Author: azeeadmin

In the first days of 2017, Osterhout Design Group arrived up at CES with a two-story booth and huge promises. The startup’s founder, Ralph Osterhout, wanted to take the small San Francisco-based company even further past its military contractor roots in AR, building out major enterprise and consumer businesses with flashy new product lines. The company had just raised $58 million, and the Las Vegas electronics show served as its launchpad for its R-8 and R-9 augmented reality glasses lines that Osterhout hoped would bring “glasses to the masses.”

Less than a year later, however, the company had burned through its funding and couldn’t pay employees. By early 2018, ODG had lost half of its workforce as it sought loans to pay back employees. Today, a skeleton crew awaits a patent sale less than a week away after acquisitions from several large tech companies, including Facebook and Magic Leap, fell through, multiple sources tell TechCrunch.

ODG founder and CEO Ralph Osterhout

Ralph Osterhout, 73, founded ODG 20 years ago as a high-tech toy company, built after his previous venture, Machina, collapsed in what a Wired report at the time called “a spectacular bankruptcy.” After underwriting ODG with $14,000 of his own cash, Osterhout kept the startup plugging along on its own merits before he decided that it was time to reach for outside funding to turn his company into a powerhouse in the burgeoning augmented reality industry. At the end of 2016, the company raised a $58 million round led by 21st Century Fox.

ODG was already getting thousands of orders for its R-7 glasses, an enterprise-focused product that it billed as a head-worn Android tablet that could help workers go through checklists, review documents and share live video feeds hands-free. Osterhout wanted to get AR glasses into the hands of consumers and take advantage of new tech advances, even as Magic Leap was teasing the release of its own heavily hyped consumer product.

“I hope Magic Leap is a huge success. I want everyone in AR to be a huge success,” Osterhout said in an interview with TechCrunch in 2017. “[Augmented reality] is going to be transformative.”

Months later, a large Chinese firm approached ODG with an offer north of the company’s $258 million Series A valuation, a source tells TechCrunch. Talks fell through, but ODG’s leadership was at their most ambitious and felt like they couldn’t be stopped.

At the same time, following the CES 2017 product unveil, some employees wondered whether having three distinct product lines under development aimed at roughly the same customer was the right direction for the company with around 100 employees. Ralph Osterhout’s strong internal popularity kept these concerns at bay even as the company faced double-digit return rates from customers of its current-generation R-7 glasses due to manufacturing issues.

“That’s a little bit the story of ODG and Ralph, in general: everything is a prototype, nothing is finished, and before one thing is 60 percent done, you’re already onto the next one,” a former employee tells TechCrunch. “I think the heart of ODG’s downfall was its lack of focus.”

The company never ended up shipping the R-9 or the R-8 or even fulfilling all of its R-7 orders. It blew through its funding before the fall of 2017, and it wasn’t long before employees were on half-pay and soon stopped getting paid at all. ODG sought backing from Chinese firms, but sources say that a negative trade environment hampered those efforts. In 2018, it received an $8 million loan from a Chinese firm used to pay back employees as Osterhout began trying to scrounge together an exit strategy, seeking out buyers for the company that bore his name.

Suitors for the company included Magic Leap, Facebook, Razer and Lenovo, sources tell TechCrunch. In each case talks fell through, as Osterhout was convinced that his company was being undervalued by the prospective acquirers.

ODG’s San Francisco offices in 2016

Sources say that Magic Leap continued to bump up its offer, eventually signing a letter of intent in the final months of 2018 to purchase the startup. The final proposed purchase price ended up at $35 million, still a far cry from its 2016 valuation, a source familiar with the deal tells TechCrunch.

This offer came with stipulations for the types of engineers Magic Leap wanted to bring aboard, leading ODG to shrink its staff to just a couple dozen employees. As the startup whittled itself down to prepare for a disappointing, yet relatively dignified, sign-off, Magic Leap began to grow cagey about finalizing the acquisition, sources say. As the deal started to fall through, some in ODG’s leadership began to wonder aloud whether Magic Leap was “acting in poor faith” and was only looking to starve the company before purchasing assets at a discount in a patent sale.

