fifteen years. The end result is that we now live in a world where billions of privately owned, internet-connected smartphones, computers, cameras, point-of-sale terminals, and IoT devices are feeding a torrent of data about every aspect of our lives into the cloud, where it’s accessible to our government’s internal and external security forces either because they’ve eavesdropped on it directly or they’ve commandeered it from whatever private server it was sitting on. As for what our future could soon look like, do you think the that Rupert Murdoch’s media properties got busted for was ugly? Well, the former head of Breitbart is in the branch of government that controls our surveillance apparatus. Think about that, and let it sink in real deep. The next Snowden probably will not leak classified details of the NSA’s illegal spying programs. Rather, he’ll use those programs to dig up compromising intel — phone recordings, location histories, web browser histories, emails, credit card purchases, Uber routes — on domestic political enemies of the Trump regime. Some of those details will get leaked to the alt-right news media and talk radio, and others will be used for blackmail purposes. And that “Snowden,” should his identity ever become public, won’t even need to ask for a pardon, because the friendly nation that hides him and protects him will be the USA. So picture in your mind the Wikileaks email dump, but instead of the secret chatter of Democratic elites it’s the deeply personal files of political activists, and instead of the and other establishment media outlets sifting through the data and publishing newsworthy excerpts, it’s the alt-right media machine blasting the most lurid tidbits across Reddit. If the celebrity nude selfie scandal made famous folks think twice about snapping candids with their smartphones, imagine what a surge of NSA-powered doxxing and blackmail will do to political speech and activism. And to my , that registration database we’re all afraid of? I’ve no doubt that a reasonable approximation of it already exists in some form on a server somewhere, assembled from illegal but nonetheless extant archives of electronic background check requests and credit card records and gun store purchase records and the like. In this respect, gun owners are in the same rickety boat as Muslims, immigrants, and anyone who has felt threatened by Trump’s campaign rhetoric. So far, we’ve seen “Big Data” used to target specific groups — expectant mothers, golf enthusiasts, males in Chicago between the ages of 25 and 45 who are about to buy an SUV and who have a credit score of 700 or more, etc. — for sales pitches. But if the government ever wanted to zero in on a particular demographic or ethnic group for the purpose of intimidation or, God forbid, rounding them up, then the NSA could easily generate targeted lists using the same data and technologies that digital marketers currently use to show us personalized ads. Ultimately, the combination of ubiquitous “smart” devices and vast data centers for collecting the private, sensitive data that those devices produce about every aspect of our modern lives makes possible a level of total surveillance that wouldn’t have been conceivable just ten years ago. We in the West have never seen anything like this used in a hostile way to suppress political dissent, but all of that could change in a little over a month. Photo courtesy of / . Who’s fault is all of this? I’m not even going to get into politics, here, because presidents from both parties, from Clinton through Bush and Obama, have actively built out this electronic surveillance apparatus with the full cooperation of congress. No, it’s more interesting and useful to think about the culpability of the same panicked tech elites that are currently . When the Snowden leaks first came out, I talked to an engineer in the Valley who once worked on some very specialized hardware intended for the private sector. One day, the feds showed up and began buying that hardware in bulk for undisclosed reasons. Given that this powerful technology had a very narrow range of possible uses, he and his colleagues knew pretty much where this stuff was going and what was being done with it. So some of the Snowden leaks just confirmed what he already knew, because he helped build the technology described in those slide decks. This person wasn’t the only techie I’ve talked to in my years of covering high-performance computer hardware who has a story like this. The Bay Area is chock full of engineers who’ve made contributions big and small to the surveillance state, and who have a good idea of what they’ve helped enable. But it’s not just hardware engineers who’ve who know what the American surveillance state is capable of. Think about the engineers at Google and Facebook who have built for-profit, private sector versions of the NSA’s surveillance machinery designed to sell ads. Again, these guys know the contours of the terrible power that Trump and his cabinet are about to come into. And this is why they, mainly a bunch of rich white hetero males, tried everything to stop him and are now either nervously or trying to . Protestors gather to share their voice in Apple vs. FBI fight. I want to be clear that I’m not in any way advocating, as some have, that we should somehow stop Trump from taking the oath of office. That ship has sailed. We had an election, and Trump won. Fantasies of swift impeachment or Electoral College shenanigans are just that, fantasies. Equally unserious is the whole “Unplug the NSA” campaign, . No, our only real hope lies in technologies of resistance that ordinary people can use to check the surveillance state’s power at every level, from the individual smartphone to the network connection to the datacenter. Specifically, we need the major companies that host our digital lives — Google, Apple, Amazon, Facebook, and others — to immediately convene a private-sector Manhattan Project aimed at bringing security, privacy, and truly anonymous political speech back to the Internet. And if Facebook persists in its privacy-hostile stance, then Mark Zuckerberg must be rejected by business elites as a man every bit as toxic as Peter Theil. I believe that the engineers who built this monster can tame it — they owe that to all of us. What technology has broken, technology can fix. The folks who had a hand in building our digital panopticon must give us the tools to fight it, and then we must all commit to using those tools in every area of our digital lives.
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Zencaster makes it easier to record high-quality podcast audio
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Haje Jan Kamps
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With podcasting growing rapidly as a medium, a new generation of audio-recording tools are appearing. is a great example. The company’s new product, launched today, is designed to make it easier to record high-quality audio for interviewees based anywhere in the world. The problem the company is solving is that phone interviews sound horrible, and VOIP solutions like Skype often don’t degrade very well. In other words: A poor internet connection can ruin an interview. Instead of recording audio that comes through a phone line, Zencastr enables the interviewer to record the audio on the interviewee’s computer. There are other ways of doing that, of course (such as explaining to a podcast guest how to record audio on a computer, iPhone or separate recorder), but that assumes that the interviewees are technically adept enough to be able to record, save and transmit the files, which isn’t always the case. “The capabilities of modern web browsers are opening the door to a whole new level of web-based applications,” said Josh Nielsen, founder at Zencastr, explaining that new real-time technologies have made it possible to build a full podcasting studio that can be consumed through a browser. Zencastr’s product works in a web browser, so a guest can simply click on a link. The interviewer can see the status of the recording, to ensure that the interview is being taped properly. Featuring a foolproof design and a relentless focus on making podcasting as high-quality and easy as possible, Zencastr includes a ton of features that makes production easier. It’s possible to record in lossless formats, for example, or to have a separate track per participant to make editing sound far more professional. The service also has an automatic post-production feature that helps equalize and mix audio so it sounds as good as possible. The software starts with an 8-hour-per-month hobbyist tier for free, or a $20-per-month professional tier.
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FriendFinder Networks hack reportedly exposed over 412 million accounts
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Megan Rose Dickey
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If you have an account on AdultFriendFinder, Cams.com, Penthouse, Stripshow and/or iCams.com — and reused it on other sites — you should probably change your password. FriendFinder Networks, the parent company of those sites, has reportedly been hacked, resulting in the leak of of over 412 million accounts, (h/t to ). For context of just how big this breach is, the Ashley Madison hack affected 32 million people. Hackers reportedly breached FriendFinder Networks last month, and gained access to over 300 million accounts on AdultFriendFinder, which markets itself as the “World’s largest sex & swinger community.” The hack also exposed over 62 million accounts on Cams.com, a site for live webcam “sex chat,” over 7 million on Penthouse.com, over 1.4 million on Stripshow.com, over 1.1 million on iCams.com and a little over 35,000 on an “unknown domain.” FriendFinder’s network was reportedly hacked through a local file inclusion exploit, which enabled the hackers to access all of the network’s sites. For now, LeakedSource says it will not make the data set searchable by the general public. FriendFinder messed up in a few ways. For one, the company either stored user passwords in plaintext, without any protection, or hashed them using the notoriously weak SHA1 algorithm, according to LeakedSource. The company also kept logins for a site they don’t even run anymore (FriendFinder sold Penthouse.com to Penthouse Global Media in February). FriendFinder also retained email and passwords for over 15 million people who had deleted their accounts. “Over the past several weeks, FriendFinder has received a number of reports regarding potential security vulnerabilities from a variety of sources,” FriendFinder Networks Vice President and Senior Counsel Diana Ballou . “Immediately upon learning this information, we took several steps to review the situation and bring in the right external partners to support our investigation.” Some of the claims were false extortion attempts, Ballou said, but the company “did identify and fix a vulnerability that was related to the ability to access source code through an injection vulnerability.” I’ve reached out to FriendFinder and will update this story if I hear back.
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How Facebook can escape the echo chamber
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Anna Escher
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Facebook may have built an influence so large that it’s cracking under the weight of its News Feed. Mark Zuckerberg began an interview on stage at Techonomy16 and Facebook’s impact on the election. Post-election, journalists, politicians, and pundits have questioned , debating the merits of Facebook’s position of primacy as a source of information. Zuckerberg . He suggested the real problem is that people by nature engage with content they like and find agreeable, and dismiss things they don’t agree with online as they would in real life. “You’d be surprised at how many things we dismiss,” he said. “The problem isn’t that the diverse information isn’t there…but that we haven’t gotten people to engage with it in higher proportions.” If Facebook won’t change its algorithms for fear of going against its wildly successful revenue model or expand its Trending Topics product, it needs to implement better features to help diversify the content we see. Facebook is hiding behind its “we’re a tech company, ” guise in an effort to excuse itself from the fact that it hasn’t figured out the news. For such an influential platform that preaches social responsibility and prioritizes user experience, it’s irresponsible for Facebook to give people such a powerful megaphone for personal expression, only to lock them inside an echo chamber. Despite what Zuckerberg claims, Facebook , just as it has shaped our news experience whether it wants to our not. I don’t recommend using Facebook as a sole news source. But 44 percent of adults in the U.S. use Facebook as source for news, a . Another study found that Facebook saw an compared to a typical evening. It’s safe to say that a solid number of people were banking on Facebook for election updates, live video and as a stage for their own social commentary. If Facebook routinely showed users things they found distasteful or viewed as incorrect, its audience wouldn’t want to use it as much. Facebook’s revenue model profits (you know, that cool ) from a strategy of making its 1.79 billion users feel validated (and ) with its . It wants to keep us in a bubble of comfort where our views are repeated back to us in the News Feed. So yes, Facebook makes money by algorithmically favoring content that affirms our opinions. Why would it want to change? And are people even ready for a fair Feed? With its massive influence, Facebook may have the ability to change this by offering both sides. Facebook has offered lip service about breaking out of the echo chamber. Its data was used in the Wall Street Journal’s experiment to juxtapose a liberal Facebook and conservative Facebook feed sourced from users’ self-proclaimed political views and what they shared. This year, Facebook published an in a lackluster plea for us to play nice this election season, offering up its search bar as a resource to discover new viewpoints (Facebook’s search may be the least useful function on the platform). Its was a hands-on guide for information about the election aimed at helping people learn about candidates, policy and ballot propositions. It also supposedly . But the way users are interacting with the ‘lean back’ News Feed experience is important too. Facebook is missing a huge opportunity to use its tech to help us see content through a more bipartisan lens during this politically divided time in U.S. history when it could also potentially change our proclivity to ignore the other side. As a company that has always prioritized the user experience, Facebook could be doing much more.
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Snapchat’s Spectacles are now on sale near Big Sur in California
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Darrell Etherington
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The Big Sur Snapbot is , so if you’re looking to grab a pair, you’ll have to wait for the next popup location. Spectacles are on sale again, in their second ever pop-up location (the first was at ) – and people in and around Loma Vista near Big Sur state park are the new lucky lotto winners who can now purchase a pair of Snapchat’s Snap-capturing eyewear. The is way more remote than the first, but judging by the example of the Snapbot vending machine’s stint in LA, it should be selling Spectacles through today, and be refilled multiple times provided there’s interest (UPDATE: Snapchat staff on location are apparently telling people in line the vending machine in BIg Sur won’t be restocked today once it sells out). The long lines from Friday, along with high selling prices on eBay that are hitting 20x the original Spectacles spelling price, suggest a lot of people could be looking to pick them up – but the somewhat remote location might make for a very different scene. If you’re curious about what it’s like to use Spectacles feel free to check out the , but everyday users seem to love the things, too, so if you don’t mind a lineup (plus beautiful California coastal highway views) and you’re in the area, there’s probably no reason not to go down and get in line. — Spectacles (@Spectacles) The second location indicates that contrary to prevailing theories, Snapchat won’t be making Snapbots available first at big urban centers like SF and New York. Instead, the company seems to want to provoke some interesting road trips with its rollout strategy – something which may, in part, be driven by Spectacle inventory scarcity, but which also finds with its brand advertising, wherein while enjoying the social app. The Snapbot is at according to people on Twitter, so you can also carbo load while you’re picking up some Specs.
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How drones will reshape the enterprise
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Alexander Niehenke
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Most people associate with troops and mad scientists tinkering around in their backyards. Thanks to technological breakthroughs — including longer and safer flights — and new federal enacted this year, use is expanding beyond military and consumer markets and is seeping into the . Analysts at PwC the emerging global market for -powered business services to be valued at more than $127 billion. has ushered technical innovation into the mainstream with its popular Phantom series of off-the-shelf . The newest models now have enhanced gyro-stabilization capabilities and the ability to fly for triple the duration of what was possible only a couple of years ago — at a digestible cost of $1,000. Simply put, the cost and hardware have reached a point where are easily accessible for most use cases. The tipping point, however, came with the Federal Aviation Administration’s decision to pass in June — now, anyone with an online certification can operate a for commercial purposes. Previously, the industry was limited to having individuals with a pilot’s license operate (both costly and cumbersome). We’re seeing a wide range of mainstream business applications for crop up, the breadth so esoteric it becomes hard to track. just unveiled a designed specifically for industrial use-cases like construction site and field inspections. Oil and gas companies are using for rig safety and maintenance, and has made its aspirations for deliveries known. Seed companies marketing to the agriculture industry are giving farmers free and training them to survey their crops. recently used a to deliver medicine to an island near Boston. I also recently spoke with a company that mapped whole swathes of freeway in Mexico to identify sections that needed the most repair. Resolution was not high enough with satellite imagery and car-based mapping would have taken too long, but completed the project in a matter of days. There are a ton of niche applications too — from insurers assessing hail storm damage on crops to cities surveying storm water drains. The new market has created the need for an ecosystem to support it. On-demand “ entrepreneurs” are working as consultants to companies that need pilots and service providers — think Uber for . For example, companies are contracting with operators for remote facility inspection rather than risking the safety of an employee or hiring a specialist solely for the assignment. This cottage industry of specialists be essential to the viability of the market. Nobody has yet aggregated the number of these service providers, but I have no doubt it is already in the tens of thousands. Early on, off-the-shelf hardware solutions from producers such as DJI weren’t ready (as highlighted above). Therefore, first-mover vendors such as and built their own hardware in addition to the software ecosystem. This is shifting. More recently, the biggest development in the market is companies like , and , which are only focused on software. These companies benefit from having to only focus on the software and the growing surrounding ecosystem of many software vendors. I expect a trend to play out similar to the commoditization of hardware within the smartphone industry — engineering your own hardware rarely be worthwhile. A few promising categories for the next wave of software are for managing flight and managing behavior and compliance, as well as real-time data analytics processing. The media likes to tell a futuristic story of whizzing through our cities, clouding our skies. While not unrealistic, this reality is quite a ways out. Less talked about is how millions of are already in use, the value that they’re creating in the and the outcomes they’re opening up that were previously cost-prohibitive or impossible. Drones are making a real impact on a number of industries, and quietly transforming the as we know it. Much like personal IP-based telephony quietly became ubiquitous overnight, the tailwinds are such that we soon see in every aspect of our lives.
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Zuckerberg claims 99% of Facebook posts “authentic,” denies fake news there influenced election
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Lora Kolodny
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In case you missed it, last night Mark Zuckerberg to accusations that “fake news” on Facebook influenced the outcome of the U.S. election, and helped Donald Trump to win. The CEO claimed that at least 99% of news content on Facebook was “authentic.” Zuckerberg wrote: “Of all the content on Facebook, more than 99% of what people see is authentic. Only a very small amount is fake news and hoaxes. The hoaxes that do exist are not limited to one partisan view, or even to politics. Overall, this makes it extremely unlikely hoaxes changed the outcome of this election in one direction or the other.” Facebook boasts in revenue in the third quarter of 2016. The company has not enumerated the volume of posts that were categorized as news, and distributed through Facebook’s News Feed during the months leading up to the election. In its earnings reports, Facebook does not break out how much of its revenue comes from political advertising or the promotion of news posts. That makes it hard for the public to evaluate what the impact of even 1% of “hoax” news could have been on users of Facebook who had the right to vote in the U.S. election. Questions remain as to whether hoaxes could have been so well-targeted that they did, in fact, sway opinions of U.S. voters on candidates and issues. We know that Facebook has the power to influence emotions and has tested its own abilities in this regard through its As TechCrunch reported when , to impact users’ moods, Facebook showed them less positive posts in their News Feed. As a result, users included .1% fewer positive words in their own posts, Facebook found. Last night, Zuckerberg emphasized that Facebook currently relies on the wisdom and involvement of its users to “flag hoaxes and fake news.” He admitted the company could do more to improve the quality of information shared via its News Feed. However, he also warned the company would not rush to release new solutions around factchecking or quality-rating news content on the platform. He wrote: “This is an area where I believe we must proceed very carefully though. Identifying the ‘truth’ is complicated. While some hoaxes can be completely debunked, a greater amount of content, including from mainstream sources, often gets the basic idea right but some details wrong or omitted. An even greater volume of stories express an opinion that many will disagree with and flag as incorrect even when factual. I am confident we can find ways for our community to tell us what content is most meaningful, but I believe we must be extremely cautious about becoming arbiters of truth ourselves.” Zuckerberg’s comment draws a false equivalency between “mainstream sources” of news (including TechCrunch) and political groups masquerading as news brands. The was one site that posed as a news publisher to bombarded readers with content full of misinformation meant to sway their opinions about candidates and issues on the ballot. And another group, based in Macedonia, had been posting fake news to Facebook’s News Feed Fake news circulated virtually everywhere online, and on Facebook, at a time when voters needed facts to inform their decisions, unfortunately. There is a possibility that Facebook may not even want to become “arbiters of truth,” because doing so could reduce engagement. As a former Facebook designer named Bobby Goodlatte wrote on November 8th on his own Facebook wall, “Sadly, News Feed optimizes for engagement. As we’ve learned in this election, ” Other social media players under fire for helping to spread false stories ahead of the U.S. election include Twitter, Reddit, and others. But unlike other social networks, Facebook can proudly claim that it helped 2 million people register to vote in this most recent election. What good is that if those voters aren’t
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Why the next great SaaS company will look nothing like Salesforce
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Aaref Hilaly
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For years, a truism in software investing was that the value of application software lies in data, not in technology. Companies like , , and are valuable because they are the “system of record” (SoR), or single source of truth, for their customers’ most valuable information, such as customer records or employee data. As a result, they become deeply embedded in their customers’ business processes, making them hard to rip out. That gives them tremendous revenue predictability and pricing power. The technology itself — databases combined with workflow engines — is not particularly innovative; it’s the information captured by the technology that’s important. The newest crop of software applications turns this logic on its head. They mimic consumer companies by using technology as a “wedge” to gain widespread adoption and don’t even try to become systems of record. Instead, they are “systems of engagement” (SoE), meaning apps that employees actually use to get their work done. For example, take , which recently identified as the most valuable private cloud company. The data in Slack is either low value (“water-cooler” conversations) or already lives in existing systems of record. The same is true for many other fast-growing apps, like (customer interaction), (sales), (employee feedback) and (shared inbox). Digging deeper, the specific areas of technology where these companies have innovated are ones that historically people have ignored — integration and design. At big companies, integration is the ugly step-child of any product roadmap: everyone wants it to work, but no one wants to work on it. Here’s an example: a senior executive at a leading SaaS company tells me that twenty people from different groups across the company show up for the “billing meeting”, where it’s decided how billing will integrate with core features. But no one wants to work on the billing team, creating those integrations. Startups have capitalized on that by creating high performance, scalable integrations, solving hard technical problems like how to sync without putting excessive load on the underlying system. Entire companies, such as our portfolio company , for single sign-on, or , for analytics, are now built on integration alone. Integration companies, while not glamorous, can build market power by positioning themselves at the center of an ecosystem and creating an “ecosystem network effect”, whereby they become a standard. Okta and Segment are both on their way to achieving this. But most new applications use integration to gather, organize, and analyze data. They win the hearts of their users through great design. That’s no small challenge, given growing data sets, shrinking screen sizes, and ever shorter attention spans, which is why the concept of design has become a huge differentiator. It works because it’s a win-win. Startups creating systems of engagement get users and revenue, by leveraging data in the systems of record. They also increase the data’s value, by using it more and adding to it. That makes the big software vendors happy, as (they believe) it increases their customer lock-in and helps them become more of a platform. What’s not clear is whether this will continue. Large companies like Salesforce want to innovate through technology. For example, the center-piece at this month’s , its annual conference, is a new artificial intelligence (AI) initiative marketed as “ ”, which layers predictive models over its existing applications. Conversely, once a startup’s product is being used every day like Slack, it may start keeping more information within it and over time wean people off whatever they were using before (Outlook, Sharepoint, etc). The game-changer could well be artificial intelligence: if AI software could extract signal from the unstructured product feedback in Intercom or the sales forecasting information in Clari, the data in those systems could become more valuable than the limited fields captured in today’s systems of record. But that’s a long way off. For current startups, the message is clear. Don’t try to be Salesforce to Seibel, Workday to Peoplesoft or Coupa to Ariba. Those battles are over, and won’t be repeated. Instead, use technology — integration, design, perhaps machine learning or AI — as your wedge into the market. Play nice with existing systems, and then analyze how people are using your product. Feed that back into new product development and drive more engagement, ideally creating a virtuous cycle between usage and design that keeps you ahead of competitors. For examples of who does this well, look no further than the large consumer companies. It’s no coincidence that the two most awe-inspiring enterprise businesses today (AWS and Google Apps) both have a consumer heritage. That’s the winning strategy for today, and most likely tomorrow.
