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June 16, 2019
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CXA, a health-focused digital insurance startup, raises $25M

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CXA Group, a Singapore-based startup that helps make insurance more accessible and affordable, has raised $25 million for expansion in Asia and later into Europe and North America.

The startup takes a unique route to insurance. Rather than going to consumers directly, it taps corporations to offer their employees health flexible options. That’s to say that instead of rigid plans that force employees to use a certain gym or particular healthcare, a collection over 1,000 programs and options can be tailored to let employees pick what’s relevant or appealing to them. The ultimate goal is to bring value to employees to keep them healthier and lower the overall premiums for their employers.

“Our purpose is to empower personalized choices for better living for employees,” CXA founder and CEO Rosaline Koo told TechCrunch in an interview. “We use data and tech to recommend better choices.”

The company is primarily focused on China, Hong Kong and Southeast Asia where it claims to works with 600 enterprises including Fortune 500 firms. The company has over 200 staff, and it has acquired two traditional insurance brokerages in China to help grow its footprint, gain requisite licenses and its logistics in areas such as health checkups.

We last wrote about CXA in 2017 when it raised a $25 million Series B, and this new Series C round takes it to $58 million from investors to date. Existing backers include B Capital, the BCG-backed fund from Facebook co-founder Eduardo Saverin, EDBI — the investment arm of the Singapore Economic Development Board — and early Go-Jek backer Openspace Ventures, and they are joined by a glut of big-name backers in this round.

Those new investors include a lot of corporates. There’s HSBC, Singtel Innov8 (of Singaporean telco Singtel), Telkom Indonesia MDI Ventures (of Indonesia telco Telkom), Sumitomo Corporation Equity Asia (Japanese trading firm) Muang Thai Fuchsia Ventures (Thailand-based insurance firm), Humanica (Thailand-based HR firm) and PE firm Heritas Venture Fund.

“There are additional insurance companies and strategic partners that we aren’t listing,” said Koo.

Rosaline Koo is founder and CEO of CXA Group

That’s a very deliberate selection of large corporates which is part of a new strategy to widen CXA audience.

The company had initially gone after massive firms — it claims to reach a collective 400,000 employees — but now the goal is to reach SMEs and non-Fortune 500 enterprises. To do that, it is using the reach and connections of larger service companies to reach their customers.

“We believe that banks and telcos can cross-sell insurance and banking services,” said Koo, who grew up in LA and counts benefits broker Mercer on her resume. “With demographic and work life event data, plus health data, we’re able to target the right banking and insurance services.

“We can help move them away from spamming,” she added. “Because we will have the right data to really target the right offering to the right person at the right time. No firm wants an agent sitting in their canteen bothering their staff, now it’s all digital and we’re moving insurance and banking into a new paradigm.”

The ultimate goal is to combat a health problem that Koo believes is only getting worse in the Asia Pacific region.

“Chronic disease comes here 10 years before anywhere else,” she said, citing an Emory research paper which concluded that chronic diseases in Asia are “rising at a rate that exceeds global increases.”

“There’s such a crying need for solutions, but companies can’t force the brokers to lower costs as employees are getting sick… double-digit increases are normal, but we think this approach can help drop them. We want to start changing the cost of healthcare in Asia, where it is an epidemic, using data and personalization at scale in a way to help the community,” Koo added.

Talking to Koo makes it very clear that she is focused on growing CXA’s reach in Asia this year, but further down the line, there are ambitions to expand to other parts of the world. Europe and North America, she said, may come in 2020.

Taxing your privacy

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Data collection through mobile tracking is big business and the potential for companies helping governments monetize this data is huge. For consumers, protecting yourself against the who, what and where of data flow is just the beginning. The question now is: How do you ensure your data isn’t costing you money in the form of new taxes, fees and bills?  Particularly when the entity that stands to benefit from this data — the government — is also tasked with protecting it?

The advances in personal data collection are a source of growing concern for privacy advocates, but whereas most fears tend to focus on what type of data is being collected, who’s watching and to whom is your data being sold, the potential for this same data to be monetized via auditing and compliance fees is even more problematic.

