Month: October 2018

In the nine months since Didi acquired the Brazilian ride-hailing startup 99 in a deal that valued the company at a reported $1 billion, the market for mobility and logistics startups in the Latin American region has changed dramatically.

The Didi deal was perhaps the first big acquisition for a Latin American startup in recent years, and a starting gun for what’s been an extremely competitive race among startup companies to win the hearts and minds of consumers across the region.

The past year has seen the on-demand delivery service Rappi raise $200 million at valuation north of $1 billion from investors including the Russian firm DST Global. And just weeks ago, the Sino-U.S. investment firm GGV led a $63 million investment into Yellow, a company launched by 99 co-founders Ariel Lambrecht and Renato Freitas.

That deal was the largest Series A investment in Latin America to date, and a potential harbinger of things to come, given that the early-stage Mexico City-based scooter on-demand service, Grin, raised $21 million from the Asian and U.S.-focused investment firm DCM. 

These deals also underscore the intensifying global competition between U.S. and Chinese technology companies and investors for larger shares of the worldwide market for technology-enabled goods and services.

Given all of the jockeying for position, we’re lucky to welcome to our inaugural Latin American event a group of investors and entrepreneurs to help us make sense of all these market moves.

Hans Tung, managing director, GGV Capital

Hans Tung, a managing partner at GGV Capital, has been on the Forbes Midas List six times (from 2013 to 2018) and is one of the top investors in Chinese startups (including Xiaomi and Musical.ly, acquired by Bytedance). Tung is also now investing in Latin America, having shepherded his firm’s investment in Yellow.

Yellow co-founders Ariel Lambrecht (who was one of the masterminds behind 99) and Eduardo Musa, who previously served as chief executive of the Brazilian bike brand Caloi, will also be on hand to give us their sense of the mobility market and the role foreign and domestic companies are playing.

Finally, Tony Qiu, the general manager of Didi in Latin America, will be on hand to give us his perspective on this increasingly strategic market for the company.

With the capital flowing and competition growing, this is certainly one panel that’s not to be missed at our Startup Battlefield Latin America event. Get your tickets here.

In an event defined largely by spec bumps to existing product lines, the Surface Headphones were certainly a surprise. For one thing, the company did an admirable job keeping them under wraps, in spite of numerous leaks for just about everything else shown off at the event.

For another thing, they’re freaking Surface Headphones. It’s just weird, man.

I will say, however, I was actually pleasantly surprised by the things. If you’d told me a couple of years back that Microsoft was releasing a pair of headphones that borrow heavily from the Surface line’s aesthetic, I probably would have kept walking.

But the company actually pulls them off pretty well, with a light gray aesthetic. They’re not the sexiest over the ear headphones, but they don’t look half bad. They’re also pretty comfortable, with generous over-ear cushioning and a lightweight design, so they won’t be a strain on the ears.

Unlike other portable Bluetooth headphones, they swivel freely, giving you a fair bit of movement in the process. Granted, the room was fairly cool, but they seem to breathe fairly well, so they shouldn’t be too stifling on a hot day.

I’m pretty happy with the headphones sound-wise. They’re rich and full with a decent low-end push. I’d like (and expect) to spend some more time with them in the near future, but so far so good — and the on-board noise canceling did a good job drowning out the scrum of nearby journalists.

I’m still getting used to the touch interaction. One tap plays and pauses, while holding down fires up Cortana — which is really one of the primary motivations for launching this product. Apple has AirPods, Google has Pixel Buds and now Microsoft has, well, headphones.

Cortana on a headset isn’t much of a standout for most users, but at least the company’s developed a fairly nice pair of $350 headphones to compete with the likes of Bose, Sony and Samsung. No word on exact release date, but the new Surface peripheral should be “coming soon.”

“Right now we’re in this Empire Strikes Back moment” says Initialized Capital’s Garry Tan, referring to tech giants ruthlessly copying and competing with fresh ideas. “We think the startups represent the Return Of The Jedi.” It’s that willingness to stand up against incumbents and give founders their best shot at disrupting them that’s won Initialized a place on the cap table’s of some of today’s fastest rising companies. Instacart, Coinbase, Flexport, and Patreon all count Initialized as investors because Tan and Serena Williams’ husband jump in the trenches with them, dispensing advice and connections over text message.

