Month: July 2018

Eatigo, a Southeast Asia-based dining service that describes itself as an ‘anti-Groupon’ for restaurants, had a busy 2017 that saw it expand into a number of markets including India. Now it is primed to continue that growth further still after it gobbled down a fresh serving of capital from TripAdvisor, the travel giant that it already counts as an investor.

Ok, no more food jokes, I promise…

The funding is undisclosed but Eatigo CEO and co-founder Michael Cluzel told TechCrunch it is ‘eight-digits.’ We do know that it takes Eatigo to over $25 million raised to date which, given that the startup had raised more than $15 million following the completion of its previous round, suggests that the amount is around the $10 million mark.

Eatigo was founded in Bangkok in 2013 and it is designed to help restaurants fill unused inventory by offering deals to customers at certain times of the day. The appeal to eaters is deals, but unlike group buying services such as Groupon, Eatigo encourages restaurants to manage their inventory and time so that they are filling their quiet hours for additional revenue not ramming people into restaurants for the sake of it. The latter scenario, of course, puts pressure on staff, reduces service quality and is generally not conducive to a good dining experience. It is also questionable whether discounts drive long-time loyalty, a cornerstone the Groupon of old was built on, but I digress.

The Eatigo service is present in six countries where it claims four million registered users and over 4,000 restaurants. That latter number ranges from high-end affairs, such as upscale hotel restaurants, to chain outlets and — my own personal favorite — street food outlets.

The important part here, besides the money, is that this new deal appears to signal a closer relationship between Eatigo and TripAdvisor, and particularly TripAdvisor’s The Fork subsidiary and its TripAdvisor Restaurants service.

The Fork, which the company got via a 2014 acquisition, is TripAdvisor’s expansion into food, allowing users to find information on availability and bookings on restaurants and in cities. Like Eatigo, it allows for advanced bookings at a discount but the service is squarely focused on Europe, having initially been founded in France. In that respect, it makes sense for the duo to collaborate.

“As we look to further our presence in the Asia Pacific region, we believe our latest strategic investment in Eatigo will continue to support a great business and strong management team. TripAdvisor’s continued partnership with Eatigo will help us both better serve millions of diners and restaurant owners who are increasingly turning to online channels,” said Bertrand Jelensperger, whos is senior VP of TripAdvisor Restaurants and the founder of TheFork, in a statement.

Cluzel, the Eatigo CEO, told TechCrunch that his company is looking to expand in Southeast Asia and the wider Asian market but, on the product side, it is preparing a new service that will “move beyond our original scope of doing just time-based discounts.”

What exactly that is — and how/whether it is tied to TripAdvisor or The Fork — he wouldn’t say at this point.

There’s more money flowing into Southeast Asia’s tech startup scene after Singapore’s Golden Equator Capital and Seoul-based Korea Investment Partners announced plans for a collaborative $88 million (SG$120 million) fund for the region.

The two investment firms will act as joint partners for the vehicle, which is expected to hit a first close before September and a final close by the end of 2018. Already, they claim to have 65 percent of the target capital committed by LPs.

The firms are aiming for the Series A and B spaces with a typical check size of between $1.5 million and $3.7 million for what will be known as the GEC-KIP Fund. It isn’t exactly clear what focus the fund will adopt for investments.

Southeast Asia often falls off the radar for investment in Asia, with the far larger countries of China and India typically getting the attention, but rising internet access among the region’s cumulative population of over 600 million signals growth potential. A recent report co-authored by Google forecasts Southeast Asia’s ‘internet economy’ reaching more than $200 billion by 2025, up from just $30 billion in 2015. A few unicorns, including ride-sharing companies Grab and Go-Jek, have also helped put it on the map for investors.

Speaking of investors, Golden Equator Capital is part of Golden Equator, a Singapore-based group of businesses that includes financial services, consulting, an incubator and, of course, investment funds. The firm has existing ties with Korea — via a Korea-focused health tech incubator launched last year — and its advisory team includes Taizo Son, founder of Japanese VC firm Mistletoe and brother of SoftBank chairman Masayoshi Son.

Korea Investment Partners, meanwhile, manages 41 funds with more than $2 billion in assets under management worldwide.