The fact is, you don’t need massive infrastructure to now track/tax businesses and consumers. State governments and municipalities have taken notice.

The result is a potential multi-billion dollar per-year business that, with mobile tracking technology, will only grow exponentially year over year.

Yet, while the revenue upside for companies helping smart cities (and states) with taxing and tolling is significant, it is also rife with contradictions and complications that could, ultimately, pose serious problems to those companies’ underlying business models and for the investors that bet heavily on them.

Photo courtesy of Getty Images/chombosan

The most common argument when privacy advocates bring up concerns around mobile data collection is that consumers almost always have the control to opt out. When governments utilize this data, however, that option is not always available. And the direct result is the monetization of a consumer’s privacy in the form of taxes and tolls. In an era where states like California and others are stepping up as self-proclaimed defenders of citizen privacy and consent, this puts everyone involved in an awkward position — to say the least.

The marriage of smart cities and next-gen location tracking apps is becoming more commonplace.  AI, always-on data flows, sensor networks and connected devices are all being employed by governments in the name of sustainable and equitable cities as well as new revenue.

New York, LA and Seattle are all implementing (or considering implementing) congestion pricing that would ultimately rely on harvesting personal data in some form or another. Oregon, which passed the first gas tax in 1919, began it’s OreGo Program two years ago utilizing data that measured miles driven to levy fees on drivers so as to address infrastructure issues with its roads and highways.

Image Courtesy of Shutterstock

As more state and local governments look to emulate these kinds of policies the revenue opportunity for companies and investors harvesting this data is obvious.  Populus, (and a portfolio company) a data platform that helps cities manage mobility, captures data from fleets like Uber and Lyft to help cities set policy and collect fees.

Similarly, ClearRoad  is a “road pricing transaction processor” that leverages data from vehicles to help governments determine road usage for new revenue streams.  Safegraph, on the other hand, is a company that daily collects millions of trackers from smartphones via apps, APIs and other delivery methods often leaving the business of disclosure up to third parties. Data like this has begun to make its way into smart city applications which could impact industries as varied as the real estate market to the Gig Economy.

“There are lots of companies that are using location technology, 3D scanning, sensor tracking and more.  So, there are lots of opportunities to improve the effectiveness of services and for governments to find new revenue streams,” says Paul Salama, COO of ClearRoad . “If you trust the computer to regulate, as opposed to the written code, then you can allow for a lot more dynamic types of regulation and that extends beyond vehicles to noise pollution, particulate emissions, temporary signage, etc.”

While most of these platforms and technologies endeavor to do some public good by creating the baseline for good policy and sustainable cities they also raise concerns about individual privacy and the potential for discrimination.  And there is an inherent contradiction for states ostensibly tasked with curbing the excesses of data collection then turning around and utilizing that same data to line the state’s coffers, sometimes without consent or consumer choice.

Image courtesy Bryce Durbin

“People care about their privacy and there are aspects that need to be hashed out”, says Salama. “But we’re talking about a lot of unknowns on that data governance side.  There’s definitely going to be some sort of reckoning at some point but it’s still so early on.”

As policy makers and people become more aware of mobile phone tracking and the largely unregulated data collection associated with it, the question facing companies in this space is how to extract all this societally beneficial data while balancing that against some pretty significant privacy concerns.

“There will be options,” says Salama.  “An example is Utah which, starting next year, will offer electric cars the option to pay a flat fee (for avoiding gas taxes) or pay-by-the-mile.  The pay-by-the-mile option is GPS enabled but it also has additional services, so you pay by your actual usage.”

Ultimately, for governments, regulation plus transparency seems the likeliest way forward.

Image courtesy Getty Images

In most instances, the path to the consumer or tax payer is either through their shared economy vehicle (car, scooter, bike, etc.) or though their mobile device.  While taxing fleets is indirect and provides some measure of political cover for the governments generating revenue off of them, there is no such cover for directly taxing citizens via data gathered through mobile apps.

The best case scenario to short circuit these inherent contradictions for governments is to actually offer choice in the form of their own opt-in for some value exchange or preferred billing method, such as Utah’s opt-in as an alternative way to pay for road use vs. gas tax.   It may not satisfy all privacy concerns, particularly when it is the government sifting through your data, but it at least offers a measure of choice and a tangible value.

