Month: July 2018

Meet Wilson, a new iPhone app that plans to change the way you discover and listen to podcasts. The company describes the app as a podcast magazine. It has the same vibe as Longreads, the curated selection of longform articles.

With its minimalistic design and opinionated typography, Wilson looks like no other podcasting app. On an iPhone X, the black background looks perfectly black thanks to the OLED display. It feels like an intimate experience.

Every week, the team selects a handful of podcast episodes all tied together by the same topic. Those topics can be the Supreme Court, the LGBTQ community, loneliness, dads, the World Cup…

Each issue has a cover art and a short description. And the team also tells you why each specific podcast episode is interesting. In other words, Wilson isn’t just an audio experience. You can listen to episodes in the app or open them in Apple Podcasts.

Navigating in the app is all based on swipes. You can scroll through past editions by swiping left and right. You can open an edition by swiping up, and go back to the list by swiping down. This feels much more natural than putting buttons everywhere.

Wilson also feels like tuning in to the radio. Podcasts are great because they let you learn everything there’s to learn about any interest you can have. But it also narrows your interests in a way. Podcast apps are too focused on top lists and “you might also like” recommendations.

Gone are the days when you would switch on the radio and listen to a few people talk about something you didn’t know you cared about. Human editors can change that. That’s why Wilson can be a nice addition to your podcasting routine.

In what’s believed to be the biggest data breach in Singapore’s history, 1.5 million members of the country’s largest healthcare group have had their personal data compromised.

The breach affected SingHealth, Singapore’s biggest network of healthcare facilities. Data obtained in the breach includes names, addresses, gender, race, date of birth and patients’ national identification numbers. Around 160,000 of the 1.5 million patients also had their outpatient medical information accessed by unauthorized individuals. All patients affected by the hack had visited SingHealth clinics between May 1, 2015 and July 4, 2018, Singapore newspaper The Straits Times reports.

“Investigations by the Cyber Security Agency of Singapore (CSA) and the Integrated Health Information System confirmed that this was a deliberate, targeted and well-planned cyberattack,” a press release from Singapore’s Ministry of Health stated. “It was not the work of casual hackers or criminal gangs.”

The hackers appear to have accessed the sensitive data by compromising a single SingHealth workstation with malware and were then able to obtain privileged account credentials with which they accessed the patient database. The breach was first noticed on July 4 and a police report was filed on July 12.

During a press conference, investigating authorities disclosed that Singapore Prime Minister Lee Hsien Loong was “specifically and repeatedly targeted.”

The Prime Minister elaborated on the incident on his Facebook page:

Waymo, the former Google self-driving project that spun out to become a business under Alphabet, has driven 8 million miles on public roads using its autonomous vehicles.

Waymo CEO John Krafcik shared the company’s milestone Friday while onstage with Nevada Governor Brian Sandoval at the National Governors Association conference in Santa Fe, N.M. The figure is notable when compared to where Waymo was less than a year ago. In November, the company announced it had reached 4 million miles, meaning the company has been able to double the number of autonomous miles driven on public roads in just eight months. 

Waymo’s fleet of self-driving vehicles are now logging 25,000 miles every day on public roads, Krafcik said.  He later tweeted out the stats along with a graphic. Waymo has 600 self-driving Chrysler Pacifica Hybrid minivans on the road in 25 cities.

The company also relies on simulation as it works to build an AI-based self-driving system that performs better than a human. In the past nine years, Waymo has “driven” more than 5 billion miles in its simulation, according to the company. That’s the equivalent to 25,000 virtual cars driving all day, everyday, the company says.

This newly shared goal signals Waymo is getting closer to launching a commercial driverless transportation service later this year. More than 400 residents in Phoenix have been trialing Waymo’s technology by using an app to hail self-driving Chrysler Pacifica Hybrid minivans.

The company says it plans to launch its service later this year.

Waymo’s driverless ride-hailing service has received the most attention. But the company is also working to apply its self-driving system to three other areas, including logistics (so trucking), making public transportation more accessible and, further off, plans to work with automakers to make personally owned vehicles.  

Waymo, and more specifically Krafcik, has never provided much detail about how its self-driving system would make public transportation more accessible. On Thursday, Krafcik teased a future announcement.

“We’ll have announcements soon about how we’re going to use our technology move people from their homes or work to existing public infrastructure hubs so we as a society can get more ROI from those public transportation infrastructure investments,” Krafcik said.