“We are excited to embark on this cross-learning development with KIP who is a seasoned VC investor with a long, established track record across several markets such as US, China, and Korea,” Daren Tan, managing partner of Golden Equator Capital, said in a statement.

“Given the fragmented tech investment landscape in Southeast Asia, uniting our strengths and network with KIP further bolsters our position. So, when we invest, it is not just capital; we are essentially also lending our portfolio companies the collective expertise and strategic networks, to accelerate their growth and success in the long run,” Tan added.

I can remember when Southeast Asia was described as having a VC crunch just a few years ago, but today the landscape is far healthier in terms of available investment money.

GEC-KIP Fund is playing in the same field as a number of Southeast Asia-focused VCs, which include Jungle Ventures, Golden Gate Ventures, Monks Hill Ventures, Venturra Capital, Insignia Venture Partners and Vertex Ventures from Singapore sovereign fund Temasek. There are, of course, plenty of others beyond that list.

Elon Musk seems not only intent on burning all the goodwill he earned for trying to help last week’s Thai cave rescue, but rolling around in its ashes, too. In a series of extraordinarily offensive, now deleted tweets, the SpaceX and Tesla CEO called a British diver who participated in last week’s dangerous rescue mission a “pedo guy,” adding in another tweet “bet ya a signed dollar it’s true.”

Musk’s tantrum was triggered by an interview the diver, Vern Unsworth, gave CNN International last Friday, in which he called the small submarine Musk had SpaceX engineers build a “PR stunt” and said Musk could stick it “where it hurts.” Though the submarine was intended to help the 12 boys stranded with their soccer coach navigate flooded cave passageways, Unsworth, who helped plan the rescue operation and recruited other cave diving experts, said it “had absolutely no chance of working.”

Unworth added that Musk “had no conception of what the cave passage was like. The submarine, I believe, was about 5 foot 6 long, rigid, so it wouldn’t have gone round corners or round any obstacles. It wouldn’t hadn’t have made the first 50 meters into the cave from the dive start point.” When the reporter mentioned that Musk had gone into the cave on Tuesday, Unsworth said he was “asked to leave very quickly. And so he should have been.”

The rescue mission, made even more challenging by monsoon season, claimed the life of a Thai Navy seal before all boys were saved last week.

This is not the first time that Musk has clashed with a member of the cave rescue team. As confirmation came in that the last group of boys and their coach had been freed on July 10, the head of the rescue mission, Narongsak Osatanakorn, told reporters that “although [Musk’s] technology is good and sophisticated it’s not practical for this mission.”

In response, Musk dismissed the credentials of Ostanakorn, who led the joint command center coordinating the operation and is former acting governor of Chiang Rai, the province where the cave is located. In a tweet he said Ostanakorn was “described inaccurately as ‘rescue chief'” and “is not the subject matter expert” (the Columbus Dispatch reports that Ostanakorn holds a Master’s degree from Ohio State University, where he studied geodetic engineering and surveying).

Though Musk’s tweet about Ostanakorn was sharply criticized, many still gave him credit for his efforts. After all, engineering a submarine in a few days to save a group of children is an impressive and laudable feat. While Musk is known for going on strange Twitter rants, however, his attack on Unsworth is an entirely different stratosphere. In addition to defaming Unsworth in a particularly heinous way, the implication that a British diver would only go to Thailand, one of the world’s top diving destinations, for child sex tourism is problematic and arguably racist, as many have pointed out.

Elon Musk implying that British expats who live in Thailand are all kiddie fiddlers?
Erm… wow… isn't that kind of a little bit racist?

— Robert Percy (@astweetedbyRP) July 15, 2018

Sure, Elon Musk calling a diver who help rescue 12 boys a ‘pedo’ just because he lives in Thailand is insulting, inflammatory and borderline libelous, but let’s not forget that it is also horrifically racist.

— Bay Area for Bernie (@BayArea4Bernie) July 15, 2018

He didn’t just call the British rescuer in Thailand a pedophile. He called him a pedophile because he couldn’t imagine another reason for a white guy to be in Thailand. Which is a false assumption. Sometimes white guys visit Thailand to show off their useless submarines.

— Kumail Nanjiani (@kumailn) July 15, 2018

TechCrunch has contacted SpaceX for comment on Musk’s remarks.