If data collection and sharing were still mainly the purview of B2B businesses and global enterprises, perhaps the rising outcry over the methods and usage of data collection would remain relatively muted. But as data usage seeps into more aspects of everyday life and is adopted by smart cities and governments across the nation questions around privacy will invariably get more heated, particularly when citizen consumers start feeling the pinch in their wallet.

As awareness rises and inherent contradictions are laid bare, regulation will surely follow and those businesses not prepared may face fundamental threats to their business models that ultimately threaten their bottom line.

Dreaming of Mars, the startup Relativity Space gets its first launch site on Earth

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3D-printing the first rocket on Mars.

That’s the goal Tim Ellis and Jordan Noone set for themselves when they founded Los Angeles-based Relativity Space in 2015.

At the time they were working from a WeWork in Seattle, during the darkest winter in Seattle history, where Ellis was wrapping up a stint at Blue Origin . The two had met in college at USC in their jet propulsion lab. Noone had gone on to take a job at SpaceX and Ellis at Blue Origin, but the two remained in touch and had an idea for building rockets quickly and cheaply — with the vision that they wanted to eventually build these rockets on Mars.

Now, more than $35 million dollars later, the company has been awarded a multi-year contract to build and operate its own rocket launch facilities at Cape Canaveral Air Force Station in Florida.

That contract, awarded by The 45th Space Wing of the Air Force, is the first direct agreement the U.S. Air Force has completed with a venture-backed orbital launch company that wasn’t also being subsidized by billionaire owner-operators.

By comparison, Relativity’s neighbors at Cape Canaveral are Blue Origin (which Jeff Bezos has been financing by reportedly selling $1 billion in shares of Amazon stock since 2017); SpaceX (which has raised roughly $2.5 billion since its founding and initial capitalization by Elon Musk); and United Launch Alliance, the joint venture between the defense contracting giants Lockheed Martin Space Systems and Boeing Defense.

Like the other launch sites at Cape Canaveral, Launch Complex 16, where Relativity expects to be launching its first rockets by 2020, has a storied history in the U.S. space and missile defense program. It was used for Titan missile launches, the Apollo and Gemini programs and Pershing missile launches.

From the site, Relativity will be able to launch its first designed rocket, the Terran 1, which is the only fully 3D-printed rocket in the world.

That rocket can carry a maximum payload of 1,250 kilograms to a low earth orbit of 185 kilometers above the Earth. Its nominal payload is 900 kilograms of a Sun-synchronous orbit 500 kilometers out, and it has a 700 kilogram high-altitude payload capacity to 1,200 kilometers in Sun-synchronous orbit. Relativity prices its dedicated missions at $10 million, and $11,000 per kilogram to achieve Sun-synchronous orbit.

If the company’s two founders are right, then all of this launch work Relativity is doing is just a prelude to what the company considers to be its real mission — the advancement of manufacturing rockets quickly and at scale as a test run for building out manufacturing capacity on Mars.

“Rockets are the business model now,” Ellis told me last year at the company’s offices at the time, a few hundred feet from SpaceX. “That’s why we created the printing tech. Rockets are the largest, lightest-weight, highest-cost item that you can make.”

It’s also a way for the company to prove out its technology. “It benefits the long-term mission,” Ellis continued. “Our vision is to create the intelligent automated factory on Mars… We want to help them to iterate and scale the society there.”

Ellis and Noone make some pretty remarkable claims about the proprietary 3D printer they’ve built and housed in their Inglewood offices. Called “Stargate,” the printer is the largest of its kind in the world and aims to go from raw materials to a flight-ready vehicle in just 60 days. The company claims that the speed with which it can manufacture new rockets should pare down launch timelines by somewhere between two and four years.

Another factor accelerating Relativity’s race to market is a long-term contract the company signed last year with NASA for access to testing facilities at the agency’s Stennis Space Center on the Mississippi-Louisiana border. It’s there, deep in the Mississippi delta swampland, that Relativity plans to develop and quality control as many as 36 complete rockets per year on its 25-acre space.

