Author: azeeadmin

When you think of e-commerce marketplaces, chances are that the first things that come to mind are storefronts built on websites and apps. But today an e-commerce startup that has never had either — and never plans to — has raised a fistful of cash to continue building out its shopping experience on the platform has been its growth engine: messaging apps.

London-based Threads has raised $20 million in funding for an operation that courts high-end, millennial, mostly female customers with tailored selections of luxury fashion, which it then sells to them on services like WeChat, WhatsApp, Snapchat, Instagram and Apple’s iMessage for their primary interactions with a team of human (not AI) shopping assistants.

“We very intentionally didn’t build a website for consumers, just as we haven’t built an app,” founder and CEO Sophie Hill explained in an interview. “The idea behind Threads is curation and convenience. It’s a customer-centric business and it’s built on chat because that is where the customers wanted to be and transact. Chat may not have been used in the way we were using it in 2010” — when the company was founded — “but that was our problem to solve. We had to learn to serve through chat rather than create was for convenient for us as a business.”

The company says that it will be using the new funding — led by fashion and millennial-focused fund C Ventures, with participation from Highland Europe (which invests in Matches Fashion, among other related businesses) — to expand its business across the board: hiring more stylists, more engineers to build tech to help the operation run smoother, and other creative and other staff to bolster the 90 who already work for the business. But even before now, the company has been growing quite impressively.

With customers in 100 countries — 70 percent of them under the age of 35, with Asia one of its fastest-growing regions — Threads says that its average amount people spend in a shopping session (basket size) is a very unshabby $3,000. And because of its success in linking up expensive goods with people willing to buy it, it’s secured relationships with designers and brands like Dior, Fendi, Chopard and some 250 other luxury names to source key items for its clients. As a marketplace, Threads makes commissions from the suppliers when items are sold.

Threads materialised (sorry) as a business when founder and CEO Sophie Hill was still working as a buyer for Topshop owner Arcadia, her first job out of university (where she studied sociology).

The year was 2010, and even though messaging apps had yet to take off, and well before the ones you likely use today really had any functionality at all, with Instagram and the “stories” format nowhere on the scene, Hill started canvassing opinion among the people she hoped to target. She saw that they were already all avidly using messaging clients on their phones to chat to each other.

Messaging in the West was relatively feature-free, but Hill could see what was coming around the corner by looking at WeChat, the Chinese app that was well ahead of its time, and that — plus what her target audience was already using — was enough to convince her of how she needed to build her business.

Threads has a somewhat unconventional cost base as an e-commerce startup.

Without a site and app, its developer team instead is focused on ways of improving the processes that go into the selling that Threads does do: personalized, concierge style services. That means building tech to make tracking items more efficient for customers (that might come in the form of an actual chatbot at some point, Hill said); building a better search engine for the assistants to find specific pieces for Threads clients; and so on.

Another area where Threads’ costs are quite different from the typical e-commerce business is in customer acquisition. Hill says the startup company also has never really had a dedicated marketing budget (nor “someone leading the marketing function”). Instead, Threads has grown mainly by word of mouth among users, and later via social media platforms like Instagram as its own content and that of its customers gets attention.

On the other hand, one area where Threads has potentially weathered significantly more expense than the average e-commerce business is in how it connects clients with products.

Hill says that its chat-based shopping service fits into a wider world of busy activity and travel for a typical customer, who will nonetheless expect a high level of engagement as part of a five-star service, even if it originated in chat. So, Threads has been known to organise designers flying in from one city to another to show off a specific piece to a client, and also pulling together shopping to hand deliver it to a client in whatever location she happens to be, or even organising excursions to actual, physical boutiques when those customers take a trip to a city, either specifically to shop or for another reason.

“It is a complement to what they need and how they want to shop for luxury goods,” she said.

There is something about a business based fundamentally around a team of people serving users, versus a business that has built technology to do that job, which frankly feels very analogue. But Hill and her investors believe that there is scalability in Threads’ future, and tech will be what helps get it there (just as it has been what helped the startup materialise in the first place).

“Just because someone doesn’t have a website or app doesn’t mean we don’t have a direct purchase path,” Hill said. “We are going to be using technology to enhance that personalised experience. Using tech blended with human interaction will be the ultimate service for the luxury industry. We see it as a complement, a way to enhance the personal experience.

“Tech has moved quickly and we are starting to test and how we will integrate more AI,” she added. “You can see where the customers might be happy with that response versus talking to a person. It’s about us seeing how customers will react.”

The mix of a business born in the concept of high-touch customer service, with luxury boutique-style profit margins, but with roots in a very popular technology (messaging) and the potential to bring on even more tech to make it work more efficiently, is the crux of what caught investors’ attention.