You can watch the full video with Sandoval and Krafcik, which begins at the 46:40 mark.

Everyone generally agrees that dilution should be avoided. VCs insist on pro-rata rights to avoid the dreaded “D” word. Executives often complain, after a new financing, that they should be “made whole” to offset the dilution that came with the new round. Founders work as hard as they can to maximize their valuation at each financing event to avoid painful dilution. Dilution = Bad.

And yet, entrepreneurs want to raise money. In many cases, they want to raise lots of money. There is great pride in the amount of money that is raised and a larger raise is typically celebrated as a greater success. This is a bit confusing given that a larger raise should also mean more of that awful dilution that everyone is trying to avoid.

Financing Events Are Misleading

Most people in the startup ecosystem think of dilution as the percent of the company that is sold in a financing transaction. If your startup completed a $5M Series A on a $20M pre-money valuation, (option pool aside) you would have 20% dilution, and everyone will own 20% less than they did before the transaction. This is very misleading.

While every equity holder may own 20% less of the company than the day before the financing, the company is worth more than the day before the financing. Even if you assume that the valuation was an objective measure of the value of the company and was flat from the previous financing, everyone now also owns their percentage share of the new cash that was added to the cap table, which wasn’t part of the company’s value prior to the financing. Here’s an example:

So if you owned 10% of the company, and the day before the financing that was worth $2M, the day after the financing you own 8% of the company, which is still $2M. In dollar value, which should be the only value that economically matters, you own the exact same amount of a company that is now worth more overall. Where is the dilution?

Financings Are Usually Accretive, Not Dilutive

I believe the startup ecosystem is confused about the impact of financings. Rather than being dilutive, any upround financing (with a caveat that I’ll address below) should be a demonstration of value accretion. Let’s add some context to our previous example.

If the previous round had $10M post-money valuation, and you owned 10%, your ownership was worth $1M at the time of the seed financing. With this new $5M financing on a $20M pre-money valuation, you may now only own 8% of the company, but your value in the startup has actually doubled to $2M. That’s amazing!

Why would anyone focus on the 2% reduction in percentage ownership when the value of their holding appreciated from $1M to $2M? It’s always better to own less of something worth much more than own more of something worth much less. That’s a trade I’d make every day of the week, and it isn’t at all dilutive to my ownership. Complaining about dilution on that transaction is totally illogical. We should all be celebrating the accretion of value when we have an up-round financing.

If VCs want to purchase their pro-rata because they believe in the long-term value of the startup, and buying pro-rata is part of their strategy, by all means, they should do so. However, if they are doing so to avoid dilution, I think they’re missing the point completely, given that they haven’t been diluted. If a founder receives more stock options because their performance is outstanding and they deserve more compensation, that’s terrific. If they are being “made whole” because they own a smaller percentage, that has doubled in value over the larger percentage they previously owned, that’s simply faulty math.

True Dilution = Burn Rate – Accretion of Value

While financings reflect value accretion or dilution, the transaction isn’t where these values really change. Dilution is actually much more complicated and shouldn’t be viewed as a transactional event.

Dilution is a function of your burn rate relative to your accretion of value. It is often measured in financing events, but it actually plays out every day in the choices the startup makes and the work that the startup accomplishes. Simply put, if you are accreting more value than you burn, there is no dilution. If you’re burning more cash than you’re accreting value, then there is dilution.

Put another way, you’re not being diluted because a VC decrees it; you’re being diluted because you spent money building features that your customers didn’t want, instead of the ones that they need. You’re being diluted because you kept scaling up an ineffective sales process because you didn’t want growth to slow.

Each financing event is more of a check-in point on the value of the company than a true dilutive or accretive event. It’s the time between the financings, when the company was burning cash to build additional value, that was truly the accretive or dilutive journey. In other words, the company isn’t worth $20M because someone bought stock in a day. Its valuation increased from $10M to $20M because of the work that was done to increase the value of the company that greatly outpaced the cost of creating that value. If the cost outpaced the value of the work, that would have been dilutive, as demonstrated by a down round.

The Paradox of Overvalued Financings

It’s the burn rate relative to the value creation, not the financing event, that truly determines accretion or dilution. However, I’d acknowledge that this equation is ambiguous at all times and the market determines that value, which is why it is fair to say that financing events are the measuring moment of the most recent period of work.

What’s particularly complicated is that financing events are incredibly inaccurate measures of value creation.