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Spark Capital suddenly has $1 billion to invest
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Connie Loizos
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, whose investments have included Twitter and Cruise Automation, has closed on $1 billion in commitments, it earlier today. The 11-year-old firm, which has offices in Boston, San Francisco, and New York, closed its fifth early-stage fund with $400 million, down slightly from the it had raised for its fourth-early stage fund, which closed in 2013. Spark also garnered $600 million in commitments for its second growth fund, just two years after launching its debut growth fund with $375 million in capital. Like a lot of early-stage funds that have raised so-called opportunity funds in recent years, Spark uses the capital to invest in its breakout portfolio companies. Among the startups it has funded are the Brazilian real estate portal and the automated investing platform . Spark has enjoyed a string of hits in its relatively short existence. Among its exits: headset maker Oculus was to Facebook for $2 billion in 2014; Twitter went public in 2013; Wayfair, an online home furnishings company went public in 2014; and the autonomous driving tech startup Cruise Automation sold earlier this year to General Motors for a reported . The firm also holds stakes in the highly valued messaging service and the still-private eyeglasses retailer . Spark is among a growing spate of early-stage venture funds that are suddenly managing far more money than they ever had previously. Other firms that have raised significantly higher amounts than in past years include Forerunner Ventures, a young, San Francisco-based firm that focuses primarily on e-commerce opportunities and has raised at least this year, up from its last, $75 million fund; and decades-old Accel Partners, which closed on across two new funds earlier this year, up from two funds that totaled $1.45 billion just three years earlier.
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WhatsApp launches video calling for everyone
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Josh Constine
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WhatsApp wants to be international cross-platform FaceTime. Today, the Facebook-owned chat service WhatsApp is officially launching video calling for its over 1 billion users worldwide on iOS, Android and Windows Phone. Its debut follows a from people who recently found the feature had been enabled in beta versions of WhatsApp on Android and on Windows Phone – an indication that a public debut was on the horizon. To use the new feature, WhatsApp users can hit the call button in the top right corner of a conversation, which will bring up an overlaid interstitial asking if you want to voice or video call the friend or family member you’re chatting with. To kick off the video call, you simply select the “video call” option from this screen. During the call itself, you can switch between the forward-facing and rear camera, mute the call or press the red button to hang up. It seems the user interface varies slightly on Android and iPhone in terms of where the picture-in-picture video feed is displayed, as well as the buttons’ size, lineup and placement. (See images and video below.) WhatsApp already supports a number of standard features for communications apps, including group texting and voice calling. But the company says that video calling has remained one of its top feature requests from users. [gallery ids="1415691,1415692,1415693,1415694"] With video calling, WhatsApp is belatedly catching up with a number of rivals, including Facebook’s own Messenger app, for example, as well as Skype, Apple’s FaceTime, Viber, LINE and Google’s recently launched Duo, to name a few. Though a late entrant, WhatsApp still has a massive user base and the addition of the feature could help them from fleeing to other messaging and calling platforms. In addition, WhatsApp touts its cross-platform support as one of the reasons to use video calling in its app, instead of elsewhere. “…we want to make these features available to everyone, not just those who can afford the most expensive new phones or live in countries with the best cellular networks,” the company said in its announcement, published today. That’s a direct shot at things like FaceTime, which only works on Apple devices, as well as newer arrivals, like Google Duo, which only runs on later versions of iOS and Android (Jelly Bean and up, or iOS 9 and up). You may not immediately see video calling in WhatsApp today, however. The rollout is staged, meaning it will arrive over the days ahead as it reaches the entire WhatsApp user base. Video calling isn’t the only new addition to arrive recently. The company in some of its beta versions, hinting that its next big release could be a security-focused upgrade. By retaining its simple interface but embracing more vivid connections beyond texting, WhatsApp could flourish with users no matter how they want to communicate
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Zuora latest cloud company to launch predictive data product
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Ron Miller
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, the cloud company that helps SaaS companies and others manage their subscription businesses, launched Zuora Insights today, a product designed to help customers understand the nuances of the data behind the subscriptions. Like so many SaaS companies these days, Zuora understands that there is value in the data they produce on a daily basis as a byproduct of simply doing business. They believe they can put this data to work to help customers link subscription revenue to key business metrics. What’s more, they think they are in a much better position to do this than traditional accounting software from vendors like SAP or Oracle, which use traditional GAAP accounting methods. “Insights allows our customers to combine financial, demographic and behavioral data that has been traditionally siloed. It represents the next major step these [subscription-based] companies will go through,” Zuora CEO Tien Tzuo told TechCrunch. Like Zendesk, to provide customer insight across the company, Zuora wants to make more practical use of its data. For Zuora, that means finding ways to combine the subscription data with other relevant customer information. Since Zuora is tightly integrated with Salesforce, it should come as no surprise that you can combine Zuora data with Salesforce customer data to build a more complete picture of the customer. The idea is to allow users to proactively make use of all this data to find possible issues and understand customers better to improve their businesses.That could mean trying to upsell a happy customer when the time is right, while making it easy to upgrade, or it could involve identifying customers giving signals they might be ready to unsubscribe to proactively try to prevent that. In the subscription business, losing customers is measured by the churn rate. You want as low a churn rate as possible. If you can use data to prevent churn, you are going to have a more successful subscription business. This ability to use the data to actively engage the customer has the potential to be a huge differentiator. “In next phase of the subscription economy, customers will not be satisfied with backward metrics. They want information to drive the business,” Tzuo said. Zuora launched in 2007, long before most people had even heard of subscription revenue, but founder Tien Tzuo had a vision of a changing software market that was ahead of its time. Today, the software business (along with many others) has caught up with the vision — and Zuora wants to help customers understand their subscription businesses better. Zuora customers include Ford, Surf Air and Trulia, as well as more traditional SaaS companies like Box and Zendesk. The company has raised over $240 million and has a valuation of over $1 billion.
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Meet Impact VC, a new firm from Accel and DCM founder Dixon Doll
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Lora Kolodny
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One of the co-founders of Accel Partners and DCM, , recently formed a new venture firm called , along with and . Ball previously served as Oracle’s treasurer, where he helped manage $50 billion in assets. And Crawford was previously an investor and founded Velocity Venture Capital. Both are also former Kauffman fellows. The firm is hosting their first annual Impact Global Venture Summit in Sacramento tonight to connect fundraising companies to angel investors, venture capital firms and corporate venture groups. Impact VC has already quietly backed a couple of companies, and According to Nightingale Security , his startup’s technology includes drones and software that can “replace security guards” and protect the perimeter of any large venue or corporate campus. Its robotic, aerial security systems are installed “on-prem,” or behind the firewall of any given company’s network. Therefore, they can be used in highly sensitive settings like at a high-security prison, film studio or large industrial operation such as a factory, solar farm or data center. Wu will be speaking at the in San Jose on Tuesday as part of a panel examining how robotics and drones specifically are transforming the physical security industry. formerly known as Sviral, has developed technology that reduces latency and power consumption in high-performance computing, employing multi-core processors used in parallel. While the partners at Impact Venture Capital declined to reveal any fund-specific details, they were able to speak to their investment philosophy broadly. Doll told TechCrunch that Impact Venture Capital seeks to back early-stage companies, strictly. Why? The veteran of venture capital said: “With early stage, seed and Series A rounds you have the most uncertainty and risk there. But if you actively manage the companies and the portfolio itself, you will realize the greatest returns. All the data from Cambridge, and others, bears this out… When you look back over the decades, the top performing returns come from early-stage firms by and large. This stage is also where you can provide the real business development part of venture, as opposed to just writing checks and staying largely on the sidelines.” Eric Ball added that Impact VC has an interest in startups developing new technology that can “cut across multiple customer verticals.” Areas of interest include: the Internet of Things, artificial intelligence, data analytics, robotics and telecommunications media technology (TMT). Ball said: “Some investors want to specialize and create silos around their space. But many technologies don’t respect silos. Nightingale is a good example of this. They can use drones to replace human security guards, but the same drones could be sent to inspect a solar panel or be sent to measure moisture levels in crops.” Impact VC has offices in Burlingame and Sacramento, but extensive international connections, with limited partners and prior co-investors based around the world, especially in Israel, Germany, Japan, China and the U.K. Why start an early-stage firm in 2016; it seems like there are so many? “There’s a dynamic going on where in the last several quarters, VCs have raised more money than at any point in history, yet have been deploying less capital than at any point in the last 10 years. Firms are hoarding dollars because they assume it will take a very long time for a startup to exit. So they’re doing fewer deals and reserving more money for follow-on rounds. Self-inflicted scarcity can be a self-fulfilling prophecy. But this creates opportunity for folks who are willing to deploy capital now,” Ball explained. Dixon Doll added that VC investors need to remain patient, and keep an open mind about where to find liquidity in this next cycle. “For the VC industry to be healthy we’ve got to have a wide set of exit opportunities, including IPOs as well as mergers and acquisitions. One of the new factors that’s helping solve at least part of this problem is that a lot of VC-backed companies are exiting by selling out to PE firms that specialize in target sectors. We expect that trend to continue. But it’s important not to be impatient just because we are weathering an IPO drought,” he said. Oh, and by the way, when the firm says “impact,” it’s not about a double or triple-bottom line, but pure financial returns. That said, Impact VC does want to help foundations, including philanthropic ones, to invest and growth their wealth wisely, Ball said.
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Amazon now pays out instantly for video game trade-ins
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Jon Russell
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Amazon is gearing up for the Christmas season by allowing customers to get instant vouchers for trading their unwanted possessions. The U.S. retail giant has long-offered in exchange for gift card credit, but now — with Christmas just 40 days away — its new ‘Instant Payment’ service lets you get your money right away… before you’ve even sent the item over. That down for its previous policy of 10 days. There’s a small catch: The instant payment service is initially live for video games and related accessories only. But . Simply submit details of the item/items that you wish to return, after which gift card credit is immediately dispatched. You then have seven days to mail the item to Amazon, via a UPS location, using a printable, prepaid shipping label that is provided on the Amazon website. Amazon stressed that trade-in values vary based on the condition of the item in question, but some rough prices for popular gaming products are as follows: The initiative will be welcomed by many customers as the costly present-buying season approaches, but don’t bank on being able to spend your trade-in cash on the hottest thing in gaming now: an NES Classic. The much-sought-after Nintendo console is, well, much sought after… with its first batch . Luckily Amazon has plenty of other items on display. More details on Amazon Instant Payment are .
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RageDonate turns Trump anger into charitable good
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Kate Conger
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A host of organizations have capitalized on the anger that followed the election of Donald Trump. The American Civil Liberties Union says it received its “ ” ever in the days following the election. The New York Times is signing up new subscribers faster than normal. And Planned Parenthood has called for donations in light of the “ ” on women’s health. Now, a new organization called is trying to consolidate all of your pissed-off donation needs into one place. The group of mostly anonymous techies and creative types launched its site today and is already partnering with the anti-sexual assault organization Project Callisto, Freedom of the Press Foundation, the Arizona chapter of the Council on American-Islamic Relations, and other groups. Each group collecting donations corresponds to a Trump statement. For instance, a donate button for the health organization Sexual Health Innovations is paired with Trump’s about assaulting women. Donations are processed via Stripe, which is offering discounts to non-profits on RageDonate that have not signed up to use Stripe before. “I am angry that we’ve elected a man unfit for office,” said Earl Carlson, a product designer and spokesperson for RageDonate. “I love this country and worked with my friends over the weekend to make sure that the people most at risk from Trump’s policies and the people he hires to enact them have a better chance of fighting back.”
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DroneBase raises from Union Square to pay any pilot for aerial footage
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Josh Constine
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That drone in your closet could earn you some money thanks to , a startup that delivers aerial data and footage to business clients. DroneBase’s new lets drone owners find gigs nearby where they can fly 10-minute missions, upload the assets and get paid if a DroneBase client wants to buy the info. By connecting idle pilots with needy businesses, DroneBase can change flying an unmanned aerial vehicle from a hobby into a profession, equip businesses with aerial data without them having to own drones and build its business too. Clients now include construction companies, Hilton hotels, Allstate insurance, Zillow, commercial real estate giants CBRE and JLL and Keller Williams, the largest realtor by number of agents. They use DroneBase to track progress at their work sites, measure areas and resources, verify insurance claims on roofs, shoot aerial marketing footage of properties and more. Clients just input their needs and DroneBase dispatches a pilot with all the skills and hardware necessary to get the job done. DroneBase CEO Dan Burton flying DJI’s latest Mavic drone Dan Burton, DroneBase’s founder and CEO, tells me it’s been “really rewarding” to pay some pilots as much as $50,000 a year. Meanwhile, DroneBase is on track to boost its revenue 700 percent from 2015 to 2016. The potential to crowdsource the future of enterprise drone usage has attracted a $3 million Series A for DroneBase. Previous investor Union Square Ventures and its top dog Fred Wilson led the round. Burton says, “Every interaction with them, they just increase our trust, even when they’re telling us something hard to hear.” The round, which brings DroneBase to just over $5 million in funding, was joined by Upfront Ventures, Accel Partners and DJI. Also based in the startup’s hometown, Burton says Upfront’s access to talent in Los Angeles has been a big help. . DroneBase requires pilots to exclusively use the Chinese manufacturer’s hardware in order to standardize the footage collected. “All the jobs we’ve done, we’ve done every single one on a DJI drone” Burton says. “It removes hardware as a variable.” For example, DroneBase did monthly check-ups on 40 construction sites across the country for one company, and the reports from Arizona and Florida are directly comparable. The funding will fuel DroneBase’s invasion of new verticals. focused on collecting beautiful shots from the sky for real estate marketers. It’s grown into insurance, construction and mining. Now it wants to advance its business with solar companies and telecom infrastructure owners. “We’re actively flying in all 50 U.S. states and 30 countries,” Burton beams. “Any address in the United States, we can get you drone imagery and data in 48 hours, for almost always under $500.” Wait time and prices could drop even further now that . “Eighty percent of people who buy a drone, they go out and fly it three or four times, and then it’s collecting cobwebs in their garage,” Burton says. Better to put them to use. DroneBase has more than a million properties it believes would benefit from drone footage. Burton thinks it can sell their owners deeper data for much cheaper than what it would cost to buy a drone and hire a pilot, get helicopter or satellite imagery or precariously dangle a human from a ladder or harness. DroneBase will have to hope regulation keeps it easy for licensed pilots to fly these quick missions. Plus, plenty of other startups want to be DroneBnB, too. There are legitimate competitors, like Skycatch, as well as lots of drone-for-hire sites like Air-Vid, Droners.io and HireAUAVPro. Still, DroneBase’s biggest foe remains the status quo of not having aerial footage or data at all. But as big businesses realize the high value of drones and the high costs of ownership and operation, more will look to pilot marketplaces like DroneBase. “The obsolescence is ridiculous,” Burton concludes. “You spend $100,000 on a fleet of drones and it will be obsolete in 6 months.” Why buy the drone when you can get the flights for cheap?
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A real teen’s take on Snapchat’s hot new Spectacles
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Daniel Singer
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on my home screen since when it took the LA high school scene by storm in 2012. Evan Spiegel first launched at his old high school in Los Angeles, which was down the street from my house. The simple concept of doodling on pictures of my friends on Snapchat was what I first fell in love with, then came stories and the rest was history. I was hooked – which makes me basically the ideal test case for Spectacles. Since then, Snapchat has exploded and morphed from a silly distraction during class into a worldwide social media phenomenon. And after hearing about the Spectacles launch on Twitter I was even more excited about Snap’s future. I wasn’t sure if I was going to buy them, but I knew they were going to be huge. Believe it or not, a man in an Elmo costume convinced me to buy Spectacles. While taking a phone call on the roof of my office overlooking Santa Monica 3rd St. Promenade, A man in an Elmo costume was surrounded and arrested by multiple police officers. I wanted to capture the moment, but couldn’t – my phone was pressed against my ear. All I could think about was how easily it could have been recordable with a pair of Spectacles. My fascination quickly turned into an obsession. I dug around on the Spectacles website, trying to figure out when they’d launch or how the online shop would work. I tweeted up a storm trying to see if anybody knew anything. As luck would have it, the first Snapbot the very next morning. The line was four and a half hours deep when I arrived Friday morning. The Snapbot was refilled three separate times (we estimated the Snapbot can hold about 200 Spectacles, so that means around 800 or so sold throughout the day). Me and those around me played games in line, sharing inside jokes about the Valley while we marched forward toward the blinking, yellow box on the side of the street. When I finally arrived to the Snapbot, I was informed I could only purchase one – normally customers can buy as many as two, but they were running out. I plugged my credit card in, and they were mine. Setup was fairly simple: You just put them on, open up the Snapchat pairing screen, and press the record button on the glasses. It took about fifteen seconds to pair, after which you can name your Specs. While a name might seem trivial, it plays an important role: only standard definition footage streams automatically to Snapchat. If you want to save HD footage, you need to connect over WiFi, using a network that uses your Spectacles’ name. It’s the lone pain in the ass of using them overall. In the end I named my Specs “InSPECtor Gadget 😎”. Yeah, I know. I’m a nerd. I like to think of my new Spectacles first and foremost as sunglasses. They’re significantly cheaper than a pair of Ray-Bans ($129 for Specs vs. around $169), come with nicer lenses, the frames are beautiful, and they weigh only slightly more. And the image quality from the camera? Spec-tacular. Recording a Snap is as easy as tapping the top left of the frame. An inner white light shines into your eyes to indicate a live recording, and the LED ring begins to spin on the outside. The default duration is ten seconds, and the inner light will begin to flash as a warning three seconds before the recording stops. Want to continue? Just hit the frame again, and it will queue up another ten seconds of video. I didn’t even realize the Spectacles had batteries. I used them quite heavily in the first few days and didn’t run out of juice. The charging case is great for when I’m inside or back home and not snapping, and it tops them up each night for a whole new day of adventures. The Specs don’t always line up with the charging case on the first try, but this is some “first generation iPhone stuff” here as my good friend, David Byttow, remarked. To fully test out the Spectacles experience, I took over the Product Hunt Snapchat for a day. They’re great for capturing both the mundane and interesting aspects of my life in Santa Monica that my friends otherwise wouldn’t get to see, like sitting in traffic on the 10 Freeway on my way to work. After reviewing my videos from the past few days, the perspective was completely different and more accurate than anything I’ve seen apart from a GoPro strapped to my head. Circular video is the closest digital media format to replicating what we see and remember in our memories. Everyone on Product Hunt, my friends, and even my little brother loved turning their phones to see the video from my (circular) point of view. Even if I don’t use the camera, my Spectacles are a keeper: they’re the perfect pair of sunglasses, and it’s reassuring to know that I can capture something without fumbling through my pockets looking for my phone. If you don’t tend to wear sunglasses regularly, they can be slightly intrusive or bothersome, but I can only imagine that as Spectacles become more commonplace, versions with clear lenses will be released for indoor use as well. In-app purchases (IAP’s) are a distinct possibility in the near future for Spectacles users. Snapchat founder and CEO Evan Spiegel once remarked that Snap, Inc would try to make its money using IAPs. While this won’t likely be Snap’s main source of revenue, it could become increasingly important as they build an arsenal of tools to better document and share your life either with your friends or, more importantly, for yourself. I actually found myself routinely snapping experiences that I wanted to keep just for myself — the default choice of keeping every video private was a brilliant product move, and you could see them unlocking more tools for both private preservation and public sharing via IAP. The Spectacles are also loaded with sensors and microphones that have the ability to accept voice commands, tap gestures, and more. All of that is filled with potential, wrapped in a simple Trojan horse of a quirky pair of sunglasses ready to claim the most valuable real estate: our faces. Or hey, maybe I’m all wrong. Maybe we’ll see the resurgence of the glasshole, this time as an ‘asstacle.’ With privacy becoming incredibly sparse online, the physical world is becoming one of the few refuges for being able to be yourself with the minimal fear of being recorded for all posterity. While Snap nailed the look of the Spectacles by making them a non-threatening pair of sunglasses the people will decide what stays and goes. In my brief time wearing them around downtown Santa Monica only a handful of people recognized what they were and they were mostly from the office next door, as well as the lone Tender Greens waitress who asked if I was filming her. Ultimately, though, I look to the bright side of truly being able to capture moments as you saw them and faster than anything else. Only time will tell.