“People who are Threads’ customers clearly like to transact like this,” Tony Zappala, a partner at Highland Europe, said. “And both Threads and those customers are getting more responses. It’s much harder to achieve that on a website these days.”

The next stop for Threads will be expanding to more product categories beyond fashion and jewellery — although Hill would not say what — and adding more offices to provide services closer to its customers on both sides of the marketplace. New York and Hong Kong are first on the list.

When you think of e-commerce marketplaces, chances are that the first things that come to mind are storefronts built on websites and apps. But today an e-commerce startup that has never had either — and never plans to — has raised a fistful of cash to continue building out its shopping experience on the platform has been its growth engine: messaging apps.

London-based Threads has raised $20 million in funding for an operation that courts high-end, millennial, mostly female customers with tailored selections of luxury fashion, which it then sells to them on services like WeChat, WhatsApp, Snapchat, Instagram and Apple’s iMessage for their primary interactions with a team of human (not AI) shopping assistants.

“We very intentionally didn’t build a website for consumers, just as we haven’t built an app,” founder and CEO Sophie Hill explained in an interview. “The idea behind Threads is curation and convenience. It’s a customer-centric business and it’s built on chat because that is where the customers wanted to be and transact. Chat may not have been used in the way we were using it in 2010” — when the company was founded — “but that was our problem to solve. We had to learn to serve through chat rather than create was for convenient for us as a business.”

The company says that it will be using the new funding — led by fashion and millennial-focused fund C Ventures, with participation from Highland Europe (which invests in Matches Fashion, among other related businesses) — to expand its business across the board: hiring more stylists, more engineers to build tech to help the operation run smoother, and other creative and other staff to bolster the 90 who already work for the business. But even before now, the company has been growing quite impressively.

With customers in 100 countries — 70 percent of them under the age of 35, with Asia one of its fastest-growing regions — Threads says that its average amount people spend in a shopping session (basket size) is a very unshabby $3,000. And because of its success in linking up expensive goods with people willing to buy it, it’s secured relationships with designers and brands like Dior, Fendi, Chopard and some 250 other luxury names to source key items for its clients. As a marketplace, Threads makes commissions from the suppliers when items are sold.

Threads materialised (sorry) as a business when founder and CEO Sophie Hill was still working as a buyer for Topshop owner Arcadia, her first job out of university (where she studied sociology).

The year was 2010, and even though messaging apps had yet to take off, and well before the ones you likely use today really had any functionality at all, with Instagram and the “stories” format nowhere on the scene, Hill started canvassing opinion among the people she hoped to target. She saw that they were already all avidly using messaging clients on their phones to chat to each other.

Messaging in the West was relatively feature-free, but Hill could see what was coming around the corner by looking at WeChat, the Chinese app that was well ahead of its time, and that — plus what her target audience was already using — was enough to convince her of how she needed to build her business.

Threads has a somewhat unconventional cost base as an e-commerce startup.

Without a site and app, its developer team instead is focused on ways of improving the processes that go into the selling that Threads does do: personalized, concierge style services. That means building tech to make tracking items more efficient for customers (that might come in the form of an actual chatbot at some point, Hill said); building a better search engine for the assistants to find specific pieces for Threads clients; and so on.

Another area where Threads’ costs are quite different from the typical e-commerce business is in customer acquisition. Hill says the startup company also has never really had a dedicated marketing budget (nor “someone leading the marketing function”). Instead, Threads has grown mainly by word of mouth among users, and later via social media platforms like Instagram as its own content and that of its customers gets attention.

On the other hand, one area where Threads has potentially weathered significantly more expense than the average e-commerce business is in how it connects clients with products.

Hill says that its chat-based shopping service fits into a wider world of busy activity and travel for a typical customer, who will nonetheless expect a high level of engagement as part of a five-star service, even if it originated in chat. So, Threads has been known to organise designers flying in from one city to another to show off a specific piece to a client, and also pulling together shopping to hand deliver it to a client in whatever location she happens to be, or even organising excursions to actual, physical boutiques when those customers take a trip to a city, either specifically to shop or for another reason.

“It is a complement to what they need and how they want to shop for luxury goods,” she said.

There is something about a business based fundamentally around a team of people serving users, versus a business that has built technology to do that job, which frankly feels very analogue. But Hill and her investors believe that there is scalability in Threads’ future, and tech will be what helps get it there (just as it has been what helped the startup materialise in the first place).