So… apparently there’s been another kerfuffle on the Twitter about some asinine things that a certain wealthy, rocket-building, payment-revolutionizing, electric vehicle company-creating entrepreneur has written in tweets to millions of followers.

This billionaire is, by all accounts, incredibly difficult to work for, very visionary and … a bit thin-skinned for someone with such a habit of courting press.

I’m not saying that’s his fault. He’s been shredded by hundreds of people in thousands of messages on a platform that’s given him millions of (fake and) real followers and a megaphone that would be powerful enough to change the world (or at least the world’s coverage of him) with a single bloviating bit of textual hot air.

And boy, as a billionaire entrepreneur, does this fella blow the hot air.

Wait… I am saying some of this is his fault.

That said, he’s done some truly amazing things for the world. AND IS A BILLIONAIRE.

With that in mind, here’re a few humble suggestions for him to keep in mind as he approaches the touchpad, keyboard, or any other tweet-enabling appliance as he looks to foray further into the wild feathered world of the Twitter-birds.

Image: Bryce Durbin / TechCrunch

THINGS THAT ARE OKAY TO TWEET

1. Tweeting about offers to help people in dire need of help. Listen, I know you got a lot of heat for this one, and it was ultimately an unnecessary gesture that some folks chalked up to a cynical attempt to change the subject, but I believe that your heart was in the right place. People love John Henry stories — especially now when technology threatens to overwhelm all of us. So this bit of ingenuity that you and your team concocted wound up as an actual embodiment of an old folktale? So what? Humans can win without machines. This is a good thing. Embrace it. But that doesn’t mean that you shouldn’t have offered to help. Or that people should dismiss that offer as ridiculous.
2. Tweeting about phenomenal things that your companies have managed to achieve in the world. It’s a jaded world, so people dismiss a lot of things that they shouldn’t, but landing parts of a rocket successfully for re-use is a goddamn miracle of science. It’s wonderful. Literally an achievement that has the potential to advance humanity… and even if a better solution comes along, you’ve proven naysayers wrong and pushed the bounds of the possible. Go you.
3. Tweeting about political and social issues you feel passionate about. You’re a — fairly — beloved billionaire (which is kind of a weird thing to write) with a platform that has millions of followers. If you think a certain way about a certain thing it’s your right to express it and your privilege to do so on a platform where people care what you have to say.
4. Challenging the substance of arguments and criticisms that are leveled against you and your initiatives by people. t’s a marketplace of ideas and you’ve been able to buy a lot of privilege and respect because you have BILLIONS OF DOLLARS and millions of people in our country and world respect the bank account. But it’s still a marketplace of ideas where you are more than capable of competing without having to rely on knee-jerk responses from [real or imagined] followers or ad hominem attacks on the folks who disagree with you.
5. Tweeting in support of punching nazis. Legit always cool. Maybe just do it once a day to see how people respond? It’s always okay to punch nazis.

THINGS THAT ARE NOT OKAY TO TWEET

1. Ad hominem attacks against people who criticize, disagree or denigrate you. (You legit called someone who just helped save 12 boys in one of the most awesome examples of human endurance and resilience a pedophile… and then doubled down on it. That’s just fucked up. Maybe time to rethink how you’re using the Twitter.)
2. Ad hominem attacks against reporters who write negative (and seemingly factually correct) articles about your companies. Going after journalists — especially women journalists — with a rabid following of tech fan boys who have no problem doxxing, verbally assaulting, or threatening people on Twitter seems a bit irresponsible. You know your power… and you’re a nerd… so you should know with great power comes great responsibility — and not just in a messianic, cynical I’m going to save humanity from itself Harry Seldon kind of way.
3. Ad hominem attacks against company executives that you’re competing against. Okay… sometimes this is great. And you’re really funny, so that works for you. And to be honest, at least you’re not punching down. But maybe there’s enough toxicity in the world already that we can actually just start championing folks who’re trying to do radical things… technologically feasible, provable and disclosable radical things. Ain’t nobody want to cheer on Theranos.
4. Lying or obfuscating when you’re caught out for things you’ve actually done. Own up to it and explain it.
5. Rick rolls and the word “lit”. This should go without saying.