Now Initialized Capital has raised enough money to tackle its next challenge: the Series A crunch. Their first fund of just $7 million in 2011 taught them to be scrappy, and consider nascent companies yet to find product market fit. But even with their $39 million 2013 fund, and the $115 million third one they raised in 2016, they didn’t have enough cash to always follow on or fill out rounds of their 100 portfolio companies the way they hoped.

That changes today with the announcement that Initialized Capital has closed its fourth fund of $225 million.

Initialized Capital’s co-founders Garry Tan (left) and Alexis Ohanian (right)

“We’ve always been the first high conviction check, and often the smallest check” Tan says, recalling how he tracked Airbnb’s Brian Armstrong as he left to start Coinbase and Initialized invested the first $50,000. With the $225 million fund, we can actually do most of round rather than being the first check and then send 30 emails trying to get people to invest in it.”

Williams’ husband, commonly known as Reddit co-founder Alexis Ohanian, is the face of Initialized. But it’s Tan and the software he’s built that lets Initialized wield The Force when picking startups, and then rearing them into Jedi. Tan had experience from building BookFace, Y Combinator’s internal community Q&A system that’s often cited as one of the accelerator’s biggest value-adds, when he and Ohanian were still partners there.

“We use software as a means of constantly sharing knowledge” Tan explains. “every phone call, every email we have . . . it all goes in there. Then we take the software that we built…and augment those really talented founders into cyborgs.” From partnerships to recruiting, all that information allows startups to scale faster, and hopefully get to that Series A Initialized now has deep enough pockets to fund.

The human element is still crucial, though, so it’s recruited a lean team of domain experts such as Thiel Macro’s financial modeling whiz Eric Woersching, ex-Founders Fund general counsel Alda Leu Dennis for legal, and former TechCrunch reporter Kim-Mai Cutler for press strategy. But unlike the “wolfpack” funds where entrepreneurs only get aid from the partner spearheading the relationship, all of Initialized’s staff pitches in with deal spotting and around-the-clock assistance.

The Initialized Capital team, where one-third of investment partners are female. Image Credit: Jessica Monroy

Sometimes being contrarian doesn’t mean doing something first, but doing something honorably. After considering bike and scooter rental startups, they saw how startups like LimeBike and Spin invaded cities like a war party. Initialized chose to invest in Skip because its heavy-duty scooters are safer, and the company actually cooperates with local governments. “We didn’t think the ‘ask for forgiveness later’ model of growth — the Uber inspired model — we didn’t think it was going to work. We wanted to bet on the high-integrity founding team.”

Other times, it means siding with founders willing to be vulnerable. Ohanian joined the board of erectile dysfunction pharmacy app Roman as part of its recent $88 million round after its founder Zachariah Reitano was willing to talk about his own men’s health struggles. Customers related, and Roman’s revenue run rate is now in the tens of millions, up 720 percent since January.

What Initialized looks for in founders is the same as what it looked for in a mascot. “I still remember doodling the Reddit alien in college and years later seeing it tattooed on people’s bodies. We know the power that symbols can have, and we do plan on being a different kind of VC firm.” One critical example of how is that one-third of Initialized’s investment team is female. “Women in tech is one of the most important trends in representation and we’re very much allies there.”

So based on an early viral video about the small animal’s ferocity, the team settled on the honey badger for their brand. Though after 20 ugly attempts, Ohanian let a professional designer draw it. In a sea of funds named after old white dudes with abstract shapes as logos, they didn’t want to be another VC that makes you cringe when you see its brand on a Patagonia pullover.

“Garry and I want taking money from our firm to be something [founders] are proud of and they can wear on their chest” Ohanian concludes with a laugh. “Maybe not tatooed…”

While it looked like all the major news from Microsoft’s Surface event today had already leaked ahead of time, the company still managed to surprise us with the launch of its new noise-canceling headphones and its new Surface All Access plans that offer a monthly installment plan for your Surface purchases, similar to the way you probably pay for your phone.

You can read all about the headphones here.

As for the All Access plan, the company said that plans start at $24.99/month for 24 months to get a Surface Go. At $625 over two years, that’s a bit more expensive than getting the Go outright, though Microsoft didn’t yet say what configuration we’re actually talking about here.

What we do know, though, is that All Access will include a subscription to Office 365, access to in-store training and support (or what Microsoft call ‘top-tier support’).