“Just because someone doesn’t have a website or app doesn’t mean we don’t have a direct purchase path,” Hill said. “We are going to be using technology to enhance that personalised experience. Using tech blended with human interaction will be the ultimate service for the luxury industry. We see it as a complement, a way to enhance the personal experience.

“Tech has moved quickly and we are starting to test and how we will integrate more AI,” she added. “You can see where the customers might be happy with that response versus talking to a person. It’s about us seeing how customers will react.”

The mix of a business born in the concept of high-touch customer service, with luxury boutique-style profit margins, but with roots in a very popular technology (messaging) and the potential to bring on even more tech to make it work more efficiently, is the crux of what caught investors’ attention.

“People who are Threads’ customers clearly like to transact like this,” Tony Zappala, a partner at Highland Europe, said. “And both Threads and those customers are getting more responses. It’s much harder to achieve that on a website these days.”

The next stop for Threads will be expanding to more product categories beyond fashion and jewellery — although Hill would not say what — and adding more offices to provide services closer to its customers on both sides of the marketplace. New York and Hong Kong are first on the list.

Coinbase has added a new buying option for its customers after the crypto exchange introduced Ethereum Classic to its collection.

The addition was first announced in July but Coinbase took its time to implement its newest addition following criticism over the way it added Bitcoin Cash last year. Allegations of insider trading led the company to investigate the incident which saw service outages and wild price fluctuations for Bitcoin Cash right after its addition to the exchange. It later introduced a framework for adding new tokens.

Nonetheless, Ethereum Classic’s value spiked 20 percent on last month’s news. Today, though, it is down two percent over the last 24 hours, according to Coinmarketcap.com.

Coinbase has taken a conservative approach to adding more crypto. Today’s addition takes it to five tokens — Bitcoin, Ethereum, Litecoin and Bitcoin Cash are the others — but that’s likely to change this year. Last month, it announced it is “exploring” the addition of another five tokens while CTO Balaji Srinivasan hinted that the selection would grow further when I interviewed him at the recent TechCrunch blockchain event in Zug.

“We hear your requests, and are working hard to make more assets available to more customers around the world,” Dan Romero, who heads Coinbase’s consumer business, said in a blog post published today.

A note on Ethereum Classic — it was created in June 2016 following a major hack on The DAO, a fundraising vehicle for the project. In short: the Ethereum Foundation created a new version of Ethereum — known today as Ethereum — that rescued the lost funds, while those who opposed continued on with the original chain which was known as Ethereum Classic.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

This post has been updated with a comment from Tesla and to indicate that a single employee was allegedly involved in the drug trafficking ring. 

Employees at Tesla’s Nevada gigafactory were allegedly involved in a massive drug ring, stole $37 million worth of precious metals and equipment and illegally spied on former employees at the behest of chief executive Elon Musk, according to a new whistleblower complaint filed against the company.

First reported by Jalopnik, the complaint is only the latest in a string of damaging news stories that have erased millions in value for Tesla shareholders and could cast the future of the company’s celebrity chief executive, Elon Musk, into doubt.

It’s also the second whistleblower claim filed against the company this summer.

This time the whistleblower is Karl Hansen, a former member of Tesla’s internal security department and investigations division.

The complaint from Hansen, a former special agent, member of the US Army’s Criminal Investigation Command, and senior investigator for the Federal Maritime Commission, reads like a weird mashup of Sons of Anarchy, Silicon Valley and Scandal.

Hansen claims that Tesla failed to disclose a recent internal investigation the company made into a tip it received from the U.S. Drug Enforcement Agency and Storey County Sheriff’s Office that one of its gigafactory employees were part of “a narcotics trafficking ring involving the sale of significant quantities of cocaine and possibly crystal methamphetamine at the Gigafactory on behalf of a Mexican drug cartel from Sonora Mexico.”

According to a statement from Hansen’s legal counsel (Meissner Associates — the firm also representing Tesla’s other whistleblower, Martin Tripp), Hansen claims that he corroborated connections between the named employees and alleged members of the Mexican drug cartel, but Tesla refused to investigate the matter further and said it would hire “outside vendors” to follow up. Hansen says the company never did.

For its part, the Drug Enforcement Agency issued a statement to BuzzFeed saying that it would not inform any “non-law enforcement entities” of ongoing or pending investigations.

Drug smuggling may not be the wildest allegation in Hansen’s complaint. According to the summary from Meissner, Hansen also claims that Tesla installed eavesdropping and wiretapping equipment at its facilities and was illegally listening to conversations and scanning messages from Tripp at the behest of the company’s chief executive, Elon Musk .

