December 12, 2018

Huawei, Google, and the tiring politics of tech

The defining question of the 21st century is pretty simple: who owns what? Who owns the telecommunications infrastructure that powers our mobile devices? Who owns the OS that powers those devices? Who owns our data?

Today, we see these intersecting arcs with two prominent tech leaders mired in legal and political processes.

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In Canada, we have day three(!) of the bail hearing for Huawei head of finance Meng Wanzhou (孟晚舟), who was arrested at the request of the U.S. a little more than a week ago. And on Capitol Hill today, Sundar Pichai, the CEO of Google, is testifying in front of the House Judiciary Committee, starting a few minutes ago at 10am.

These may be pedestrian proceedings, but they are riven with deep debates over the meaning of ownership. Meng was arrested for supposedly selling equipment to Iran through intermediaries in violation of U.S. sanctions. Huawei is a Chinese company, but uses American intellectual property in its products. Thus, America claims worldwide jurisdiction over the company, since it owns the patents beneath Huawei’s products.

Meanwhile, Pichai is testifying over a number of concerns, including data privacy (i.e. data ownership) and Project Dragonfly, the company’s attempt to re-enter China. He also has to contend with another data breach bug discovered yesterday in Google+. Is Google an American “owned” company (as Pichai will attempt to paint it today), or is it a global company owned by shareholders with obligations to enter China?

These aren’t simple questions, which is why the broader question of ownership will be so important for this century. Despite the win-win attitude of free traders, the reality is that much of technology ownership is monopolistic owing to barriers to entry – there are only a handful of telco equipment manufacturers, public clouds, mobile OSes and search engines out there. Whoever owns that property is going to get rich at the expense of others.

That’s why the US/China trade conflict is an irreconcilable tug-of-war.

For China, a developing country by most metrics even if it has glittering cities like Shanghai, owning that technological wealth is crucial for it to reach the zenith of its growth. It cannot become rich without becoming a technology power, a manufacturing power, and a consumer market capital all at once. And it views with deep suspicion American blocks on wealth transfers. Isn’t this just a way to keep the country down, to replay the century of humiliation all over again?

For the U.S., China’s constant conniving to pilfer American intellectual property undermines U.S. economic hegemony. China does want to steal plans for airplanes, and semiconductors, and other high-tech goods. Of course, it eventually wants to have the human capital and know-how to build these themselves, but first it has to catch up. America, fundamentally, doesn’t want it to catch-up.

As more and more wealth derives from technology, technology = politics becomes the bedrock law.

That’s frankly tiring for someone who just loves great products and wants to see massive technological progress for everyone regardless of nationality. But political symbolism is increasingly a language that Silicon Valley and the tech industry writ large have to understand.

Why Oath keeps Tumblring (now with a price tag)

Last week, I wrote a bit of a screed on why TechCrunch’s parent company, Oath, is struggling so badly:

Oath has a problem:* it needs to grow for Wall Street to be happy and for Verizon not to neuter it, but it has an incredible penchant for making product decisions that basically tell users to fuck off. Oath’s year over year revenues last quarter were down 6.9%, driven by extreme competition from digital ad leaders Google and Facebook.

Now, we know the costs of those product decisions, as well as the greater challenges in the digital advertising market. Verizon announced today that it will write down the value of Oath by $4.6 billion. That will change Oath’s goodwill value from $4.8 billion to $0.2 billion in the fourth quarter. Yikes.

This was a necessary accounting valuation change, and one that recognizes the challenges that Oath faces. As the filing said:

Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.

The upside is that Oath still has many, many millions of users every month. It just needs to figure out what to do with all of those eyeballs to build a sustainable business.

Can the West build anything?

Photo by VictorHuang via Getty Images

Seriously, from the Financial Times:

The capital should have been celebrating the opening of the east-west London railway, the biggest construction project in Europe, this week. But Crossrail announced in August that it would not begin operation until autumn 2019 at the earliest.

Even that now seemed “wildly optimistic”, one person close to the project said, given the problems with signals, trains and stations leading to “growing panic” among TfL executives. A number of people close to the project now say it may not be ready until late next year.