All of this activity helps the company in another segment of its business: licensing and selling the manufacturing technology it has developed.

“The 3D factory and automation is the other product, but really that’s a change in emphasis,” says Ellis. “It’s always been the case that we’re developing our own metal 3D printing technology. Not only can we make rockets. If the long-term mission is 3D printing on Mars, we should think of the factory as its own product tool.”

Not everyone agrees. At least one investor I talked to said that in many cases, the cost of 3D printing certain basic parts outweighs the benefits that printing provides.

Still, Relativity is undaunted.

But first, the company — and its competitors at Blue Origin, SpaceX, United Launch Alliance and the hundreds of other companies working on launching rockets into space again — need to get there. For Relativity, the Canaveral deal is one giant step for the company, and one great leap toward its ultimate goal.

“This is a giant step toward being a launch company,” says Ellis. “And it’s aligned with the long-term vision of one day printing on Mars.”

Apple plans major US expansion including a new $1 billion campus in Austin

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Apple has announced a major expansion that will see it open a new campus in North Austin and open new offices in Seattle, San Diego and Los Angeles as it bids to increase its workforce in the U.S. The firm said it intends also to significantly expand its presence in Pittsburgh, New York and Boulder, Colorado over the next three years.

The Austin campus alone will cost the company $1 billion, but Apple said that the 133-acre space will generate an initial 5,000 jobs across a broad range of roles with the potential to add 10,000 more. The company claims to have 6,200 employees in Austin — its largest enclave outside of Cupertino — and it said that the addition of these new roles will make it the largest private employer in the city.

Beyond a lot of new faces, the new campus will include more than 50 acres of open space and — as is standard with Apple’s operations these days — it will run entirely on renewable energy.

Apple already has 6,200 employees in Austin, but its new campus could add up to 15,000 more

The investment was lauded by Texas Governor Greg Abbott.

“Their decision to expand operations in our state is a testament to the high-quality workforce and unmatched economic environment that Texas offers. I thank Apple for this tremendous investment in Texas, and I look forward to building upon our strong partnership to create an even brighter future for the Lone Star State,” he said in a statement shared by Apple.

But Austin isn’t the only focal point for Apple growth in the U.S.

Outside of the Austin development, the iPhone-maker plans to expand to over 1,000 staff Seattle, San Diego and LA over the next three years, while adding “hundreds” of staff in Pittsburgh, New York, Boulder, Boston and Portland, Oregon.

More broadly, Apple said it added 6,000 jobs to its U.S. workforce this year to take its total in the country to 90,000. It said it remains on track to create 20,000 new jobs in the U.S. by 2023.

With new tech coming online, cities need a department of urban testing

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The design and operation of cities is the province of urban planning. But an explosion of startups in cities means a lot of new products and services for urban areas. The problem is, we don’t really know how people are going to use these new products and services.

“The company launched a trial service in Santa Monica just last year and when I first saw the scooters (parked literally outside of our office) I was convinced nobody would want to ride them…The volume grew so steadily that I finally hopped on one, rode down to Bird’s offices and pleaded with Travis to take money from us. I had literally never seen a consumer phenomenon take off so quickly,” says Mark Suster in All The Questions You Wanted Answered about Bird Scooters and Their Recent $300 Million Funding.

There is no doubt Santa Monica scooter usage has benefited from a significant investment in bike lanes, as you can see from this map. If you doubt this, take a look at what happens as you travel a little outside of Santa Monica, where bike infrastructure doesn’t exist. Scooter riders take to sidewalks, just as they do on bikes. (I suspect data would also reveal less usage in these areas and that there are a lot of complaints in these areas about the scooters.)

Adapting To New Behavior

Just four-and-a-half years ago, people were stunned by the then huge valuation of Uber at over $3.5b. It took Uber just over four years to get to that valuation. Now Uber is acquiring electric, dockless bike companies and investing in shared scooters, as they dial back their self-driving activities. The chart below explains why.