Here’s the relevant section from the complaint:

According to Mr. Hansen, following Tripp’s departure from Tesla, Tesla went so far as to install specialized router equipment within its Nevada Gigafactory designed to capture employee cell phone communications and/or retrieve employee cell phone data. The Meissner firm recently released police reports relating to this past June’s GigaGate incident indicating that Tesla security personnel may have unlawfully accessed Mr. Tripp’s cell phone long after he was fired by Tesla. Mr. Hansen states that he was told these tactics were specifically authorized by CEO Elon Musk and were implemented by members of Tesla’s internal investigations/security/IT units.”

Finally, Hansen has said that the company never disclosed the theft of $37 million in precious metals and materials used in making the company’s batteries.

The release today follows disclosures from Tripp, the original gigafactory whistleblower, of damaged Tesla batteries that allegedly made their way into actual vehicles.

These disclosures, coupled with allegations of erratic behavior from Tesla chief executive Elon Musk, and the (apparently fictitious) nebulous plans to take the company private, have caused Tesla’s share price to slide over roughly $40 over the last two weeks, erasing nearly $6 billion in value from the company.

The full text of Meissner’s summary of the complaints their client is making is below. Mr. Meissner said that Hansen would not be conducting interviews. The Storey County Sheriff’s Department said they would issue a statement on the Meissner report this evening.

“Mr. Hansen’s allegations were taken very seriously when he brought them forward. Some of his claims are outright false. Others could not be corroborated, so we suggested additional investigative steps to try and validate the information he had received second-hand from a single anonymous source,” a spokesperson for Tesla wrote in an email. “Because we wanted to be sure we got this right, we made numerous attempts to engage further with Mr. Hansen to understand more about what he was claiming and the work that he did in reaching his conclusions. He rejected each of those attempts, and to date has refused to speak with the company further. It seems strange that Mr. Hansen would claim that he is concerned about something happening within the company, but then refuse to engage with the company to discuss the information that he believes he has.”

Client Revised FinaL to Be Released UPDATED by Jonathan Shieber on Scribd

It looks like Amazon may be gearing up to make more moves in the brick-and-mortar world. Bloomberg reports that the e-commerce behemoth is putting itself in the running to acquire Landmark Theatres, which claims to be the United States’ largest chain of movie theaters focused on art house (indie and foreign) movies, with a network of 56 cinemas, covering 268 screens in 27 markets.

Bloomberg’s sources say that Amazon is going up against other potential acquirers in purchasing the business from Wagner/Cuban Cos., but that no final decisions have been made.

The companies aren’t publicly commenting on the reports, but it’s an interesting scenario to consider because of all the ways that it seems to fit into Amazon’s wider strategy. 

The company has done an incredible job of making it easy (and cheap) to buy virtually anything you want from it in the digital world, whether it’s necessities like toiletries, books, groceries, clothes and electronics, or digital products like movies, music and cloud storage space for your app or game, in as little as one click. Through its marketplace model — where it is both a middleman between consumers and sellers, and the seller itself of different goods and services — Amazon wants to be wherever people want to spend money.

But there are certain forms of retail that may never translate to the online world. Experiential retail — dining out at restaurants, going to a bar or event, picking a melon that you can smell before you pay for it and, of course, going to the movies — requires that you get up and go somewhere to do it.

Amazon knows this, and so it’s slowly, quietly amassing selective assets that will let people engage in the more physical side of commerce. These have included book stores, and its own futuristic, checkout-free food shops. And of course it spent $13.7 billion to gobble up the natural food leviathan Whole Foods.

The latter of these is very instructive when you consider how a movie theater chain might fit into the Amazon pantheon. Amazon’s Prime Fresh grocery delivery service gives busy users the convenience of skipping the grocery store, but Whole Foods also gives Amazon a way of capturing buyers who might prefer to make trips to a grocery store.

But that’s not all it does. It’s added Whole Foods discounts as yet another sweetener for Prime subscribers; it’s extending its formidable logistics muscle to Whole Foods ordering and delivery (first for Prime subscribers, naturally); and of course it has put in pop-up shops selling its other products, like the Kindle and the Echo, in prime spots when you enter a store.

Amazon owning a chain of theaters spells out a lot of opportunities for it in terms of expanding its interests in film; in experiential, physical commerce; and in leveraging the rest of the pieces in its commercial empire.

The world of movie theaters has been hobbling for years, with droves of consumers these days foregoing increasingly expensive tickets and snacks and opting to watch a slightly smaller screen in the comfort of their own home. But to the disruptive eye, that ageing business model is catnip, and so unsurprisingly, MoviePass has come along, seeing that there was an opportunity to try to revive the cinema experience by offering subscriptions for a flat rate to get more bums on those seats.