Fella, you’re an incredibly powerful person with a significant, and rabid, following on a platform that isn’t known for rewarding perspicacity and reason (maybe using your platform you can change that?).

Typically, these days, you’ve been uniting more people in anger than you have behind your good intentions. As a public figure with an aggressive following, maybe work on increasing the peace?

There’s already one bloviating, egomaniacal, too-powerful, sycophant-encouraging, id and idiocy-inducing jerkface on Twitter. Let them keep that particular throne and maybe keep you keep the toxicity to yourself?

Netflix has been killing competitors with its original TV shows and movies. A Morgan Stanley survey released back in May had 39 percent of U.S. consumers naming Netflix as offering the “best original programming” among subscription video services, with everyone else eating its dust, including HBO, which nabbed 14 percent, Amazon Prime Video (5 percent) and Showtime Networks, with a measly 3 percent of the votes.

That could well change with a new, seven-part Showtime series by Sacha Baron Cohen, the English actor, comedian, screenwriter, and producer who has played fictional characters Ali G, Borat Sagdiyev, and Bruno, and who is back in brilliant form, including as Israeli anti-terrorist expert Col. Erran Morad.

If you doubt that the series — “Who is America” — is going to be the talk of the internet (and offline word), check out this clip streamed last night ahead of its premiere tonight at 10 p.m. EST.

Among other things, it features former Congressman Trent Lott promoting putting guns in the hands of “law-abiding citizens, good guys, whether they be teachers, or whether they actually be talented children and or highly trained preschoolers.“ (Lott hardly appears to have an, ahem, gun to his head, either.)

The clip may well leave you speechless at first, especially if you have parented, or even momentarily interacted with, or possibly just seen on TV, a preschooler.

Once America had an unassailable advantage, an economic flywheel that spun off innovation and Fortune 500 companies like a perpetual-motion machine. Bring in the best, brightest, and most driven from around the world; educate them or their children at its universities; then watch them start companies, succeed wildly, give back to their alma maters, and recruit new talent as the virtuous cycle began again.

It hardly mattered whether these immigrants came in as students (think Satya Nadella, Sundar Pichai, and Steve Jobs’ father Abdul Fattah Jandali) or with their families (Sergey Brin and Jerry Yang) or as refugees (eg Alexis Ohanian’s father’s family) or as undocumented immigrants (eg Ohanian’s mother.) Meanwhile, the UK, thanks to its Commonwealth connections and universities like Oxbridge and Imperial College, did much the same on a smaller scale. It was a self-sustaining wealth-generation and nation-strengthening machine of gigantic proportions, and it would take colossal idiocy to want to interfere with it.

Enter Brexit. Enter Donald Trump. Enter their implicit and explicit rejections of immigration, including serious barriers to and discouragement of legal and skilled immigration, such as H-1B visa holders and international students — along with the general sense of “you’re not welcome here” that they’re clearly doing their damnedest to convey.

Meanwhile, across the Atlantic, that other great immigrant nation, France, has been working overtime for the last four years to open both its economy and its borders to tech startups. I was skeptical of these efforts a couple of years ago, but two days ago I sat down with former Cisco CEO John Chambers and Accel partner Joe Schoendorf to talk tech in France, and they’ve convinced me that under President Macron, “everything has changed.”

It’s not just that Macron’s reforms have made it far easier to hire and fire in France, making labor costs far more understandable and predictable — although this is a huge deal and a major sea-change. It’s not just that France is offering easy-to-access French Tech visas to founders, employees, and investors alike, so that it’s never been easier for techies to live and work in France — which, as a former Paris resident myself, I can tell you is pretty great.

It’s not just access to a sizable pool of relatively inexpensive engineers. It’s not just openness across academia as well as the private sector 941% of France’s 75,000 Ph.D students are not French.) It’s not just Paris beginning to surpass London in investor interest generally, not just in technology.

It’s also the transformation of the French population as well as the government. 50% of French youth aged 18-24, and 70% of students at the École Polytechnique, France’s flagship technical university, want to go work for startups rather than enterprises — and their ambitions are now European and/or global, not merely French. There’s strength in depth there, too; Chambers compares the raw engineering talent at the Polytechnique to that at Stanford, and France is one Fields Medal away from overtaking the USA in total numbers won.

