Year: 2018

Getting banned for cheating is nothing new in Pokémon GO. There’ve been big ol’ ban waves every few weeks for ages now.

The policies have never been totally set in stone, however — at least not publicly. Like many of the game’s mechanics, the player base has had to share info amongst themselves to figure out the offenses and their relative punishments, from slaps on the wrist to lifetime bans.

At long last, Niantic has published a proper “Three-Strike Discipline Policy.”

As the name implies, most infractions will be handled on a three-strike system. Niantic notes, however, that “some misbehaviors” (they leave that one pretty open-ended) will work out to an instant perma ban.

So what’s worthy of a strike? Spoofing (making the game think you’re somewhere you’re not), using modified Pokémon GO clients or bots or doing something that accesses Pokémon GO’s backend in an unauthorized way.

On the first strike, you’ll get a warning message. You’ll still be able to play, technically, but you won’t see anything even remotely rare for seven days.

On the second strike, they’ll close your account for a month.

On the third strike, the account is banned for good.

And if you think you got stuck in the crosshairs by accident? Niantic has an appeal process for that.

It’s worth noting that these punishments aren’t really new; bans of all variety have been happening since shortly after the game’s release. This is just the first time Niantic has really put the hows-and-whys in stone.

Niantic could probably go a few steps further in their clarifications here, though, as plenty of players are still confused as to whether or not they’re breaking the rules.

Will they get in trouble for using third-party software (like an automated IV calculator) that doesn’t modify the client or access Niantic’s backend but does provide the player with more info? What about players using third-party versions of the Go Plus hardware, like the Go-tcha? That thing pretty much automates catching/spinning as you walk around… but it’s also been sold in retail stores for years now, likely to many players who’ve never considered that this thing they bought in their local GameStop might not be allowed.

Insurance premiums total more than a trillion dollars in the U.S., and yet, where that money goes is something of a mystery. It certainly doesn’t seem to get invested in the consumer experience, where ancient incumbent companies still process paperwork as if it is the 1800s, and consumers are left wanting for new insurance options that meet their needs.

Insurance might well be the last frontier for disruptive innovation, but now, a generation of insurance tech startups is bringing new data models and product experience talent to bear on this sclerotic industry. In the process, they may well become some of the most durable and profitable companies the industry has ever seen.

Those startups face challenging questions. How can a startup even get started in an industry where an insurer often needs millions sitting on the balance sheet just to get started? How can a startup compete in a highly regulated industry, where incumbents have the financial might to actively stamp out competition? Can there be such a thing as delightful insurance?

These are just some of the questions we will be investigating during a high-powered insurance tech panel at Disrupt SF this September 5-7. We will be joined by two founders who are spearheading a complete overhaul of the industry through their companies.

Mario Schlosser is the CEO and co-founder of Oscar, a New York-based health insurance startup that has raised approaching a billion dollars in venture capital. Schlosser started programming as a young boy in Germany, and eventually moved to the U.S. to work on computer science research at Stanford. Later, he migrated to Harvard Business School, where he met his Oscar co-founder Joshua Kushner.

Working with Kevin Nazemi, the trio launched Oscar in 2013 just as Obamacare’s exchanges were becoming operational. Since then, the company’s health insurance products have become available in six states, and it has more than 700 employees. The company is reportedly on track to hit a billion in revenue in 2018, and recorded its first quarterly profit a few months ago.

Health is just one segment of the insurance landscape though. We also will be hosting Daniel Schreiber, who is the CEO and co-founder of Lemonade, a New York-based renters and home insurance startup. Lemonade, which uses artificial intelligence to make the insurance process faster and more consumer friendly, has gotten huge attention from investors since its launch in 2015, receiving $180 million in venture capital, including a mega round from SoftBank late last year.

Schreiber, a former attorney who was perviously president of wireless charging startup Powermat, joined with Shai Wininger to launch the startup, and since then the company’s product has been made available in 19 states and the District of Columbia. Perhaps most interestingly, Lemonade has a unique service model for its policyholders. Policyholders are grouped together with “peers” who want to commit to helping the same causes. Then, at the end of the calendar year, any premiums remaining in that group of peers is donated to their cause as part of a “Giveback.” Lemonade takes a fixed cut of the premium, to incentive-align itself with customers and ensure they always pay out claims as efficiently as possible.

If you want to understand the challenge but incredible opportunities present in regulated businesses like insurance, these two founders are not to be missed. They will be chatting on the Next Stage of Disrupt SF the morning of September 5th.

The full agenda is here. Passes for the show are available at the Early-Bird rate until July 25 here.

I’ve been working with an ugly but functional lopsided two-monitor setup for years, and while it has served me well, I can’t say the new generation of ultra-wide monitors hasn’t tempted me. But the truth is they just aren’t wide enough. Or rather, they weren’t.

Samsung has just blown my mind with a monitor so wide it will serve as a ramp that you can trick off of in the summer. It’s so wide that when it puts on a pair of BVDs they read BOULEVARD. It’s so wide that the Bayeux Tapestry got jealous.

Actually it’s a little less wide than a couple of the monitors Samsung announced at CES — but those had two problems. First, they were 3840×1080. And I just need more vertical pixels than that. Second, they were 49 inches wide. That’s a BIG monitor! Not just big, but with those pixels spread out that far, it’s not going to be sharp at all.

On the other hand, this new one not only adds an extra 120 pixels, bringing it to the far superior 1200 vertical (for a total of 3840×1200), but it is 43 inches corner to corner. Forty-three inches… would that be too big, too small, or would it be…

Just right?!

(Yes, my left monitor is a bit warmer than my right, but it’s not as bad as it looks — that’s a viewing angle issue.)

One of the downsides of a giant monitor is that it can be a pain to separate workspaces or, say, have a movie playing “full screen” on one half while you browse Etsy for vintage kettles on the other. But Samsung has a “picture-by-picture” mode and some other useful features that help with this. So I’m going to give it a shot.

It’s also got 120Hz refresh (though no word on sync tech), a bunch of USB ports, and even a headphone jack. I don’t know why you would want built-in sound on a thing like this, since you clearly are a media freak if you buy it, but they felt the need to add in speakers.

The Samsung C43J89 monitor will cost $900 when it comes out, which admittedly is two or three times what I would normally pay for a monitor — I’m more of a Dell Ultrasharp guy, IPS all the way. But my whole workflow could change when this thing goes on sale.

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.