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GoodLands partners with ESRI to launch the Catholic Geographic System
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Samantha O'Keefe
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Religion and technology are not two phrases that often go hand in hand. Molly Burhans is looking to change that. Growing up Catholic in upstate New York, Burhans had the intention of becoming a nun. However, after studying landscape and ecological design in graduate school, she discovered a different calling. In her coursework, Burhans begin using geographic or geospatial information systems, GIS, to better plan wetland restoration on individual parcels of nearby land. GIS is a general term for a tool that allows users to store, analyze and visualize layers of information over a map. Today the technology is used in a variety of ways — to predict earthquakes and the presence of oil reserves, model the impacts of global warming and monitor the global spread of disease. Burhans began researching the land holdings of the Catholic Church and was surprised to find that none existed. It is said that the individual dioceses, various Catholic religious orders and the Vatican in aggregate comprise of the world’s largest land holders. Exactly how much land appears to be unclear. Like so many industries, the Church has struggled to modernize its data set. According to Burhans, much of the information is dispersed, contained within .PDFs in dioceses or local parishes. Opportunities for better land planning around the Church’s holdings were nonexistent. Burhans founded to use mapping technologies to do just that. Ultimately, she hopes that the data can be used to “create a greater sense of stewardship” in communities and promote positive change in planning for environmental and social change. To date, GoodLands has mapped 35,000 Church properties in the U.S. as part of their . To gather the raw data, GoodLands partnered with parishioners, academic institutions, NGOs and other social services. Today, GoodLands is announcing a partnership with ESRI, the global leader in GIS. With ESRI’s technology, GoodLands will be able to visualize and analyze the data to present a global landscape of holdings overlaid with the structure and population distribution of the one billion-plus Catholics globally. Burhans recently traveled to Rome to participate in the Vatican Youth Symposium. CGISC has been approved by the Vatican’s Technology and Arts Council, hopefully indicating an openness from the top to collaborate and act on the findings of GoodLands’ research. A more compelling early use case that GoodLands has mapped has to do with climate change. Using climate models available through ESRI, CGISC can identify parishes significantly impacted by global warming and visualize a map of growing-season reduction. This could allow parishes to better serve the needs of their communities by planning more focused outreach, education and service efforts. In a related example, using weather prediction models, GoodLands can show the Church which dioceses are likely to need aid or assistance in the coming years based off likelihood of hurricanes and other destructive natural disasters. Today, nonprofit GoodLands’ vision is much broader. The company aims to have a hybrid structure, part nonprofit, part for-profit, that sells various mapping models. The company also has future plans to assist parishes in their own land planning efforts. Burhans is honest when she says that the true geo/religious impact of GoodLands’ work is unclear. Still, it’s interesting to see one of the oldest institutions on earth collide with technology.
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Adobe makes big bets on AI and the public cloud
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Frederic Lardinois
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held its annual MAX conference for users of its Creative Cloud earlier this month. That’s where the company usually announces new and upcoming features to applications like Photoshop or Premiere Pro. This year, however, Adobe also introduced , its new artificial intelligence- and machine learning-based platform that combines Adobe’s knowledge of working with photos, videos, documents and marketing data with a unified AI and machine learning framework. Just like Microsoft and Google are trying to imbue all of their products with “intelligence,” Adobe, too, is now on a mission to bring more smarts to its products — be that in the form of machine learning-based tools and features, or through smarter traditional analytics. Sensei is Adobe’s version of this. The framework will find its way into all of Adobe’s products — not just its Creative Cloud tools, but maybe even more importantly its Marketing and Document Cloud services, as well. In addition, the company plans to open these services to s and developers through APIs that will allow them to build the same features into their own applications. In its current form, Sensei powers Adobe’s “search by image” features in Photoshop and Adobe Stock, for example (this is similar to “search by image” tool). The company wants the public to see Sensei as its “unified AI framework.” “At the top-most level, we have always been focused around what are the set of technology investments and product investments we can make that are ultimately aimed at improving the digital experience — whether that’s the consumer experience on the creative side or the product we build to serve marketers,” Adobe CTO told me. “We are a deep technology product company but it has to be in service of really driving the experience innovation across the three products: Creative, Marketing and Document Cloud.” Sensei, he argues, is one of the company’s “most strategic bets that we rolled out this week by far — not just in terms of what it is today but because of the profound impact we expect it will have over the next five to ten years — not just for our products but actually more importantly for customers.” Parasnis described Sensei as a “continuously learning system which learns from users’ behavior — it learns from what users are doing with our products across the full suite.” He also stressed that Sensei brings together the two parts of Adobe — that is, its creative and analytical sides. https://www.youtube.com/watch?v=t0QGAQwLHog On the technical side, Parasnis noted that the company uses lots of open-source tools like Spark, Torch and TensorFlow and then combines those into a unified framework that trains its models. He believes that the most successful intelligence systems in the next decade will be the ones that have very deep domain knowledge. For Adobe, that obviously means creativity, document productivity and customer journey and customer experience. “Unlike any other AI framework — whether real or just a fake announcement — our view is to lead with deep services that show as end-user consumable behavior,” Parasnis said. He cited Photoshop’s Face-Aware Liquify, Document Cloud’s ability to find similar documents and similar tools as examples of where Adobe already surfaces Sensei’s capabilities. Parasnis acknowledged that companies like Google and Microsoft may look like competitors, but he argues that their platforms are more horizontal while Adobe plans to go very deep. Indeed, he told me to expect to see Sensei work with Microsoft’s infrastructure, as well — which of course isn’t a surprise, given that Adobe has recently announced it is betting on Microsoft Azure as its preferred public cloud provider. Talking about cloud, Parasnis told me that he believes the company will be able to leverage the advances in public clouds to power a lot of this innovation. “Long term, the move to public cloud is inevitable,” he said. But while Adobe runs a small number of its own data centers, which are at least partially powered by the open source , it’s not planning to shut them down either, though. Parasnis noted that a lot of Adobe’s services — especially around its analytics and Marketing Cloud service — need to have very dependable latency and the ability to deliver sub-second experiences. At least for the next few years, he doesn’t expect this to change. “We now have one of the most complicated and complex cloud infrastructures across public, private and our own data centers,” he believes.
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xAd raises $42.5M more, buys WeatherBug to boost location-specific marketing
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Ingrid Lunden
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, the ad network that serves you ads in apps and mobile web pages based on your location, is today announcing another hefty round of funding, as well as its first acquisition in the world of consumer apps to grow its audience and data set. The company has raised $42.5 million, and it’s buying , the popular weather app that competes with the likes of the Weather Channel app from The Weather Company (now owned by IBM). xAd’s valuation is not being disclosed with this round, but CEO and founder Dipanshu Sharma told me in an interview that it’s “definitely an up-round.” The company had not disclosed its valuation in the past, either, but when , a Series D of $50 million in 2014, xAd was valued at $250 million, according to one report. As with that last round, this Series E was an opportunistic raise. Led by Eminence Capital and joined by W Capital, IVP and Emergence Capital (plus a large tech company that only wants to release its name tomorrow, we’ve been told), the investment comes at a time when xAd is already profitable. Sharma said xAd raised this in order to fund the acquisition of WeatherBug from previous owner . That’s not to say that WeatherBug was a $42.5 million transaction — xAd is not releasing those terms, either, but Sharma told me it was more than this. The Series E brings the total raised by the company to $116.5 million. The funding comes at a crossroads for the world of location services. In the early days of smartphone use, the promise of location services was just that — a concept that people were still working on to make a reality. These days, location in apps is something we’ve come to expect to just work. At the same time, some have grown wary of location services: they can drain our batteries, they might feel intrusive and what data are they collecting, exactly? xAd predicates its service on the idea that push-based notifications are indeed intrusive, and that the most effective location-based advertising is the kind that comes to you because you are already open to seeing something. “You’re already in the app experience,” Sharma said. xAd works by using GPS signals within apps, server integrations and location requests if you have them turned on, but no Wi-FI (“we don’t touch WiFi”) and then, when you are in a particular location, and you open an add-based app or web page, xAd — which has negotiated placement in various mobile ad networks — will serve you an ad relevant to that location. It uses this formula to place ads in some 150,000 apps today. This is where the WeatherBug acquisition will figure in more ways than one. The app is popular, consistently ranking within the top five downloads on iOS and top 10 on Android within weather apps, according to figures. xAd says that it had 20 million unique users per month. (xAd itself counts its reach by devices and places, respectively numbering 5 But WeatherBug will also give xAd a huge data trove that can be used in xAd’s wider platform, too. When Earth Networks developed the app, it stood apart from a number of other weather apps in that it also built out a network of weather sensors that formed the basis of its weather updates and forecasts. Interestingly, those sensors are located globally even though WeatherBug was only marketed in the U.S. xAd has not acquired those sensors, but it has picked up an extended license to use their data as part of the deal. And the plan will be to invest in a global rollout to tap into that network better, Sharma told me. The weather data, he added, is a perfect complement to location and for providing more color that can help deliver more relevant marketing to users in particular locations. Weather and environment data and its many applications, of course, was a key reason behind IBM’s acquisition of , reportedly in a $2 billion deal. This looks like it’s xAd’s second acquisition, although its first of a publisher property. (The first was , mobile search and mobile ad assets from a company called Go2.) Looking ahead, Sharma said that xAd plans to look at more of these. Sharma said that this is part of a long-term plan he and management and the board planned out some time ago, to acquire key apps that have strong use cases and audiences for location services. While he wouldn’t say what might be the next target, categories that might potentially also be included in such a strategy include fitness apps and mapping services. And the bigger strategy behind this, he said, is to help xAd remain an independent player even as the likes of Facebook and Google ramp up with more location functionality in their own platforms and advertising, and many others continue their wider consolidation in the wider world of adtech.
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Valuation metrics show weakening for the fourth straight quarter
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Connie Loizos
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The law firm quietly released its third-quarter venture capital survey this past Friday, and its findings aren’t exactly shocking. At the same time, they hint at problems to come for some startups. The survey, which analyzed the valuations and terms of financings for 149 Bay Area companies that raised capital in the third quarter, showed that 71 percent of those financings were “up” rounds, meaning the price per share of the company increased over its last round. Another 14 percent were down rounds, meaning the opposite happened, and 15 percent were “flat,” so the companies’ valuations didn’t change, despite that they raised more funding. The picture was almost exactly the same as in the second quarter of the year, when 74 percent of rounds were up rounds and 13 percent were flat, but the third-quarter marks the fourth quarter in a row that venture valuation metrics have declined, which has the survey’s author, attorney Barry Kramer, following the development closely. “It’s not like things have fallen dramatically,” he told us by phone on Friday. “Basically, we were close to all-time highs in 2014 and 2015, and valuations are now at their 12-year averages, so you could argue that we’re in a healthy regression to the mean.” Of greater concern to Kramer is that the number of deals has also gone down over the past four quarters. In the second quarter, for example, Fenwick was able to analyze 195 financings for Silicon Valley companies — or 30 percent more than in the third quarter. That could mean that only stronger companies are getting financed. At the same time, it does raise questions about what happens to all the startups that raised funds in 2014 and 2015 and haven’t raised again. “Are they kind of starting to run on fumes, and we’re a quarter or so away from seeing something more dramatic?” Kramer asks. “I’d feel better if deal volumes weren’t falling.” You can check out the entire .
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Facebook chose to fight fake news with AI, not just user reports
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Josh Constine
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versions of a fix for clickbait this year, and decided to trust algorithmic machine learning detection instead of only user behavior, a Facebook spokesperson tells TechCrunch. Today Facebook was hit with more allegations its distribution of fake news helped elect Donald Trump. A new saying Facebook shelved a planned update earlier this year that could have identified fake news because it would disproportionately demote right-wing news outlets. Facebook directly denies this, telling TechCrunch “The article’s allegation is not true. We did not build and withhold any News Feed changes based on their potential impact on any one political party.” However, TechCrunch has pulled more details from Facebook about the update Gizmodo discusses. Back in January 2015, Facebook rolled out an update designed to , which demoted links that were heavily flagged as fake by users, and that were often deleted later by users who posted them. That system is still in place. In August 2016, Facebook released another News Feed update . Facebook trained a machine learning algorithm by having humans identify common phrases in old news headlines of clickbait stories. The machine learning system then would identify and demote future stories that featured those clickbait phrases. According to Facebook, it developed two different options for how the 2016 clickbait update would work. One was a classifier based off the 2015 hoax detector based on user reports, and another was the machine learning classifier built specifically for detecting clickbait via computer algorithm. Facebook says it found the specially-made machine learning clickbait detector performed better with fewer false positives and false negatives, so that’s what Facebook released. It’s possible that that the unreleased version is what Gizmodo is referring to as the shelved update. Facebook tells me that unbalanced clickbait demotion of right-wing stories wasn’t why it wasn’t released, but political leaning could still be a concern. The choice to rely on a machine learning algorithm rather than centering the fix around user reports aligns with Facebook’s recent push to reduce the potential for human bias in its curation, which itself has been problematic. A Gizmodo report earlier this year alleged that Facebook’s human Trend curators used their editorial freedom to suppress conservative trends. Facebook denied the allegations but fired its curation team, moving to a more algorithmic system without human-written Trend descriptions. Facebook was then criticized for fake stories becoming trends, and the New York Times reports “The Trending Topics episode paralyzed Facebook’s willingness to make any serious changes to its products that might compromise the perception of its objectivity.” If Facebook had rolled out the unreleased version of its clickbait fix, it might have relied on the subjective opinions of staffers reviewing user reports about hard-to-classify clickbait stories the way it does with more cut-and-dry hoaxes. Meanwhile, political activists or trolls could have abused the reporting feature, mass-flagging accurate stories as false if they conflicted with their views. This tricky situation is the inevitable result of engagement-ranked social feeds becoming massively popular distribution channels for news in a politically-polarized climate where campaign objectives and ad revenue incentivize misinformation. Facebook as well as other news distributors such as Twitter and Google have a challenge ahead. Clear hoaxes that can be disproven with facts are only part of the problem, and perhaps are easier to address. Exaggerated and heavily-spun stories that might be considered clickbait may prove tougher to fight. Because Facebook and some other platforms reward engagement, news outlets are incentivized to frame stories as sensationally as possible. While long-running partisan outlets may be held accountable for exaggeration, newer outlets built specifically to take advantage of virality on networks like Facebook don’t face the same repercussions. They can focus on short-term traffic and ad revenue, and if people get fed up with their content, they can simply reboot with a different brand. Simplifying user flagging of fake or exaggerated stories, appending fact-checking sites to suspicious articles, and withholding distribution from domains that haven’t proven their accuracy but prioritize monetization could be some ways to fight the avalanche of fake news. More clearly needs to be done. But perhaps its risky to demand networks like Facebook become the truth police. That could force it to make more wide-reaching calls about what to censor that would inevitably invite blame. At least technology platforms that err on the side of ranking by engagement allow users to decide individually if what they read is false or exaggerated. Facebook’s CEO Mark Zuckerberg has reiterated this perspective, writing “I believe we must be extremely cautious about becoming arbiters of truth ourselves.” Right now, Facebook is damned if does allow fake news to spread because it relies on users to think for themselves, but it’s damned if it doesn’t allow fake news to spread because it makes decisions about what to censor that remove the power of choice from its users. The social network will have to choose its next moves carefully.
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Marshall’s new Bluetooth headphones promise 30 hours of life on a charge
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Brian Heater
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“Mid” is probably not the most intuitive name for a premium addition to an existing product category. But there you have it. Marshall’s latest on-ear Bluetooth headphones join the company’s (surprisingly good) Major II offering, priced at an additional $50. The $200 cans retain Marshall’s familiar aesthetic – you either love it or don’t – borrowing the leather and brass design language from the company’s amp, coupled with the iconic Marshall logo. Though these look to be a bit more rounded and minimalist than their predecessors. The Mid Bluetooth promise 30 feet of Bluetooth range and an admittedly impressive 30+ hours of playback on a charge. Once the battery runs down, you plug in the cord and listen to them like a wired pair of headphones. And when they’re in wireless mode, the cord can be used to share music playback with someone else. A brass knob built into the right cup controls playback, volume and will answer calls. The Mids have 40mm drivers built in and offer the same folding design the company’s other on-ear headphone offers for added portability.
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Guess where Spectacles are going on sale next and win some TechCrunch swag
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Fitz Tepper
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We’re four days into the launch of Snapchat Spectacles and the hype has shown no signs of letting up. Snapchat has deployed its in two different locations so far – in Los Angeles and a , California. Both locations were announced at 7AM local time, at which point it was a mad rush to get in line – hundreds of people drove to Big Sur as soon as Snapchat announced the location on . Anyways, Snapchat’s 24-hour counter has started again, this time counting down to tomorrow morning at 5am PT (which is 7am CT and 8am ET). Here at TechCrunch we’ve been trying to figure out where it will go next (my guess is Texas), and decided to do a quick contest so all of you could guess along with us. Here are the rules: Post your guess in the form below. You should be as specific as possible – for example, if someone guesses Houston Street in SoHo and that’s where the Bot shows up, they would obviously win over someone who just guessed NYC. If there’s a tie we’ll randomize everyone who guessed correctly to pick a winner. So what are the prizes you ask? Unfortunately Spectacles themselves are impossible to get and currently retailing on secondary markets for the price of a small car. So we can’t give you those. But we will give you like a T-shirt, water bottle, stickers and other surprises! If you’re lucky we’ll even throw in some plastic sunglasses from startups that we’ve amassed in the office over the years, so you can at least pretend you’re wearing Spectacles. The survey is embedded below, and you can also . The contest will end at 7am CT tomorrow (November 15th), which is when Snapchat will reveal the location on their website.
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GE Digital snags ServiceMax for $915 million
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Ron Miller
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announced today it was buying , a cloud-based field service management company, for $915 million. GE Ventures had been an investor in the company as part of the $82 million Series F round in 2015. The two companies have more in common than you might think. GE is building the Predix Platform, on top of which it hopes companies will build applications that take advantage of sensor data coming off of Internet of Things-connected devices. GE has made a huge bet on the Industrial Internet of Things, using data on huge machines like MRI machines, wind turbines and airplane engines to give customers the data they need to proactively maintain these mega systems. In fact, when I spoke to Athani Krishnaprasad, co-founder and chief innovation officer at ServiceMax recently, we talked about a future vision where sensors on IoT devices fed information to companies, allowing them to build entirely new business models. In Krishnaprasad’s vision for his company, a hospital would subscribe to an MRI machine instead of buying it and pay for guaranteed up time instead of the physical hardware. It would be up to the vendor to proactively monitor the device and keep it up and running. Data coming from sensors would let the company know when a part was about to break or that it was time for regular maintenance. He called this “outcome-based services.” “Analyzing the data to change business process to gain efficiencies or service customers better is a big win,” Krishnaprasad explained. And as GE transforms from a company simply selling those big machines to one that fits so well with ServiceMax’s future world view, the two companies coming together makes so much sense. “This acquisition builds upon our ongoing efforts to enhance our overall technology stack around the Predix platform and advance our Industrial Internet vision,” Bill Ruh, GE Digital CEO said in a statement. “Improved productivity is critical for the Industrial Internet and digitizing field services is a cornerstone of a successful digital industrial strategy,” he added. ServiceMax CEO Dave Yarnold says this move gives his company resources he couldn’t imagine, and he still gets to run it as a separate entity within the larger organization. “Bill [Ruh] wants to run this as a separate business and really invest it. We want to build an operating system for the service economy. To be able to accelerate that and work with one of the best companies in the world and increase investment in the marketing and the product, it allows us to accelerate that vision — and I’m excited about taking that forward. ServiceMax has raised over $200 million since it was founded in 2007. It would seem on its face, that getting $915 million for the company is a pretty decent return for its investors.