“Ralph turned around and he didn’t have a company or team anymore, and then Magic Leap goes, you know what, we’re just going to buy the IP, we don’t want the company, you don’t have a company anymore,” one source said.

Magic Leap did not respond to a request for comment.

With the deal shot and the indebted company in shambles, the team dwindled down further to a skeleton crew — essentially a deals team — as company assets were put up for sale by IP advisory firm Hillco Streambank. The company’s patent portfolio up for sale next week includes 107 issued patents and 83 pending applications.

The 20-year-old company has already seen its early work in foundational AR patents pay off for it. In 2014, Microsoft paid around $150 million to acquire a trove of ODG patents after deciding not to buy the company outright. In documents reviewed by TechCrunch, ODG highlights a number of AR patents in its collection that it believes existing products from companies like Magic Leap, Google and Facebook infringe on, specifically pointing to diagrams of systems like the Magic Leap One and Oculus Quest that they claim conflict with its prior art.

With a patent sale (spotted first by UploadVR), ODG’s leadership is looking to recoup enough to pay back the company’s debts, as well as the employees who worked for months on partial salaries.

Whether or not ODG’s downfall was largely a cause of mismanagement, the disparity between acquisition offers and its 2016 valuation showcases a broader cool down in the augmented reality industry, as capital-intensive efforts in enterprise and hardware have proven to be a more difficult sell for investors heading into 2019.

Last month, Blippar, an enterprise-focused AR startup that raised more than $130 million, collapsed after failing to secure an emergency influx of cash. Just yesterday, it was reported that Meta, an AR hardware startup with $73 million in funding from Y Combinator, Tencent and Comcast, had fallen into insolvency. Magic Leap itself has had issues breaking into broader markets: In November the startup lost out to Microsoft on a $480 million military contract.

Asked whether they would pin the company’s failures on the broader industry slowdown, a former employee said, “From an internal standpoint, all I saw was, we are fucking it up.”

Ralph Osterhout did not respond to a request for comment.

Months after an earth-shattering New York Times investigation exposed Google parent company Alphabet’s $90 million payout to Android co-founder Andy Rubin, despite the accusations of sexual misconduct made against him, a Google shareholder is suing the company.

James Martin filed suit in the San Mateo Superior Court Thursday morning, alleging the company’s leaders deployed massive allowances to poor-behaving executives to cover up harassment scandals. Both Rubin and Google’s former head of search Amit Singhal, who peacefully left the company in 2016 amid harassment allegations that weren’t made public until the following year, are listed as defendants in the court filing. This is because the plaintiff is seeking a full return of the massive payouts awarded to the embattled former execs.

With charges including breach of fiduciary duty, unjust enrichment, abuse of power and corporate waste, per The Washington Post, the lawsuit asks for an end of nondisclosure and arbitration agreements at Google, which ensure workplace disputes are settled behind closed doors and without any right to an appeal. Martin is also requesting Google incorporate three new directors to the Alphabet board and put an end to supervoting shares, which gives certain shareholders more voting control.

The lawsuit also targets Rubin, Google co-founders Larry Page and Sergey Brin, chief executive officer Sundar Pichai and executive chairman Eric Schmidt. Former human resources director Laszlo Bock, chief legal officer David Drummond and former executive Amit Singhal are also named, as are long-time venture capitalists and Google board members John Doerr and Ram Shriram.

Google didn’t immediately respond to a request for comment.

Following the release of the NYT report, Googlers across the world rallied to protest the company’s handling of sexual misconduct allegations. The protestors had five key asks, including an end to forced arbitration in cases of harassment and discrimination, a commitment to end pay and opportunity inequity and a clear, uniform, globally inclusive process for reporting sexual misconduct safely and anonymously. Google ultimately complied with employees and put an end to forced arbitration; other tech companies, such as Airbnb, followed suit.