As far as we can tell, there’s no discounted upgrade plan included here, something Microsoft previously offered when it launched its first financing option for its Surface devices last year. Those plans quietly disappeared a few weeks ago, though, likely in order to make room for this new plan.

To get a device on this new plan, you’ll have to go to a Microsft retail store, though.

Granted, most of today’s big announcements were iterative updates on devices we’ve seen in past years. Even so, Microsoft to sneak one surprise into today’s event. The simply titled Surface Headphones are perhaps the oddest addition to the line of laptop and desktop products.

The key to these over-the-ear headphones, however, is clearly Cortana. The company has had some issues helping spread its Siri/Alexa/Assistant competitor, so perhaps these devices with their next level of noise cancelling will go a ways toward spreading that gospel.

Priced at $350, the wireless headphones should be competitive with the likes of Bose’s ubiquitous QuietComfort and competing offerings from companies like Sony and Samsung. Of course, if Cortana is the main distinguishing factor, it’s going to be hard for these products to truly stand out from the pack.

It’s still early days, and we don’t even have a release date (beyond “coming soon”), so perhaps the company still has a couple of tricks left up its sleeve.

A tri-fold automotive renaissance, led by technology, has been playing out over the past few years. Electric vehicles finally have been embraced by mainstream consumers — and elevated by Tesla with long range and luxury quality. Meanwhile, rides on demand from Uber and Lyft have become a global movement that’s liberated personal mobility (and briefly snared China’s Didi the title of most valuable unicorn).

The third dimension, and most significant catalyst of this renaissance, is autonomous driving. Already, more than 15 million vehicles feature fundamental, Level 2 autonomy, thanks to  Mobileye, and Waymo is within reach of commercializing fully autonomous, Level 5 driving.

These innovations have earned enough momentum to draw luxury brands Mercedes and Cadillac into the fray. Yet vehicles combining all three aspects of this renaissance remain a niche market; EVs, for instance, last year accounted for only a little over 300,000 of the 18 million cars and trucks produced in North America.

It is China that will push this market into overdrive, guided by the Five Year Plan the country passed in 2016. It mandated 1 million electric vehicles be sold domestically by 2020, and 3 million by 2025. In the past year alone, China made itself the world’s largest EV market by a wide margin: Sales in the country reached 777,000 vehicles, more than doubling North America’s results.

A massive flood of capital is being directed toward this Five Year Plan, both from incumbent automakers and investors funding hundreds of new Chinese automakers. The incumbents — global brands such as GM and Volkswagen, and Chinese leaders such as SAIC and Dongfeng — face tremendous pressure from the army of investors at the gates. Powered by this new funding, as many as a dozen Chinese companies are on the verge of scaling, in the next three to five years, to a level it took Tesla a decade to reach.

Suddenly, every global automaker has a strategy for electrification, high-level autonomy and rides on demand, with products available to consumers now or in the next year. GM, for example, bought Cruise Automation and released Super Cruise on the Cadillac CTS 6; started mass producing Chevy Bolts and planning more than 20 new EV models in the next five years; invested in Lyft; and created Maven, its own ride-on-demand service, with autonomous rides due to start this year.

Sure, global automakers had already started heading down this path once Tesla proved there was a market. But I’d argue that without pressure from China, these new vehicles wouldn’t be arriving so soon, especially in an affordable offering. When you look at the volume China is able to drive, prices go way down for crucial items like electric vehicle batteries and LIDAR. China’s scale has become the greatest accelerant to mainstream adoption of the next-generation vehicle.

In addition to pushing down the cost curve, the emergence of new Chinese companies eyeing the market (such as NIO, Byton, Faraday Future, Xiaopeng and WM Motors) has provided opportunities for promising new technical talent to emerge. As a result, the barriers to high-level autonomy and electrification may well become more easily surmounted.

Let’s take two major barriers for electric vehicles: The time required to charge them and the general shortage of charging stations. Now EV makers are pushing to establish charging networks: NIO is implementing battery swap stations, while Porsche is adding chargers to all its dealerships. In addition, wireless charging looms on the horizon: Dan Bladen, CEO of our portfolio company Chargifi, believes Apple’s decision to embrace wireless charging in the latest iPhone will pave the way for ubiquitous wireless vehicle charging.

