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July 18, 2018
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China

Google launches its first WeChat mini program as its China experiments continue

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Google is continuing to test new strategies in China after the U.S. search giant released its first mini program for WeChat, the country’s hugely popular messaging app.

WeChat is used by hundreds of millions of Chinese people daily for services that stretch beyond chat to include mobile payments, bill paying, food delivery and more. Tencent, the company that operates WeChat, added mini programs last year and they effectively operate like apps that are attached to the service. That means that users bypass Google Play or Apple’s App Store and install them from WeChat.

Earlier this year, Tencent added support for games — “mini games” — and the Chinese firm recently said that over one million mini programs have been created to date. Engagement is high, with some 500 million WeChat users interacting with at least one each month.

WeChat has become the key distribution channel in China and that’s why Google is embracing it with its first mini program — 猜画小歌, a game that roughly translates to ‘Guess My Sketch.’ There’s no English announcement but the details can be found in this post on Google’s Chinese blog, which includes the QR code to scan to get the game.

The app is a take on games like Zynga’s Draw Something, which puts players into teams to guess what the other is drawing. Google, however, is adding a twist. Each player teams up with an AI and then battles against their friends and their AIs. You can find an English version of the game online here.

Google’s first WeChat mini program is a sketching game that uses AI

The main news here isn’t the game, of course, but that Google is embracing mini programs, which have been christened as a threat to the Google Play Store itself.

‘When in China… play by local rules’ and Google has taken that to heart this year.

The company recently introduced a Chinese version of its Files Go Android device management app which saw it join forces with four third-party app stores in China in order to gain distribution. This sketching game has lower ambitions but, clearly, it’ll be a learning experience for Google that might prompt it to introduce more significant apps or services via WeChat in the future.

Indeed, Google has been cozying up to Tencent lately after inking a patent deal with the Chinese internet giant, investing in its close ally JD.com and combining on investment deals together, including biotech startup XtalPi.

That’s one side of a new initiative to be more involved in China, where it has been absent since 2010 after redirecting its Chinese search service to Hong Kong in the face of government pressure. In other moves, it has opened an AI lab in Beijing and a more modest office in Shenzhen while it is bringing its startup demo day event to China for the first time with a Shanghai event in September.

Finally, in a touch of irony, Google’s embrace of WeChat’s ‘app store-killing’ mini programs platform comes just hours before the EU is expected to levy a multibillion-euro penalty onit for abusing its dominant position on mobile via Android.

News Source = techcrunch.com

WeWork’s biggest rival in China is on an acquisition spree

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WeWork may have combined forces with its fiercest rival in China, Naked Hub, in a recent merger, but its new enemy numero uno in the country is also building up a roster of friends through aggressive M&A.

Ucommune may not be spending the kind of cash WeWork China did — it reportedly spent $400 million to get Naked Hub — but it is quietly picking up smaller rivals via acquisitions. Last week, it completed its fourth piece of M&A of the past year with a deal to buy Workingdom for 300 million RMB, or roughly $45 million.

Two-year-old Workingdom offers working spaces in Shanghai, and online services that help SMEs and multinationals growth their businesses.

An acquisition spree from Ucommune — which was forced to rebrand from UrWork following a lawsuit from WeWork — has seen it snap up lesser but strategic players Wedo, Woo Space and New Space to boost its presence and rival WeWork. All told, and thanks to these deals, Ucommune claims to operate 60 offices in Beijing, 20 more in Shanghai and a significant presence in Guangdong, Macau and Hong Kong.

In comparison, Naked Hub says it has 10,000 members across its 24 office locations while WeWork says it has 10,000 members in 13 locations in Greater China. The U.S. firm plans to grow its reach to 40 offices by the end of this year, a move that it says will quadruple its membership numbers in China to 40,000.

Those numbers explain why the acquisition deals aren’t likely to stop any time soon for Ucommune.

The Chinese he company said in its latest announcement that it will “continue to acquire more co-working companies to grow its global footprint.” Currently, its presence outside of China includes New York and Singapore, but it is clearly exploiting the bursting of the co-working bubble which initially attracted a huge number of companies to the space, particularly in China.

Inside a Ucommune space

Ucommune last raised money when it closed a $17 million round at a valuation of 9 billion RMB ($1.4 billion) in February 2018. Post-acquisitions, the company said that it plans to return to private investors with the goal of raising further capital at an enhanced valuation of 11 billion RMB, or $1.65 billion.

