Category: UNCATEGORIZED

19 Oct 2019

The new iPhone is ugly

I’ll be the first to admit that I’m a bit old-fashioned when it comes to phones. Everyone scoffs at my iPhone SE, but the truth is it’s the best phone Apple ever made — a beautiful, well designed object in just about every way. But damn is the iPhone 11 Pro ugly. And so are the newest phones from Samsung and Google, while we’re at it.

Let’s just get right to why the new iPhones are ugly, front and back. And sideways. We can start with the notch. Obviously it’s not new, but I thought maybe this would be some kind of generational anomaly that we’d all look back and laugh at in a year or two. Apparently it’s sticking around.

I know a lot of people have justified the notch to themselves in various ways — it technically means more raw screen space, it accommodates the carrier and battery icons, it’s necessary for unlocking the phone with your face.

Yeah, but it’s ugly.

If they removed the notch, literally no one would want the version with the notch, because it’s so plainly and universally undesirable. If Apple’s engineers could figure out a way to have no notch, they’d have done it by now, but they can’t and I bet they are extremely frustrated by that. They try to hide it with the special notch-camouflaging wallpaper whenever they can, which is as much as saying, “hey, we hate looking at it too.”

nonotch

You can forget for a few seconds. But in the back of your mind you know it’s there. Everyone knows.

It’s a prominent, ugly compromise (among several) necessitated by a feature no one asked for and people can’t seem to figure out if they even like or not. Notches are horrible and any time you see one, it means a designer cried themselves to sleep. To be fair that probably happens quite a bit. I grew up around designers and they can be pretty sensitive, like me.

I’m not a big fan of the rounded screen corners for a couple reasons, but I’ll let that go because I envision a future where it doesn’t matter. You remember how in Battlestar Galactica the corners were clipped off all the paper? We’re on our way.

Having the screen extend to the very edge of the device on the other hand isn’t exactly ugly, but it’s ugly in spirit. The whole front of the phone is an interface now, which would be fine if it could tell when you were gripping the screen for leverage and not to do something with it. As it is, every side and corner has some kind of dedicated gesture that you have to be wary of activating. It’s so bad people have literally invented a thing that sticks out from the back of your phone so you can hold it that way. Popsockets wouldn’t be necessary if you could safely hold your phone the way you’d hold any other object that shape.

 

iphone 11 pro

The back is ugly now, too. Man, is that camera bump bad. Bump is really the wrong word. It looks like the iPhone design team took a field trip to a maritime history museum, saw the deep sea diving helmets, and thought, Boom. That’s what we need. Portholes. To make our phone look like it could descend to 4,000 fathoms. Those helmets are actually really cool looking when they’re big and made of strong, weathered brass. Not on a thin, fragile piece of electronics. Here it’s just a huge, chunky combination of soft squares and weirdly arranged circles — five of them! — that completely take over the otherwise featureless rear side of the phone.

The back of the SE is designed to mirror the front, with a corresponding top and bottom “bezel.” In the best looking SE (mine) the black top bezel almost completely hides the existence of the camera (unfortunately there’s a visible flash unit); it makes the object more like an unbroken solid, its picture-taking abilities more magical. The camera is completely flush with the surface of the back, which is itself completely flush except for texture changes.

The back of the iPhone 11 Pro has a broad plain, upon which sits the slightly higher plateau of the camera assembly. Above that rise the three different little camera volcanoes, and above each of those the little calderas of the lenses. And below them the sunken well of the microphone. Five different height levels, producing a dozen different heights and edges! Admittedly the elevations aren’t so high, but still.

hero gallery color story m6kjl7t4boqm large

If it was a dedicated camera or another device that by design needed and used peaks and valleys for grip or eyes-free navigation, that would be one thing. But the iPhone is meant to be smooth, beautiful, have a nice handfeel. With this topographic map of Hawaii on the back? Have fun cleaning out the grime from in between the volcanoes, then knocking the edge of the lens against a table as you slide the phone into your hand.

Plus it’s ugly.

The sides of the phones aren’t as bad as the front and back, but we’ve lost a lot since the days of the SE. The geometric simplicity of the + and – buttons, the hard chamfered edge that gave you a sure grip, the black belts that boldly divided the sides into two strips and two bows. And amazingly, due to being made of actual metal, the more drops an SE survives, the cooler it looks.