I can aver that all this is a massive change from when I lived in France a decade ago. Schoendorf says he can think of only one comparable example of a major developed democracy changing so much, in such a short time, as France over the last four years: the UK under Thatcher. Regardless of whether you lionize or demonize Thatcher, that gives you an idea of the scale of the transformation. (And it’s nationwide: 75% of France’s members of parliament are new, and there are twice as many women as ever before.)

I don’t want to pretend that Silicon Valley is at risk of being supplanted by the Île-de-France. The Valley is and will remain the sun at the center of tech’s solar system. But France has now graduated from “asteroid” to “planet,” and is well on its way to “gas giant.” Not least because of its spectacular timing: inviting immigrants just as the US and UK are in the midst of the spectacularly stupid process of dissuading them, and just as the Valley has gotten so expensive, courtesy of NIMBY housing paralysis, that leaders there are looking for any way to diversify to other locales.

All this is beginning to have a measurable effect. There were 274 French companies at the latest CES, up from 13 less than a decade ago. There were more than 700 VC investments in French tech companies last year, which rivals the UK, and more than 50 had American VC involvement. Also, I don’t want to put too much weight on anecdotal data, but two serious, impressive tech people I know have, independently, moved from America to Paris in the last few months.

My chief complaint two years ago was that the French government wanted startups to make their big enterprises better and more competitive, rather than wanting startups to become their big enterprises. That has changed. As Schoendorf says, “Macron sees the world’s five most valuable companies, all tech companies on the West Coast of America, and thinks: we need one of those.” Pascal Cagni, chairman of Business France, has a more accessible intermediary goal: a French “NATU”, meaning Netflix / AirBNB / Tesla / Uber.

And he’s right. France’s transformation into Europe’s primary technology power is real and ongoing, among all of government, academia, big business, and startups; but what they really need is a big hit and a cohort of successful entrepreneurs, a French equivalent of what the PayPal Mafia became. (Xavier Niel is having an enormous effect — see Ecole 42 and Station F, “the world’s largest startup facility” in southeast Paris — but he can’t do it alone.) If and when that happens, though, France will lead Europe for the foreseeable future … and help lead the globe, too.

Three e-mobility startups are accelerating into the U.S. motorcycle market.

Italy’s Energica and California based Alta Motors and Zero Motorcycles have revved up promotion, distribution, and sales.

You may see their machines zip by on American roads before the big two-wheel gas powered companies get EVs to showroom floors.

These startups could reboot U.S. motorcycle sales while shifting the global motorcycle industry toward electric.

The market

Since the recession, America’s motorcycle sector has been in the doldrums. New bike sales have dropped roughly 50 percent since 2008—with sharp declines in ownership by everyone under 40. [Chart: MOTOSALES] Most of the market is now aging baby-boomers, whose “Live to Ride” days are winding down.

Two bright spots in the space are women and resales. Females are one of the few growing U.S. ownership market segments. And per an Insurance Institute for Highway Safety study, total motorcycles on the road actually increased from 2008 to 2017, though nearly 75 percent of registrations are for bikes over 7 years old.

So Americans are buying motorcycles, but for some reason not choosing new ones.

On the e-moto front, two-wheel gas manufacturers have mostly stagnated around EV concepts. None of the big names—Honda, Kawasaki, Suzuki, BMW—offer a production electric street motorcycle in the U.S.

Harley Davidson jolted the industry in February by committing to produce an EV for sale by August 2019.

On U.S. e-motorcycle sales, Global Market Insights (GMI) recently tallied 2017 combined American e-scooter and moto sales at 245K units worth $155M. Following worldwide trends, GMI projects that to grow to 598K and $304M by 2024, with the share of U.S. e-motorcycles to scooters increasing.

The startups and motorcycles

Alta, Energica, and Zero have niche markets for their unique tech and design.

Italy’s Energica is targeting the high performance, higher priced superbike segment. On disrupting existing market leaders such as Ducati or Kawasaki, “Of course we want to do that,” CEO Livia Cevolini told me.

Energica offers three models in the U.S.: the EVA ($26,240), EVA ESSEESSE9 ($24,940) and top line 145 horsepower, 150mph EGO ($26,460).

All three share innovative features, including a patented cooling system to optimize performance of their motors and high energy lithium polymer batteries.