Crossrail is one of the most important subway projects in the world, designed to dramatically increase capacity in London’s Underground on the east-west axis. But it is just one of a series of major setbacks in infrastructure costs in the West. Meanwhile in California from Connor Harris at City Journal:

Ten years later, supporters have ample cause to reconsider. CAHSR’s costs have severely escalated: the California High-Speed Rail Authority (CHSRA) now estimates that the train’s core segment alone, from San Francisco to Los Angeles, will cost from $77 billion to $98 billion. Promises that private investors would cover most of the costs have fallen through. Forecasts for the project’s completion date and travel times have also slipped. The fastest trains in the CHSRA’s current business plan have a running time of over three hours, and the first segment of the line—San Jose to Bakersfield, almost 200 miles short of completion—won’t open until 2029.

I want high-speed rail, and I want new subways. I just don’t want new subways that cost billions of dollars per mile, and I don’t want high-speed rail at $100 billion.

The inability of Western countries to build infrastructure within any period of time and within any sort of budget is just mesmerizing. What we are left with is raising the speed limits on subways in New York City from 15 MPH to something a bit more reasonable.

I have talked previously about the need for more startups in this space:

California is home to two very different innovation worlds. For the readers of TechCrunch, there is the familiar excitement of the startup world, with startups working on longevity and age extension, rockets to Mars, and cars that drive themselves. Hundreds of thousands of entrepreneurs, engineers, and product managers are building these futures every day, often on shoestring budgets all in the hope of seeing their solution come to fruition.

Then, there is the “innovation” world of California’s infrastructure. Let’s take the most prominent example, which is the bullet train connecting southern to northern California. The train, first approved in a bond authorized by voters in 2008, is expected to have its first passengers in 2025 — three years after the original target of 2022.

That’s roughly 17 years start to finish, or older than the ages of Facebook (14 years) and the iPhone (10 years) are right now. Given that environmental reviews aren’t even slated to come in until 2020, it seems hard to believe that the route will maintain its current schedule.

Startups, we need your innovation in this space desperately. It’s a trillion dollar market ready for anything that might make these projects move faster, and cost less.

Quick Bites

My quick bites turned into full bites above.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.

Thoughts on Articles

The Increasingly United States – I read this book this weekend. Probably best to just read the reviews for most readers, although if you like modern political science research, this has about all the techniques you can do in American studies these days.

The core thesis is that the notion that “all politics is local” is completely bunk on two dimensions. Voters increasingly vote for candidates at every level of government using the same litmus tests, and they also get their information about politics exclusively from national sources. That basically means city councilors are debating immigration policy (which they have zero control over) rather than trash policy. It also explains the rising polarization in Congress — with less local issues to debate, there are just no opportunities afforded to build coalitions.

The book charts the pathways through which this nationalization takes place, and they will be intimately familiar to most readers (campaign finance changes, national media markets, nationalized policy planning, etc).

The thesis though raises a number of questions. First, how will local issues (zoning, trash pickup, etc.) get the attention they need to make our cities livable and thriving? Second, how can we fund local media so that voters have differentiated visibility into what is happening in their own backyard? These questions aren’t easy to answer, but we must if we want our federal-style system to function the way the founders intended.

The Death of Democracy in Hong Kong by Jeffrey Wasserstrom. A short and emotional look back at the failure of Hong Kong’s Umbrella Movement in 2014 and its ramifications.

Lean In’s Sheryl Sandberg Problem by Nellie Bowles. What does an organization do when the reputation of its founder and major icon turns sour? Lean In is trying to find out. Good if a bit lengthy, but I’m starting to get tired of the constant anti-Sandberg coverage.

Reading docket

What I’m reading (or at least, trying to read)

News Source = techcrunch.com

AppOnboard raises $15 million to let Android users try before they buy apps on Google Play

Pitching app developers with a new way to convert app browsers into actual customers, AppOnboard has raised $15 million in a new round of funding, the company said.

Based in Los Angeles, AppOnboard sees itself as one of a new breed of LA startup that’s steeping itself in the local ecosystem and trying to be one of the cornerstone’s for a new technology hub in the southern California region.

Company co-founder Jonathan Zweig has already had one hit as a Los Angeles-based entrepreneur. Zweig was one of the architects behind the success of AdColony, a startup which sold to Opera Software in 2014 for $350 million. It was an early success for the regional ecosystem and proved to be one of the most valuable exits (from a capital efficiency standpoint) for the year.

Now Zweig is back again… this time pitching app developers a tool that can help convert browsers into buyers for new applications in app stores around the world. As consumers sour on the free-to-use model (since that model depends on selling user information in order for “free” apps to make money), giving users a way to try before they buy makes sense.

Zweig claims that conversion rates have increased significantly for the companies that pay a fee for his company’s service. Play Store shoppers who engage with an app store demo before installing have higher retention and are more likely to become paying customers than those who install directly without playing or using a demo version, the company said.