The sides of the new iPhones look like bumpers from cheap model cars. They look like elongated jelly beans, with smaller jelly beans stuck on that you’re supposed to touch. Gross.

That’s probably enough about Apple. They forgot about good design a long time ago, but the latest phones were too ugly not to call out.

Samsung has a lot of the same problems as Apple. Everyone has to have an “edge to edge” display now, and the Galaxy S10 is no exception. But it doesn’t really go to the edge, does it? There’s a little bezel on the top and bottom, but the bottom one is a little bigger. I suppose it reveals the depths of my neurosis to say so, but that would never stop bugging me if I had one. If it was a lot bigger, like HTC’s old “chins,” I’d take it as a deliberate design feature, but just a little bigger? That just means they couldn’t make one small enough.

sung 10

As for the display slipping over the edges, it’s cool looking in product photos, but I’ve never found it attractive in real life. What’s the point? And then from anywhere other than straight on, it makes it look more lopsided, or like you’re missing something on the far side.

Meanwhile it not only has bezels and sometime curves, but a hole punched out of the front. Oh my god!

Here’s the thing about a notch. When you realize as a phone designer that you’re going to have to take over a big piece of the front, you also look at what part of the screen it leaves untouched. In Apple’s case it’s the little horns on either side — great, you can at least put the status info there. There might have been a little bit left above the front camera and Face ID stuff, but what can you do with a handful of vertical pixels? Nothing. It’ll just be a distraction. Usually there was nothing interesting in the middle anyway. So you just cut it all out and go full notch.

Samsung on the other hand decided to put the camera in the top right, and keep a worthless little rind of screen all around it. What good is that part of the display now? It’s too small to show anything useful, yet the hole is too big to ignore while you’re watching full-screen content. If their aim was to make something smaller and yet even more disruptive than a notch, mission accomplished. It’s ugly on all the S10s, but the big wide notch-hole combo on the S10 5G 6.7″ phablet is the ugliest.

galaxy s10 camera

The decision to put all the rear cameras in a long window, like the press box at a hockey game, is a bold one. There’s really not much you can do to hide 3 giant lenses, a flash, and that other thing. Might as well put them front and center, set off with a black background and chrome rim straight out of 2009. Looks like something you’d get pointed at you at the airport. At least the scale matches the big wide “SAMSUNG” on the back. Bold — but ugly.

Google’s Pixel 4 isn’t as bad, but it’s got its share of ugly. I don’t need to spend too much time on it, though, because it’s a lot of the same, except in pumpkin orange for Halloween season. I like the color orange generally, but I’m not sure about this one. Looks like a seasonal special phone you pick up in a blister pack from the clearance shelf at Target, the week before Black Friday — two for $99, on some cut-rate MVNO. Maybe it’s better in person, but I’d be afraid some kid would take a bite out of my phone thinking it’s a creamsicle.

pixel 4

The lopsided bezels on the front are worse than the Samsung’s, but at least it looks deliberate. Like they wanted to imply their phone is smart so they gave it a really prominent forehead.

 

I will say that of the huge, ugly camera assemblies, the Pixel’s is the best. It’s more subtle, like being slapped in the face instead of kicked in the shins so hard you die. And the diamond pattern is more attractive for sure. Given the square (ish) base, I’m surprised someone on the team at Google had the rather unorthodox idea to rotate the cameras 45 degrees. Technically it produces more wasted space, but it looks better than four circles making a square inside a bigger, round square.

And it looks a hell of a lot better than three circles in a triangle, with two smaller circles just kind of hanging out there, inside a bigger, round square. That iPhone is ugly!

19 Oct 2019

Mercedes-Benz app glitch exposed car owners’ information to other people’s accounts

Mercedes-Benz car owners have said that the app they used to remotely locate, unlock and start their cars was displaying other people’s account and vehicle information.

TechCrunch spoke to two customers who said the Mercedes-Benz’ connected car app was pulling in information from other accounts and not their own, allowing them to see personal information — including names, locations, phone numbers, and other information — of other vehicle owners.