08-01-2017 Torino, calcio campionato serie a Tim, gara Juventus-Bologna, nella foto: .photo damiano fiorntini

Energica’s proprietary Vehicle Control Unit syncs to a digital dash and MYEnergica app. The VCU regulates everything from power output and preset riding modes to ABS and regenerative braking.

As a member of the ChargePoint EV network, Energica integrates the group’s 20 minute DC Fast Charging tech “because if want to ride Saturday with your sport bike friends nobody is going to wait 2 hours for you to charge,” said U.S. CEO Stefano Benatti.

He explained the company is expanding its American dealer network from San Francisco, to Chicago, Florida, and New York. Energica is also entering racing. Its EGO motorcycle was named the class bike for FIM’s 2019 Moto-e World Cup.

Brisbane, California based Alta Motors focuses primarily on producing electric powered off-road machines. Four of Alta’s five models—including the three that are street legal—are specialized for dirt riding. The MX and Redshift MXR motorcycles are full on motocross racers.

The startup has raised $45M and counts Tesla co-founders Marc Tarpenning and Martin Eberhard among its investors.

From a design perspective Alta’s two-wheelers are distinctly minimalist and produce significant power to weight. “We pioneered a new approach to building 18650 based packs,” Chief Product Officer Marc Fenigstein told TechCrunch—referring to the lithium-ion battery cells used by Tesla.

Alta recently launched its second generation—waterproof, 350 volt, 66 pound—battery. “That pack gives us unique…range per pound­­ for a battery pack and unique economics, not just for the world of electric motorcycles…but pretty much everything smaller than a passenger car,” he said.

Fenigstein estimated “the premium off-road motorcycle market is bigger than people think, at [roughly] $2BN.” He would not divulge Alta Motors revenue or sales figures.

Shortly after their EV commitment, Harley Davidson took an (undisclosed) equity stake in Alta, along with a board seat, and entered into a co-development partnership.

Alta’s CEO revealed Harley’s recent EV announcement “isn’t the program we’re working on”, but confirmed the Alta-HD partnership “should result in a motorcycle.”

Of the three startups, Scotts Valley, California based Zero Motorcycles has the widest market and model breadth. The company has six base models, three with dual sport capabilities, distribution in 30 countries, and had sales of $90M in 2017 (according to GMI—Zero wouldn’t confirm revenue data).

“We’re the number one full sized electric motorcycle manufacturer in the world. We sell more every year than all our competitors combined,” CEO Sam Pascheltold TechCrunch—though Zero did not provide exact figures.

Like Alta, Zero manufactures its EVs in the USA. The startup’s ZForce battery connects to an internal magnet driven motor. Both are governed by a proprietary Main Bike Board (MBB) processor “the brain…that houses all of our algorithms,” said Zero’s VP for Product Development Brian Wisman.

“The specific energy that’s achieved on Zero’s lithium ion batteries is far greater than anything achieved by automotive EVs right now,” he said.

Zero motorcycles connect via Bluetooth to an app that allows riders to monitor and adjust performance from devices. The company’s EV’s can be fast charged from charging stations or by plugging into the same home outlet that powers your toaster.

In addition to citizen motorcyclists, Zero has started specialized fleet sales to the U.S. military and police departments.

The ride

I got a chance to test models from all three companies. The most significant distinctions between their e-motos and gas two-wheelers are power delivery and no shifting.

Zero, Alta, and Energica’s machines are fully automatic—no clutch or gears.

Simply flick the on switch and twist the throttle to go. When you do an immediate and uninterrupted stream of voltage powered torque launches you forward. The wind is louder than the motor—though each e-motorcycle has a distinct sound—and when you stop there’s silence.

Energica’s big battery acceleration is akin to striking a lightning bolt to the pavement. Alta’s lightweight RedShift MXR is quick, nimble, and flight capable on a motocross track. And Zero’s SR feels distinctly balanced across power, performance, and rideability. I didn’t find myself misting gas motorcycles at any point of the tests.

The biz play

Energica, Alta, and Zero face their own steep climbs to profitability—and the e-moto space has already seen two flops in Mission Motorcycles’ collapse and Brammo sputtering out.