That certainly aligns with the thinking of Paul Heydon, an investor at Breakaway Growth, which led the new round for AppOnboard. “The entire app store paradigm is about to change dramatically, and AppOnboard is perfectly positioned for this disruption,” said Heydon in a statement. “With its patented app demo technology and tools, users will now be able to experience their apps and games on-demand and without an install across various platforms, starting with Google .”

Zweig says that the service is the first from a third party to be directly integrated into a platform like Google’s Play store.

“Google has been a great partner for us,” Zweig says. And the company is in talks with other platforms, like the Apple Store, he said.

Now, with the additional cash in hand, Zweig says AppOnboard is ready to make some international expansion moves. The company already has offices in London and in cities across the U.S., but Zweig thinks there’s more room to grow.

“Our vision continues to be that every app and game will be instant and available for users to experience without a download. We look forward to continuing to work with global developers, Google, and partners to make this a reality for all mobile app users,” said Bryan Buskas, the chief operating officer of AppOnboard. As part of its new pitch, the company is offering a 30-day free trial for any App Store Demo.

News Source = techcrunch.com

Capture lets you grab real 3D models with your iPhone X’s powerful camera

Three dimensional modeling used to be hard. It used to require something at least as big as the Xbox Kinect to get really high quality scans you needed high-powered laser sensor systems. Now all you need is your phone and Capture.

Capture is a proof-of-concept for a company called Standard Cyborg led by Jeff Huber and Garrett Spiegel. These YCombinator grads have worked in a number of high-profile vision startups and raised $2.4 million in seed from folks like Scott Banister, Trevor Blackwell, and Jeff Huber.

They launched the app on December 3 and it’s already making 3D waves. The tool, which uses the iPhone X’s front camera and laser scanning system to create a live color point cloud, can create 3D models that you can view inside the app or in an AR setting. You can also export them into a USDZ file for use elsewhere. The app is actually a Trojan horse for the company’s other applications including a programming framework for 3D scanning.

“We are at the bleeding edge – deploying 3D dense reconstruction and point cloud deep learning on mobile devices,” said Huber. “We package up this core technology for developers, abstracting away all the math and GPU acceleration, and giving them superpowers in just 3 lines of code.”

I’ve tried the app a few times and the resulting scans are still a little iffy. You have to take special care to slowly scan all facets of an object and if you move, as you see below, you end up with two noses. That said it’s an amazingly cool use of the iPhone’s powerful front-facing sensors.

“Standard Cyborg is building the API for the physical world,” said Huber. “We make it easy for developers to build 3D scanning, analysis, and design into their applications. Our Capture app is a showcase of our technology that makes it easy for anyone with a FaceID-enabled iPhone to play with the technology and share scans with their friends. Our scanning SDK is launching in January and is currently in beta with a few enterprise-level sporting goods companies.”

While you won’t be scanning your loved ones into a TRON remake with this thing just yet it’s cool to think about how far we’ve come from flailing around in our living rooms with a clunky Kinect next to our TV.

News Source = techcrunch.com

InVision, valued at $1.9 billion, picks up $115 million Series F

“The screen is becoming the most important place in the world,” says InVision CEO and founder Clark Valberg . In fact, it’s hard to get through a conversation with him without hearing it. And, considering that his company has grown to $100 million in annual recurring revenue, he has reason to believe his own affirmation.

InVision, the startup looking to be the Salesforce of design, has officially achieved unicorn status with the close of a $115 million Series F round, bringing the company’s total funding to $350 million. This deal values InVision at $1.9 billion, which is nearly double its valuation as of mid-2017 on the heels of its $100 million Series E financing.

Spark Capital led the round with participation from Goldman Sachs, as well as existing investors Battery Ventures, ICONIQ Capital, Tiger Global Management, FirstMark and Geodesic Capital. Atlassian also participated in the round. Earlier this year, Atlassian and InVision built out much deeper integrations, allowing Jira, Confluence and Trello users to instantly collaborate via InVision.

As part of the deal, Spark Capital’s Megan Quinn will be joining the board alongside existing board members, Amish Jani, Vas Natarajan, Simon Nebel, Lee Fixel, and Mark Hastings.

InVision started out back in 2011 as a simple prototyping tool. It let designers build out their experience without asking the engineering/dev team to actually build it, to then send to the engineering and product and marketing and executive teams for collaboration and/or approval.