The apparent security lapse happened late-Friday before the app went offline “due to site maintenance” a few hours later.

It’s not uncommon for modern vehicles these days to come with an accompanying phone app. These apps connect to your car and let you remotely locate them, lock or unlock them, and start or stop the engine. But as cars become internet-connected and hooked up to apps, security flaws have allowed researchers to remotely hijack or track vehicles.

One Seattle-based car owner told TechCrunch that their app pulled in information from several other accounts. He said that both he and a friend, who are both Mercedes owners, had the same car belonging to another customer, in their respective apps but every other account detail was different.

benz app 2

Screenshots of the Mercedes-Benz app showing another person’s vehicle, and exposed data belonging to another car owner. (Image: supplied)

The car owners we spoke to said they were able to see the car’s recent activity, including the locations of where it had recently been, but they were unable to track the real-time location using the app’s feature.

When he contacted Mercedes-Benz, a customer service representative told him to “delete the app” until it was fixed, he said.

The other car owner we spoke to said he opened the app and found it also pulled in someone else’s profile.

“I got in contact with the person who owns the car that was showing up,” he told TechCrunch. “I could see the car was in Los Angeles, where he had been, and he was in fact there,” he added.

He said that he wasn’t sure if the app has exposed his private information to another customer.

“Pretty bad fuck up in my opinion,” he said.

The first customer reported that the “lock and unlock” and the engine “start and stop” features did not work on his app, somewhat limiting the impact of the security lapse. The other customer said they did not attempt to test either feature.

It’s not clear how the security lapse happened or how widespread the problem was. A spokesperson for Daimler, the parent company of Mercedes-Benz, did not respond to a request for comment on Saturday.

According to Google Play’s rankings, more than 100,000 customers have installed the app.

A similar security lapse hit Credit Karma’s mobile app in August. The credit monitoring company admitted that users were inadvertently shown other users’ account information, including details about credit card accounts and balances. But despite disclosing other people’s information, the company denied a data breach.

19 Oct 2019

HTC releases a cheaper blockchain phone

Whatever you might say about HTC (and believe me, there’s plenty to say), at least the company takes some fascinating chance. As newly minted CEO Yves Maitre admitted to me at Disrupt a couple of weeks back, the once mighty smartphone giant has lost the thread in recent years. But if nothing else, the Exodus project marks a glimpse at some potential smartphone future.

With this weekend’s launch of the Exodus 1s at Berlin’s Lightning conference, HTC aims to make it clear that the project is more than just a one-off. The new device lowers the barrier of entry to €219 (~$244). All said, not a bad price for those looking to dabble in the technology. Oh, and obviously it’s available in all of the various equivalent cryptocurrencies.

Exodus1s 6V 19Oct1

The specs are fittingly pretty dismal. There’s a Snapdragon 435, running Android 8.1. The screen is a 5.7 inch HD+, coupled with a decent 4GB of RAM and 64GB of storage. Oh, and there’s a microUSB port and, good news, a headphone jack. Honestly, it’s a pretty low-end device, all told.

The big difference here being the the inclusion of a hardware wallet and Bitcoin node access. “We gave users the ability to own their own keys, and now we’ve gone one step further to allow users to run their own full Bitcoin node,” HTC’s Phil Chen said in a release tied to the news. “We are providing the tools for access to universal basic finance; the tools to have a metaphorical Swiss bank in your pocket.”

Exodus1s PerRight 19Oct1

Maitre told me the other week he still believes mainstream use of blockchain on these devices is more than two or three years out. What the 1s provides, however, is an inexpensive way to see what the technology provides today. Interested parties in Europe, Taiwan, Saudi Arabia and the UAE can order it online starting today.

19 Oct 2019

Startups Weekly: The unicorn from down under, an Uber TV show and All Raise’s expansion

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy news pertaining to startups and venture capital. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about Revel, a recent graduate of Y Combinator that’s raised a small seed round.

Remember, you can send me tips, suggestions and feedback to kate.clark@techcrunch.com or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here.


What happened this week?