“We do have a burn rate. Like any sub-scale EV manufacturer such as Tesla, we are pre-profit,” said Zero CEO Sam Paschel. “The way to win is scale.”

And while these electric startups probably can’t revive new U.S. motorcycles sales to seven-figures annually—that would take 12 years of five percent growth—they could play a role in transforming the global motorcycle industry.

As their models close gaps on price, performance, weight, recharge times, and ride distance—Zero, Alta, and Energica could shift the market from gas to electric.

Their tech appeal and simplicity to ride could bring more first-time and younger riders into motorcycling, including women.

This — and Harley’s EV production commitment — could pressure the likes of Honda, Yamaha, and Ducati to produce electric motorcycles sooner.

These factors (and regulatory tailwinds) could thrust Alta, Zero, and Energica into an active space for partnerships, mergers, and acquisitions. Their compact, lightweight technology has application for other non-auto, non-motorcycle e-mobility solutions.

Growing competitive pressure and a shift in two-wheel consumer preferences could also make Energica, Zero, and Alta acquisition targets for mainline motorcycle manufacturers.

That’s a lot of speculation, but the big gas manufacturers are apparently watching. “Since Harley’s EV announcement, three of the big motorcycle companies bought one of our bikes,” an exec from one of the startups told me on background.

“We’d like to think they’re just curious to ride our e-motos, but more than likely it’s to break them down and study the tech,” the exec said.

For the last few years now, BMW has wrestled with the question of what it’ll mean to be a luxury car manufacturer in the age of electric cars, autonomous driving and rapidly changing — and increasing — customer expectations. What, after all, makes something the “ultimate driving machine” when the driver eventually stops driving?

For BMW, the answer is a renewed focus on technology and the in-car experience it enables, without forgetting its heritage in performance cars. To discuss the state of the company’s transformation, not just in terms of its cars but also its business model, I sat down with BMW’s outspoken VP of Digital Products and Services Dieter May shortly after the company unveiled the latest version of its in-car operating system.

“We build digital products and services that are meant to help us differentiate our core product, the car and generate revenue,” May said. “But these digital services also provide us with channels and touch points that allow us to now have a direct relationship with the customer on the sales side and talk to the customer directly.”

In the car industry, however, the sales channel has traditionally been the dealership. That’s where you buy the car and that’s where you get it serviced. It’s the dealer who knows (ideally) who you are and what you want. The manufacturer’s role in this model is to build the car, maybe build a bit of a central online presence with a configurator so customers can get some idea of the car’s price — and get out of the way.

That’s not the future that May envisions, though. And neither is it one where the big tech companies like Apple and Google own the driver and the user experience.

“As we’re building the digital products in the car, we are also building out the car as a channel and touchpoint at the same time,” May noted. “We’ll have our app, a personal assistant etc. and with that, we can create a user profile and provide that to our sales teams. Today, virtually every car manufacturer can’t talk directly to the customers because the customer belongs to the dealer, and because the different business units, like after sales, financial services, etc., aren’t unified and all try to talk to the customer separately.”

So for BMW, digital experiences in the car are one thing — and you can expect to hear a bit more about this in the coming weeks and months — but the company is looking beyond this and how it can use this transformation to also create new business opportunities that go beyond maybe selling an in-car Spotify subscription for a few dollars. But what gets May most excited about this is the prospect of being able to talk to the customer throughout the ownership lifecycle. “That’s the cool part, because it allows me to keep the product ‘car’ fresh throughout the lifecycle and manage it like a device,” he said.

The move that May is hinting at here means that BMW wants to not just focus on selling cars but to create a model where it can extract some revenue from users throughout the car’s life. As an example, May noted that BMW may sell you a Mini with a charging package and, in addition, it’ll sell you a flat-rate subscription to charge it. “There are so many opportunities here, but you have to play it smart, both before somebody buys the car and after the sale.

If BMW wants to own the customer, though, that means dealerships have to change. “The dealers will have to grow into a different role over time,” May acknowledged. “We expect and hope that just as we will share data with the dealer, the dealers will share their data with us. A small piece of a larger cake is still better than nothing.”

Customers will still come to the dealer for their service needs, so BMW isn’t cutting them out completely, but the company definitely wants to own a larger part of the relationship with the customer. And at the end of the day, it’s the dealer who represents the manufacturer, whether that’s taking somebody on a test drive or helping the customer take delivery of a car.