That’s some way short of WeWork’s gargantuan figures. The company has raised capital at a valuation of $20 billion, while newer reports suggest the figure has ballooned to $35 billion in its latest quest for additional financing, but the continued efforts of Ucommune will give WeWork food for thought in China.

News Source = techcrunch.com

3D printed guns are now legal… What’s next?

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On Tuesday, July 10, the DOJ announced a landmark settlement with Austin-based Defense Distributed, a controversial startup led by a young, charismatic anarchist whom Wired once named one of the 15 most dangerous people in the world.

Hyper-loquacious and media-savvy, Cody Wilson is fond of telling any reporter who’ll listen that Defense Distributed’s main product, a gun fabricator called the Ghost Gunner, represents the endgame for gun control, not just in the US but everywhere in the world. With nothing but the Ghost Gunner, an internet connection, and some raw materials, anyone, anywhere can make an unmarked, untraceable gun in their home or garage. Even if Wilson is wrong that the gun control wars are effectively over (and I believe he is), Tuesday’s ruling has fundamentally changed them.

At about the time the settlement announcement was going out over the wires, I was pulling into the parking lot of LMT Defense in Milan, IL.

LMT Defense, formerly known as Lewis Machine & Tool, is as much the opposite of Defense Distributed as its quiet, publicity-shy founder, Karl Lewis, is the opposite of Cody Wilson. But LMT Defense’s story can be usefully placed alongside that of Defense Distributed, because together they can reveal much about the past, present, and future of the tools and technologies that we humans use for the age-old practice of making war.

The legacy machine

Karl Lewis got started in gunmaking back in the 1970’s at Springfield Armory in Geneseo, IL, just a few exits up I-80 from the current LMT Defense headquarters. Lewis, who has a high school education but who now knows as much about the engineering behind firearms manufacturing as almost anyone alive, was working on the Springfield Armory shop floor when he hit upon a better way to make a critical and failure-prone part of the AR-15, the bolt. He first took his idea to Springfield Armory management, but they took a pass, so he rented out a small corner in a local auto repair ship in Milan, bought some equipment, and began making the bolts, himself.

Lewis worked in his rented space on nights and weekends, bringing the newly fabricated bolts home for heat treatment in his kitchen oven. Not long after he made his first batch, he landed a small contract with the US military to supply some of the bolts for the M4 carbine. On the back of this initial success with M4 bolts, Lewis Machine & Tool expanded its offerings to include complete guns. Over the course of the next three decades, LMT grew into one of the world’s top makers of AR-15-pattern rifles for the world’s militaries, and it’s now in a very small club of gunmakers, alongside a few old-world arms powerhouses like Germany’s Heckler & Koch and Belgium’s FN Herstal, that supplies rifles to US SOCOM’s most elite units.

The offices of LMT Defense, in Milan, Ill. (Image courtesy Jon Stokes)

LMT’s gun business is built on high-profile relationships, hard-to-win government contracts, and deep, almost monk-like know-how. The company lives or dies by the skill of its machinists and by the stuff of process engineering — tolerances and measurements and paper trails. Political connections are also key, as the largest weapons contracts require congressional approval and months of waiting for political winds to blow in this or that direction, as countries to fall in and out of favor with each other, and paperwork that was delayed due to a political spat over some unrelated point of trade or security finally gets put through so that funds can be transfered and production can begin.

Selling these guns is as old-school a process as making them is. Success in LMT’s world isn’t about media buys and PR hits, but about dinners in foreign capitals, range sessions with the world’s top special forces units, booths at trade shows most of us have never heard of, and secret delegations of high-ranking officials to a machine shop in a small town surrounded by corn fields on the western border of Illinois.

The civilian gun market, with all of its politics- and event-driven gyrations of supply and demand, is woven into this stable core of the global military small arms market the way vines weave through a trellis. Innovations in gunmaking flow in both directions, though nowadays they more often flow from the civilian market into the military and law enforcement markets than vice versa. For the most part, civilians buy guns that come off the same production lines that feed the government and law enforcement markets.

All of this is how small arms get made and sold in the present world, and anyone who lived through the heyday of IBM and Oracle, before the PC, the cloud, and the smartphone tore through and upended everything, will recognize every detail of the above picture, down to the clean-cut guys in polos with the company logo and fat purchase orders bearing signatures and stamps and big numbers.