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German online wealth management platform Cashboard scores €3M Series A
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Steve O'Hear
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, an online wealth management startup based in Berlin, has closed €3 million in Series A funding. The round was led by Digital Space Ventures, with participation from existing investors Redalpine Capital, Earlybird, and 500 Startups. Other previous backers include Makers, and ProSiebenSat.1. The German fintech startup says it is different from so-called robo-advisors because rather than selling Exchange Traded Funds (ETFs) it gives clients access to a much broader spectrum of different asset classes. These range from call money (short term loans typically offered by a bank), stocks, to crowd lending. “Cashboard is not ‘just another robo advisor’,” says the company’s CEO and co-founder Robert Henker. “After the term became popular numerous websites started offering basically only one product: passive index funds called ETF. Often they are even limited to one issuer and the ‘robo’ turns out to be prefabricated and standardised portfolios”. Instead, says Henker, Cashboard has set out to build what he claims is the first curated marketplace for retail investment. “We identify and combine the best products from the best providers on one online platform [and in a single account] making them understandable and accessible for everyone,” he says. The idea is that you set your saving goals and how much you want to invest, and Cashboard suggests a selection of asset classes and providers based on your chosen level of risk. It then invests on your behalf ensuring that your portfolio is well diversified. It charges a 10 per cent performance fee on net profits each year. Meanwhile, the startup plans on using today’s Series A to grow its team and internationalise the service.
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Dear Facebook, please fix the plague of fake news before you ruin foreign elections too
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Romain Dillet
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It’s true, Facebook isn’t single-handedly responsible for the outcome of the U.S. presidential election. But the company played an important part in the rise of Donald Trump. Many people now think Facebook has to find a way to flag fake news appropriately before the next election in 2020. But it’s a much more urgent issue. Facebook has to weed out fake news before the Dutch, French, Kenyan, Chilean, and in 2017. These elections could see populist candidates triumph once again. The company shouldn’t just when there’s an election in the U.S. Given Facebook’s penetration rate around the world, Facebook is now in charge of propagating news in most countries. I’m tired of seeing Facebook its in the on this issue. Instead of issuing multiple half-hearted statements saying that “everything is fine,” Facebook should be open and transparent about this issue. It doesn’t matter if Facebook thinks that everything is fine and well. Millions of people now think that Facebook could do a better job when it comes to news articles in the news feed. So the company should work on it. It seems like a reasonable thing to ask as this is exactly what technology companies are supposed to do. They iterate, improve their products over time and add new features. But the worst part is that Facebook’s incentive aren’t directly aligned with everyone’s incentive. Fake news articles spread like a virus. They create a lot of engagement. They improve the number of daily active users, which leads to more ad engagement, which leads to better quarterly earnings. And yet, it doesn’t matter if Facebook’s quarter is awesome thanks to the presidential election if the company becomes irrelevant in five years. Facebook has to act now to protect its long-term reputation. Even more important, I’d even say that this issue could greatly damage the economy in many countries, which could have indirect effects on the company’s bottom line. Facebook tends to boost the so-called anti-establishment candidates. Many of them are just populists who want to destroy existing policies in favor of alternative policies that exclude immigrants, minorities and demolish the welfare state. Dividing people into groups and pitting them against each other will lead to systemic economic growth. And because of Facebook’s algorithm, populist candidates with a vocal fanbase can use Facebook as a megaphone to convert new people. It doesn’t matter if something is true or false. Many people are now looking for articles that will validate their views and share them . That’s why it’s important to fix the megaphone. “But free speech!” you might say. Facebook isn’t a balanced platform in the first place. You choose your friends on Facebook, and they tend to validate your opinion. After Trump’s election, many of my friends told me something along the lines of “I thought my liberal bubble was bigger than it actually is and I blame Facebook.” How many people did you unfriend because they shared some nonsensical article about Hillary Clinton or Donald Trump? Given that most people share articles in the first place, Facebook should at least flag articles when they’re fake so that people know what they’re dealing with. I’m not saying that Facebook should stop you from posting all sorts of articles. People should be able to share cute kitten videos as well as conspiracy theories. But if people don’t even click on the links before sharing them, Facebook should put a question mark and say “you should think twice before sharing this.” That’s the least the company can do. This issue isn’t just affecting Facebook. It turns out that Facebook is the bigger player in this space, so the focus is on Facebook right now. But Twitter, Google search results, YouTube and all social networks should take a minute and think about what they’re going to do over the next few months to fix their platforms. I can’t help but feel a sense of urgency around Facebook’s plague of fake news. If Facebook can’t fix its platform, France will end up with Marine Le Pen. In other words, no, Facebook, it’s not time to issue 18 different statements saying that sure, maybe one day Facebook will consider thinking about someday drafting a new feature that will reduce the reach of fake news. It’s time to act now before all world leaders are demagogues. It all comes down to a simple question — is Facebook a technology company or a media company? When the company its human editors for Trending Topics, Facebook made a clear choice in favor of algorithms. But by putting the algorithms in charge, Facebook unintentionally made an editorial decision. Facebook doesn’t get to decide if it is a media company or not. It gets to set its own editorial rules and enforce them using a combination of algorithms and humans.
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Zugata raises $7 million to make annual performance reviews obsolete
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Lora Kolodny
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Even before they began to graduate from college, millennials drove , from management and recruiting practices to the design of office interiors. But companies are still adapting and figuring out what matters most to this large demographic and employee base. Now, a tech startup called has raised $7 million in Series A venture funding to replace the crusty old performance review with something more motivating to this group than a twice-a-year, managerial write-up. Investors in Zugata’s new round included , and Founded in 2014, Palo Alto-based Zugata developed software as a service that automatically figures out who employees work with most, and then helps them gather feedback from each other, directly, without managers or HR departments eavesdropping. Companies that use Zugata can set a policy so that employees may exchange feedback either anonymously, or with their names attached. Zugata shows users a set of skills that a colleague should have mastered, based on their functional role. For each skill, a user marks it as strength or not yet a strength. The employer cannot access messages exchanged, not through their HR department, IT or any other division. If court orders (or some other situation) required messages between employees to be disclosed such requests would be handled by Zugata. Zugata CEO and cofounder explained that providing employees with a private, but official, means of exchanging feedback decouples professional development and performance goal-setting from salary and promotion decisions. Krishanmurti said the effect is beneficial for a few reasons. “Feedback that employees get is only visible to them. Managers, others do not see it. So if I have a problem with what you are doing, you get feedback from me, but your boss cannot see it and in effect, I don’t rat on you to HR or your boss,” he explained. Ultimately, Zugata should help employees understand where their own perceived strengths and weaknesses lie, he said, and how to improve their work and careers. Many HR Tech players, from startups like Glint, Impraise or Namely to larger players like PeopleSoft or Cornerstone On Demand, have tried to redefine performance reviews. Key features feel like a survey that’s run throughout the year, or systems that allow employees to give kudos to one another. Zugata considers its approach distinct in the field of HR tech, and what’s called “performance management” in the trade. To ascertain which employees should give feedback to which other employees, and to deliver “learning modules” that address areas for improvement with some educational content, Zugata uses artificial intelligence and machine learning, and plugs into email and collaboration tools like Gmail, Outlook, Slack, Github and Gira. Canaan Partners General Partner Hrach Simonian said, “The paradigm shift from annual to continuous feedback is talked about by a lot of companies. But most of the big platforms are really gimmicky. Zugata is providing an objective system that helps you score skills and set goals instead of just collecting badges. And it’s gaining traction in what amounts to a huge market.” Primarily, the company plans to use the Series A capital for hiring, product development, international expansion, and to help its clients deliver corporate learning to their employees that is perfectly tailored to their needs.
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Investing in the future of urbanization
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Connie Loizos
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For roughly a year, Niko Bonatsos, a managing director at the venture firm , didn’t make a single investment. He was meeting with startups daily, as it’s his job to do. But Bonatsos, who General Catalyst to Snapchat in 2012, was finding it hard to be inspired by what he was saw. That changed in September, says Bonatsos, who has spent half his time in recent months focused on what urban centers are going to look like in the coming decades. On a recent afternoon in San Francisco, we sat down with him to talk about it. Our chat has been edited for length. NB: There are two buckets. The first is in helping cities to run more efficiently, and this is anything that’s happening in the background that you don’t notice until it breaks down – water management, parking, safety, energy stuff. The second bucket is more consumer-facing, meaning products and services that make life better, easier, and more convenient for inhabitants of dense cites. Think of marketplaces to find roommates, or startups that can help you find physical storage, or hyper-local news that helps you understand what’s happening in the world around you. NB: I think it will take ten to twenty years. And it feels to me that in the Western world, if you and I were to find ourselves in downtown San Francisco 30 years from now, most the buildings would be the same. I don’t see a lot of new inventory coming in. But buildings will need to be repurposed. [In addition to Uber and Airbnb], if Amazon continues to eat up [more of our discretionary spending], what’s going to happen to all the department stores? If self-driving happens, what does that mean for streets and parking lots? NB: I don’t know if whether self-driving cars, when they happen 10 or 25 years down the road, will mean that cities will be more dense or not. You could argue it either way. The cost of transportation will go to zero, and it will be become either entertaining or productive for you to commute. There may also be a consumer preference component, where the introverts are going to find themselves living in the suburbs, and the extroverts will be hanging out in downtown areas. Policy makers, local municipalities, startups that are selling to them. I’ve been reading a bunch of books, including the . [the Alphabet subsidiary focused on tech that improves urban life] has also published a lot of really good stuff. There’s a lot to think about. Consider that the government makes a lot of money auctioning spectrum to carriers; if self-driving cars happen, you’ll need 3D maps of everything. Could local municipalities make money from selling data from the cameras that will be installed? Will cities have high-quality data for urban planning purposes for the first time? Right now, if you look at how urban planning happens today, a lot of the tools are stuck in the past, yet even now, with simple webcams, you can count how many cars, dogs, people, and bicycles are moving back and forth through certain areas, then make decisions around new roads, bus stops, and stuff like that. Some cities are already better than others when it comes to capturing information, including New York and London. NB: Well, for places like San Francisco to become denser, the single most important thing we can do is to change zoning laws. In lower Manhattan in the 1920s, density was four times was it is today, then zoning changed owing to public health concerns that aren’t [concerns] today. Assuming zoning rules don’t change, what can we do is make housing more affordable. One way is to think about co-living situations. There are probably 20 companies that have been started like and from WeWork. Hotels like the Westin, W Hotels, and Marriott could have co-living brands, too. Co-living isn’t just for young people; it’s also for older people who are going through a status change like a divorce or a death in the family and who are looking for a way to start a new chapter with the right community and the right price point. A related question is how could you make construction itself more affordable? How can you build homes for 30 percent less? How can you make prefab homes fully customized? How can you make construction more modular so you can build things quickly and cheaply. So I’m looking at this part of the world right now, too. NB: It’s true. One of challenges I’m seeing or facing so far, especially for companies that want to sell to municipalities or local governments, is they’re too much mission-driven. It almost feels like they’re nonprofits versus for-profit entities. For the venture capital model to work, you need a high sense of urgency and continued, exponential growth; the impact can’t just be at the hyperlocal but global level, and it needs to come faster. I also don’t know yet the equivalent of Moore’s Law — what will serve as the pacemaker. If I had certainty that drones or self-driving cars will happen in the next 10 years, then I’d know that yes, use for land will be changing in the next 10 years. NB: A lot of people are thinking about it. So are some micro VCs and corporate VCs. is doing some interesting stuff. BMW and Mini in New York for founders who are focused on urban tech. Sidewalk Labs is building companies in-house. It feels like there’s an underground movement happening. NB: I did make my first investment in a year in September, though I can’t talk about it yet. But I’m very excited about this space. I’m in learning mode. I can’t pretend I’ve figured out everything. I’m two months in. But it feels like there’s something there.
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Secure messaging app Telegram now offers its own anonymous blogging platform
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Jon Russell
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Telegram, the security-focused messaging app, has launched its own take on blogging platforms. If you’re among Telegram’s 100 million-plus active users then the new service will be much as you’d expect. It’s minimalist and anonymous — you can add your name if you wish — with support for markdown, in-line photos and other embeds as is standard. That makes Telegraph an interesting option for posting short notes or anonymized content online. I took it for a spin — — and it was very easy to use. Of course, one drawback of being anonymous is that if you lose a link, it is nearly impossible to find it again since there are no user accounts or user histories. But this is probably not the right place for cat pics or food shots, despite my own example. Telegraph posts can be shared anywhere using the link, but they are optimized for Telegram and its new Instant View media layout. Instant View is essentially rich embeds for media links when they are pasted into a Telegram chat. Like Twitter, Facebook or other platforms, Instant View includes an article preview and a feature image to make clicking that link more tempting that just a bare bones URL. Once opened, they load an in-app version of the story, not unlike Facebook Instant Articles or Google AMP. These new features fit with Telegram’s recent push to develop content inside of its app. The company last month. Unlike Facebook and others who are developing playable titles that open from Messenger, Telegram’s games are text based and . These developments are all taking Telegram from what was once a basic chat app to a more sophisticated messaging platform that is inspired by the likes of WeChat and Line from Asia. And, with Telegram founder Pavel Durov — featured in the top image — recently telling us that a payment system is on track to launch before the end of 2016, another critical piece of the puzzle is set to arrive soon. Potentially, support for payments could light up games and even media, too, depending on how Telegram wants to play things. “Something big is brewing in our secret dungeons,” Telegram teased in a blog post — looks like we won’t have to find out more.
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India’s tech bubble is about to burst
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TechCrunch Staff
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The Silicon Valley “tech bubble” is a popular topic of discussion among business pundits, entrepreneurs and analysts who have dissected and predicted the upcoming “burst” for nearly the last decade. For all the talk of and a slowdown in private capital markets, it’s hard to say if, or when, this will ever come to a head — at least in Silicon Valley. But there’s no question a tech bubble is emerging, just not where you might think. Overvalued startups focused on growth over revenue are a problem that stretches far beyond U.S. borders, and it’s an even bigger problem in India. Granted, a tech bubble bursting in India isn’t going to send shock waves through the ecosystem worldwide, let alone the public markets in that country, as it would in the U.S. However, it will impact the pace of innovation and investor risk appetite in the short-term in India and other emerging markets (other than China, the behemoth outlier) who share similar market characteristics (like Brazil, Indonesia and Nigeria). The successes — or failures — from what works for the Indian consumer in their home market translates to the rest of the world significantly more so than following the successful models of companies like , and others in China. Even if you don’t care about other emerging markets, experts agree India will soon be the most important economy in the world. Much of India’s future success depends on whether the government can leverage its potential by training its workforce and providing adequate infrastructure for businesses. This challenge is compounded by where the growth in mobile consumers is occurring. India will see more people come online in the next 15 years than any other country, with the majority of that growth coming from rural, not urban areas. These new mobile consumers will generally be poorer and lack the purchasing power needed to support a booming tech sector. While India’s internet and smartphone penetration is growing incredibly fast, this does not directly translate either into users having the ability to buy voraciously like their Chinese counterparts or new companies able to deliver goods in a timely fashion to rural communities. More to the point, mobile in India, like other emerging markets, do not make the robust use of the internet possible for the vast majority of people. That is not a simple problem to fix, but it is certainly easier to resolve than trying to improve livelihoods and logistics from the top down. Plus, the regulatory context in the country leaves a lot to be desired — just ask Facebook about “ ” related to its “Free Basics” initiative. Morgan Stanley released a earlier this year estimating e-commerce sales in India of $119 billion in 2020 — a seven-fold increase from its 2015 prediction. Travel is expected to account for 60 percent or more of e-commerce, with electronics coming in at 30 percent, according to the . A four- to seven-fold increase in market size does not seem too crazy — until you pair it with e-commerce startup valuations in India. Look at the top e-commerce company in India — , most recently valued at $15 billion. That is just shy of Morgan Stanley’s estimate for the entire e-commerce market in the country, and does not even include the next two competitors, and . Flipkart has approximately 45 percent market share, which means the company should have roughly $7 billion in gross merchandise volume (GMV) in 2015 using Morgan Stanley’s calculations. So the company is basically valued at more than two times its GMV. But GMV is not sales or revenue to Flipkart; it is total sales of online products. Flipkart likely takes a nominal revenue share or take rate like Amazon does, but they also must shoulder significant user acquisition costs, meaning they are losing money on every transaction for the foreseeable future. Granted, this is not unlike Amazon’s past strategy, but Amazon was never valued at equal to the entire market’s value either. Add on the fact that approximately 40 percent of the market is non-travel and you have to wonder how these numbers add up. It is no surprise that Flipkart saw its valuation marked by almost a quarter by three fund investors. Another reason for the flood of investment into India is the fear of missing out — or FOMO — on something akin to China’s enormous success. In one camp, you have investors Naspers and Softbank whose portfolios include very successful bets in the Chinese and Indian markets (JD.com, Tencent and Flipkart for Naspers, and Alibaba and Snapdeal for Softbank). In the other camp, you have the investors like Amazon who misfired on Chinese growth and do not want to repeat past mistakes. Beyond that, there are local and international VC firms like Sequoia and Accel, as well as more opportunistic investors like Tiger Global that sense opportunity and do not want to be left out. So what does this mean for the other unicorns in India? Investment in Indian startups decreased in the first half of 2016 to $2.1 billion, , when startups raised $3.5 billion. Anecdotally, it seems as though this retrenchment is not due to a reassessment of the startups in question but is part of a global reassessment of investor appetite for tech startups worldwide. It is likely that market leaders like Flipkart, and others will get devalued markedly, but will continue to receive investor interest due to FOMO. This does not portend well for the rest of Indian startups that are not No. 1 or No. 2 in their market segment. In addition, for some companies, it may be too early to dive into a fledgling market that lacks a . While e-commerce retailers and marketplaces can leverage technology to achieve low capital costs up and down the value chain, this is less true for food or grocery delivery companies that have to contend with India’s poor infrastructure. When the number of turns per hour is the key metric for success and profit, logistics is critical. Add to that high user acquisition and retention costs thanks to innumerable and subsidies, and it is hard to believe these burn rates can last much longer given the poor unit economics. Consider food delivery startup TinyOwl’s recent termination of 100 employees, shutting down operations in smaller cities and raising prices — that is likely just the beginning. When asked about those changes, CEO Harshvardhan Mandad earnestly, “The market dynamics changed. People now want to invest in sustainable businesses.” When do they not? A potential bright spot is the crop of Indian startups that are taking the learnings from their home market and applying it to other, more mature markets while waiting for India to become viable. , for instance, a listings service for restaurants, expanded from its New Delhi headquarters because the Indian market was too limited. Most of India’s restaurants are extremely inexpensive and a customer’s average ticket is too low to justify the support, whereas other parts of Asia and even Europe are much more ripe for the pickings. , a mobile advertising platform headquartered in Bengaluru is another Indian startup with substantial operations overseas, including the United States. Their motivation is simple: The mobile ad market is bigger outside India. So how bad is the bubble in India? Is it at the point where Silicon Valley was in the dot-com bubble from 1999-2001? No. This is private market overvaluation, not public markets. But compared to the “bubble” we have in Silicon Valley, it is undoubtedly worse. All said and done, India will be one of, if not the biggest, internet market of the future, but I wouldn’t bet on that happening anytime soon.