PeakSpan Capital, a four-year-old, Burlingame, Calif.-based venture firm, has closed its second fund with $265 million in capital commitments, according to a new SEC filing that shows that 68 investors were involved in the fundraise.

That’s a meaningful jump in size from the firm’s $150 million debut fund, which it closed in 2016.

PeakSpan was co-founded by Phil Dur and Brian Mulvey, longtime investors who’d spent the previous eight years working together for an outfit that’s no longer around (Investor Growth Capital).

Their firm specializes in growth-stage business software companies.

Among its newest bets is Cordial, a four-year-old, San Diego-based email platform that raised $15 million in Series B funding last summer led by PeakSpan; Inference, an eight-year-old, San Francisco-based company whose AI-driven self-service applications aim to replace human service and support agents (it has never announced its outside funding); and BookingBug, a 10-year-old, London-based customer engagement platform that raised $13.4 million in Series C funding last April, led by PeakSpan.

According to a new report published earlier this week by PwC and CB Insights, business software remains among the biggest areas of interest for VCs. According to the firms’ findings, 111 software deals (not relating to the internet or mobile) raised $3 billion from investors in the fourth quarter of last year, compared with 51 consumer products and services deals that attracted a collective $382 million.

Ford is shutting down Chariot, the shuttle startup that it purchased just two years ago that was supposed to be a part of the automaker’s fresh effort to move beyond the traditional business of buying and selling cars.

Chariot will end service on commuter routes in the U.K. on January 25, according to a company update Thursday. Other commuter routes in New York and San Francisco will cease by February 1. The dynamic shuttle service also had an enterprise business, which were routes with corporate and transit companies. Those enterprise routes in Austin, Chicago, Denver, Detroit and Seattle, will begin winding down by early March.

Chariot wouldn’t provide many details about why the service was shutting down except to allude to failing ridership numbers.

“In today’s mobility landscape, the wants and needs of customers and cities are changing rapidly,” the company wrote in a post on their website. The company went on to thank its customers for their support over the past five years.

Reports of sluggish demand and company morale had been trickling out for months now. A post in August by Streetsblog noted that Chariot’s shuttles in New York were empty most of the time, according to data provided by the company and evaluated by transit analyst Eric Goldwyn. That analysis found that Chariot’s fleet of 25 or so vans was serving around 1,000 riders total, or about nine riders per vehicle per day.

In February, Ali Vahabzadeh, the CEO and co-founder of ride-sharing startup Chariot left the company. He was replaced in the interim by Dan Grossman, who leads Microtransit for Ford Smart Mobility, while the company looked for a permanent person to lead Chariot.

Chariot has 625 total employees, including drivers; about 385 of those are in the Bay Area. Some Chariot employees will be offered opportunities in Ford Mobility, a company spokesperson said.

Chariot launched at Y Combinator and had only raised around $3 million before Ford acquired it, reportedly for $65 million plus earn-outs. It bases its service around a fleet of transit vans whose routes are aimed at commuters, and where routes are offered based on a “crowdsourced” vote.

Chariot was part of a slew of acquisitions and investments made by Ford since the automaker announced a broad transportation and mobility plan in 2015. That strategy, which has evolved over time, involves increasing connectivity (and the services that come with that feature) in its cars, developing autonomous vehicle technology, using big data collected from sensors in cars to learn more about how people travel and launching Ford Smart Mobility, a private subsidiary tasked with investing in and building out transportation services, including car sharing and ride hailing.

Electric vehicle competition is heating up and it’s pushing some of the first entrants to add range and other features in hopes of keeping up with automakers that are just bringing EVs to the market.

Nissan has been in this EV game for nearly nine years now. The company has sold more than 380,000 Leaf vehicles globally since the EV first went on sale in 2010. And while it debuted a refreshed version of its all-electric Leaf just 16 months ago, the automaker is back with another Leaf variant that’s packing a lot more range and power, as well as several other new features.