Uber the TV show

Is anyone surprised Mike Isaac’s “Super Pumped” is set to become a TV show? Travis Kalanick’s notorious journey to CEO of Uber and subsequent ouster was made for television. This week, news broke that Showtime’s Brian Koppelman and David Levien, the creators and showrunners of “Billions,” would develop the project, with Isaac himself on board to executive produce. I will be watching.

All Raise expansion

All Raise, an 18-month-old nonprofit organization that seeks to amplify the voices of and support women in tech, announced new chapters in Los Angeles and Boston this week. I spoke with leaders of the organization about expansion plans, new hires, product launches and more. “Women are hungry for the support and guidance we provide. I think the movement is just gathering momentum,” All Raise CEO Pam Kostka told me.

VCThe unicorn from down under

You’ve probably heard of Canva by now. The Australian tech company, which has developed a simplified graphic design tool, is worth a whopping $3.2 billion as of this week. Investors in the company include Bond, General Catalyst, Bessemer Venture Partners, Blackbird and Sequoia China. Alongside a fresh $85 million funding, Canva is also making its foray into enterprise with the launch of Canva for Enterprise. Read about that here.


What else?

  1. The Station, TechCrunch’s Kirsten Korosec’s new weekly newsletter, has officially launched. She is going deep each week on all things mobility and transportation. You can read her first one here and subscribe here.
  2. ‘Cloud kitchens’ is an oxymoron, says TechCrunch editor Danny Crichton. He penned an interesting piece this week, arguing cloud kitchens are just adding more competition to one of the most competitive industries in the world, and that isn’t a path to leverage.
  3. NASA made history this week when astronauts Christina H. Koch and Jessica Meir took part in the first-ever spacewalk in the agency’s history featuring only women. No, this isn’t startup-related but it’s pretty damn cool. Watch the video here.

EHJxl5XW4AAu3PN 1

NASA astronauts Christina H. Koch and Jessica Meir


VC deals


Startup spotlight: Petalfox. I discovered the business earlier this week. Basically, it’s a super easy way to order flowers, coffee and others goods via SMS. I’m trying it out. That’s all.


Equity

This week was honestly a treat. We had myself in the studio along with Alex Wilhelm and a special guest, Sarah Guo from Greylock Partners, a venture firm (obviously). Guo has the distinction of having the best-ever fun fact on the show. We kicked off with Grammarly, a company that recently put $90 million into its accounts. Then chatted about Lattice, Tempest, WeWork, SaaS, the future of valuations in Silicon Valley and more if you can believe it. Listen here.

Equity drops every Friday at 6:00 am PT, so subscribe to us on iTunesOvercast and all the casts.

19 Oct 2019

Apple’s China stance makes for strange political alliances, as AOC and Ted Cruz slam the company

In a rare instance of bipartisanship overcoming the rancorous discord that’s been the hallmark of the U.S. Congress, senators and sepresentatives issued a scathing rebuke to Apple for its decision to take down an app at the request of the Chinese government.

Signed by Senators Ron Wyden, Tom Cotton, Marco Rubio, Ted Cruz, and Congressional Representatives Alexandria Ocasio-Cortez, Mike Gallagher and Tom Malinowski, the letter was written to “express… strong concern about Apple’s censorship of apps, including a prominent app used by protestors in Hong Kong, at the request of the Chinese government.”

In 2019, it seems the only things that can unite America’s clashing political factions are the decisions made by companies in one of its most powerful industries.

At the heart of the dispute is Apple’s decision to take down an app called HKMaps that was being used by citizens of the island territory to track police activity.

For several months protestors have been clashing with police in the tiny territory over what they see as the undue influence being exerted by China’s government in Beijing over the governance of Hong Kong. Citizens of the former British protectorate have enjoyed special privileges and rights not afforded to mainland Chinese citizens since the United Kingdom returned sovereignty over the region to China on July 1, 1997.

“Apple’s decision last week to accommodate the Chinese government by taking down HKMaps is deeply concerning,” the authors of the letter wrote. “We urge you in the strongest terms to reverse course, to demonstrate that Apple puts values above market access, and to stand with the brave men and women fighting for basic rights and dignity in Hong Kong.”

Apple has long positioned itself as a defender of human rights (including privacy and free speech)… in the United States. Abroad, the company’s record is not quite as spotless, especially when it comes to pressure from China, which is one of the company’s largest markets outside of the U.S.