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Agricool harvests $4.3 million to grow fruits and vegetables in containers
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Romain Dillet
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French startup has raised $4.3 million (€4 million) from newly launched VC firm as well as Parrot founder Henri Seydoux and Captain Train ( ) co-founder Jean-Daniel Guyot. Agricool’s product is quite unusual as the company wants to grow strawberries and later other fruits and vegetables inside shipping containers. With many people moving to mega-cities, it has become increasingly difficult to provide good food to people living in these cities. In just a few decades, there will be many, many cities with tens of millions of people living there. It’s a logistical and environmental challenge. That’s probably one of the reasons why processed foods have taken off. It’s so much easier to ship across great distances instead of relying on perishable goods. And yet, many cooks are trying to reverse this trend, looking for fresh and local ingredients for their recipes. It’s a good trend, but it also means that you’re limiting your options, especially in places with a hostile weather. Why do we keep seeing the same bright red tomatoes that never go bad and don’t taste like anything? Intensive farming has been great to fight hunger issues, but it’s time to look further — in this case, it means going back to what makes food tastes great in the first place. Agricool is trying to do something about this and started with strawberries. Instead of relying on trucks filled with strawberries coming from Turkey, Germany, Spain or Italy, the startup tried to produce strawberries right where they were, in Paris. If you can control the light, the water, the substrate and other factors, the startup noticed that you can grow strawberries anywhere — including in a shipping container. Then, it’s a matter of optimizing all these factors so you can produce more strawberries from a single container, or cooltainer as the company calls them. The company doesn’t want to use any pesticide and my guess is that it’s going to take a while to make these strawberries as cheap as existing strawberries. The company is now renting a big warehouse to fill with containers. There’s probably a fair share of A/B testing going on, but with fruits and not website designs. With today’s funding round, Agricool wants to create 75 containers in 2017 and install them around Paris — the goal is to produce 91 tons of strawberries. The startup also wants to test other crops soon. Maybe some vegetables and fruits will be harder than others when it comes to growing them in a container. It’s going to be a long, capital-intensive venture to iterate on those containers. But it’s an interesting take on the food industry.
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Twitter mistakenly suspended its own CEO’s Twitter account
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Jon Russell
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November 2016: the month that Facebook ‘killed’ its CEO Mark Zuckerberg (and ) and Twitter suspended its CEO and co-founder Jack Dorsey. That’s right, social media glitches have embarrassed two of the world’s premier social networks lately. Hot on the heels of its founder as dead, so today Dorsey — the visionary behind Twitter’s inception and driving force for its development — was suspended from the service he helped create for hours. Former TechCrunch’er Drew Olanoff was among those to notice that @jack was no longer reachable: So the CEO of Twitter is suspended. On Twitter. — drew olanoff (@yoda) Twitter recently dropped the hammer and suspended its service, and it appears that its own CEO was locked out for around two to three hours. Dorsey reprised with a message explaining that there had been an “internal mistake”: just setting up my twttr…again (account suspension was an internal mistake) — jack (@jack) We’ve contacted Twitter for more details, but let’s hope whoever made the “mistake” is on the end of some Thanksgiving-inspired forgiveness and not looking for a new job. For those who believe Twitter could do a much better job managing abuse and protecting its users, even after 10 years online and , this story is a fairly apt piece of symbolism.
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Shopify’s experimental product shop launches flash sales app Frenzy
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Darrell Etherington
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Shopify’s Garage group is a product skunkworks of sorts, and it’s launching a new app called today, focused on flash sales, just in time for that most consumerist of holidays — Thanksgiving. Limited-release sales are big again, with Yeezy raffles all over the place and Snapchat just dotting the map with expiring Snapbot vending machines for Spectacles. So Frenzy enters the stage at a time when people are very eager to spend money in fast, competitive, bite-sized flurries. Frenzy is an app that gives you a central place to put all your hypebeast hopes, where the path to purchase is as easy as using Apple Pay (which is dangerously easy). Frenzy is based on Shopify’s back end to hopefully ensure the app doesn’t crash while you’re scrambling to acquire whatever thing has captured the world’s attention for the next five minutes. The Frenzy app will work with partner retailers and brands, so it should cover a range of bases in one place, which is more convenient for a consumer versus looking around at vertical-specific retailers and/or . I may have engaged in some frenzied online ordering a time or two myself, and the app looks to streamline in all the ways that anxious buyers with twitchy ordering fingers will appreciate, getting you from browse to checkout in as few taps as possible (while still showing off the product with nice big images). Frenzy’s first sale launches tomorrow afternoon in partnership with Kith, and additional merchants including Love Your Melon, Raised by Wolves and Off the Hook are following up with subsequent flash sales over the course of the weekend.
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Ditto is now in Pokémon GO
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Greg Kumparak
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This post is going to be brief because I’m about two seconds from running outside to catch me some Ditto, but: Reports are pouring in left and right that Ditto has, at long last, been added to Pokémon GO. The lil’ purple blob has been curiously absent from the game since launch, but the reason wasn’t too hard to figure out: he has a unique ability (the ability to change into the Pokémon it’s battling) and the code behind it wasn’t quite ready at launch. Why hold the game up for one Pokémon when adding it later would be all the more exciting? Ditto won’t show up as Ditto on the map. It’ll show up as something else — a pidgey, or a rattata, amongst other common Pokémon — and only once you catch it does Ditto reveal itself. We wrote about the likelihood that Ditto . In the off chance you’re worried this is some elaborate hoax, I can personally confirm it’s legit. Had to catch about a zillion pidgies/rattatas/zubats, but it’s definitely real. And, if you’re not worried about spoiling the fun of your first Ditto capture, here’s what it looks like in action: Managed to get another video of catching Ditto, this time it transformed from a Rattata — Nick • WhatUpMC (@WhatUpMC)
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Crunch Report | Tesla and SolarCity-powered Island
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Khaled "Tito" Hamze
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Tito Hamze, John Mannes
Tito Hamze
Gregory Manalo
Gregory Manalo TechCrunch C/O Tito Hamze
410 Townsend street
Suite 100
San Francisco Ca. 94107
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Google’s AI translation tool seems to have invented its own secret internal language
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Devin Coldewey
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All right, don’t panic, but . Well, that’s kind of an oversimplification, and the last part is just plain untrue. But there a fascinating and existentially challenging development that Google’s AI researchers recently happened across. You may remember that back in September, Google . It uses deep learning to produce better, more natural translations between languages. Cool! Following on this success, GNMT’s creators were curious about something. If you teach the translation system to translate English to Korean and vice versa, and also English to Japanese and vice versa… could it translate Korean to Japanese, without resorting to English as a bridge between them? They made this helpful gif to illustrate the idea of what they call “zero-shot translation” (it’s the orange one): Google It produces “reasonable” translations between two languages that it has not explicitly linked in any way. Remember, no English allowed. But this raised a second question. If the computer is able to make connections between concepts and words that have not been formally linked… does that mean that the computer has formed a concept of shared meaning for those words, meaning at a deeper level than simply that one word or phrase is the equivalent of another? In other words, has the computer to represent the concepts it uses to translate between other languages? Based on how various sentences are related to one another in the memory space of the neural network, Google’s language and AI boffins think that it has. A visualization of the translation system’s memory when translating a single sentence in multiple directions. Google This “interlingua” seems to exist as a deeper level of representation that sees similarities between a sentence or word in all three languages. Beyond that, it’s hard to say, since the inner processes of complex neural networks are infamously difficult to describe. It could be something sophisticated, or it could be something simple. But the fact that it exists at all — an original creation of the system’s own to aid in its understanding of concepts it has not been trained to understand — is, philosophically speaking, pretty powerful stuff. The paper describing the researchers’ work (primarily on efficient multi-language translation but touching on the mysterious interlingua) . No doubt the question of deeper concepts being created and employed by the system will warrant further investigation. Until then, let’s assume the worst.
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Bad PR agencies can kill a startup before it has a chance to succeed
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Colin Jordan
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Right now there’s a multi-million-dollar con being played on employees, investors and founders of startup companies — and they don’t even realize it. In a dying media world where quality coverage has become invaluable to a rising startup, public relations agencies charge startups anywhere from $10,000 to $100,000+ per month for their services. Unfortunately, these “services” involve a lot of smoke and mirrors that are designed to bilk startups. And in a startup world that is already hard enough to navigate, every dollar counts. So by swiping precious dollars from these young companies, PR agencies are effectively killing them before they even have a chance. To understand the conspiracy, you need to understand how these bad agencies work. PR agencies are like great white sharks when it comes to freshly funded startups. The minute a startup receives a new round of funding, it’s like blood in the water — PR agencies start circling the water to get the opportunity to take a chunk of flesh right out of them. Once one of these bad agencies wins an account, they agree to a monthly retainer and sign a contract, which usually has a 30-day out (strategically very important as a part of the bilking). To help paint the picture, let’s say the startup agrees to pay $20,000/month. Now the agency has started and they need a “ramp-up” period. In their agency language, this means they need time to get to know your executives, understand your business, get a good feel for what your company currently does and where you want to go for the future. In reality, they want a solid, 1-2 weeks of leniency before they are expected to really produce anything — which in this example would amount to $10,000. After the “ramp-up,” the startup needs to provide something newsworthy that they can share with the public or at least be able to provide some unreleased content that can be pitched with some exclusivity. The startup then has to allocate more money and resources into drumming up news and creating content, which will typically take at least another 1-2 weeks — another $10,000. After one month, the startup has paid a $20,000 retainer and may very well not see a single piece of coverage. Now that the agency has everything that they “need,” they take a week to pitch, while collecting $5,000 more from the startup. Unfortunately, many agencies are staffed with junior employees that are being trotted out as “PR Pros” when they really have no experience at all (that is putting it very kindly). These junior employees are often unsuccessful in their pitching and that is when the agencies call in favors. They reach out and manipulate whatever media relationships they do have in hopes of gaining coverage for their client. If (or when) that fails, they take desperate measures. But how could that be? Is that ethical? How does that make financial sense? Many publications, like Forbes, IDG, Inc., Huffington Post, etc. have built up solid contributor networks that allow credible writers to consistently post on their site. Unfortunately for these publications and all those talented and credible contributors, there are unethical contributors ruining the system. The agencies will engage corrupt contributors and agree to pay their fee for writing the article. Then the agencies go back to the startup and say, “Hey, we locked in a briefing for you with Forbes,” which any startup is absolutely thrilled about. The agency strategically sets the interview up for a week later, buying them another week, collecting another $5,000 from the startup. Once the interview is finally conducted, everyone involved feels good about the situation. The startup is about to be in Forbes, the agency saves their retainer and the contributor gets a piece of the pie. The agency will tell the contributor to hold off on posting the article for a week or so in order to buy another week at $5,000 — which the startup is fine with because, hey, they’re going to be featured in “Forbes.” Now the article goes live. The startup is happy and they have a great Forbes article to show investors, board members, employees, customers and prospects. Unfortunately, they don’t realize that a Forbes contributor piece receives little to no promotion from the publication, which results in far fewer views than an article from full-time staffers. Nonetheless, the agency’s mission is accomplished and now the startup is happy for another week or so ($5,000), until this cycle repeats itself. In this very real scenario, the PR agency has now charged the startup for two months of retainers, totaling $40,000, while siphoning a few thousand dollars to the contributor. Multiply this by 10-12 clients and you have a multi-million-dollar “business.” What’s more frightening is that the global market for PR agencies in 2015 was to be $14.2 billion, so if you look at this on a larger scale, agencies are raking in billions. While it is not the case for every agency, it is a very real problem. No startup should be unknowingly swindled out of their money. Startups need to know the truth and what to look for to protect themselves: A safer option is for startups to initiate their PR efforts in-house. With the prices agencies charge startups, it makes more sense to hire 1-2 PR managers who can be full-time advocates for your business and not be juggling 3-4 accounts across multiple industries. My advice: Invest in PR, but invest in yourself and build a team you can trust.
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Starbucks starts selling Ember mugs, which keep your drink at a steady temp for hours
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Lora Kolodny
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Last year, ran a crowdfunding campaign on to build a mug that keeps hot drinks at the perfect sipping temperature. By now, it’s sold 4,000 of these devices. And in something of a coup for the startup, has begun selling in its stores across most of the U.S. and online for $149.95. Whether it’s coffee, cocoa or tea, hot drinks are usually prepared and served around 160° Fahrenheit, said Ember CEO Clay Alexander — and that’s how cafes and restaurants mostly serve them. Yet, people like to drink hot beverages closer to 130°. Commonly available thermoses work with simple insulation, but they heat unevenly and don’t cool drinks when they are searing, resulting in plenty of burnt tongues. Ember works with semiconductors inside to bring a drink to the ideal temp and hold it there it for hours, Alexander said. Out of the box, the Ember mug needs to be charged one time. It is then ready to use. There is an optional mobile app that works in conjunction with the mug. A dial on the bottom allows users to set their preferred temperature on the mug. There are no buttons or moving parts otherwise. To get their products sold at Starbucks was no easy feat, Alexander said. The coffee giants have a rigorous product evaluation and testing process, encompassing safety, quality and coffee tasting tests, and audits of startups that want to work with Starbucks. Alexander told TechCrunch that the deal only happened with the help of his board of directors and investors. Working with the design consultancy didn’t hurt, either. Ember has raised funding from celebrity investors, including , Nick and Joe Jonas and the DJ Kascade, among others. Additional temperature-control products are in development using Ember’s patented systems. The startup wants people to be able to warm or cool liquids of every kind, without requiring any ice or open flames. So stay tuned for temp-controlled baby bottles, serving dishes and more, Alexander said.
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TechCrunch Gift Guide 2016
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Travis Bernard
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Facebook built censorship tool to get into China despite human rights risks
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Josh Constine
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Facebook wants to be unbanned in China, so it’s built a censorship tool that could hide posts about prohibited topics from people in China, according to ‘ Mike Isaac. Rather than censor posts itself, Facebook would potentially provide the tool to a third-party in China such as a local partner company that could use it to prevent users in China from seeing content that breaks the government’s rules. While China could unlock huge amounts of users and ad revenue for Facebook, the censorship tool could also be used to enact human rights abuse. If China could track which local users are trying to protest or bad-mouth the government, they could face persecution. Perhaps that’s why The New York Times says several Facebook staffers who worked on the product have left the company. So far, there are no signs that Facebook has offered the tool to Chinese authorities. We don’t have details on the specifics of how it would work. It’s apparently only one of several ideas Facebook has explored for getting access to China, and they might never be launched. But the existence of the tool brings up strong concerns about what’s best and safest for Chinese citizens. Mark Zuckerberg has held in the past that some Facebook access could benefit them. The New York Times reports that at an internal Q&A about its intentions in China, Zuckerberg said, “It’s better for Facebook to be a part of enabling conversation, even if it’s not yet the full conversation.” That mirrors , where it’s pushed the idea that limited free access to the web is better than none at all for those who can’t afford it. Facebook already allows Chinese companies to buy ads that run in places where it isn’t banned. In a statement to TechCrunch, a Facebook spokesperson wrote: “We have long said that we are interested in China, and are spending time understanding and learning more about the country. However, we have not made any decision on our approach to China. Our focus right now is on helping Chinese businesses and developers expand to new markets outside China by using our ad platform.” Over time, the interpersonal connection via Facebook could strengthen communities who might be able to organize and protest the government outside of the app. Yet the censorship tool’s potential to be used to round up dissidents looms over any long-term benefit for citizens, or profit for Facebook.