Yes, MoviePass is bleeding money, and it looks like a mess for many other reasons, but it’s had an impact, so much so that AMC has taken notice and launched its own competitor.

The world’s largest theater chain almost certainly won’t experience the same sort of pains that MoviePass has, because it both controls the means of distribution and has a sizeable support infrastructure, and of course owns the cinemas.

But if AMC has a safety net, then Amazon — one of the world’s most valuable companies — has airbags, collision sensors, seatbelts, automatic braking and maybe even an Alexa-powered predictive voice to tell you what to do next. If Amazon ran a loss-making chain of cinemas, it would be but a little drop in the bucket for it.

Amazon already has one of the biggest digital subscription businesses in the world, with more than 100 million Prime members, as of April 2018. Tacking a subscription to cinemas on to that, which either made going free or discounted, is a no-brainer.

But wait! You get more for the price of the Landmark Theatres! Amazon, as we know, also has a budding media business, offering movies, TV and music to Prime users. Included in that is its own original content machine, Amazon Studios, responsible for shows like Transparent and movies like Manchester by the Sea.

A theater chain acquisition would further open the distribution channels for Amazon’s own films, and give Amazon a much tighter grip on the costs for that distribution. And with a position covering theatrical, DVD and digital distribution windows, you can bet that will give Amazon more leverage when negotiating screen rights to films that it hasn’t produced itself.

Controlling distribution could also prove useful during awards season — the timing of a film’s release goes a long ways toward determining nominees. (And yes, those screens also become one more place where Amazon can run ads, too, in its budding advertising empire.)

And don’t forget the fact that theaters are, at the end of the day, also retail real estate.

It’s a long-known fact that cinemas make most of their money on concessions, and they have accordingly built out large lobby areas where people can mill about and spend money before and after sitting down in the darkened screening rooms. In addition to selling all the usual concessions (both made by Amazon and its marketplace partners), Amazon could use those spaces as they have with Whole Foods, creating retail experiences for products that might have nothing at all to do with what you came to the cinema for in the first place, but then suddenly seem like interesting places to try out something new.

Is it any wonder that even without Amazon or Landmark responding to Bloomberg’s report, theater chain stocks dropped on word of the news?

Food delivery startup DoorDash announced this afternoon that it has raised $250 million, just five months since the company announced a $535 million round.

Why raise more money so soon? CEO Tony Xu told Axios that he wasn’t actively looking for additional investment, but was open to investor interest because it could help the company expand more quickly. (Maybe he’ll have more to say about those plans at Disrupt SF next month.)

The new funding was led by Coatue Management and DST Global. It sounds like the terms were pretty appealing too, with the valuation growing from $1.4 billion to $4 billion.

In a blog post, the company said it’s had a good 2018, with deliveries increasing 250 percent year-over-year, restaurant chains like Chipotle and IHOP signing up and last week’s launch of the DashPass subscription service, where you can pay $9.99 per month to get unlimited free deliveries.

“As we grow, we will stay true to our values and our mission of connecting people with possibility  —  and, trust us, we’re just getting started,” DoorDash wrote.

Facebook announced today the winners of its annual Internet Defense Prize and awarded first-, second- and third-place winners a total of $200,000 for research papers that addressed topics of internet security and privacy. Combined with $800,000 in Secure the Internet Grants awarded to security and privacy researchers earlier this week, the company has now completed its 2018 goal to invest $1 million toward securing the internet.

The Internet Defense Prize first started in 2014, but this year the prize quadrupled from its original $50,000 award to $200,000 spread across three groups. In a statement announcing the winners, Facebook said that the increase of this year’s prize money reflected not just the company’s ongoing (and in light of the its privacy catastrophes this year, seemingly increased) interest in security and privacy, but also the quality of work submitted.

“Over the years we’ve gotten higher and higher quality of submissions,” Pete Voss, Facebook’s Security Communications Manager told TechCrunch. “[But] the criteria has always been the same, and that’s making practical research. Making this go beyond theory and making it so you can actually apply security in real life.”

The first prize, $100,000, was taken home by a team from Belgium for a paper entitled “Who Left Open the Cookie Jar? A Comprehensive Evaluation of Third-Party Cookie Policies” that proposed improvements to browser security that would make users less susceptible to having their internet trail tracked from site to site.

Second- and third-place prizes (for $60,000 and $40,000 each) were awarded to research teams in the U.S. and China, respectively, for papers focusing on proper use of cryptography for app development and for strengthening the algorithm behind single sign-on security systems.

Voss says the entries this year are a great example of the award’s mission to fund research that benefits not just Facebook’s interests in security and privacy, but the internet’s as a whole.