Back in 2017, Apple capitulated to a request from the Chinese government that it remove all virtual private networking apps from the App Store. Those applications allowed Chinese users to circumvent the “Great Firewall” of China, which limits access to information to only that which is approved by the Chinese government and its censors.

Over 1,100 applications have been taken down by Apple at the request of the Chinese government, according to the organization GreatFire (whose data was cited in the Congressional letter). They include VPNs, and applications made for oppressed communities inside China’s borders (like Uighurs and Tibetans).

Apple isn’t the only company that’s come under fire from the Chinese government as part of their overall response to the unrest in Hong Kong. The National Basketball Association and the gaming company Blizzard have had their own run-ins resulting in self-censorship as a result of various public positions from employees or individuals affiliated with the sports franchises or gaming communities these companies represent.

However, Apple is the largest of these companies, and therefore the biggest target. The company’s stance indicates a willingness to accede to pressure in markets that it considers strategically important no matter how it positions itself at home.

The question is what will happen should regulators in the U.S. stop writing letters and start making legislative demands of their own.

18 Oct 2019

AI is helping scholars restore ancient Greek texts on stone tablets

Machine learning and AI may be deployed on such grand tasks as finding exoplanets and creating photorealistic people, but the same techniques also have some surprising applications in academia: DeepMind has created an AI system that helps scholars understand and recreate fragmentary ancient Greek texts on broken stone tablets.

These clay, stone, or metal tablets, inscribed as much as 2,700 years ago, are invaluable primary sources for history, literature, and anthropology. They’re covered in letters, naturally, but often the millennia have not been kind and there not just cracks and chips but entire missing pieces that may comprise many symbols.

Such gaps, or lacunae, are sometimes easy to complete: If I wrote “the sp_der caught the fl_,” anyone can tell you that it’s actually “the spider caught the fly.” But what if it were missing many more letters, and in a dead language to boot? Not so easy to fill in the gaps.

Doing so is a science (and art) called epigraphy, and it involves both intuitive understanding of these texts and others to add context; One can make an educated guess at what was once written based on what has survived elsewhere. But it’s painstaking and difficult work — which is why we give it to grad students, the poor things.

Coming to their rescue is a new system created by DeepMind researchers that they call Pythia, after the oracle at Delphi who translated the divine word of Apollo for the benefit of mortals.

The team first created a “nontrivial” pipeline to convert the world’s largest digital collection of ancient Greek inscriptions, into text that a machine learning system could understand. From there it was just a matter of creating an algorithm that accurately guesses sequences of letters — just like you did for the spider and the fly.

PhD students and Pythia were both given ground-truth texts with artificially excised portions. The students got the text right about 57 percent of the time — which isn’t bad, as restoration of texts is a long and iterative process. Pythia got it right… well, 30 percent of the time.

But! The correct answer was in its top 20 answers 73 percent of the time. Admittedly that might not sound so impressive, but you try it and see if you can get it in 20.

greek process

The truth is the system isn’t good enough to do this work on its own, but it doesn’t need to. It’s based on the efforts of humans (how else could it be trained on what’s in those gaps?) and it will augment them, not replace them.

Pythia’s suggestions may not be perfectly right on the first try very often, but it could easily help someone struggling with a tricky lacuna by giving them some options to work from. Taking a bit of the cognitive load off these folks may lead to increases in speed and accuracy in taking on remaining unrestored texts.

The paper describing Pythia is available to read here, and some of the software they developed to create it is in this GitHub repository.

18 Oct 2019

Adam Neumann planned for his children and grandchildren to control WeWork

WeWork cofounder Adam Neumann didn’t plan for his family’s control of WeWork to end at his death but he expected it be controlled by future generations of Neumanns, too. According to Business Insider,

The outlet reports that in a  speech Neumann gave to employees in January of this year, footage of which it says it has viewed but it has not published online, Neumann is seen saying that WeWork isn’t “just controlled — we’re generationally controlled.” He reportedly goes on to say that while the five children he shares with wife Rebekah Neumann “don’t have to run the company,” they “do have to stay the moral compass of the company.”