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Lab-made meat startup Memphis Meats hopes to grow a Thanksgiving turkey
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Sarah Buhr
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sizzled onto the startup stage earlier this year with a lab-grown meatball. Now, it’s entertaining the idea of growing other meats — including turkey. The startup has created an to save some of the nearly 50 million birds from the slaughter each Thanksgiving by educating the public on what meat of the future could look and taste like. While I am not crazy about posting Indiegogo campaigns, the company says this one is about getting the word out, not so much about raising funds to make turkey or other meats. In fact, Memphis Meats has already raised $3 million in seed funding to harvest animal cells and grow their meat in a petri dish. The animal industrial complex is terrible for the planet and us, says Memphis Meats. It takes 660 gallons of water to produce one hamburger and, according to the , raw meat is a major source of bacteria causing food-borne illnesses. So instead, the startup grows biologically identical meat in the lab, gathered from animal cells, essentially creating real meat, but cruelty-free and planet friendly. Now Memphis Meats says it wants to get the market ready in time for its “clean meat” products to hit shelves in the next five years. Memphis Meats definitely has its work cut out. I’ve asked several vegan friends in the past if they’d eat meat grown in a lab and most either said they weren’t sure or were grossed out by the idea. But cultured animal products like Memphis Meats might be perfect for meat lovers who don’t currently eat it because of concerns for health or the environment. However, the startup acknowledges it will take some preparation to get some consumers on board and it’s asking supporters to donate to help the cause. The donations range in scale from $3 to $1,000. For a donation of $3 — the price of a typical fast food burger — Memphis Meats will name you as a “champion.” You could also get a sticker, a water bottle or a hoodie with the company logo on it, depending on the donation amount. The $1,000 level will get you all the swag plus your name on the website. At this writing, Memphis Meats has raised more than $52,000 from nearly 700 backers to put turkey and other meats made from its Bay Area lab on shelves. Though the Thanksgiving bird is probably a distant future project for the company, but there’s hope it could be sooner. “The company will start with ground meats, but formed meats are on the roadmap, and could be chicken breast, steak, and even a whole turkey if the demand is there,” a company spokesperson told TechCrunch. We were also able to obtain a video from the startup showing something like a piece of beef cooking on the grill. Will turkey be next? You can see the never-before-seen footage of the new beef fajita meat from Memphis Meats below:
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Patient data API pivotal to DeepMind’s push into UK’s NHS
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Natasha Lomas
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with the U.K.’s National Health Service (NHS), initially focused on building an app for helping early detection of Acute Kidney Injury (AKI), was — under a new information-sharing agreement with the Royal Free NHS Trust, and a broader scope for the collaboration. The agreement lasts until at least 2021. Under the arrangement, patient identifiable data (PID, aka people’s medical records) continues to be shared across a wide range of data types for some 1.6 million+ individuals who are being treated or have been treated at the Royal Free’s three London hospitals (five years of historical in-patient data is also made accessible under the arrangement). The types of data being shared under ISA 1 and 2 (aka the legal contracts that set out how the data can be used) are described as “similar” by DeepMind — and a spokesman confirmed that patient data shared under the original arrangement has therefore not been deleted (given that they view it as a continuation of the same arrangement). The relevant section of ISA 2, detailing the data types being shared, can be found at the bottom of this post. There are some notable additions to the project at this point — such as a plan to create a technical audit infrastructure to track and log individual access to patient data, and an explicit commitment in the ISA that Google will not use the PID for any other purpose, nor combine it with other data, nor sell data to third parties. (Although one legal expert we contacted was less reassured, noting for example there is no explicit bar on Google conducting marketing on the data.) But buried at the bottom of the PR announcing the forthcoming roll-out of the Streams app in Royal Free hospitals in early 2017 is a major new facet to the collaboration: a plan to develop a data-sharing access infrastructure for the Royal Free, aka a FHIR (fast healthcare interoperability resources) API. Noting this new development project in passing on the , DeepMind writes: In time, we hope that [Streams] can help unlock the next wave of innovation in the NHS. The infrastructure that powers Streams is built on state-of-the-art open and interoperable standards (known as FHIR) allowing the Royal Free to have other developers build new services that integrate more easily with their systems. More detail is provided in an FAQ further down the page — where it becomes clear the Streams AKI app is really just the initial showcase for the underlying data access and streaming infrastructure DeepMind is intending to create to facilitate/broker access to NHS patient data, via its API, with the aim of powering a third-party health app ecosystem. Here DeepMind writes: Currently, [patients’ complete medical history] information exists across several different hospital systems that don’t talk to each other as efficiently as they could, which has a knock-on effect on patient care. Streams will help bring that information together and allow doctors to access it securely and instantly on smartphones when they need it. But to make this happen, Streams and those systems need to use a shared computer language. We have committed to building our infrastructure on open and interoperable standards, namely the FHIR API (Fast Healthcare Interoperability Resources Application Programming Interface) that many others across the sector have agreed will be a new standard in health tech. Not only will this ensure the data we process is in a modern infrastructure, but it will help to develop common information processing standards that other technologists and clinicians can also use to build their apps and other software which will improve patient care (subject to those third parties seeking all the appropriate approvals). The services agreement contract between the Royal Free and DeepMind further notes that the FHIR API will be owned by DeepMind, and licensed to the Trust for non-commercial, internal use during the five-year term of the agreement. What’s now clear is that there is a very considerable widening in scope of the collaboration between DeepMind and the Royal Free, with the Streams app itself evolving into a more general-purpose clinical assistance function (including incoming features such as in-app messaging, for example). And — even more significantly — DeepMind using Streams as the pilot project for building a Trust-wide access infrastructure for patient medical records. This far more substantial infrastructure project seems a better explainer for the scope of the PID data originally shared under the initial ISA, signed between DeepMind and the Royal Free back in September 2015 — although, when the partnership was publicly launched in February, no explicit mention was made of an intention to build a streaming health data access infrastructure for enabling a third-party app ecosystem. The first mention of the FHIR on the Streams website was earlier today — when DeepMind also added this explainer infographic of the intended infrastructure … Speaking to TechCrunch today, DeepMind co-founder Mustafa Suleyman describes the FHIR API as “a central part of what we’re doing”. “The idea is that we basically create a standard interface that allows third-party developers to build their applications into a canonical API,” he says. “What we’re trying to do is make it as easy as possible for different developers of different sizes, small and big, to build into a standardized file format… We wouldn’t have any role in determining who could build into that API or not.” So, in theory, DeepMind could charge developers for access to this API in the future — as its route to monetizing the FHIR API — although Suleyman would not confirm if this is the intention when asked directly, saying only: “I don’t know.” The discrepancy between the scope of the data originally made accessible to DeepMind under the original data-sharing arrangement and the stated kidney app use-case explains the crux of the — when it was revealed quite how much data was flowing from the Royal Free to the Google-owned company. Far more than appeared necessary for an app simply targeting AKI. And, lo and behold, DeepMind’s ambitions for this NHS Trust’s data do indeed scale far greater. “Why was the FHIR API secret until this morning?” queries Sam Smith of health data privacy advocacy group , which has been critical of the DeepMind/Royal Free arrangement since details were made publicly available. “The contract is for Google to build two things: 1. Streams, 2. FHIR API, and it is 2 that is the justification for all the data being copied into Google. “In the same way that if you want the prettiness of Gmail, you have to give Google all your data to show you ads, the deal for the app (with all the governance) is that you have to have the data copying for the API. The legal justification for copying data on everyone in the hospital is “we’re building a shadow IT infrastructure.” The public justification is “look, pretty app!” That’s not necessarily wrong, but why was the FHIR API not mentioned yesterday?” For its part, DeepMind has maintained it is not breaking any NHS information governance rules by processing so much PID for a specific app use-case — or indeed for the planned FHIR data access infrastructure. Rather, it has said it needs access to all the data as AKI could potentially affect any patient. More broadly, it claims there’s no difference in the structure of the information-sharing arrangement it has versus other third-party healthcare system providers to the NHS, such as . Although Smith dismisses this argument, pointing out that Cerner provides “the primary mission critical IT system for the entire hospital” versus DeepMind building just an app. We’ve contacted two of DeepMind Health’s independent reviewers who have clinical backgrounds to ask for their opinion on this point and will update this post with any response. Asked why DeepMind did not reveal its plans to build a data access infrastructure sooner in regards to the Streams project, Suleyman says he has personally talked about the company’s “commitment to open standards and interoperability” — and points to a paragraph on its website when it launched in February which references an aim to “build technologies that work together.” Although it’s a pretty big leap from such broad-brush comments to the PID API being revealed as the keystone of the project now — with Streams evolving into the showcase app for a future third-party healthcare services developer ecosystem. Also ongoing: an ICO investigation into the legality of the original data-sharing arrangement between DeepMind and the Royal Free; and a , the government appointee that works with the Department of Health to help ensure citizens’ confidential health data is safeguarded and used properly, considering how data is being shared for the Streams project. Despite these bumps in the regulatory road, Suleyman rejects the idea the Royal Free collaboration is having to be “relaunched” now — characterizing this next phase as a “natural progression” of an evolving partnership. “We’ve taken the last six to nine months to get to know one another better, to meet the teams more deeply, to prototype a bunch of throwaway applications, do some very early user testing and development, and out of all of that has come a really great relationship — and now we’ve decided to launch a five-year partnership,” he says, adding: “This is increasing the strength and depth of the relationship.” He is also at pains to characterize the data-sharing arrangement as highly “transparent” — rebutting criticism to the contrary — although he concedes, “in hindsight,” it would have been better if the Royal Free collaboration had been made public sooner than the four+ months it took for DeepMind Health to be officially announced versus the signing of the ISA. “We’ve committed, from the day that we launched DeepMind Health in February, to setting a new standard in transparency and information governance,” he adds. “And we started that by appointing our independent reviewers — these are nine, impartial, unpaid, uncontracted public experts who we’ve invited to scrutinize us in the public interest. That in itself I think is unprecedented.” Julian Huppert, chair of DeepMind’s group of external reviewers, tells TechCrunch their “principle output” will be an annual review. “We are currently working towards that,” he says. “The exact coverage of issues to go into that review is not yet finalised, but is planned to include data security, information governance, clinical utility, system interactions and the overall business model. We would be happy to receive further suggestions for areas to cover.” “We will shortly be commissioning technical audits of the DMH systems, using a specialist of our choice, paid for by DMH,” he adds. “DMH have offered us a £50k budget, but have also been clear that if our reasonable costs of hiring experts in exceeds that budget, they will provide further support. We are all unpaid, other than expenses.” Another forthcoming technical audit infrastructure for the Royal Free PID data — also only announced earlier today, and slated to be built by Ben Laurie, co-founder of the OpenSSL project (but now a DeepMind employee) — is, says Suleyman, intended to help DeepMind deliver “a level of oversight and transparency that goes above and beyond what anyone else in the system has been doing today.” “I think it’s really important that we can verify that data has moved around a technical infrastructure according to policies that have been approved by the information governance experts in that system and the controllers of the data,” he says. “Increasingly we have techniques that can prove with mathematical certainty the proof of encryption that information has passed from one location to another, or it has been accessed by one member of staff or another for a specific purpose.” That said, he confirms the technical audit infrastructure will not launch in time for the rollout of the Streams app — describing it as “a research project” at this point, and setting a potential launch as more than a year out at this point, i.e. well after Streams is up and running. “That’s something that we’re working on,” he says. “That we think will be prototyped by the end of [2017]. So it’s not a legally required thing — it’s going way above and beyond what is required but we think it’s an additional layer of security and transparency that I think will add a lot of extra value. But it won’t be ready for January or February or March.” Discussing the controversy over the structure of the data-sharing arrangement, Suleyman is strident in rejecting criticisms of the scope of its access to patients’ medical records — seeking to justify the sharing of Trust-wide PID for the Streams app by drawing a parallel between mission critical IT systems providers (such as Cerner) and DeepMind’s NHS collaborations. He also attempts to create a legal distinction between data being “processed” (i.e. access being granted by the Trust to DeepMind as the data processor) and specific patient data being accessed by someone using the Streams app — i.e. at the point of patient care occurring. And he reiterates that the current arrangement with Royal Free does not enable DeepMind to use the PID data to build any other products — nor as raw material for developing any machine learning models off of the NHS data. That would require additional agreements to be signed, he says. “The intuition that I have, as we see it, [is] this data cannot be used for any other purpose, other than when a nurse or a doctor wants to use it for direct care. So the only ever time that this is accessed by anybody for any purpose is when the clinician is standing in front of a patient, or is off to see a patient, or is discussing a case with a colleague. It’s all direct care,” he argues. “If we wanted to go and do secondary research, or if we wanted to train a machine learning model, or anything else that would require a completely different data architecture, a completely difference infrastructure, a whole set of different legal agreements, a whole different set of information governance standards and so on and so forth. That’s very, very different to, I think, the terms under which we are accessing data today. I think there’s been a lot of misunderstanding about that… This is entirely consistent — it’s exactly the same agreement as a Cerner or an Epic or Systems C or Allscripts.” “It’s really important that the questions being raised are raised in that context of the broader market situation,” he adds. “It’s really important to understand that the consent model today, which we have followed, which is entirely in line with the controller/processor arrangements that are in place across every Trust across this country — 200 or so Trusts, operate under the same framework — which is the hospital take responsibility as the controller for processing the patients’ data in order to improve care, and so our job is to do whatever the hospital tells us with respect to developing software that they think is going to improve care. “That’s essentially the consent model. When you go into the hospital, in return for your care, you agree to allow the controller, the hospital to process the data as it sees fit — in order to improve patient care. It can’t do anything else with that data other than improve the direct care that you receive, on a day to day basis, whilst you’re in admission. And that’s exactly the framework that we’ve been operating under.” But not everyone is convinced by Suleyman’s “intuition” of the legal soundness of the arrangement. Jon Baines, chair of (National Association of Data Protection and Freedom of Information Officers) argues that a “fundamental legal point” continues to be overlooked in the structure of the data-sharing agreement — both by the parties involved and the regulators, who have yet to provide adequate clarity on this point. “Putting aside broader ethical issues (negative or positive), I think there is a fundamental legal point which I have not seen adequately addressed in any communications emanating from the partnership,” he tells TechCrunch. “The parties have repeatedly said that Deepmind only has the status in data protection law of a ‘data processor’ and the most recent ‘information processing agreement’ of November 10 is predicated on this presumption. “However, the legal position is quite clear that whether or not an entity is a data processor (with very limited responsibilities in law) or a data controller (with effectively all responsibilities) is a matter of fact, not something that can merely be asserted in an agreement. If Deepmind has autonomy, and expertise, to manipulate the data it is given access to — and the facts certainly suggest it does — then it is highly likely that a regulator, and the courts, would determine that it is a data controller. “If that is the case, the basis of the whole arrangement is fundamentally altered. And we are facing a situation where Deepmind, and its owners Google, have access to and control of the data of huge numbers of patients who are almost certainly not aware of the fact.” “I think this cries out for the input of the Information Commissioner,” Baines adds. “As much as the parties to the agreement can assert one view, and as much as concerned commentators can express another, we need the expert input of the regulator explicitly tasked with promoting and enforcing data protection law.” Pressed on this point, Suleyman rejects the idea that the data-sharing arrangement it has with the Royal Free affords more latitude to DeepMind that just a data processor, and again brands criticism of its interpreting of NHS information governance rules as “a misinterpretation.” “I can’t stress enough how the way that we are processing data is entirely consistent with every other technology provider, software provider in the system — and every other Trust that is commissioning services,” he says. “In some sense I recognise that we’re an exceptional company, in other senses I think it’s important to put that in the wider context and focus on the patient benefit that we’re obviously trying to deliver.” Asked what the NDG’s concerns are about the data-sharing arrangement, and how DeepMind and the Royal Free are addressing them in their new ISA, Suleyman says DeepMind has not yet been informed of their specific concerns. “As far as I know they are still thinking through their position on this. We’re not in any active discussion with them but I know that they are thinking about the right position on this,” he adds. A spokeswoman for the NDG confirmed its consideration of the original ISA is ongoing. “We also look forward to receiving information about their new project,” she noted, adding: “As the National Data Guardian has made clear in her recently published review, great benefits can be reaped where patient data is used to develop innovative new treatments. This must be done carefully and safely in patients’ best interests and the public must be engaged in an ongoing conversation about how information is used and their choices.” An ICO spokesperson also confirmed it continues to probe the data-sharing arrangement: “Our investigation into the sharing of patient information between the Royal Free NHS Trust and Deep Mind is on-going. We are working with the National Data Guardian to ensure the project complies with the Data Protection Act. We’ve been in contact with the Royal Free and Deep Mind who have provided information about the development of the Streams app. It’s the responsibility of businesses and organisations to comply with data protection law.” At this point Royal Free patients can opt out of having their data made accessible under the forthcoming FHIR API — which DeepMind says it expects to launch early next year — although Suleyman notes those decisions are made by the Trust, as the data controller, and says the Royal Free could decide to remove the opt out in the future if the API ends up being considered a core system for them. “They’ve made a decision in their Trust that they will continue to provide an opt-out for our service for as long as it’s not a core and central part of their system,” he says. He also confirms DeepMind will be paid when Streams is officially deployed in Royal Free hospitals. Up to now the company has not charged the Trust for the development work it has undertaken as part of the collaboration. “We’ll get a very modest service fee for delivering some of our infrastructure work,” is what he says on payment. The relevant part of the ISA agreement detailing the commercial arrangements has been redacted so it’s not possible to quantify quite how “modest” the fee is. Whatever it is, it’s likely to change as DeepMind’s business model evolves — with Suleyman reiterating the ultimate goal for DeepMind Health is to be paid by performance. “In the future what I would really like to do is change the way the market operates. I’d like for us to get paid when we can deliver concrete outcomes — and so have a very significant part of our overall fee be paid when we can move the needle on some of these clinical outcomes that people really care about.” Asked when the company will have any data to back up its claims of app-delivered healthcare improving clinical outcomes and reducing healthcare costs for the NHS, Suleyman suggests it might be able to prove out its case with some firm results by next summer. “I’m hoping by the summer of next year we will have enough data that we’re able to start to look at what the kind of concrete clinical impact we’re actually having and we can share that with our independent reviewers and we can share it more widely with patients and clinician associations, and start to get feedback on whether these are the right metrics that we’re tracking, these are the right kind of improvements that we’re looking to make or not. And whether we need to shift gear again.” “It’s been estimated that you could reduce by 40 per cent the number of intensive care admissions, simply by improving co-ordination and communication across the system,” he adds, discussing the potential benefits of the expanded Streams app — which will include not just alerts to patients at risk of developing conditions such as AKI, sepsis and organ failure, but more general purpose clinical assistance features such as secure messaging and action request features aiming to replace the role of pagers in hospitals. “Intensive care is one of the most expensive areas in the hospital system… if you could reduce the number of people who are admitted there, not only are there cost savings but there’s massive patient benefit,” he adds. While DeepMind hopes to have robust metrics to prove the efficacy of its health pitch to NHS Trusts by next summer, others will be hoping to have had a lot more clarity from U.K. regulators on the robustness of the startup’s interpretation of data protection law.
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Don’t know what they want? Give a pre-swappable Snappy Gift
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Josh Constine
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Pick the suggested gift or swap it for one you like better You go to , choose a price range and then select from a collection of gifts your recipient will choose from, like ‘gadgets’, ‘cooking’, ‘outdoors’ or ‘teens.’ You can then designate a suggested gift from legit brands like DJI drones, Amazon mobile devices, GoPros, Prada clothing and Kate Spade purses. Without having to pay up front, you send the digital present. The recipient gets to virtually scratch to reveal the suggested gift. They can then accept it, or pre-swap it for anything else in the collection within your price range. You’ll receive an email asking you to pay the standard retailer price of the present, and Snappy Gifts ships it off. Snappy Gifts cuts deals for discounts from the manufacturers, and keeps the average 10 percent margin between the wholesale price and what it charges you. Recipients get to virtually scratch to reveal their suggested gift Snappy Gifts has plenty of advantages, especially if you can’t deliver a physical gift in person: And because Snappy Gifts curates a selection of popular, brand-name products, it’s easy to send something awesome even if you can’t imagine what to send. Snappy Gifts is still a little rough around the edges. The design needs polish, and you can only send a gift from its iOS app — not the web or Android. There are some gimmicky Sharper Image-reject gifts in the collections. And if the giver is a deadbeat, a recipient might pick a gift that never ends up getting paid for and sent. Conceived in Tel Aviv and built in San Francisco, has been bootstrapped but is now trying to raise a seed round of funding. It will have to compete directly with , which has a gorgeous website but crappy gifts that seem like rip-offs at their price points. There’s also traditional giving and gift cards, as well as startups like Gyft, Giftagram, Swift Gift and Jifiti. But none of those make it so easy for people to pick what they want and get it quickly. Give the gift of choice.
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SpaceX wins NASA launch contract for first-ever global survey of Earth’s water
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Darrell Etherington
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NASA has to provide the launch services for an April 2021 mission with the aim of surveying all of Earth’s surface water for the first time. The launch of the “Surface Water and Topography” mission will be handled by a SpaceX Falcon 9 rocket, taking off from Launch Complex 4E at California’s Vandenberg Air Force Base. The NASA mission itself is a first, with the aim of providing high-res measurements of the world’s oceans, as well as measurements of changes to oceans over time. A minimum of 90 percent of the world will be covered by the survey, with coverage of both freshwater and saltwater rivers, lakes, oceans and more occurring at least twice per body every 21 days. The intent in gathering this data is to help with climate science, as well as efforts to manage freshwater access for people around the world. SpaceX currently has nine NASA missions on its planned launch manifest for upcoming contracts, but it still hasn’t provided a definite date for resuming launches following the during pre-flight checks on a launch pad in September. SpaceX CEO Elon Musk said on CNBC in early November that the company’s launches could resume as early as mid-December, as the investigation into the cause of the explosion nears an end.
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Zola wedding registry lands $25 million led by Lightspeed
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Jordan Crook
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, the smarter wedding gift registry, has signed term sheets on a $25 million Series C round of funding, according to sources close to the matter. Sources say that Lightspeed led the round, and that Zola’s pre-funding valuation was at $200 million. Zola is an online wedding registry that lets couples choose products from a number of brands and even set up a cash fund. Guests can purchase products on a couples’ Zola page and have them sent directly to the couple, avoiding the hassle of going into a store that already has a registry and dealing with the mess of gift wrapping, transportation, etc. Zola ties in with existing brands but also lets users import products from other sites to add to their registry. Plus, the Zola couple can choose when their products arrive or convert their gifts into Zola store credit. [youtube https://www.youtube.com/watch?v=ysI8hmJaj4s&w=640&h=360] was started by Gilt founder Kevin Ryan in 2013, and has raised a total of $15.85 million from investors like Thrive Capital, Canvas Ventures, Female Founders Fund and BBG Ventures (excluding this latest round). Both Zola and Lightspeed declined to comment on this story.
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Sarah Buhr
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Platio turns sidewalks into solar collectors
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John Biggs
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Platio is a new company from Hungary dedicated to putting solar panels just about everywhere. They’re starting with sidewalks. Founded by a team of engineers and architects the system uses solid solar panels overlaid on plastic backing that ensures the panels won’t break when stepped on or rolled over and that each panel connects with the next securely. Imre Sziszák is a mechanical engineer who created the injection-molded bases while Miklós Ilyés and József Cseh worked to ensure that the panels look great and work properly. They’ve raised $70,000 for the project so far and they’ve sold 150 square meters of solar tile for their pilot projects. The product is recycled out of plastic waste and they click together like Lego. Electric wires inside the panels connect seamlessly as well, ensuring you can place them and forget them. “The founders are childhood friends and environmentally friendly technology enthusiasts,” said Sziszák. “Two years ago, as all us happened to move to Budapest we started hang out again and realized as having expertise in very various fields we work together efficiently. We started this project two years ago, and founded our company a year ago.” The project is still a bit pie-in-the-sky but I saw the and the team is already shipping product to pilot customers. It’s a fascinating effort to generate free energy and reduce waste at the same time and, as the team writes, it’s an “alternative to the depressing regular concrete paving elements.”
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Building jobs, not walls, in Silicon Valley
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Ravi Mhatre
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election cycle that has provoked a lot of emotion and debate is immigration. To oversimplify, it comes down to whether new immigrant groups coming to the United States is a good thing or a bad thing. I can only tell you my experience, which is that of a son of an immigrant man who left India for a shot at building a better life here in the U.S. and ultimately got his opportunity to realize this dream in Silicon Valley. My experience is also that of an investor who has spent the past 20 years working with entrepreneurs, many of whom are brilliant, highly motivated immigrants and many of whom, like my father, came to this country from South Asia seeking the opportunity to do something better. The story of these immigrant entrepreneurs is the same as my father’s. He came to the United States more than 50 years ago to complete his education in science and engineering. After school, he got a job, worked insanely hard and eventually was offered an opportunity to take over a startup company that was on the verge of bankruptcy. Not everyone’s dream job, but for my father, it was the chance to fully engage with the economic system and the country he had come to truly call his own. He took that startup, teetering close to collapse, from 10 employees to several thousand employees, and from near financial insolvency to several hundred million in revenue. And my father’s story is not so unusual. by the non-partisan Center for American Policy found that immigrants have started more than half (44 of 87) of America’s startup companies valued at $1 billion dollars or more as of January of this year. The Indian immigrant founders of companies in the Lightspeed portfolio like Informatica, which invented the market for business intelligence datamarts in the late 1990s; or Brocade, which developed one of the first Fiber Channel networking switches for storage area networks (a foundational technology for modern computing); or Kosmix, the topic search engine that powers all of Walmart’s research and development, have contributed billions of dollars and hundreds of jobs to the American economy. My father never set aside his Indian culture, but boy did he love a great 4 of July celebration and a massive Thanksgiving meal. One of the proudest days of his life (he passed away two years ago) was when he became a naturalized citizen. Most of the people I’ve worked with in Silicon Valley who arrived as immigrants came here because they believed in the American system and the American dream. Like my father, they were never given a chance in their home country, and they believed that not only would the U.S. welcome them, it would give them a fair shot, unlike so many other places in the world. That opportunity to succeed, to be the best that your talent and intellect allows, is a powerful motivator. It is why the United States has been a beacon for the smartest, most creative, most innovative and driven people you can find. And when those people come here and do succeed, as a group they have amazing loyalty to the country. They literally give their all to the new businesses they join almost as a matter of principal. Their drive to give back is tied up in proving to anyone and everyone that the U.S. wasn’t wrong to let them come here and make this country their new home. They absolutely continue to carry with them their cultural heritage (which has always been the American way), but in terms of their personal ambition, it is to fully embrace and adopt the U.S. market-based systems and to build companies that can have a real impact in the world. They believe deeply in the merit-based, “color-blind” system that the U.S. has always stood for (even if it’s not perfect) because often they have experienced some form of persecution or class-based discrimination that capped their opportunity in their home country. Virtually all the successful non-resident Indians I know have received green cards because of the skills they bring to the country, but have gone on to become U.S. citizens because they want this country to be their home. As citizens, there are no incremental benefits in terms of the job opportunities they can access but virtually all of them can’t wait to apply for full citizenship. They are here because they want to belong and because they believe in the systems and values for which the U.S. stands. In return, this immigrant population has created a tremendous economic windfall for America, including hundreds of thousands of new jobs, new technologies and intellectual property. All of which continues to sustain the United States’ leadership in innovation and provide us with new, unique, high-value products that we export to the rest of the world (which helps offset the negative trade imbalance which Donald Trump has so accurately pointed out as a key problem for the U.S.). Like Silicon Valley broadly, the immigrants that succeed here are builders, and what they offer is growth. There is a conversation among some that we can fix things by clawing back jobs that have gone to lower-wage countries. I’m not sure trying to roll the country back to the economic past will fully solve our current problems. We may get some additional jobs by pulling work back from overseas, but I believe we can get much larger (potentially massive) uplifts by continuing to create and grow new markets and industries and by being the source of the best new products and services. These “greenfield” opportunities, when they work, can lead to entirely new job ecosystems. That is the kind of growth that the immigrant entrepreneurs I see in Silicon Valley have often been able to help instigate. President-elect Trump is right to reach out to this group and build additional bridges. The worst thing that could happen is that this group starts to feel alienation and people decide not to come in the future or decide to return to India or other countries of origin. We would weaken our own tech sector, and in the process might help to create other more competitive regions elsewhere. So let the people who are the builders, the innovators and the driven come in. Like my father, they will rise up and make the American system stronger and bring others along with them. The more people like that who want to come here, the better. There should be no limits.