“We’re investing in not just Facebook security but in public security for the entire internet,” said Voss. “We want to keep the internet strong and the only way we can do that is by making it secure.”

As for the recipients of the Secure the Internet Grants, the $800,000 was divided between 10 teams whose research ranged from sociological approaches (like “Understanding the Use of Hijacked Facebook Accounts in the Wild” and “Enhancing Online & Offline Safety During Internet Disruptions in Times of War”) to more technical ones like improving the strength of encryption methods.

Voss told TechCrunch that Facebook has no plans to announce at this time regarding its next steps toward providing funding for researchers in this space (unlike last summer when the company laid out its $1 million goal), but says that the company is “always looking at incentivizing this kind of research” and providing support.

Just a few months back, Niantic added its first “Special Research” to Pokémon GO. Sort of like an in-game quest, the research had players complete a series of tasks (often over a number of days) to unlock an otherwise unobtainable Pokémon.

Now they’re back with another one.

The company will be adding a second Special Research quest to the game on August 20th. Whereas the last set unlocked Mew from the first generation of Pokémon games, this one brings out Gen II’s Celebi.

This technically isn’t the first time Celebi has appeared in GO – attendees of GO Fest back in July got an early crack at a Special Research quest specifically tailored to the event, with the final reward being the opportunity to catch Celebi a solid month before anyone else.

Though a bummer to anyone who couldn’t make it to Chicago, it was a fitting way to debut Celebi. Celebi has almost always been an “event” Pokemon in the original series, meaning you had to do something special to encounter one. Depending on the game, sometimes that meant going to a physical, real world event; sometimes it just meant having the right pre-order disc.

Those who already did the GO Fest research will also be able to do this public run of the Special Research, earning a bit more candy for the Celebi they’ve already caught.

And if you haven’t finished the first (Mew) Special Research yet? That’s okay – they can run in parallel.

These Special Research quests are a clever way for Niantic to keep things interesting. It turns the process of catching one particularly worthwhile Pokémon from something that might take 10 seconds into something that might spread into hours or days (depending on how intense you get about it.) I just wish there were more of them (even if they were only for big lumps of XP). Though it’s smart for Niantic to keep them rare and special, these multi-stage tasks are a bit more rewarding than the one-off quick tasks you get anytime you spin a Pokéstop.

AR/VR/XR are going to be big, but not everyone will win. Today’s market is a collection of related point solutions to specific problems, but not a fully functioning ecosystem. Not yet. For the market to begin to challenge incumbent platforms (particularly mobile), great tech alone is not enough. AR/VR/XR needs its own Reality Ecosystem. And there are a lot of pieces to the puzzle.

(Note: This discussion focuses on consumer, not enterprise, AR/VR/XR markets)

Active users

For platforms to be platforms, they need active users. Lots of them. Table stakes are tens of millions; hundreds of millions are better, but billions are the ultimate goal. Today we’re all active users of a platform with four and a half billion active users — mobile.

Early indications are positive for mobile AR, with Pokémon GO (tens of millions), Snapchat (hundreds of millions) and WeChat (billions) showing what is possible. Google’s Maps/Lens combo demoed at Google I/O also has potential. But it will still take multiple breakouts across the 20-plus mobile AR app categories to leverage early successes into a true platform.

VR has different user dynamics, partly because of a lack of plurality, but also due to relatively limited scale and user attrition. One of the challenges for VR is a primary entertainment focus (games, video), which can be done more easily and cheaply on existing devices (even though they can’t rival it for immersion). Also, the social side of VR hasn’t really scaled so far — AltspaceVR was one of the biggest VR social apps last year with 35,000 monthly active users (“MAU”) when acquired by Microsoft after reporting it was closing. So while there is an active core VR user base, some casual users haven’t stuck with the platform for long enough.

If Apple launches smartphone-tethered smart glasses as an iPhone peripheral (we’ve forecast 2020 for a few years now), we’ll get a better idea of what smart glasses daily active users (“DAU”) could look like. But Snap Spectacles (not smart glasses) and Google Glass highlight that cool tech goggles can end up in the closet. Magic Leap’s recent launch has also received mixed reviews. Smart glasses need to sort this out if they hope to scale.

High-frequency users

The most important economic lesson from mobile is “Frequency ∝ Revenue” (“∝“ means “proportional to”). In other words, high user frequency = money. For example, the top 1 percent grossing mobile apps deliver 35x the sessions per day of the top 5 percent apps. And going back to active users, lifetime value of the top 1 percent grossing apps is 20x that of the the top 5 percent. While it’s obvious, you need to hold on to users and give them something to do to make money. While there are big differences between AR/VR/XR and mobile, this remains a crucial dynamic.