According to BI, Neumann even invoked his future grandchildren, telling those gathered: “It’s important that one day, maybe in 100 years, maybe in 300 years, a great-great-granddaughter of mine will walk into that room and say, ‘Hey, you don’t know me; I actually control the place. The way you’re acting is not how we built it,'” he said.

“If we do this right, over the years different CEOs will come, but we will keep an eye on these basic values and basic moral standards and not allow them to shift,” he’s quoted by BI as saying.

It may sound like yet another outlandish proclamation from Neumann, who has a flair for the dramatic. (Talking to Fast Company earlier this year, for example, he compared WeWork to a rare jewel, asking, “Do you know how long it takes a diamond to be created?”)

But before WeWork began coming apart at the seams, Neumann had every reason to believe that he could pass power down to his heirs. Though many public shareholders may not realize as much, a growing number of tech founders enjoy the kind of dual-class shares that Neumann had extracted from investors, shares that don’t merely give founders more voting power for a while after their companies go public or or even throughout their lifetimes, but whose power can be passed down to their children, too.

We wrote about this very issue as a kind of hypothetical last month, quoting SEC Commissioner Robert Jackson, a longtime legal scholar and law professor, who told an audience last year that nearly half of companies that went public with dual-class shares between 2004 and 2018, gave corporate insiders “outsized voting rights in perpetuity.”

Warned Jackson, “Those companies are asking shareholders to trust management’s business judgment — not just for five years, or 10 years, or even 50 years.” It asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids . . . It raises the prospect that control over our public companies, and ultimately of Main Street’s retirement savings, will be forever held by a small, elite group of corporate insiders — who will pass that power down to their heirs.”

The market spoke in WeWork’s case, but not every company has such apparent flaws, and Neumann could have made himself a lot harder to shake than he did. In fact, the broader question the video raises is whether anyone will step in to stop the broader trend, or public market investors be living the consequences down the road instead. (When Jackson delivered his talk, as tried teasingly baiting his SEC colleagues into taking action.)

Neumann wasn’t insane to imagine the scenario that he did. That doesn’t mean it’s rational. Giving founders super-voting shares for some period after transitioning onto the public market, we can understand. Giving founders so much power that their kids call the shots? That is crazy.

18 Oct 2019

Adam Neumann planned for his children and grandchildren to control WeWork

WeWork cofounder Adam Neumann didn’t plan for his family’s control of WeWork to end at his death but he expected it be controlled by future generations of Neumanns, too. According to Business Insider,

The outlet reports that in a  speech Neumann gave to employees in January of this year, footage of which it says it has viewed but it has not published online, Neumann is seen saying that WeWork isn’t “just controlled — we’re generationally controlled.” He reportedly goes on to say that while the five children he shares with wife Rebekah Neumann “don’t have to run the company,” they “do have to stay the moral compass of the company.”

According to BI, Neumann even invoked his future grandchildren, telling those gathered: “It’s important that one day, maybe in 100 years, maybe in 300 years, a great-great-granddaughter of mine will walk into that room and say, ‘Hey, you don’t know me; I actually control the place. The way you’re acting is not how we built it,'” he said.

“If we do this right, over the years different CEOs will come, but we will keep an eye on these basic values and basic moral standards and not allow them to shift,” he’s quoted by BI as saying.

It may sound like yet another outlandish proclamation from Neumann, who has a flair for the dramatic. (Talking to Fast Company earlier this year, for example, he compared WeWork to a rare jewel, asking, “Do you know how long it takes a diamond to be created?”)

But before WeWork began coming apart at the seams, Neumann had every reason to believe that he could pass power down to his heirs. Though many public shareholders may not realize as much, a growing number of tech founders enjoy the kind of dual-class shares that Neumann had extracted from investors, shares that don’t merely give founders more voting power for a while after their companies go public or or even throughout their lifetimes, but whose power can be passed down to their children, too.

We wrote about this very issue as a kind of hypothetical last month, quoting SEC Commissioner Robert Jackson, a longtime legal scholar and law professor, who told an audience last year that nearly half of companies that went public with dual-class shares between 2004 and 2018, gave corporate insiders “outsized voting rights in perpetuity.”