In the recent era of an overcapitalized venture capital industry, we’ve seen some extraordinary financing events across nearly every startup stage. So what is the implication of overcapitalized and overvalued companies? Are those transactions clear evidence of value accretion?

Unfortunately, this is a particularly confusing phenomenon. These financings are celebrated because they appear to be minimally dilutive and the company gets a stock-pile of cash. Unfortunately, I think they distort the economic equation of the startup and usually have the opposite result.

Imagine that same startup that rationally should have raised $5M on $20M pre-money, is able to raise $20M on $80M pre-money.

This type of round seems crazy to anyone who hasn’t experienced it, but we’ve been there with our companies many times. It appears that the company has just had an exceptional outcome. The person who previously owned 10% still owns 8%, but the value appears to have increased from $1M to $8M. Happy days! For the same 20% dilution, the company raised 4X the capital and stock is now worth 8X the last round value! Unfortunately, it is the embedded future implications of this event that are so misleading and undermine that value.

Because it is the burn rate and not the transaction that really drives dilution, typically these large financings end up being very dilutive to the company. As I’ve written about previously, these financings often come with unreasonable pressures to prematurely grow the business and incentives to chase the marginal dollar at great cost. The end result of these financings is typically that the burn rate will often outpace value accretion at the startup. This is extremely dilutive over time and typically will have the effect of conditioning a company for an indefinitely high burn rate, which will require much more cash and possibly a down round in the future. Or worse yet, the company fails as the investors lose enthusiasm and the company is depending on continued cash infusions that never come.

In other words, large financings are typically very dilutive, even if on paper they appear to be evidence of massive value accretion and misleadingly little dilution. Paradoxically, given the same stage of growth, the $5M financing for 20% of the company is often more likely to be long-term accretive, than the $20M financing for 20%.

Words of Caution

I would encourage startup founders, employees, and investors to stop viewing up round financings as dilutive and recognize that they are accretive (except when they incentivize future wasteful spend). Instead, they should obsess about the burn rate and ensure that the capital being burned is invested in high confidence opportunities that yield true value that will be reflected in accretive future financings. If every dollar invested is showing demonstrable value accretion, by all means burn as fast as confidence allows! Profitability is important, but focusing on it too early can undermine value in the same way that burning too aggressively can. The point of venture capital is to make investments in confident areas of high growth. Venture capital is not the right tool for every job, but if a startup can use VC as intended, they should.

We had a saying at my last startup that “every dollar that we spend is a dollar of dilution.”  While that was probably a good mindset, the wording suggests that investing in a business with strong return isn’t worthwhile. Today I’d revise that saying to “every dollar that we spend, that doesn’t create more than a dollar of value, is dilution.”

May your burn rates be accretive and your financings increase your ownership value.

A new $200 billion round of tariffs on Chinese goods could have some broader implications for U.S.-based hardware companies. New government rulings on the Trump-imposed tariffs single out a couple of key devices buy name, including the Apple Watch, Fitbit trackers and Sonos speakers.

Products like smartphones have thus far been unimpacted by fees leading to product price spikes, but other electronics could potentially be hit, due to what Reuters deems “an obscure subheading of data transmission machines in the sprawling list of U.S. tariff codes.”

That’s among the 6,000+ codes cited by the White House’s proposed tariffs. That could mean upwards of a 10 percent tariff on popular products, including the Apple Watch, Fitbit Charge and Surge and the Sonos Play:3, Play:5 and SUB.

While Trump reportedly told Tim Cook that Chinese tariffs wouldn’t impact the iPhone, it seems the promise didn’t apply across the company’s product lines.  In order to not be impacted, manufacturers could potentially attempt to have products classified under a different code or apply for an extension.

Trump’s protectionist approach to trade has already impacted some U.S. industries. Last month, Harley-Davidson — a company he insisted would benefit — opted to move production overseas to avoid steep E.U. tariffs, stating that the move “is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the E.U. and maintain a viable business in Europe.”

The second quarter of 2018 was another record-breaker for mobile app downloads and revenue. According to a new report this week from App Annie, there were over 28.4 billion app downloads worldwide across both iOS and Google Play in the quarter, up 15 percent year-over-year. That number is even more remarkable because it doesn’t include reinstalls or updates – only new app downloads. In addition, consumer spending in apps was up 20 percent year-over-year to reach $18.5 billion across iOS and Google Play combined.

This is the most money spent in apps compared with any other quarter before, the report notes, topping the prior quarter’s record-breaking $18.4 billion in app revenue, and 27.5 billion downloads.