Nissan unveiled this week at CES 2019 the Leaf e+, a version of the Leaf all-electric hatchback with 40 percent more range. The Leaf e+ has a 62 kilowatt-hour battery pack that has a range of 226 miles. That puts the Leaf e+ just under the Chevy Bolt EV, which has a 238-mile range, the upcoming Kia Niro EV with 239 miles and the Tesla Model 3 mid-range variant with 264 miles.

Pricing for the new Leaf e+ hasn’t been announced for the North American or European markets. In Japan, it will start at ¥4,162,320, which is around $38,000.

Consumers might have trouble distinguishing the Leaf and Leaf e+. Other than a 5-millimeter increase in overall height (16-inch wheels), the car’s exterior and interior dimensions are unchanged. The Leaf e+ has a revised front fascia with blue highlights and an “e+” logo plate on the underside of the charge port lid. Inside, drivers might notice the blue contrast stitching on the steering wheels, seats and door trim.

The Leaf e+ is also equipped with advanced driver assistance technology known as ProPILOT and a one-pedal driving mode feature that allows the driver to start, accelerate, decelerate and stop using only the accelerator pedal.

ProPILOT is an in-lane semi-autonomous driving technology that can automatically adjust the distance to the vehicle ahead (some call it adaptive cruise control), using a speed preset by the driver. The system can also help the driver steer and keep the vehicle centered in its lane. ProPILOT Park, which is available only on Japan and EU models, is a system that can provide vehicle acceleration, braking, handling, shift changing and parking brake operation to guide the car into a parking spot.

Leaf e+ models in North American and EU will have a larger full-color 8-inch display, with an updated navigation system that can be linked to a compatible smartphone. This thin film transistor display features smartphone-like operation, including swiping, scrolling and tapping. Applications, maps and firmware are updated over the air, instead of having to manually update by USB or at a Nissan dealership, the company said.

Other new features include “Door-to-Door Navigation,” which syncs the vehicle’s navigation system with a compatible smartphone for driving and walking directions.

The big story here, of course, is the increased range and power. The Leaf e+ has a new electric powertrain that, combined with the battery, produces 160 kw of power and 340 Nm of torque. This means the Leaf e+ will have the get up and go required for merging and passing slower-moving vehicles on the highway.

Nissan says the Leaf e+ is 13 percent quicker when accelerating from about 50 mph to roughly 74 mph. The top speed has increased by about 10 percent.

The battery pack in the Leaf e+ is almost the same size and configuration as the one in the standard Leaf despite a 25 percent increase in energy density and increase in energy storage capacity.

The Leaf e+ also has a high-speed charging package — for those who want to pay for that feature — that will let drivers charge up to 80 percent of its range in 40 minutes. Based on early testing, Nissan Leaf e+ owners can expect similar charging times when hooked up to a 100 kW charger as current Nissan Leaf owners do with a 50 kW charger, despite a 55 percent larger battery storage capacity, the company said.

The new variant is expected to hit Nissan dealerships in Japan in late January. U.S. sales are expected to begin in the spring of 2019, and European sales will start in mid-2019.

Amazon’s IMDb movie website today announced the launch of a free streaming service, called Freedive. The service offers viewers in the U.S. access to an ad-supported collection of TV shows like  Fringe, Heroes, The Bachelor and Without a Trace, as well as Hollywood movies like Awakenings, Foxcatcher, Memento, Monster, Run Lola Run, The Illusionist, The Last Samurai, True Romance, and others.

The content is free to watch without a subscription, and can be viewed on a phone, laptop or a big screen by way of Amazon Fire TV devices.

IMDb was already the home for some video content, including trailers, celebrity interviews and short-form original series such as The IMDb Show, Casting Calls, and No Small Parts. These are now being bundled into Freedive, says the company, and will remain free to watch.

The new service will also feature X-Ray, the IMDb-powered service that offers details about the title’s cast, crew, music, and more.

“Customers already rely on IMDb to discover movies and TV shows and decide what to watch,” said Col Needham, Founder and CEO of IMDb, in a statement about launch. “With the launch of IMDb Freedive, they can now also watch full-length movies and TV shows on IMDb and all Amazon Fire TV devices for free. We will continue to enhance IMDb Freedive based on customer feedback and will soon make it available more widely, including on IMDb’s leading mobile apps.”