“What’s most important for us — and everybody is talking about autonomous driving and electric vehicles and so on — but if we don’t become a customer-centric company, then we are destined to fail. The number of digital elements in our customers’ lives and in the car continues to increase, and if we don’t understand that, we’ve got a problem.”

As for its current in-car systems, May told me that BMW now has more than three million registered users for its ConnectedDrive system, but what’s maybe more important is that the number of user interactions is increasing significantly faster than that. What’s interesting to hear is that the way BMW thinks about these users is pretty much in line with any consumer internet company. The team tracks monthly, weekly and daily active users, for example, and is working to increase those engagement numbers with every update.

One problem car manufacturers have long suffered from is that cars stick around far longer than smartphones, and that the in-car technology can quickly seem out of date. Because it is betting on a connected car that is always connected to the cloud, BMW (and, to be fair, many of its competitors) is now able to update the in-car software. That’s true for new head units, but not necessarily for older ones, and fragmentation remains an issue — though with a standardized model for both BMW and its Mini brand, that’ll likely be less of a problem for newer cars than for those that launched two or three years ago.

“In the car industry, a lot of people think that everything has to be backward-compatible reaching back 20 years, but my take is that we have to be more like smartphone vendors,” said May.

Taking a page from the software industry, the BMW team often launches new features that are akin to minimal viable products. That’s not necessarily something the luxury car buyer is used to, of course, but it does allow the company to test new features and expand on them as they gain traction.

The next concrete step for BMW in this journey is to feature an interactive personal assistant in the car that knows about the customer. May believes this will drive a lot of usage. Although the exact details remain to be seen, the BMW team hinted that we’ll learn more in the fall.

Here is what you should take away from the state of the global venture capital market: late-stage deals dominated Q2.

Using projected data provided by Crunchbase, Crunchbase News reported that Q2 2018 marks new post-dot com highs for both VC deal and dollar volume around the world, the latter of which was propelled by a surge in late-stage deals (Series C and above).

The chart below plots growth in projected late-stage deal and dollar volume over time.

This remarkable growth in dollar volume — more than doubling since the same period in 2017 — has led to the late-stage deal market looming large over the venture landscape. For perspective, late-stage rounds accounted for about 42 percent of dollar volume in Q2 2017, but it made up 64 percent of dollar volume in Q2 2018.

To be clear, this isn’t a rising tide raising all ships. Worldwide, late-stage venture activity is intensifying at a more rapid clip than other venture funding stages, squeezing other stages toward the margins. We can see this happening in the chart below:

Two things are happening at once here: On one side, private equity deals with previously venture-backed companies — what we call “Tech Growth” — account for less of the action; on the other side of the spectrum, angels, seed investors and writers of Series A and Series B checks account for less of the total dollar volume over time.

As it happens, in Q2 seed and early-stage venture — despite reaching post-dot com highs in absolute terms — make up for a smaller percent of total dollar volume than in any quarter since at least Q3 2013, the last records we had readily available.

In the second quarter, seed and early-stage venture lost ground in relative terms, making up a smaller percent of total dollar volume than in any quarter since at least Q3 2013, the last for which records were available.

Private equity, on the other hand, is getting squeezed out because a certain class of venture capital firms are able to invest more capital into late-stage venture deals.

Venture capital shops — especially the well-established — are raising ever-larger funds at an increasing pace. Just as an example, three VC firms recently (Scale Venture Partners, Index Ventures and Lightspeed Venture Partners) announced $4 billion in fresh powder across six new funds.

In part, this pivot to larger funds is a strategic countermeasure against SoftBank and its behemoth $100 billion Vision Fund. The fund routinely leads (sometimes as the sole investor) late-stage venture capital rounds sized in the hundreds of millions of dollars.

In order to compete with SoftBank for the best deals, many VC firms are raising big new funds. Capital pools earmarked for late-stage deals are growing deeper. Sequoia Capital’s third Global Growth Fund is expected to top out at $8 billion, whereas its second (announced in June 2017) was a comparatively paltry $2 billion.

So is there an end in sight for all this late-stage largesse? For the time being, not really.

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.