Warned Jackson, “Those companies are asking shareholders to trust management’s business judgment — not just for five years, or 10 years, or even 50 years.” It asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids . . . It raises the prospect that control over our public companies, and ultimately of Main Street’s retirement savings, will be forever held by a small, elite group of corporate insiders — who will pass that power down to their heirs.”

The market spoke in WeWork’s case, but not every company has such apparent flaws, and Neumann could have made himself a lot harder to shake than he did. In fact, the broader question the video raises is whether anyone will step in to stop the broader trend, or public market investors be living the consequences down the road instead. (When Jackson delivered his talk, as tried teasingly baiting his SEC colleagues into taking action.)

Neumann wasn’t insane to imagine the scenario that he did. That doesn’t mean it’s rational. Giving founders super-voting shares for some period after transitioning onto the public market, we can understand. Giving founders so much power that their kids call the shots? That is crazy.

18 Oct 2019

VR/AR startup valuations reach $45 billion (on paper)

Despite early-stage virtual reality market and augmented reality market valuations softening in a transitional period, total global AR/VR startup valuations are now at $45 billion globally — include non-pure play AR/VR startups discussed below, and that amount exceeds $67 billion. More than $8 billion has been returned to investors through M&A already, with the remaining augmented and virtual reality startups carrying more than $36 billion valuations on paper. Only time will tell how much of this value gets realized for investors.

(Note: this analysis is of AR/VR startup valuations only, excluding internal investment by large corporates like Facebook . Again, this analysis is of valuation, not revenue.)

Digi-Capital AR/VR Analytics Platform

Selected AR/VR companies that have raised funding or generated significant revenue, plus selected corporates as of September 2019.

There is significant value concentration, with just 18 AR/VR pure plays accounting for half of the $45 billion global figure. Some of the large valuations are for Magic Leap (well over $6 billion), Niantic (nearly $4 billion), Oculus ($3 billion from exit to Facebook), Beijing Moviebook Technology ($1 billion+) and Lightricks ($1 billion). While there are unicorns, the market hasn’t seen an AR/VR decacorn yet.

Across all industries — not just AR/VR — around 60% of VC-backed startups fail, not 90% as often quoted. That doesn’t mean this many startups crash and burn, but that 60% of startups deliver less than 1x return on investment (ROI) to investors (i.e. investors get less back than they put in). To better understand what’s happening in AR/VR, let’s analyze the thousands of startup valuations in Digi-Capital’s AR/VR Analytics Platform to see where the smart money is by sector, stage and country.

Do what you can, with what you have, where you are

Digi Capital AR VR Valuation Sectors Q4 2019

Free charts do not include numbers, axes and data from subscriber version, with underlying hard data sourced directly from companies and reliable secondary sources. Methodology in Digi-Capital’s companion Augmented/Virtual Reality Report Q4 2019

A rising tide lifts all boats, while an ebb tide reveals the rocks beneath the waves. Similarly, the AR/VR industry sectors in which startups operate have a big impact on how they deliver value. Across the 30+ AR/VR sectors that Digi-Capital tracks, some sectors appear to be more equal than others.

Core AR/VR tech startups have delivered the most value to date, with “picks and shovels” businesses supporting the entire market while avoiding customer risk in any one sector. The largest valuations are for core tech companies that operate across either augmented reality and computer vision markets (particularly in China), or games and AR/VR markets. These startups are not AR/VR pure plays, showing how revenue diversification can be highly valuable in early stage markets.

Smartglasses make up the next AR/VR sector in terms of valuation, with around two-thirds of that locked up in smartglasses platform company Magic Leap (again, this analysis is of startups only, excluding internal corporate investment like Microsoft mixed reality).

VR headsets come in at number three, due to Facebook’s acquisition of Oculus back in 2014. While that deal was arguably the catalyst for the current wave of AR/VR, other VR headset startups haven’t delivered similar levels of value to investors yet.

AR/VR games follow, with startup valuations dominated by Pokémon Go developer Niantic and smaller exits like Osmo. AR/VR photo/video is next, with a large chunk of that value having been realized for investors through exits such as Shenzhen Lianmeng Technology, Replay Technology and Magic Pony Technology. There are also ongoing startups like Goldman Sachs-backed Lightricks.