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Draper Nexus closes $175 million fund, LP’s include Panasonic, Canon and other Japanese tech giants
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Lora Kolodny
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Early stage venture firm, , has closed its second fund at $175 million, according to Managing Director . Its debut fund closed in 2013, at $50 million. Limited partners in Draper Nexus are global tech conglomerates, primarily based in Japan. For its second fund, the firm signed up about 20 LP’s including Panasonic, Hitachi, Kyocera, Shimizu, NEC, Canon and others. Most are global brands that early-stage tech entrepreneurs, whether they’re building enterprise software or consumer hardware, would love to include on their client rosters. Draper Nexus was an early backer of marketing firm , AI-based cybersecurity providers , autonomous vehicle tech firm , and , makers of smart lighting systems for commercial buildings. Though the firm is young, it has already chalked up eight exits, most notably with its investment in Shift, a software-testing company that went public on the Tokyo Stock Exchange in 2014. The company is thriving and Draper Nexus has retained shares in the business. What makes Draper Nexus stand out from other, larger and older venture firms in Silicon Valley is an emphasis on helping startups lock in their first, or biggest enterprise customers. Motiwala said, “We invest in companies that are not just exciting to us, but where we know we can bring some customer or channel partnership advantages to them. The large corporations in our fund have skin in the game.” The firm assigns multiple partners to each startup, working to get them agreements with corporations and executives they would have had a hard time just meeting on their own. With its second fund, Draper Nexus plans to back companies in transportation or mobility, cybersecurity, big data as it applies to complex industries such as insurance or logistics, AI and robotics. About one-third of Draper Nexus’ investing team is based in Tokyo, and the rest is in San Mateo. The fund sometimes invests in companies that start with a regional focus on Japan. In Japan, Motiwala said, Draper Nexus may back new marketing automation and adtech, startups. The country’s enterprise software providers have yet to catch up to the U.S. in these segments. Up to 80% of Draper Nexus’ money is invested in early stage deals, and that’s a focus they want to maintain with their second fund. They usually seek to co-invest with other firms, and sign a check up to $5 million in Series A deals. If they missed a particularly good opportunity, partners said, they will look at Series B deals. About 5% of Draper Nexus investments go to seed-stage deals, and the firm typically invests $250,000. A rising star in the firm, senior associate , is helping to run a new program for Draper Nexus with the close of its second fund. Dubbed GoPilot, the initiative will serve as something of an accelerator for already formed and funded companies. Draper Nexus will invite early stage startups with enterprise software, services or hardware to pitch five to ten corporations in a given field at something like a closed demo day. Startups that succeed walk away with 2 enterprise clients or business development agreements after they pitch. And Draper Nexus will put $50,000 in funding, at founder-friendly terms, into the startup. The funding will go to support the development of joint projects with large corporate partners. “We have enabled more than 50 pilot projects already here, and were able to create a kind of template that works to make these things come together in a shorter period of time than it would normally take a startup. It’s a really important milestone,” Jagannathan said. Meanwhile, corporations are happy to have external money support a pilot project that could otherwise be delayed while they try to find internal budget. Draper Nexus also works to make sure that the terms of any business development deals are founder-friendly, so startups can, for example, retain intellectual property or avoid exclusivity that could limit their growth.
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Black Friday online sales to hit a record-breaking $3 billion, over $1 billion from mobile
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Sarah Perez
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Black Friday online shopping is continuing to grow, and this Friday was another record-breaking day. According to a new report out this evening from Adobe, which has been tracking e-commerce transactions throughout the sales holiday, Black Friday is on track to set a new record by surpassing the $3 billion mark for the first time. It’s also expected to become the first day in U.S. retail history to drive over a billion dollars from mobile sales. With an estimated $3.05 billion expected by the day’s close, Black Friday 2016 is up 11.4 percent from the same day last year, says Adobe. It was clear earlier in the day that seen on Thanksgiving Day and on Black Friday. Major retailers, like Amazon, Walmart, Target and eBay, noted that mobile traffic and sales were on the rise. Amazon said that mobile orders on Thanksgiving topped Cyber Monday last year, for example, while Walmart said that over 70 percent of website traffic on Thanksgiving was mobile. Target said that 60 percent of Thanksgiving sales were from mobile devices. This trend continued into Black Friday, as the sales event is currently tracking to bring in $1.13 billion in revenue, which is up 25 percent year-over-year. Walmart said that 60 percent of Black Friday orders on Walmart.com came from mobile devices, for example. Mobile was also driving the majority of retail sites visits on Friday at 56 percent, Adobe noted. Most of that (47%) was from smartphones, as opposed to tablets (9%). In addition, mobile accounted for 40 percent of sales, with 29 percent from smartphones, and 11 percent for tablets. By 3 PM ET, mobile alone had accounted for $680 million in online sales. What’s interesting, however, is that smartphones don’t drive as many conversions as tablets and desktops. While conversions were up overall, smartphone conversations were at 1.9 percent, compared with tablets at 3.7 percent, and desktops at 4 percent. For comparison’s sake, holiday averages are 1.3 percent, 2.9 percent, and 3.2 percent, for phones, tablets, and desktops, respectively. In addition, iOS continued to drive larger sales than Android. The average order value on iOS devices was $144 compared with $136 on Android. It still remains to be seen if Adobe’s estimates of mobile sales topping $1 billion out of over $3 billion in total online sales will change when Black Friday finally wraps tonight, of course. But Adobe’s sample is large enough for its numbers to be fairly close. Its report is based on aggregated data from 22 billion visits to retail websites, and includes 80 percent of all online transactions from the top 100 U.S. retailers. Adobe also noted this year’s top-selling electronics were Apple iPads, Samsung 4K TVs, the Apple Macbook Air, LG TVs, and Microsoft Xbox. Combined with yesterday’s $1.93 in online sales on Thanksgiving, the two days are expected to close out at nearly $5 billion in sales. Top-selling toys included Lego Creator Sets, electric scooters from Razor, Nerf Guns, DJI Phantom Drones, and Barbie Dreamhouse. Despite the record numbers, the e-commerce industry is still recovering from the downturn it took following the election. “The negative impact on online shopping we saw following the election has not been fully made up, but consumers are back online and shopping,” said Tamara Gaffney, principal analyst and director, Adobe Digital Insights, in a statement. “As spending ramps up on Black Friday, we are back on track. We still expect Cyber Monday to surpass Black Friday and become the largest online sales day in history with $3.36 Billion.”
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No Man’s Sky’s upcoming update paves the way for building bases
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Darrell Etherington
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The sci-fi universe wandering game got a vocal and sizeable negative reception after a portion of players felt it overpraised with hype and pre-release advertising but didn’t deliver ultimately with actual gameplay. I , but it might be because I didn’t pay very much attention to the actual promises being made by studio Hello Games after the initial news of its existence. Regardless of whether you did or didn’t appreciate ‘s unique approach to console gaming, Hello’s on Friday (via ) that a forthcoming update will lay the groundwork for base building will probably come as welcome news. Base building will be introduced in what Hello’s calling “The Foundation Update,” which is coming this week for , along with detailed patch information. The Foundation Update has been in development for nine weeks, Hello says, but don’t expect it to transform the in-game experience right away; the developer is setting expectations by calling it “the start of something,” rather than the fully-formed arrival of a whole new way to play. Hello Games also took the opportunity to address negative feedback for the game, noting that they’ve followed the “intense and dramatic” discussion around their title but that they’re focusing on improvements rather than on wading into the debate. Again, I liked the game and don’t regret buying it, but I will welcome substantial gameplay updates as a way to wind my way back into its expansive virtual universe.
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Siren Care makes a “smart” sock to track diabetic health
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Sarah Buhr
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smart s that use temperature sensors to detect inflammation — and therefore injury — in realtime for diabetics. Co-founder Ran Ma was working on growing biomass to grow back skin that had been damaged while at Northwestern University when she started learning how to treat diabetic feet and thought of making a wearable that could track and prevent injuries. Both type 1 and type 2 diabetes patients are prone to foot swelling, among other foot issues and it can lead to some serious problems such as infection or amputation of the foot if not checked. Early detection is crucial to head off any serious complications and Ma and her co-founder Veronica Tran believe built-in sensors are the key. But Siren’s socks aren’t the first wearable to aim for detection of a diabetic foot injury. is a wireless shoe insert for diabetics and the PressureGuardian from is a boot designed to detect issues as well. But a boot is cumbersome and Siren’s socks are closer to the skin than a foot pad in your shoe. The sensors are woven into the fabric of the sock to detect when there is inflammation. All information is then uploaded to an app on your smartphone to alert you to an issue. All data is stored on the sock, on the app and in the cloud and when the sock detects a high-temperature difference — meaning there’s an injury of some sort to the foot — the app will send you an alert to check your foot. “It could be something as simple as you have a shoelace tucked into your shoe and don’t feel it and you can get an injury from that,” says Ma. Although these are wearables, there’s no need to charge the socks. Each sock comes with a full battery built to last for the whole six months lifespan. Siren says the socks are only “on” when you are wearing them and goes into deep sleep mode once you take them off. They’re also machine washable and built to endure at least the six months your supposed to wear them. Siren’s co-founders also have bigger plans than just temperature detection. “Our Smart Textile technology is able to incorporate a number of sensors and electronics, including moisture sensors, pressure sensors, light sensors, LEDs, RFIDs, MCU, BLE, etc seamlessly into fabric,” Ma tells TechCrunch. That means in the future the company could make other smart textiles to detect injury in other parts of the body as well. Siren came out of 500 startups batch 18 and will start shipping its socks in the spring. You can now and Siren will start sending you a pair of seven socks (one for every day of the week) every six months when it’s ready to ship.
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How to recruit, hire and retain female engineers
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Sharon Wienbar
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Leaders at tech startups are alarmed by the absence of women from mission-critical roles — software engineering, especially — at their own companies. Their boards are saying, “We gave you the money to grow, grow, grow, but you’re not. You don’t have the engineers to get it done.” The board can’t miss that you only seem able to hire men. So your dev team is shorthanded. Moreover, they might be shortsighted. As a 15-year veteran board member at more than a dozen tech companies — I’m still on three of them — and a venture partner at Scale Venture Partners, I don’t need to or quote profitability reports from and . I’ve seen firsthand, over and over, that companies with diverse teams (Salesforce: in technical roles) do better financially and compete better in the market. Entrepreneurs contact me because they want to change the ratio on their eng teams. It’s not because they’re out for social justice, or because they fear a lawsuit, or because California has gone insane with political correctness. It’s because founders want to build successful products and make a lot of money. But if fast-growing tech companies can’t find and hire qualified women software engineers — whom they know exist — their goal of a fully-staffed engineering team is even more elusive. They lose an important diversity component, which means everyone touching the product is constrained by a similar, maybe singular point of view. It’s not news: Any real geek knows “diversity overcomes adversity” was an unspoken theme of Star Trek from the start. A company whose engineering team can only hire men may miss goals, may make less money, may flat-out fail. That’s why founders want to change the ratio. Yet their startups, which aspire to be visionary and disruptive, are possibly ignoring or even repelling a valuable set of candidates who could help meet and beat company goals. This article is a how-to guide for finding and hiring women software engineers who will get the job done. Front-end or full-stack, QA or customer success specialist, it doesn’t matter. These steps to success apply to hiring women into any coding or code-adjacent role. Don’t think that diversity hiring only means onboarding junior people into entry-level roles. Look at your open positions and you’ll see you’ve got the same situation as most other tech firms: There are far more mid-level positions going unfilled than there are at the entry level. We made a map that showed the number of open software engineering roles in a dozen Silicon Valley area cities. We counted 3,443 open entry-level engineering jobs. But we also found 8,548 unfilled mid-level positions, . That’s two and a half times more empty mid-level spots on the org chart. Raising the number of mid-level women would solve two problems at once: The need for talent of any gender identity, and the ratio of diverse staff. Many CEOs tell me that’s their dual goal today. There are two strategies to hiring qualified mid-level staff. Strategy No. 1 is to throw money at the problem: Raise the salary offers, hiring bonuses and perks for mid-level engineers working at other places. Hope that candidates who’ve spent five years optimizing algorithms on live servers, then playing Civilization all weekend, haven’t also figured out how to game the Valley’s compensation system. Good luck. Engineers have online and offline backchannels, just as founders and funders do. If more pay is what you have to offer, you will end up with employees who value money disproportionately — the mercenaries. Your internal pay equity will be out of whack, teamwork will go out the window and your costs will spiral up. Strategy No. 2: Hire women into entry-level positions — you have plenty of those open — who come from other professional backgrounds, yet have the affinity and chops for coding. Bootcamps alone , with over one-third of those women, a higher percentage than traditional college CS programs. These women, thanks to their time in other careers such as lawyers, analysts, marketers and scientists, have entry-level coding skills, but mid-level professional skills. You won’t have to train them how to manage people, how to meet team deadlines and budgets, how to stick to your priorities when they don’t agree and how to interact with clients and partners professionally to save a business relationship until your technology delivers on your promise. I wrote an last year on what works at companies with qualified women in coding or code-savvy roles. Most of it still holds. Here are a few updates from a year at the front lines with and our industry partners. All you’ll have to do is raise their level of software skills. That’s much easier. Your mid and top-level staff love being the experts. Let them show their stuff — they can conduct internal bootcamps on the company’s tech stack and mentor professional co-workers into becoming valued peers. The women they’ll be helping to grow into more senior roles have the proven grit and interest for learning software skills, and they’re more professional to work with than a squad of college hires at their first real jobs. In fact, do that for all your entry-level hires. Bloomberg does. You’ll accelerate their time to value, and integrate them better with your senior engineers. It sounds exhausting. But the alternative is to sit surrounded by empty desks with an unmeetable deadline. Which would your engineers prefer? There are two fronts on which the diversity staffing battle is fought. Recruitment is one. The other is retention. “We tried hiring women, but they keep quitting.” Why would that be? A workplace that makes women feel unwelcome or unappreciated is as doomed as one that discards their applications. Once you’ve grown an entry-level woman into a mid-level senior engineer or manager, you risk the same threats you do with men who become disgruntled. They’ll leave for their own sanity, or they’ll be poached by an employer who uses Strategy No. 1. My original TechCrunch article includes resources for analyzing performance reviews, code reviews, salary reviews and culture. Your competitors are using these resources. , and hold themselves to the highest standards of gender and racial equity. You can’t afford not to. Patience is a requirement. Habits are hard to break, and your culture may favor the incumbent majority until you get closer to parity. Losing the good women on your team becomes a downward spiral. The market gains reference points that your company isn’t worth applying to. Do you see a conspicuous lack of women applicants? The word may be out there already. Internally, the guys may conclude “women can’t cut it here,” excusing themselves rather than making an effort to change their behavior. They’ll find other explanations for the team’s constant understaffing, and competitors’ more frequent innovations. Changing the ratio of your tech team is a proven path to smarter problem-solving, more bright ideas, more success and more money. Look at and the follow-up actions they took to equalize pay. It’s a simple formula:
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Sphero’s BB-8 wearable brings Force control to home automation with IFTTT support
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Brian Heater
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Sphero’s BB-8 was the most memorable bit of merchandizing among last year’s epic merchandising bonanza. It was the perfect piece of synergy – leveraging the hardware startup’s compelling piece of remote control technology to bring to life the film’s most marketable creation. This year the company looked to take things a step further with the addition of , a wearable that brings gesture control to the lovable robot, mimicking the franchise’s force pushes and pulls. It’s a fun addition, but a little tricky to control – and priced a bit high at $80 as a standalone (or $200 if you buy them as a bundle). Appropriately unveiled the week of Black Friday, Sphero’s taking the Force Band’s functionality to a compelling new level with the . That means the sky’s really the limit on the sorts of things wearers will be able to control with the wrist band. Users can create commands to control all sorts of smart home functionality with a push, pull or stop. Behold, the Jedi coffee maker: Sphero’s posted up some over on its page – controlling smart lights like the Philips Hue is a pretty obvious one. And hey, who wouldn’t want to force pull a Tweet and Slack post or force stop some music? It’s probably more fun that legitimately useful, but the force still seems pretty strong with this one.
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Watch Dogs 2 lampoons Silicon Valley with open-world hacking fun
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Darrell Etherington
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It was like Grand Theft Auto except it took itself and its melodramatic, sad sack hero very seriously. Watch Dogs 2 will probably hold a special charm for anyone who’s lived or worked in the Bay area, including Silicon Valley. The game uses San Francisco and its surrounding area as the canvas for its tale of counterculture hackers fighting evil government and private companies who want to dismantle privacy in the name of marketing. It’s the perfect stage for the play in question, and it’s amazing how closely the virtual Bay area mimics the real one. Sure, it only take you about 2 minutes to commute from downtown SF to Palo Alto, and there’s never any stop-and-go traffic prolonging the trip across the Bay Bridge to Oakland, but what it lacks in hyperrealism it makes up for with recognizable landmarks and roughly accurate relative placement of in-game locations. The SF locale is not just a visual treat, however; Watch Dogs 2 is set in and around Silicon Valley because it’s a tale of tech company overreach, in which a team of rag tag hackers including yourself do their best to remain off the grid and reverse the trend of exchanging anything resembling privacy in the name of convenience and connectivity. [youtube https://www.youtube.com/watch?v=JNj_Y-lwZBw] From fighting fictional corporations like search giant Nudle, hearing passersby talk about the success or failure of their startups, and fighting back against hardware companies that change their ports with every new product launch in consumer-hostile behavior all contribute to a relentless send-up of the Valley’s worst characteristics – but in a tone consistently light enough that you’ll be chuckling rather than tearing up throughout. I thought that the game mechanics in the original Watch Dog were great – they’re the main reason I stuck it out and completed the main campaign even though the story and hero were majorly boring. Most of the basic mechanics are the same here, and that’s a good thing. And what Ubisoft has changed is almost entirely for the better. Two new drone accessories really add a new dimension to the game, for instance, and make it easier to navigate vertical terrain in a game where your parkour skills are sorely lacking. The Jumper, once upgraded, takes the sting out of a lot of acrobatic bonus pickups that would otherwise be mostly annoying, instead of just enjoyably challenging. New hacking abilities also bring a lot of extra fun to solving the riddles of infiltrating heavily guarded compounds or negotiating car chases. The Watch Dogs 2 world is even more widely accessible to the player than the original because of the added scope of hacking mechanics, and it makes the open world feel, well, even more open. Side missions are plentiful, as you might expect, but also feel rich and not strictly paint by numbers, whether because of how they’re spaced out or because of minor changes. The main plot itself also offers a lot of variety, making it feel more like you’re waging a war on multiple fronts than being driven by a single-minded mission. As for extras, there are tons. You can unlock new paint jobs for your drones, for your guns and for your cars. You can also shop at multiple different clothing chains, plus kiosks that sell touristy wear in case you want to show how much you’re enjoying your virtual tour of SF in-game. Despite the omnipresence of paid upgrades that you buy with in-game currency, I never once felt compelled to drop any extra on in-game purchases to improve my experience, which is the sign of a really great approach to add-on content. The expanded clothing options for your main character really do add a lot to the game, too, in my opinion. I’m generally not that distracted by this kind of feature, but I did find myself dressing up antagonist Marcus Holloway in different outfits frequently, and appreciating the ability to do so much more than usual. The bottom line with Watch Dogs 2 is that it leaves you wanting more. That’s no small feat when the original felt so lacklustre, and really hasn’t benefitted much from the intervening time since its release. Because of the attention to detail with characters and story, Watch Dogs 2 feels like it’s an entirely new game that just happens to contain the mechanical skeleton of another, distantly remembered one. Silicon Valley was the right target for the acerbic humor of Watch Dogs 2, but this series now has lots of potential in terms of seeking out future targets, provided it can keep the same balance of quality open-world gameplay and wit. For now, though, definitely go out and play Watch Dogs 2 on your platform of choice (it’s available on PC, Xbox One and PlayStation 4) if you can tear yourself away from the startup grind long enough to do so.