The launch comes at a time when the streaming industry as a whole is focusing more heavily on AVOD – ad-supported video-on-demand. Roku, for example, has been expanding the content available on The Roku Channel, which offers ad-supported movies, TV, news, sports, and other entertainment. Plex at CES this week also said it would launch ad-supported content this year.

For Roku, the availability of free content on Roku devices may help its hardware sales business, and clearly Amazon has the same idea.

However, Roku is now augmenting its free service with additional paid subscriptions. Meanwhile, Amazon’s Prime Channels service for cord-cutters, which consists of optional paid subscriptions to channels like HBO, Showtime, Starz, and others, is only available to Prime members.

It’s a bit odd for Amazon to have its TV shows and movies split up across two separate services – one from Amazon, through Prime, and another from its subsidiary IMDb.

The industry knew Amazon was preparing to enter the AVOD space, it was only a matter of when. It was earlier rumored that the service would launch this past fall, but that didn’t come to pass.

The new streaming service is live now at www.imdb.com/freedive. On Fire TV devices, a new icon will appear in the “Your Apps & Channels” row, says IMDb.

Earlier this week, when Razer announced that it would integrate Amazon’s Alexa into its gaming platform, I wondered if this was a strong signal of how Amazon may be starting to lay the groundwork for its own strategy to do more in gaming. By coincidence, today The Information reports just that: Amazon is now developing its own streamed gaming service, according to its sources. It’s already talking with publishers to stream their titles on the platform, and it aims to launch it next year.

A streamed gaming service from Amazon not only would complement what Amazon is already offering in streamed media — which today includes video, music, photo storage and more — but it will put Amazon squarely in competition with those that are working on, or have already launched, their own streamed gaming efforts. Players include Sony’s PlayStation Now, Microsoft, Google, Nvidia, and Electronic Arts.

To be clear, Amazon already offers streamed gaming in a limited format. Prime subscribers get access to “Twitch Prime,” which provides users with free games every month, along with selected free in-game perks. This is separate to Twitch’s mainstay product, a video streaming service that works alongside other games creating a social network of sorts, where users watch each other playing and commenting on playing games.

When Amazon acquired Twitch in 2014, many wondered if that would lead to it launching a bigger gaming service. That possibility was bolstered when Amazon acquired UK cloud gaming backend specialist GameSparks (in 2017 as we first reported, although only confirmed by Amazon in 2018). GameSparks’ technology has already been deployed in Amazon’s AWS service — which has a dedicated business targeting games publishers providing everything they need, from gaming technologies to server space, analytics, backend services and more.

That is also strong sign of how Amazon has quickly integrated the tech into its infrastructure already, and already has all the tools it needs to build a consumer service of its own.

So it has definitely taken a while, but perhaps Amazon’s own, bigger, direct-to-consumer gaming effort is what’s finally taking shape.

The idea is that Amazon’s gaming service would go head-to-head not only with console-based gaming platforms, but also a number of other big players that are tapping into the boom we’ve seen in streamed media services. Consumers now have faster, more reliable and cheaper broadband connections and are using them to replace legacy hardware and services in areas like music, television and more.

For those who are selling services in those other areas — and Amazon is one of them, by way of its Prime-fuelled Amazon Music, Amazon Prime Video and its Fire TV service — providing a gaming platform not only could make the overall service more “sticky” but could attract new consumer Prime subscribers who might come specifically for the games.

But those are not the only weapons Amazon has in its artillery. As we noted this week, we’ve seen very little application of Amazon’s AI muscle — all the voice services that have completely excited consumers, and its work in augmented reality — in media services beyond the Echo devices.

In gaming, we are starting to see small moves there — such as Razer’s integration of Alexa voice commands to control its game console — but there are ways that you could imagine that technology being incorporated into actual gameplay, which could help set Amazon apart from the very big field of competition.