Over the years, the company has stretched its efforts both up and downstream in the process, building out a full collaboration suite called InVision Cloud (so that every member of the organization can be involved in the design process), Studio, a design platform meant to take on the likes of Adobe and Sketch, and InVision Design System Manager, where design teams can manage their assets and best practices from one place.

But perhaps more impressive than InVision’s ability to build design products for designers is its ability to attract users that aren’t designers.

“Originally, I don’t think we appreciated how much the freemium model acted as a fly wheel internally within an organization,” said Megan Quinn. “Those designers weren’t just inviting designers from their own team or other teams, but PMs and Marketing and Customer Service and executives to collaborate and approve the designs. From the outside, InVision looks like a design company. But really, they start with the designer as a core customer and spread virally within an organization to serve a multitude.”

InVision has simply dominated prototyping and collaboration, today announcing it has surpassed 5 million users. What’s more, InVision has a wide variety of customers. The startup has a long and impressive list of digital first customers — including Netflix, Uber, Airbnb and Twitter — but also serves 97 percent of the Fortune 100, with customers like Adidas, General Electric, NASA, IKEA, Starbucks, and Toyota.

Part of that can be attributed to the quality of the products, but the fundamental shift to digital (as predicted by Valberg) is most certainly under way. Whether brands like it or not, customers are interacting with them more and more from behind a screen, and digital customer experience is becoming more and more important to all companies.

In fact, a McKinsey study showed that companies that are in the top quartile scores of the McKinsey Design Index outperformed their counterparts in both revenues and total returns to shareholders by as much as a factor of two.

But as with any transition, some folks are adverse to change. Valberg identifies industry education and evangelism as two big challenges for InVision.

“Organizations are not quick to change on things like design, which is why we’ve built out a Design Transformation Team,” said Valberg. “The team goes in and gets hands on with brands to help them with new practices and to achieve design maturity within the organization.”

With a fresh $115 million and 5 million users, InVision has just about everything it needs to step into a new tier of competition. Even amongst behemoths like Adobe, which pulled in $2.29 billion in revenue in Q3 alone, InVision has provided products that can both compliment and compete.

But Quinn believes that the future of InVision rests on execution.

“As with most companies, the biggest challenge will be continued excellence in execution,” said Quinn. “InVision has all the right tail winds with the right team, a great product, and excellent customers. It’s all about building and executing ahead of where the pack is going.”

News Source = techcrunch.com

Apple Pay finally launches in Germany

Apple’s mobile payment technology has finally launched in Germany, some four years after it debuted in the U.S.

On its newly launched Apple Pay website for Germany, Apple lists partner banks and credit card companies at launch, with customers from the likes of Deutsche Bank, O2 Banking, N26, Comdirect, HypoVerensbank, Bunq and Boon able to tap up the payment method directly.

Some fifteen banks and services are supported at launch. A further nine banks are slated as adding support in 2019, including DKB, INK and Revolut.

iOS users in the country can now add supported debit or credit cards to Apple Pay to make contactless payments with their device, rather than having to carry cash. Apple’s Face ID and Touch ID biometrics are used to a security layer to the payment system.

The local Apple Pay site also lists a selection of retailers, with Apple writing: “Apple Pay works in supermarkets, boutiques, restaurants, hotels and many other places. You can also use Apple Pay in many apps — and on participating websites with Safari on your Mac, iPhone or iPad.”

Aside from convenience, the other consumer advantage Apple touts for the system is privacy, with Apple Pay using a device-specific number and unique transaction code — and the user’s actual card numbers never stored on their device or on Apple’s servers — which means trackable card numbers aren’t shared with merchants, so purchases can’t be tied back to the individual.

While that might sound like an abstract concern, a Bloomberg report this summer revealed details of a multi-million deal in which Google pays for transaction data from Mastercard — in order to try to link online ad views with offline purchases in the US.

Facebook has also long been known to buy offline data to supplement the interest signals it collects on users from inside (and outside) its social network — further fleshing out ad-targeting profiles.

So escaping the surveillance net of one flavor of big tech can require buying into another. Or else going low tech and paying in cash.

Apple does not say what took it so long to add Germany to its now pretty long list of Apple Pay countries but Apple Insider suggests the relatively late adoption was down to pushback from local banks over fees, noting that it’s four months after the official announcement of a German launch.

It’s also true that paying by plastic isn’t always an option in Germany, as cash remains the dominant payment method of choice — also, seemingly, for privacy purposes. So Apple Pay is at least aligned with those concerns.

News Source = techcrunch.com

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