The long tail of 25 other AR/VR market sectors each make up a decreasing proportion of remaining startup valuations today. There are individual later-stage startups such as Beijing Moviebook Technology in AR/VR categories like social, but these are in the minority today (Note: this does not mean there isn’t significant value across remaining sectors or companies within them, but that value has not been quantified by exit value or investment round valuations yet).

All the world’s a stage

Digi Capital AR VR Valuation Stages Q4 2019

Source: Digi-Capital AR/VR Analytics Platform

The highest valuations on paper tend to be in later-stage startups for most tech markets, so it’s no surprise that companies at Series D and Series C stage in China and the USA make up around 45% of valuations in today’s AR/VR market. In terms of realized returns to investors, M&A has delivered over 12% of total global value. While the $3 billion Oculus exit to Facebook back in 2014 stands out, there have been a significant number of exits over the $100 million mark since that time.

When looking at all the different investment stages from Angel through to Series F, their valuation order is slightly jumbled. Series B, A, E and F (in that order) are a similar order of magnitude, followed by Seed, Pre-Seed, Angel and Accelerator at a much lower level. This is a product of the number and valuation of individual startups in each of these stages.

It’s a small world after all

Digi-Capital AR/VR Analytics Platform

Source: Digi-Capital AR/VR Analytics Platform

The geographic distribution of value in AR/VR is extreme, with the USA and China accounting for more than 80% of all AR/VR startup valuations worldwide. These are followed at a much lower level by the UK, Israel, Switzerland and Canada, with a long tail of around 50 other countries. At the regional level, the running order is North America, Asia and Europe, with Latin America and MEA making up the balance. It’s worth noting that while a lot of stored valuation has been in US startups historically, Chinese AR/VR startups have raised far more money in recent years. However, Chinese VC investment dropped dramatically this year across sectors — not AR/VR specifically.

A journey of a thousand miles begins with a single step

Augmented reality, virtual reality and mixed reality (XR) remain early stage, with both consumer and enterprise markets looking for an inflection point to help them truly scale. During a transitional period with many VC and corporate investors taking a wait-and-see approach, startups might need to focus on generating revenue and controlling costs rather than seeing VC funding rounds and exits delivering valuation/value increases. This could end up being a good thing in the long run, as the strongest AR/VR startups rise to the top. For those that do, there’s a lot more value to come.

Tim Merel is Managing Director of AR/VR adviser Digi-Capital, and is a software engineer, investment banker, lawyer and founder.

18 Oct 2019

Tilting Point acquires game monetization startup Gondola

Tilting Point announced yesterday that it has acquired Gondola, a company that aims to increase to improve game monetization by optimizing in-game offers and video ads.

Tilting Point CEO Kevin Segalla described his company’s model as “progressive publishing” — usually, mobile game developers starting working with Tilting Point because they need help with user acquisition, and then develop a deeper publishing relationship over time.

“With a select group of our development partners, we’ll acquire an IP, and we’ll … have them take the engine that they already have and create a whole new game,” Segalla said. “It’s really a dual effort between us and the developer.”

To accomplish all this, the company has built artificial intelligence tools to improve user acquisition. But the other side of that equation, in Segalla’s view, is increasing the lifetime value of the users acquired.

“At the end of the day, scaling a game boils down to two simple things, [cost per install] and LTV,” he said. “Strong developers are working to improve the LTV of their players, but there’s a lot of low-hanging fruit that with the right toolset you can use to improve the lifetime values. That’s what Gondola is about … We’ve been following for years, and we said, ‘Let’s bring this in-house.'”

Gondola currently offers four modules: Target Optimization (choosing the best offer for a player), Rewarded Video Ad Optimization (choosing the right amount of virtual currency to reward a player for watching a video ad), Store Optimization (choosing the right store items to show a player) and Currency Optimization (choosing the best virtual currency amounts for offers and promotions).

The financial terms of the acquisition — Tilting Point’s first — were not disclosed. As part of the deal, Gondola CTO André Cohen is joining Tilting Point as its head of data science, while his co-founder and CEO Niklas Herriger remains involved as an executive advisor.