Mobile AR has shown what is possible, with Pokémon GO, Snapchat and soon Google Maps/Lens again standouts. While each has a different approach to user engagement, usage frequency is high. It’s part of why they’re so valuable.

Some VR headsets get used less than once a day, with a significant proportion every few days, weekly or even monthly. Our User Strategy team’s product/market fit reviews for startups have shown this dynamic even when users love their VR apps. The words “evenings,” “weekends” and “holidays” come up, particularly for under-34 Snapchat demographic users. Not ideal for frequency.

Again, with smart glasses it is too early to tell, but app developers might need a mental model closer to mobile than enterprise to get frequency to work. Lightweight, short-duration apps that are opened tens to hundreds of times a day could keep smart glasses on peoples’ faces when they’re ready for prime time. No pressure there, then.

Critical use cases

We think about use cases for new technology platforms in terms of valuable versus critical. Valuable use cases might be cool and technically hard to do, but either don’t fundamentally transform user experience or aren’t important to users. Critical use cases enable lots of users to do something they really care about, and that couldn’t be done in any other way. Critical is interesting, valuable not so much.

Critical use cases for mobile AR are beginning to emerge, with perhaps the first being Google’s Maps/Lens combination revealed at Google I/O 2018. It solves a universal problem when you come out of Embarcadero Station and are told to go south — but where’s south? Google combined computer vision with mobile AR to show you exactly where to go, and even gave you a cute fox to lead you there. This produced a visceral response in the audience at the I/O Keynote, because it solves a problem we all share. And it couldn’t be done in any other way.

VR is valuable — just ask Palmer Luckey. It’s also cool, technically hard to do and can take you to other worlds. But critical? Again, VR’s entertainment focus effectively makes it a subset of the games market, as well as other use cases, such as enterprise training. But critical use cases don’t appear to have emerged three years into the market. For comparison, Uber launched three years after the iPhone.

As smart glasses are largely enterprise focused today, again it’s early for critical consumer use cases. The first could evolve from mobile AR, but they are more likely to come from native smart glasses use cases that only work for that form factor.

Critical apps

On average, Americans tend to use nine mobile apps per day, and 30 per month. Most download zero apps per month. This means critical use cases are not enough. They need to be features of critical apps we already use all the time, or something so insanely great that we might actually download it.

This dynamic could be mobile AR’s secret weapon, with mundane use cases embodied in ubiquitous apps the possible winners. Again, think Google Maps (soon Apple Maps, too) or Snapchat. Outliers like Pokémon GO come from specific sets of circumstances and are hard to duplicate. There’s a reason why breakout hits are rare in mobile (not just mobile AR). Houzz proved mobile AR apps can drive an extraordinary 11x sales uplift for e-commerce, but again, this is a feature of an already successful app. Current mobile leaders could determine how mobile AR evolves even more than startup insurgents.

The challenges for critical VR use cases apply to critical VR apps too. It’s hard to describe a VR app most people couldn’t live without, even if you love Beat Saber. It’s too early to tell with smart glasses again, but their critical use cases might need to be more than ports from breakout mobile AR successes.

Cloud/data

Many people in the industry are excited about AR Cloud, a persistent 3D real-world data layer for shared AR apps. It could become a key enabler for the Reality Ecosystem for both mobile AR and smart glasses. But discussions with AR Cloud startup CEOs indicate that critical use cases and monetization remain open questions for some. Google, Niantic (and again, Apple) have it figured out, but startups in the space must avoid phase 2 of the Underpants Gnomes’ business model. Google and Uber are proof that platform economics can take time to develop, so the excitement may yet be warranted.

Blockchain has been said to be VR’s cloud. While this could be the future, it needs to avoid what Steve Wozniak and others have called the “Blockchain Bubble.”

Data/analytics to support the industry have largely come from industry reports so far (including our own). But AR/VR/XR tools equivalent to Bloomberg, AppAnnie or PitchBook hadn’t emerged before Digi-Capital’s Analytics Platform was first seen at Google in May (before launching in July). Piper Jaffray Apple analyst (now Loup Ventures managing partner) Gene Munster describes it as “Bloomberg for AR/VR/XR” — so hopefully that helps fill the vacuum.

Installed base

For the Reality Ecosystem to succeed, massive installed bases for underlying hardware and software platforms are required. While this does not guarantee users downloading or using AR/VR/XR apps, without them, there’s little chance of success.