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Jill Stein campaign files to recount votes in Wisconsin
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Lora Kolodny
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Green Party presidential candidate Jill Stein, and independent party candidate Rocky De La Fuente, today filed for a recount of votes in the state of Wisconsin after Stein raised more than $5.2 million via to pursue “election integrity.” Stein’s crowdfunding campaign raised donations after a group of legal and cybersecurity experts about voting results in three states, including Wisconsin, suggesting they theoretically could have been hacked or otherwise manipulated. The group included attorney John Bonifaz and J. Alex Halderman who is the director of the University of Michigan Center for Computer Security and Society, The official Twitter account of the confirmed its receipt of the filing on Friday before the 5:00 p.m. ET deadline. Stein’s campaign could not be immediately reached for comment. On behalf of the Green Party, she has said she intends to file for recounts in two other states as well, Pennsylvania and Michigan after Wisconsin. The Commission has received the Stein and Del La Fuente recount petitions. Details and news release posted soon at . — Wisconsin Elections (@WI_Elections) Trump won in all three of these states by a narrow margin. In order to challenge the federal election results, if vote counts hold in all other states, recounts would have to prove Hillary Clinton the winner in Wisconsin, Pennsylvania and Michigan. It was preliminarily determined that Trump beat Clinton in Pennsylvania by 70,010 votes, in Michigan by 10,704 votes and in Wisconsin by 27,257 votes. Wisconsin must now of completing a vote recount by December 13th in order for its votes to be counted at all, thanks to a federal safe harbor law. U.S. elections are not ultimately determined by popular vote, of course, but by members of the . They are set to meet on December 19th to issue final votes based on state-by-state contests. Hillary Clinton has not made any statement about, or called for, a recount, officially. Jill Stein is planning to answer questions about the recount campaign via a , but the time of that event has yet to be determined. (The drama of it all makes me wonder why vote audits and recounts aren’t standard operating procedure after a federal election.)
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Salesforce serves as training ground for SaaS startup execs
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Ron Miller
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When startups go looking for executive talent, they want someone with some experience working for a successful organization. When it comes to the cloud, there is a dearth of expertise — with one notable exception — Salesforce. Perhaps, that’s why , has become a pipeline for executive talent. The company launched in 1999 and has grown over 17 years to more than 24,000 employees, over 6000 of which work in the Bay area, making . With that many employees, it would make sense that some would venture out on their own and start their own companies, or be recruited to help run startups — and that has clearly been the case over the years. The fact is that former Salesforce employees are spread across the Silicon Valley ecosystem and beyond. Whether we are talking about Zuora co-founder and CEO, Tien Tzuo or Okta CEO and co-founder, Todd McKinnon, both of whom got their start at Salesforce, there are countless examples of former Salesforce employees heading out into the world and bringing the skills they learned running the world’s biggest SaaS company to bear on other other organizations. When you bring in good talent, chances are at some point, some will want to spread out and try their hand at other companies, says Tim McAdam, general partner at TCV, who sits on the board of FinancialForce, a company built on top of the Salesforce platform. “Salesforce has attracted great people over time, but great people are ambitious and they want to take their learnings and start a business or join a newer business,” McAdam explained. Salesforce chairman and CEO Marc Benioff at TechCrunch Disrupt in September, 2016 in San Francisco. He adds, Salesforce is extremely goal-oriented and hits their numbers, and those are the kinds of skills that translate well at other organizations. As though to prove his point, the company killed it earlier this month, generating $2.14 billion in revenue, up from $1.71 billion for the same period last year. What’s more, revenue goal it set for itself, and it even went so far to set a $20 billion revenue goal for some time in the next three-four years. You just don’t see that ability to execute at that level from other SaaS vendors, at least not yet, and McAdam says that it starts at the top with CEO and Chairman Marc Benioff. “The inculcation of execution from Benioff trickles down and allows executives to be entrepreneurial and to do great things over time,” he said. Zuora’s Tien Tzuo was Salesforce’s first CMO when the company was so new it was being run out of Marc Benioff’s apartment. He says, what they built, and Benioff was a driving force, was a great environment for building, marketing and delivering software. “We rewrote the rules,” he said. When he was ready to go start his own company managing subscription businesses in the cloud in 2007, Benioff encouraged and supported him. Over the last nine years, Zuora has raised over $242 million and has achieved a unicorn valuation of $1.12 billion. Todd McKinnon from Okta says that working at Salesforce between 2003 and 2009 gave him a front row seat as companies started their shift to the cloud. “The biggest impact was working at Salesforce during the critical emergence of the cloud. It really informed my view of the problem I was solving. I would work with CIOs from big companies. When you were talking to CIOs, [you realized] the cloud was going to change IT radically and it didn’t have tools to manage and secure it.” McKinnon used that knowledge to help launch Okta, a cloud identity company that has raised over $228 million and grown to unicorn status with a valuation of $1.2 billion. But Tzuo and McKinnon are far from alone. The alumni network of former Salesforce employees is deep and growing. In fact, I spoke to several executives who cut their teeth at Salesforce recently including Clara Shih, CEO, at Hearsay Social; Alex Bard, CEO, Campaign Monitor; Jager McConnell, CEO, Crunchbase and Andy MacMillan, CEO at Act-On Software. Each felt that being part of Salesforce had been an enormous influence on them and how how they run their companies today. In fact, these folks have often formed bonds that lasted long after they left Salesforce. There is a strong network of Salesforce alums that includes regular in-person meetings, a Slack channel, Facebook groups and other means of staying connected to one another. McConnell says he and Shih recently hosted a dinner for Salesforce alums, who are now CEOs and he found it tremendously useful to talk to other people facing similar problems to him who come from a comparable background. Many alums look to help one another whether they worked together directly or not when they were at Salesforce. “It’s such a strong culture. Andy [MacMillan] and I didn’t know each other [when we were at Salesforce], yet we still feel like kindred souls,” Shih said. She says it stems from the culture, from learning to think and operate a certain way — and all of that carries forward, even after leaving the company. “I ask Andy for help all the time and I’m not shy about asking my [Salesforce] network [for assistance],” Bard said. He says that people talk about the “ ,” the group of executives and venture capitalists that came out of Paypal that includes Peter Thiel and Elon Musk — but he believes that there is a similar dynamic at work with Salesforce alums. MacMillian sees a kind of flywheel effect within the Salesforce executive alumni network. When you go to a SaaS company, and you’re looking for smart, competent people, there aren’t that many sources he says, so people tend to feed off what they know — and what they often know is Salesforce.
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Japan looks to create a superfast supercomputer for deep learning
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Brian Heater
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Japan is reportedly eyeing a return to the top of the supercomputer ranks. The county’s Ministry of Economy, Trade and Industry plans to spend 19.5 billion yen ($173 million) on a new supercomputer, according to budget filings , with aims of developing a machine capable of 130 petaflops. That number would put the company in the top spot, moving the AI Bridging Cloud Infrastructure ahead of t, the supercomputer unveiled by China over the summer capable of 93 petaflops. The Ministry already has some fairly big plans for the previously unannounced supercomputer, utilizing its record-breaking speeds to help the country develop advances in AI technologies like deep learning. Also on the list (at 130 quadrillion calculations per second, the thing would be fairly adept at multi-tasking) are gains in autonomous vehicle development, medicine and robotics. According to the report, the planned computer would be licensed to domestic corporations for a fee. The Ministry’s not doing much talking about the computer at this early stage, but a director from the National Institute of Advanced Industrial Science and Technology, where the planned system would be constructed says, “as far as we know, there is nothing out there that is as fast.” Fujitsu’s Oakforest-PACS was certified as the country’s fastest computer earlier this month, capable of 13.6 petaflops.
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Mobile and enterprise are the keys to VR/AR scale
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Michael Boland
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Though PC and console VR are the sexier formats we’re all excited about, is mobile where VR will really scale in the near term? This is a question I’ve been posing to investors and innovators for an upcoming research report. For example, despite impending , IDC 2 million tethered VR headsets will be sold this year. That’s dwarfed by the 2.6 trillion global smartphones that represent mobile VR’s addressable market. Though it’s a stripped-down version (no positional tracking, etc.), mobile VR is improving with things like Google Daydream. Its mainstream-friendly price point and accessibility also make it the gateway drug that VR needs. The same goes for AR. Rudimentary forms — a la Pokémon GO — are the mainstream a taste of what’s to come. And though “real AR,” it will do the technology a favor through that same gateway-drug effect. Silicon Valley business strategist also reminds me that VR and AR align with 5G network roll-outs. That’s good timing, given that massive data payloads will make use of those bigger pipes. “Between 2015 and 2018 [Orange has] committed 15 billion euros to get this infrastructure out,” she said. “So there’s a lot of money behind 5G, and VR is one of the driving factors in having the bandwidth.” Cu is joined by Comcast Ventures, Lenovo and several other corporate investors currently vetting or sinking their teeth into VR and AR. And in the process of due diligence, they see a lot. Comcast Ventures’ has an investment thesis grounded in VR and AR’s long run position as primary computing platforms. But more important is that they scale by crossing geographic and industry borders. “It’s both consumer and enterprise, especially AR,” Yang told me. “It’s also very global right out of the gate. Other sectors we invest in aren’t as immediately global.” CV portfolio company , for example, brings VR to a media staple with massive reach: live sports. Beyond the consumer angle, live sports is broadcast’s saving grace against cord cutting… and VR amplifies that. Lenovo is meanwhile attacking these opportunities on two levels: It manufactures high-octane PC rigs for VR’s heavy graphical processing needs, and it’s pioneering mobile AR through the Tango-infused . Lenovo’s director of worldwide innovation, , expressed his vision of AR’s future, including his lead role on Meta’s . He believes the long-run opportunity is enterprise utility. This is one reason we’ll see AR VR in market size. Mikhail says that AR’s value will truly be unlocked with everything from workplace productivity to manufacturing and industrial design (think: 3D modeling). The name of the game is to improve operational efficiencies, he says, as a means to real bottom-line results — and that’s what will really compel wide-scale AR adoption. Yang agrees, advising a vertical-focused approach. “For a general-purpose developer, trying to understand a vertical is harder,” he said. “I’m looking for people from oil and gas, or aerospace or construction who envision AR overlays that make processes more efficient and intelligent. That’s the future we’re particularly excited about.”
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Giving corporate innovation a jolt
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Armin Prommersberger
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Today’s competitive business world demands innovation. Corporations need to innovate to inspire, compete and survive. However, the burden of innovation has largely rested on startups. Large corporations and established businesses are expected to out-think their rivals, but more often we see that they rely on minor product updates or acquisitions in place of home-grown innovation. Startups are moving too fast these days for a complacent strategy to be enough. No longer can companies and business leaders rely on slow-moving corporate or product strategies to withstand the attack from disruptive upstarts. Corporations need to take a hard look at the challenging business landscape that surrounds them, identify internal weaknesses and create action plans to truly innovate and empower employees with the right tools to deliver success. “Disruption” and “exponential” are some of the most commonly used buzzwords. Now combine them with “corporation” and it becomes quite a conundrum. Sometimes it feels like they are natural enemies. On one side, you have entrepreneurs and disruptive minds who want to tackle a situation from a completely different perspective and create something unseen for a desire formerly unknown. And on the other side, you find well-known corporations with established business models, five-year sales plans and processes tailored for incremental product improvements to avoid scaring off a loyal customer base. Broadcast television is a prime example of an industry struggling with this paradox of desire for innovation versus incremental development. Until a few years ago, we looked primarily to broadcast networks and channels to find interesting content. Though media networks continued to introduce new material for consumption, their mode of delivery remained stagnant. Audiences seemed satisfied, given that no greater options were even presented, throttling any need for innovation. Change was introduced when consumers started using their mobile devices as second screens while watching TV. This set the barrier of entry considerably low for outsiders with business models that could further appeal to consumers. Over-the-Top (or OTT) entrants such as YouTube, Netflix and Hulu deliver content via the internet in an inventive and affordable format, without requiring users to subscribe to a traditional cable or satellite TV service. And now, after initially creating additional subscriptions, they have started eating into cable’s subscription base. OTT services offer value with greater flexibility and personalization, which leads to disruption, not only for the broadcasters but eventually to anyone using traditional TV as a channel to address target customers. We are still awaiting a significant effort by the “disrupted” parties to deal with this challenge, but Comcast and Netflix may soon embrace the convergence. Too many industries keep slowly “evolving” a product or service in search of perfection, as opposed to going out on a limb to develop something truly revolutionary. Although iterations and 2.0 products are important, making mere updates the norm could be a fatal mistake. Innovation doesn’t ask us to reinvent the wheel — it asks us to create something . Real innovation is challenging, and having a great idea alone is not enough — finding the right way to execute innovation requires a tremendous amount of R&D, capital and collaboration. What’s even harder is that organizations looking to break through the mold of iteration must embrace risk. And this is where creative strategy can make all the difference. For example, Google doesn’t rely on one innovation strategy, it deploys several to weave an innovation ecosystem. Just within the artificial intelligence realm, Google routinely acquires early-stage startups, actively partners with the scientific community, funds more than 250 academic research projects per year and invites about 30 top scholars to spend sabbaticals at Google every year. A few of these scientists were interested in a new brand of artificial intelligence, called deep learning, and decided to work on their project at Google X, the company’s internal incubator. The result of this work was an actual product that became its first-generation machine learning system, and was incorporated into various Google products like Google Maps, Google Translate and YouTube. The team working on this project has now grown to 100 researchers, and they have built more advanced innovations with real applications — like making Google voice search faster and more accurate. Most of us remember when innovation was a matter of small and dedicated R&D departments, top-notch specialists who were kept in isolation and asked to think about what the world needs. The digital age begged for a better model, as we quickly realized that innovation can’t exist, let alone flourish, in a vacuum. Today, it is essential to develop an internal infrastructure to foster and implement innovation without sacrificing an established consumer base of relevant size, unless your moonshot idea is so transformative that it instantly replaces your old income stream with a new one — but that is not what we are talking about here. The digital domain can help drive this progress. Crowdfunding platforms can be a powerful tool, even stronger in combination with crowdsourcing. Organizations should look inward and enable staff to effectively brainstorm concepts embracing social network best practices of collaboration. An intrapreneurial program that offers motivated employees the platform and resources to innovate can also be a great option, like Adobe’s and LinkedIn’s initiatives. In the age of information with a looming successor — the age of user experience — companies can quickly and easily curate an internal infrastructure to establish an innovation-friendly environment that provides a pipeline of potential products and ideas while mitigating risk. But a company doesn’t just have to look internally for innovation; external options also can be leveraged. One route is through investment, which is used by companies like to fund early-stage startups using direct corporate investments. Partnering with external accelerators or incubators is another option, and there are many doing interesting work in this space, like , , and . Think also about where the action is, e.g. hackathons. Tapping into developer communities and external knowledge pools provides additional resources. Partnering with startups or universities offers the ability to fill gaps in any organization’s established infrastructure, with the benefit of a targeted investment and faster time-to-market compared to building internally from the ground up. But be aware: The concept of partnering with another organization for development and manufacturing can be unsettling — especially within heavily competitive industries. The biggest threat in collaboration is the slow death of a project due to the everlasting “Not-Invented-Here” syndrome. Another excellent way, especially when dealing with multi-disciplinary products, is to transfer engineering processes into the virtual domain, starting with multi-physical simulations to reduce the need for physical prototypes. This eventually creates a holistic virtual engineering environment that enables collaboration, breaking location and time-zone barriers. Beyond all the tools, methods and processes we use to improve innovation in our organizations, execution is still the key. Focused execution and cutting-edge innovation are complementary. True innovation is an idea that becomes a successful product or implementation. This means you need to bring together a group of team players and individualists, subject matter specialists and system designers, technologists and product thinkers… you need to build a “strange team.” Dan Cable from London Business School summarizes it nicely in his latest book, These teams don’t only consist of internal team members. We recently partnered with Under Armour to provide athletes additional tools to work with as they train. The set target was to reduce the complexity of training gear by jointly developing highly accurate heart-rate sensing in ear headphones. This was not a licensing deal — but an innovation collaboration in its purest sense, and with Kevin Plank’s key talents involved throughout the full ideation, development and testing cycles. Either could have tackled such a project independently, but both parties concluded it would be better to take on a partner with experience in the space, alleviating risk, to develop the envisioned product. This innovation on Under Armour’s part now helps them extend the brand to our loyal consumers, and vice versa. These moments are transformational as you realize that innovation doesn’t have to stop at the company, customer or product level — innovation should be extended to all stakeholders and transform your company culture. One thing is fundamental though; the right to fail in innovation is healthy. If you provide your teams the opportunity to take risk, it induces excitement and motivation, but also helps create tangible results from people that feel accountable and want to deliver against all odds. Any of these steps can mitigate a considerable amount of the cost and risk attributed to successful innovation, because it is calculated risk distribution over a variety of work streams. Innovation can be truly ignited with a multi-layered approach — increasing focus and investment in R&D, collaborating with best-in-class organizations and pursuing strategic acquisitions. Though in recent years, iteration has become the new norm in corporations across industries, with innovative concepts being blocked in favor of steady profits from marginal upgrades. Innovation has become a task for startups, but there is nothing stopping an organization of any size from making use of all the tools out there to change this perception and behavior immediately. Let’s be fair; knowing what you do is one thing, is another — so keep trying new ways to foster innovation. Some attempts will fail, and some will be less efficient than others. But understand this: Innovation is not a function of engineering only, but a matter of culture.
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Xiaomi admits it doesn’t make money on smartphone hardware sales
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Darrell Etherington
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Xiaomi’s business model isn’t about selling handsets, except insofar as those handset sales lead to recurring service revenue later on. So said Xiaomi global VP and former Android VP Hugo Barra in an interview with . The executive for the device maker was commenting on a drop in its smartphone sales in China, explaining that they wouldn’t impact the company’s long-term profit growth. Barra explained that Xiaomi “could sell 10 billion smartphones and [the company] wouldn’t make a single dime in profits,” speaking to Reuters, adding that Xiaomi is essentially giving away its smartphones “without making any money,” because ultimately it “care[s] about the recurring revenue streams over many years” rather than immediate margins on hardware. Xiaomi is also focusing increasingly on other categories, including smart-home device sales, and, as suggested by Barra, revenue driven by software and services. Smartphone sales, once its core strength, dropped 12 percent globally last year, and IDC stats suggest its Q3 sales in China for the devices will be down 45 percent. The company doesn’t need to IPO or even raise funds privately, however, Barra told Reuters, and is looking forward to CES where it’s participating for the first time, and where it’ll unveil a new product. It sounds like Xiaomi’s approach has more in common with Amazon’s hardware strategy than with Apple’s, even though when it debuted it seemed poised to threaten the latter, especially in markets like China. Dwindling hardware sales also aren’t great for service revenue potential long-term, it’s worth noting, but Barra and Xiaomi are probably hoping other device categories and overall installed base can carry that weight regardless of smartphone device sales performance.
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