The author with LMT Defense hardware.

Guns, drugs, and a million Karl Lewises

This is the part of the story where I build on the IBM PC analogy I hinted at above, and tell you that Defense Distributed’s Ghost Gunner, along with its inevitable clones and successors, will kill dinosaurs like LMT Defense the way the PC and the cloud laid waste to the mainframe and microcomputer businesses of yesteryear.

Except this isn’t what will happen.

Defense Distributed isn’t going to destroy gun control, and it’s certainly not going to decimate the gun industry. All of the legacy gun industry apparatus described above will still be there in the decades to come, mainly because governments will still buy their arms from established makers like LMT. But surrounding the government and civilian arms markets will be a brand new, homebrew, underground gun market where enthusiasts swap files on the dark web and test new firearms in their back yards.

The homebrew gun revolution won’t create a million untraceable guns so much as it’ll create a hundreds of thousands of Karl Lewises — solitary geniuses who had a good idea, prototyped it, began making it and selling it in small batches, and ended up supplying a global arms market with new technology and products.

In this respect, the future of guns looks a lot like the present of drugs. The dark web hasn’t hurt Big Pharma, much less destroyed it. Rather, it has expanded the reach of hobbyist drugmakers and small labs, and enabled a shadow world of pharmaceutical R&D that feeds transnational black and gray markets for everything from penis enlargement pills to synthetic opioids.

Gun control efforts in this new reality will initially focus more on ammunition. Background checks for ammo purchases will move to more states, as policy makers try to limit civilian access to weapons in a world where controlling the guns themselves is impossible.

Ammunition has long been the crack in the rampart that Wilson is building. Bullets and casings are easy to fabricate and will always be easy to obtain or manufacture in bulk, but powder and primers are another story. Gunpowder and primers are the explosive chemical components of modern ammo, and they are difficult and dangerous to make at home. So gun controllers will seize on this and attempt to pivot to “bullet control” in the near-term.

Ammunition control is unlikely to work, mainly because rounds of ammunition are fungible, and there are untold billions of rounds already in civilian hands.

In addition to controls on ammunition, some governments will also make an effort at trying to force the manufacturers of 3D printers and desktop milling machines (the Ghost Gunner is the latter) to refuse to print files for gun parts.

This will be impossible to enforce, for two reasons. First, it will be hard for these machines to reliably tell what’s a gun-related file and what isn’t, especially if distributors of these files keep changing them to defeat any sort of detection. But the bigger problem will be that open-source firmware will quickly become available for the most popular printing and milling machines, so that determined users can “jailbreak” them and use them however they like. This already happens with products like routers and even cars, so it will definitely happen with home fabrication machines should the need arise.

Ammo control and fabrication device restrictions having failed, governments will over the longer term employ a two-pronged approach that consists of possession permits and digital censorship.

Photo courtesy of Getty Images: Jeremy Saltzer / EyeEm

First, governments will look to gun control schemes that treat guns like controlled substances (i.e. drugs and alchohol). The focus will shift to vetting and permits for simple possession, much like the gun owner licensing scheme I outlined in Politico. We’ll give up on trying to trace guns and ammunition, and focus more on authorizing people to possess guns, and on catching and prosecuting unauthorized possession. You’ll get the firearm equivalent of a marijuana card from the state, and then it won’t matter if you bought your gun from an authorized dealer or made it yourself at home.

The second component of future gun control regimes will be online suppression, of the type that’s already taking place on most major tech platforms across the developed world. I don’t think DefCad.com is long for the open web, and it will ultimately have as hard a time staying online as extremist sites like stormfront.org.

Gun CAD files will join child porn and pirated movies on the list of content it’s nearly impossible to find on big tech platforms like Facebook, Twitter, Reddit, and YouTube. If you want to trade these files, you’ll find yourself on sites with really intrusive advertising, where you worry a lot about viruses. Or, you’ll end up on the dark web, where you may end up paying for a hot new gun design with a cryptocurrency. This may be an ancap dream, but won’t be mainstream or user-friendly in any respect.

As for what comes after that, this is the same question as the question of what comes next for politically disfavored speech online. The gun control wars have now become a subset of the online free speech wars, so whatever happens with online speech in places like the US, UK, or China will happen with guns.