The more people we have attacking these problems, the faster we’ll have mass-market solutions. This is a seismic shift in the automotive industry, and it couldn’t be more exciting.

Even further down the road, the innovation explosion in China’s automotive sector is poised to disrupt the entire U.S. automotive market. Much as we saw Germany, Japan and Korea make major headway versus Detroit in the late 20^th Century, I believe it’s just a matter of time until Chinese brands take to American highways.

One last piece of hardware from today’s Microsoft event. The company issued an update to what is arguably the most compelling member of the Surface family. The company’s innovative iMac competitor, the Surface Studio got a refresh today, as expected.

As with the other products announced at today’s event, things look pretty similar on the, you know, Surface. Like the Laptop, that’s actually just fine here. The Studio’s got one of the more groundbreaking designs you’ll find in a desktop PC. There are a number of key updates from a hardware perspective, however.

The 28-inch screen is 38 percent brighter, with 22 percent more contrast, according to the company’s numbers. It features a total of 13.5 million pixels.

The touchscreen features tilt sensitivity for pen input, with 4,096 levels of pressure and improved ink latency. Inside you’ll find Pascal graphics, coupled with up to a 2TB solid state drive. That’s an interesting move, given that Nvidia recently announced its next-generation Turing architecture. Those cards are still very expensive, though, and Nvidia continues to sell them side-by-side with its Pascal-based cards.

The Studio 2 worked admirably during the demo, with a speedy response time using the pen, along with on-board AI capable of transforming handwriting into text, while pulling corresponding images down from the cloud.

Google just introduced a new Android app to better enable people with limited mobility to use their phones. Called Voice Access, the app offers people a hands-free way to use apps, write and edit text and, of course, talk to the Google Assistant.

It’s designed to make it easier to control specific functions like clicking a button, and scrolling and navigating app screens. Currently, the app is only available in English, but Google is working on additional languages.

Google created the app in service of people with Parkinson’s disease, multiple sclerosis, arthritis and spinal cord injuries, but recognizes that the tool can also be helpful for people whose hands are tied with other tasks.

Another bit of expected news at today’s big Microsoft event. Here’s the latest version of the Surface Laptop. Once again, not a lot of changes on the outside of the product — which might be for the best. After all, the Laptop is presently my favorite member of the Surface family.

Product lead Panos Panay touched upon the keyboard, which is easily one of the device’s best features, particularly compared to the keyboard cases found on other Surface devices. Like the Pro, the new device now comes in a much slicker matte black. And, like the Pro, most of the key changes are inside.

The new Laptop is said to be 85 percent faster than its predecessor, thanks to an on-board 8th-gen Quad Core Intel processor. The battery also gets an impressive 14.5 hours, which should more than get you through that flight. That’s even more impressive because Microsoft is giving the laptop a brighter, thinner and higher-resolution display, too.

Pre-order for the device opens today, starting at $899. It will start shipping October 16.

Microsoft today announced that the Windows 10 October 2018 update is now available. The company made the announcement at a small press event in New York, though it’s obviously no surprise that Microsoft decided to roll out the October update in the month that gave it its name.

As usual, these rollouts take a while. You can force the update now, but for those who want to wait, Microsoft will start the automatic updates on October 9.

Like most recent Windows updates, the October release isn’t going to blow you away with a new interface or crazy new features. Most of these updates now are incremental, but overall, the new release offers a number of interesting new features.

The most interesting of these is probably the new “Your Phone” app, which allows you to text from your PC using an Android phone that also runs Microsoft’s mobile companion app. In later iterations, that app will also sync notifications to your desktop, but for now, that’s not an option. There also are tools for continuing your workflow as you switch from your phone to PC (or vice versa). These features work for iOS users, too.

As far as syncing between devices goes, it’s worth noting that the update also will allow you to share your clipboard between PCs.

Since everybody likes a dark mode these days, the Windows 10 File Explorer now also includes a dark theme. There’s also a revamped search experience, as well as a new screenshot tool.

While the release includes plenty of other tweaks, both in terms of functionality and design, the most anticipated feature, Sets, didn’t make it into this release. Sets is probably the biggest change to the overall Windows user experience since the release of Windows 10, so maybe it’s no surprise that Microsoft is trying to perfect this. And perfection takes a while.