Much of the download activity in Q2 came from Google Play.

On its app marketplace alone, global downloads topped 20 billion, up 20 percent year-over-year and widening the gap between itself and iOS by 25 percent points to 160 percent. (See below).

This massive download growth is attributable largely to India, says App Annie .

The country was the biggest driver of download growth year-over-year in both absolute values and growth in market share. Indonesia also played a big role in Google Play downloads.

Meanwhile, the U.S., Russia and Saudi Arabia saw the largest growth in iOS downloads.

In particular, Google Play app downloads included growth in categories like games, video players and editors, and – not surprisingly, given the World Cup – sports applications. And on iOS, Sports apps were also the largest driver of global iOS downloads, followed by Finance and Travel apps.

The impact on the 2018 FIFA World Cup on sports app downloads was also highlighted last month by Sensor Tower, whose own analysis found that new installs of the five leading live TV on demand apps offering channels with the World Cup grew 77 percent during the first week of World Cup coverage, compared with the three preceding weeks (excluding the NBA Finals period).

Sports streaming service fuboTV saw the largest impact, growing at a whopping 713 percent and adding 309K new users in the U.S., while Hulu saw the smallest impact at 18 percent growth.

Single network apps grew, too, this earlier report said. FOX Sports downloads increased by 95x for the same period, while Telemundo Deportes En Vivo grew 444x, for example.

App Annie added that the top 3 sports apps in Android in the U.S. during the first three weeks of the tournament were Telemundo Deportes (#1), FOX Sports GO (#2), and FOX Sports (#3), in terms of average megabytes per user – an indication of users’ live-streaming activity. The apps were also new entrants to the top 10 list of apps by total time spent, compared with the three weeks directly prior.

In the U.K., over 6 million hours were spent in the top 10 sports apps on Android during the first 3 weeks of the World Cup, up 65 percent from the 3 weeks prior.

The World Cup also had an impact on consumer spending in apps in the quarter.

Sports apps on iOS were the third largest contributors to absolute growth in consumer spend and in market share in Q2, while Entertainment and Productivity apps were numbers one and two, respectively. In-app subscriptions for both Sports and Entertainment apps drove the consumer spending increases.

On Google Play, Games, Social, and Music & Audio apps saw the largest download growth, quarter-over-quarter.

However, despite the downloads and consumer spending in sports and TV apps, the charts of the top 10 apps by worldwide downloads and consumer spending look a lot like they usually do – with Facebook apps dominating the top 10 by downloads (Messenger, Facebook, WhatsApp and Instagram were the top  4).

And the top 10 apps by spending were still largely those subscription-based entertainment services like Netflix, Tencent Video, iQIYI, Pandora, Youku, and YouTube.

French startup Tempow has been working on improving the Bluetooth protocol at a low level to make it more versatile. The company is introducing a new audio profile for your TV or set-top box.

TV and set-top box manufacturers can license Tempow’s software and integrate new features in their devices. It works with regular Bluetooth chips, but it opens up new possibilities.

In particular, Tempow has been working on a one-to-many pairing model. You can pair multiple Bluetooth speakers with your TV to create a wireless surround system using good old Bluetooth speakers.

The reason why soundbars slowly replaced 5.1 systems is that you don’t have to run cables on the floor to the back speakers. Tempow solves that, and Bluetooth speakers are much cheaper than a bunch of Sonos speakers.

With Tempow’s stack, you can also stream different audio tracks to different devices. In other words, you could pair multiple headphones with your TV and watch a movie in different languages. If your kid is too young to read subtitles, you no longer need to make compromises.

You can also configure each speaker individually so that you can reproduce the same sound profile across the board, even if you’re using speakers from different brands.

The startup first worked on an audio profile for smartphones. For instance, if you have a Moto X4 phone, you can pair it with multiple Bluetooth speakers at once. With today’s news, the company is expanding beyond smartphones. But it’s still about Bluetooth.

There isn’t a business person alive who doesn’t appreciate an advantage, but sometimes folks need to be reminded of an advantage that’s staring them right in the face. This is that reminder. Your opportunity to save up to $1,200 on passes to Disrupt San Francisco 2018, which takes place on September 5-7, comes to an end on July 25 at 5 p.m. PST. Why pay more? Go buy your passes today.