News Source = techcrunch.com

A new $124 million for Brazil’s Movile proves that investors still see promise in Latin American tech

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Brazil’s macroeconomic picture may be gloomy, but technology investors still see hope in the nation’s burgeoning technology sector — and a recent $124 million financing for the mobile conglomerate Movile is the latest proof that that the pace of investment isn’t slowing down.

Brazil was already the hottest spot for technology investment throughout Latin America — with Sao Paulo drawing in the majority of the record-breaking $1 billion in financing that the region’s startups attracted in 2017. And with this latest funding for Movile, led by Naspers, that trend looks likely to continue.

Indeed, Naspers investments in Movile (supplemented by co-investors like Innova, which participated in the most recent round) have been one of the driving forces sustaining the Brazilian startup community. In all, the South African technology media and investment conglomerate has invested $375 million into Movile over the course of several rounds that likely value the company at close to $1 billion.

Another Brazilian tech company, the financial services giant Nubank, has raised around $528 million (according to Crunchbase) and is valued at roughly $2 billion, putting it squarely in the “unicorn club”, as the Latin American Venture Capital Association noted, earlier this year.

Both chief executive Fabricio Bloisi and a spokesperson from Naspers declined to comment on Movile’s valuation. “My dream is not to become a unicorn my dream is to become much bigger than that,” Bloisi said in an interview.

Nubank and Movile are the two most recent privately held independent companies to achieve or approach unicorn status in Brazil, but they’re not alone in reaching or approaching the billion dollar threshold in Latin America. MercadoLibre was an early runaway success for the region (hailing from Argentina) and the ride hailing service 99Taxis was acquired by the Chinese ride-hailing behemoth Didi for a roughly $1 billion dollar valuation last year.

All of this points to an appetite for Latin American tech that Movile is hoping it can seize upon with its new $124 million in financing.

The company is looking to expand its food delivery business iFood, its payment company, Zoop, and its ticketing platform, Sympla.

Both Movile and Naspers look to Chinese companies as their model and inspiration for growth, with Bloisi saying that he’s eyeing the eventual public offering for Meituan — the Chinese online retailer as the company to emulate in the market these days.

“The Chinese companies are doing extremely well and Movile is very similar to a Chinese company,” says Bloisi. And the company’s buy and build strategy certainly mirrors that of a tech business in the world’s largest emerging market economy moreso than it does a typical U.S. startup.

That extends to Movile’s investment in the tech ecosystem in its native Brazil and the broader Latin American region. Already the company boasts 150 million users per month across its application ecosystem. Through on-click payment services provided by Zoop, Movile offers a WePay and WeChat like experience for buyers in Latin America, Bloisi said.

It’s a playbook that the company’s backers have run before — with WeChat. Naspers came to prominence and untold riches by being an early backer of Tencent who’s WeChat and WePay applications have become the backbone of mobile commerce in China.

Now it’s looking to replicate that with Movile in Brazil and beyond. Like its Chinese counterparts, Movile is more than just one of the largest startup companies in the Brazilian ecosystem… it’s also a big investor. Indeed, subsidiaries like iFood began as small investments the company made in promising businesses.

It was with its last $82 million round of financing from Naspers and other co-investors that Movile backed Mercadoni, a Colombian grocery business, and its payment services play in Brazil — Zoop (which is one of the company’s main areas of interest going forward).

For Bloisi, that future outlook seems pretty bright. “Our confidence is extremely high,” he says of the recent financing. “For me it’s an indicator that things are growing. There was a hot moment in Latin America in 2010-2012. Then there was a recession, now while Movile is raising more there are also many more players,” who are coming to market with convincing offerings for investors. 

Movile itself isn’t afraid to let its checkbook do the talking for it when it comes to confidence in the market for online retail and commerce in Brazil. Bloisi estimates that his company has made nearly 35 transactions over the past few years, and will continue to invest heavily in the sector.

“Many of our business are growing at over 100% per year,” Bloisi said.

Investors like Martin Tschopp the chief executive of Naspers can’t complain about that kind of growth across multiple business units.

As the executive said in a satement:

“Naspers has been a long-term partner of Movile because of its ability to build transformative mobile businesses in Latin America and beyond. Movile has great expertise in identifying high-potential companies in consumer segments with opportunity for massive growth, including food delivery with iFood, which is why we continue to support the company.”

That sentiment, an optimism about the future of technology enabled businesses in Brazil and the broader Latin American region has captured investors’ imagination from billionaire backed offices like the Russian investment firm DST and large multinational U.S.-based players like Goldman Sachs.