There are some juicy tid-bits in the Information story around the bigger news that Amazon is eyeing up a streamed gaming service that point to some of the challenges it might be facing.

Venture firms can come and go, as anyone who lived through the boom and bust of the late ’90s internet bubble can attest. Some firms have staying power, however, and among these is Mayfield, founded 50 years ago, just ahead of Kleiner Perkins and Sequoia Capital (both founded 47 years ago) and Menlo Ventures and New Enterprise Associates, which celebrate their 43rd and 42nd birthdays this year, respectively.

Indeed, to ensure it continues to stick around, Mayfield decided it was time to strengthen its bench as it sailed into 2019, and its newest partner toward that end is Patrick Sayler, most recently the CEO of Gigya, a Mayfield-backed company where Sayler started as a VP and who, on his 30th birthday, three years into his tenure with the company, was asked by its board to take over as CEO.

Given that SAP spent $350 million in 2017 to acquire Gigya —  it helped online properties manage customer identities and profiles and raised roughly $100 million from investors) — that decision seems to have panned out. We had a quick exchange with Sayler earlier this week about the experience, as well as asked what he’ll be focused on now as a first-time VC.

TC: Why were you asked to take over Gigya three years into career with the company, and what was that transition like?

PS: I had been one of the first employees and had established myself as a business leader on the team.  We were going through a pivot from an advertising focused business to a SaaS enterprise business, and the previous CEO had stepped down for personal reasons. This was an incredible opportunity but a trying one as a first-time CEO, as I was suddenly in charge of people that used to be my peers or even senior to me.

TC: Any interesting details you can share about how that acquisition by SAP came together a year and a half ago?

PS: We also found ourselves working together on a long list of shared customers. As time went on, we both realized that what we
could accomplish together outweighed what we could do apart.

TC:  When did you start talking with Mayfield about joining as a partner, and have you ever invested before as an angel investor?

PS: I’ve been 100 percent focused on running a startup for the past seven years. This next  career move is as much about the opportunity to work with the team at Mayfield as it is about joining venture. Along my journey, I realized how lonely the founder-CEO role can be. I couldn’t have imagined navigating this without great people surrounding me and in particular, the investors at Mayfield, so when Navin [Chadda], Mayfield’s managing director and one of my previous board members, brought up the idea of joining Mayfield, I was super excited about the opportunity to take my own learnings and serve other entrepreneurs in the same way.

TC: Will your focus be on cyber security? What’s your mandate at Mayfield?

PS: I’m going to focus on B2B companies, primarily in the applications versus the infrastructure space, given my experience over the last decade.

Beyond that, I want to keep an open mind and follow great entrepreneurs who want to grow into world-class CEOs.  There are many interesting areas of focus I’ll look forward to digging into. For example, I’m very intrigued on the impact of privacy, including regulation like GDPR and changing consumer sentiment, and how that creates opportunities within B2B.

TC: How many deals will you be expected to lead each year?

PS:  The firm makes 8 to 10 investments a year, but there’s no target or quota for each partner.

TC: How will your own experience as a CEO of a venture-backed company influence how you talk with founders?

PS: It starts with empathy.  Running a startup is the hardest job in the world. My own experience was anything but a straight line, requiring multiple product pivots, go-to-market changes, management team rebuilds, and tough fundraises.  This can be the case even during the ‘ups,’ where you know something bad can happen around the corner, but it especially can happen during down periods, when you think it’s all your fault. I am hoping to encourage CEOs to take the long view.

I also learned so much from being part of a CEO coaching group — both through guidance from the leader and from my peers — and I plan to
share that playbook with other CEOs.

Finally, I had the opportunity to get a deep understanding of achieving product market fit and go-to-market approaches, as Gigya went through multiple pivots; I hope to draw from those experiences.

TC: What did you learn as the CEO of a venture-backed company that you want to avoid doing as a VC?

PS:  I’m fortunate to have a wealth of operating experience as a startup CEO to draw upon, but I also need to realize that every business and market is different.  It’ll be important to keep a beginner’s mind as I meet with entrepreneurs.