The practice of sharing rides came out of nowhere five years ago, and two years ago, docked bikeshare seemed to be rewriting what was possible with on-demand transportation. (Let’s see if/where scooters show up in Q1:19.) It’s hard to appreciate the impact of these new mobility models until you look at them against some well-established existing modes of transportation like taxis and car rentals. These industries trace their roots back to the explosion of the automobile with Model T’s a century ago and to when entrepreneurial companies like Hertz decided taxis should be yellow to enhance their visibility for hailing. (And yes, that’s the same yellow Hertz car rental sign.) As the chart below shows, these 100-year-old industries are rapidly melting away in the face of on-demand competition.

Revisiting City Planning

What does this mean for city planners? For a very long time in the US, cars have so dominated public spaces that we’ve mostly focused on parking and roads. e forget that companies lobbied for the car – they hadn’t always dominated public spaces, and now cities around the world are steadily pushing back. With new mobility options come new corporate alliances.

“San Francisco has more than 250,000 on-street parking spaces for “dockless” cars, so why does the addition of a few thousand dockless scooters spark such a heated debate?” says Roelof Botha, who is also an investor in Bird.

Parking for small shared EVs is just the start. What about the impact of last-mile options on public transit usage? Lyft’s “friends with transit” policy could be viewed cynically as a way to win favor with regulators, but last-mile trends are also playing out with smaller on-demand vehicles. In Germany, DB figured out the relationship between bikes and transit more than 10 years ago with the first dockless shared bikes, and the massive bike parking infrastructure connected to Dutch transit.

In the city most associated with car culture, you can now stop by any Metro station along the Expo Line in LA and see a growing number of bikes and scooters. Is this associated with an increase in transit usage? Is this another reason to sort out parking for small, last-mile vehicles? With more venture dollars in the mix, there are now strong alliances seeking to test new approaches.

Maybe We Just Forgot History

Just before cars finally took over most public spaces for transportation, there were more public transit options provided by some weirdly familiar looking vehicles. You can almost see how this 1922 Austro Motorette would eventually be given a seat to become the more familiar looking Vespa.

There are some important differences now. Electric vehicles need new charging infrastructure, which has led to debates about who will pay for it. On the other hand, scooter-sharing companies have learned infrastructure doesn’t need to look like charging stations. Small vehicles can have their batteries swapped out (as with the scooter- share Coup) or companies can offer incentives to people to take vehicles home to charge (and then return them). Electric vehicles will  continue to drop in price as the main cost – batteries – become cheaper. Finally, shared vehicles have never been more available, and electric scooters are almost 100x cheaper than cars. What happens to behavior when availability is so high that it doesn’t require you to leave your block to find a vehicle.

Bad Old Assumptions

It seems inevitable that AVs will replace drivers at some point. While we wait for the takeover, there are some approaches we can take to improve safety. Unfortunately, some of these seem to have unintended negative consequences. Growing up I used to visit Zimbabwe, where speed bumps were called “sleeping policemen” because it was believed that they caused drivers to slow down and obey posted speed limits. But data from a recent NYU and Urban Us portfolio company Dash, reveal that “drivers have a tendency to accelerate quickly after traffic calming infrastructure like speed bumps, which can lead to dangerous situations for pedestrians.” This is potentially a new issue as more drivers discover previously quieter streets via navigation apps and it should still force us to revisit how we try to manage drivers who are going too fast.

Beyond Mobility

With NYC’s L train shutting down in 2019, people have started to plan their housing options and new commutes to and from Manhattan. The city has responded by saying they will add additional ferries and CitiBikes. But is there a way to add more options quickly? How might they fare in the winter? It’s hard to know, but the consequences go far beyond mobility to impact everything from restaurants to residential real estate.

Mobility ultimately has lot of consequences for real estate. Are people going to live in smaller private spaces in exchange for better shared amenities? Will they use robotic furniture to get more from smaller spaces? What might cause homeowners to purchase backup power in the form of a home battery system? How will this impact the grid? Will people be OK sharing sidewalks with delivery robots?

With so many questions about how our behavior will change, we need to find better, faster ways to test new solutions. Maybe alongside Departments of Urban Planning, we need  Departments of Urban Testing.

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