As HIllel Moerman, head of Goldman’s private capital investment group told The Financial Times, “The [venture capital] ecosystem is still nascent compared to the US and other international markets — therefore there is a large opportunity for start-ups.”

Beyond the relative maturity of the venture community, there are macroeconomic forces at play that continue to make the Brazilian market attractive.

“Brazil has a large market, a pretty tech savvy population with attractive demographics and decent engineering and computing talent. You have all the right ingredients for an ecosystem to develop,” Tom Stafford, an investor with DST Global, told the British paper in an interview.

 

News Source = techcrunch.com

Aspire Capital offers fast finance for SMEs in Southeast Asia

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Southeast Asia’s digital economy is tipped to grow more than six-fold to reach more than $200 billion per year, according to a report co-authored by Google, with e-commerce accounting for the dominant share. The emergence of e-commerce platforms like Alibaba’s Lazada and U.S.-listed Shopee have enabled online entrepreneurship across the region, but still financial support for online sellers, who are basically SMEs, is lagging.

That’s where Singapore-based Aspire Capital, a six-month-old organization focused on speedy SME lending, is hoping to make a difference.

The company certainly has opportunity. With a cumulative population of over 600 million consumers and a rising middle class, Southeast Asia is increasingly an attractive market for businesses of all kind, and online companies in particular. Chinese giants Alibaba and Tencent have long devoted significant resources to the region where, like India, they see significant growth potential. E-commerce is the clear winner, in terms of size, with the e-Conomy SEA report — a joint research project between Google and Singapore sovereign fund Temasek — forecasting e-commerce revenue will hit $88 billion by 2025 from $10.9 billion in 2017.

Data from the e-Conomy SEA report

The crux of its problem is that online sellers who use Lazada, Shopee or other platforms that are forgoing profit in order to grow, are ironically less able to scale their business since there are few ‘e-commerce friendly’ financing options.

That problem became apparent to Aspire founder and CEO Andrea Baronchelli during a four-year stint with Lazada Singapore where, as CMO, he identified a financing disconnect for Lazada merchants.

“I saw the problem while trying to rally small businesses trying to grow in the digital economy,” Baronchelli told TechCrunch in an interview.

“The problem is really about providing working capital to small business owners. We started with online sellers, but we have expanded a bit as we see demand. There are 65 million small businesses in Southeast Asia, that’s ten times more than the U.S. so we see so much potential,” he added.

Aspire founder and CEO Andrea Baronchelli pictured while at Lazada

Today, Aspire Capital covers Singapore where it has expanded beyond e-commerce merchants to cover other things of SMEs who seek loans, primarily for working capital as Baronchelli explains. So far, he added, it has served loans to over 100 businesses. Typically, its spread goes from as low as SG$5,000 to up to SG$100,000, that’s around $3,600-$73,500 in U.S. terms.

The company was founded in early 2018 and already it has done plenty. It was part of the Y Combinator Winter 2018 cohort and it has closed a $9 million seed round to kick its business off with the working capital that it needs itself.

That round included a range of investors such as Europe-based Hummingbird, New York’s Mark II Capital, ex-Sequoia partner Yinglan Tan’s Insignia Ventures Partners and Y Combinator.

The principle behind the business is to make business financing quick and simple, Baronchelli said.

So rather than stacks of paperwork, SME owners fill out online forms and get a response the same day. Large parts of the application and review process are automated using a proprietary risk assessment engine, but Baronchelli said that ultimately a human makes the final call on whether to accept the application or not.

“We want to really be fast,” Baronchelli explained. “SMEs need quick decisions, they cannot wait three months for a bank. They need super quick, fast and no paperwork.”

The application process for companies seeking loans from Aspire Capital

He paints an example of online merchants who typically buy inventory from China which is sold customers within three to six months. If the business has a track record, it can take a loan to increase its stock and grow its revenues and profit, he explained.

Singapore may be a key market in Southeast Asia, but with a population of just over five million expansion is top of mind for Aspire. Baronchelli said he is doing due diligence on the first market expansion which he expects will happen before the end of this year. He expects that the business will raise further capital, perhaps towards the tail end of this year, which would be used to expand more aggressively across Southeast Asia in 2019.

He is also occupied building out the team. Right now, Aspire has ten people but he is keen to bring in ten to fifteen more staff, particularly on the tech side of the business.

News Source = techcrunch.com

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