Disrupt SF 2018 is the place to be if you’re at all interested in tech startups. Whether you’re a founder, an investor, a marketer or a job-seeker, you’ll find plenty of inspiration, opportunity and blow-your-mind technology at Disrupt. And this year, we’ve gone all-out to produce our biggest Disrupt event ever.

What’s that mean? Well, take Startup Battlefield for example. We’ve upped the ante on the world’s best startup pitch competition by increasing the prize money to $100,000 in non-equity cash. Yeah, we did. You know the battle will be even more fierce, exciting and epic.

It also means we’ve tripled our floor space by moving the party over to Moscone Center West. We expect a minimum of 10,000 attendees, and you’ll find more than 1,200 outstanding startups and exhibitors showcasing an incredible array of technology on our show floor in Startup Alley.

Disrupt is famous for the quality of its speakers and (shameless brag) we’ve outdone ourselves this year. We’re offering more than 40 presentations, and here’s just a taste of what you can expect: Whitney Wolfe Herd, founder and CEO, Bumble; Reid Hoffman, partner, Greylock; and Dara Khosrowshahi, CEO, Uber. Check out the full speaker lineup here.

If you want to dig even deeper, you can check out the full Disrupt San Francisco 2018 agenda.

We also wanted our hackathon to reflect the grandeur of this year’s Disrupt. How’d we do that? By going virtual — and global. Thousands of the best hackers, developers, designers and programmers around the world can compete in our Virtual Hackathon. The application for submitting a hack is August 2. If you want to compete, sign up right here, right now.

Disrupt San Francisco 2018 takes place on September 5-7, and early-bird pricing disappears — along with your chance to save up to $1,200 — on July 25. You don’t need to be in fintech to know a good deal when you see one. Go buy your passes today.

Dish today announced it’s becoming the first TV provider to offer customer support over Apple’s Business Chat. Launched earlier this year, Business Chat allows companies to communicate with their customers over iMessage in order to answer questions, provide customer service, or even enable purchases. In Dish’s case, the TV provider says its customers can use Business Chat to reach a live agent with their questions, make account changes, schedule an appointment, and more.

They can even use their credit card in Business Chat to order a pay-per-view movie or sporting event, then watch it within minutes of confirming the purchase, Dish says.

This feature takes advantage of Apple Pay, which lets you quickly make purchases using your stored payment information without having to leave the iMessage conversation.

Business Chat is as secure as placing a call, where customers would have had to provide information to identify themselves as the account holder. As Dish explains, Apple Business Chat doesn’t display the customer’s contact information to the agents, so customers can choose if they want to share that information themselves. They’re also in control of authenticating their account, if they want to make changes or purchases.

“TV should be simple, so we’ve made reaching our live customer service representatives as easy as sending a text,” said John Swieringa, Dish’s chief operating officer, in a statement about the launch. “Adding messaging with Apple Business Chat is a powerful way to connect with us, giving another choice so you can pick what fits with your life.”

Business Chat is a direct attack by Apple on social media platforms like Facebook and Twitter.

Today, businesses tend to set up Facebook Pages and often offer customers the ability to reach out over Facebook’s Messenger, Instagram and WhatsApp with questions. Twitter has also entered the customer service business, allowing businesses to respond to customers over tweets and DMs. Business Chat offers companies an alternative to social media, with the advantage of having access to Apple Pay built-in. (Facebook, meanwhile, hasn’t established itself as a payments company nor does much of its user base keep their payment information on file with the company. The same goes for Twitter.)

In addition, operating over iMessage means businesses get even closer with their customers – their conversations are in the same Messages app as chats with friends and family, not in a third-party app. And Apple isn’t interested in profiting from data collection. Its main goal is to sell more devices, which in turn allows it to sell more of its own services to users, like iCloud storage and Apple Music.

That said, it’s not likely that businesses will abandon their social media presence for Business Chat, so it may end up being just one more place for them to check – albeit one with an install base of hundreds of millions.

Dish is one of the earlier adopters for Business Chat. Other companies on the platform include Aramark, Discover, Four Seasons, Harry & David, Hilton, The Home Depot, Lowe’s, Marriott, NewEgg, T-Mobile, TD Ameritrade, Wells Fargo, 1-800-Flowers, and, of course, Apple.

To chat with Dish via Business Chat on iPhone or iPad (iOS 11.3 or higher), customers search for “Dish” then tap the Messages icon that appears next to the Dish search result. They can also open chat from the contact page of their MyDISH app, where they manage their Dish TV account.