Mobile AR is the front-runner, as Apple ARKit, Google ARCore and Facebook Camera Effects could deliver more than 900 million installed base by the end of this year, and approach three and a half billion by 2022. So while mobile AR has a lot of other challenges to solve (not least UI/UX), installed base appears to be a done deal.

VR (mobile, console/PC, standalone) could reach 50 to 60 million installed base in five years’ time, but again, looks more like a subset of the games market than anything else.

Smart glasses could produce tens of millions installed base by 2022 (again, if and when Apple enters), and result in a combined AR/VR headset installed base in the high tens of millions to more than 100 million in five years (or around 3 percent of mobile AR).

Critical hardware

Today’s critical hardware is the smartphone. It’s the first, most frequent and last thing most of us look at every day. So mobile AR has critical hardware already. And if we’re right about Apple rolling out TrueDepth sensors beyond the iPhone X, functionality could get better for a broader set of users.

VR hardware is valuable, but its usage patterns don’t make it look critical yet. Again, as a subset of the games market, it seems to have found a deep niche audience without going mass-market.

Smart glasses need an Apple-quality device (whether made by Apple or somebody else) to be critical. They could start as mobile peripherals, but a device capable of replacing your phone might be what’s needed. However there are major technical and packaging issues to solve first, so this could take a few years.

Corporate and VC investment

The Reality Ecosystem could depend more on internal corporate investment than startups raising cash from VCs. For example, Apple’s investment over the last four years to build its AR Cloud for Apple Maps (and a range of other potential applications) could be greater than the largest VC investments. While attention has been focused on monster rounds for Magic Leap and others, the corporate world could prove more important.

However, VC investment will always be a major driver because it enables black swans like Google, Facebook, Uber, Tencent and Alibaba to emerge. They would not have reached escape velocity without great VCs bankrolling them, and the Reality Ecosystem should be no different.

Talking with 30 leading VCs in Sand Hill Road and China showed a mental model geared toward mobile AR and computer vision in the near-term, and smart glasses in the long-term. VCs appear to be far less focused on VR.

While AR/VR/XR saw more than $1.5 billion investment in Q2 2018 and more than $5 billion in the last 12 months, the shape of the VC market has changed. The shift to China (which could win AR/VR/XR long-term) with larger, later-stage deals, was twinned with fewer early-stage deals in the U.S. in Q2 2018. It will be interesting to see how this plays out through the year.

If you build it, they will come… but who will build it?

Ubiquitous AR (mobile AR, smart glasses) could drive $85 billion to $90 billion revenue by 2022, dominating focused VR (mobile, console/PC, standalone) with $10 billion to $15 billion in the same time frame. But this won’t happen without a robust Reality Ecosystem to support it.

So who will build it?

Digi-Capital tracks thousands AR/VR/XR leaders across mobile AR (gathering momentum, but more traction needed), smart glasses (too early to tell) and VR (still all to prove, three years in). While there are extraordinary startups like Niantic, some of the smart money is on incumbent platforms like Apple, Google, Facebook, Tencent, Alibaba and Amazon to form the bedrock of what is yet to come. None has emerged as the Reality Ecosystem’s true champion yet, so it’s all to play for. That said, Apple’s full-stack ecosystem, Google’s AR Cloud, Facebook’s social scale and Alibaba’s Online-to-Offline (“O2O”) dominance position them as strong contenders.

There’s clear blue ocean between here and the end-game for the Reality Ecosystem, and a massive amount of work to be done. A fair wind and following seas could help, but luck and determination might turn out to be far more important.

Netflix just announced a multi-year deal with Kenya Barris, creator of Black-ish and its spinoff Grown-ish.

While Barris will remain an executive producer on those shows (and on the upcoming Besties), he will be exclusively developing new series for Netflix.

The deal only covers TV, as Barris (who was one of the writers of Girls Trip) has a first-look movie deal at Fox. That’s according to The Hollywood Reporter, which also cites sources who say the deal is for three years and is in the “high-eight-figure range.”

“When my agents reached out to me about this little garage start-up called Netflix, I wasn’t sure what to think,” Barris said in a statement. “But after I talked to [Netflix executives Ted Sarandos and Cindy Holland], I started to believe that maybe this mom-and-pop shop with only 130 million subscribers might just be something… so I decided to take a swing… a leap of faith if you will, and take a chance with the new kids on the block.”

In the past year, Netflix shook up the television industry by signing big deals with Shonda Rhimes and Ryan Murphy — Rhimes’ deal was reportedly worth $100 million, while Murphy’s was for $300 million.

In each case, Netflix isn’t just betting on one big show. Rhimes and her production company Shondaland, for example, recently announced seven projects in development for the streaming service.