Category: UNCATEGORIZED

Facebook has finally revealed the details of its cryptocurrency Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger, and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.

Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association including Visa, Uber, and Andreessen Horowitz who’ve invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra blockchain and developer platform with its own Move programming language plus sign up businesses to accept Libra for payment and even give customers discounts or rewards. Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting. Your real identity won’t be tied to your publicly visible transactions. But Facebook/Calibra and other founding members of the Libra Association will earn interest on the money users cash in that is held in reserve to keep the value of Libra stable.

Facebook’s audacious bid to create a global digital currency that promotes financial inclusion for the unbanked actually has more privacy and decentralization built in than many expected. Instead of trying to dominate Libra’s future or squeeze tons of cash out of it immediately, Facebook is instead playing the long-game by pulling payments into its online domain. Facebook’s VP of blockchain David Marcus explains the company’s motive and the tie-in with its core revenue source, telling me “if more commerce happens, then more small business will sell more on and off platform, and they’lll want to buy more ads on the platform so it will be good for our ads business.”

The Risk And Reward Of Building The New PayPal

In cryptocurrencies, Facebook saw both a threat and an opportunity. They held the promise of disrupting how things are bought and sold by eliminating transaction fees common with credit cards. That comes dangerously close to Facebook’s ad business that influences what is bought and sold. If a competitor like Google or an upstart built a popular coin and could monitor the transactions, they’d learn what people buy and could muscle in on the billions spent on Facebook marketing. Meanwhile, the 1.7 billion people who lack a bank account might choose whoever offers them a financial services alternative as their online identity provider too. That’s another thing Facebook wants to be.

Yet existing cryptocurrencies like Bitcoin and Ethereum weren’t properly engineered to scale to be a medium of exchange. Their unanchored price was susceptible to huge and unpredictable swings, making it tough for merchants to accept as payment. And cryptocurrencies miss out on much of their potential beyond speculation unless there are enough places that will take them instead of dollars, and the experience of buying and spending them is easy enough for a mainstream audience. But with Facebook’s relationship with 7 million advertisers and 90 million small businesses plus its user experience prowess, it was well poised to tackle this juggernaut of a problem.

Now Facebook wants to make Libra the evolution of PayPal. It’s hoping Libra will become simpler to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers, and more long-lasting through decentralization.

“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee” Facebook writes in its Libra documentation. That would be a big improvement on today, when you’re stuck paying rent in insecure checks while exploitative remittance services like charge an average of 7% to send money abroad, taking $50 billion from users annually. Libra could also power tiny microtransactions worth just a few cents that are infeasible with credit card fees attached, or replace your pre-paid transit pass.

If Facebook succeeds and legions of people cash in money for Libra, it and the other founding members of the Libra Association could earn big dividends on the interest. And if suddenly it becomes super quick to buy things through Facebook using Libra, businesses will boost their ad spend there. But if Libra gets hacked or proves unreliable, it could cost lots of people around the world money while souring them on cryptocurrencies. And by offering an open Libra platform, shady developers could build apps that snatch not just people’s personal info like Cambridge Analytica, but their hard-earned digital cash.

How Does Libra Work?

By now you know the basics of Libra. Cash in a local currency, get Libra, spend them like dollars without big transaction fees or your real name attached, cash them out whenver you want. Feel free to stop reading and share this article if that’s all you care about. But the underlying technology, the association that governs it, the wallets you’ll use, and the way payments work all have a huge amount of fascinating detail to them. Facebook has released over 100 pages of documentation on Libra and Calibra, and we’ve pulled out the most important facts. Let’s dive in.

The Libra Association – Crypto’s New Oligarchy

Facebook knew people wouldn’t trust it to wholly control the cryptocurrency they use, and it also wanted help to spur adoption. So Facebook recruited the founding members of the Libra Association, which oversees the development of the token, the reserve of real-world assets that gives it value, and the governance rules of the blockchain. Each founding member paid a minimum of $10 million to join and optionally become a validatory node operator (more on that later), gain one vote in the Libra Association council, and be entitled to a share (proportionate to their investment) of the dividends from interest earned on the Libra reserve users pay fiat currency into to receive Libra.

The 28 soon-to-be founding members of the association and their industries, previously reported by The Block’s Frank Chaparro, include:

• Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
• Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
• Telecommunications: Iliad, Vodafone Group
• Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
• Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
• Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Facebook says it hopes to reach 100 founding members before the official Libra launch and it’s open to anyone that meets the requirements including direct competitors to like Google or Twitter.

To join, members must have a half rack of server space, a 100mbps or above dedicated internet connection, a full-time site reliability engineer, and enterprise-grade security. Businesses must hit two of three thresholds of a $1 billion USD market value or $500 million in customer balances, reach 20 million people a year, and/or be recognized as a top 100 industry leader by a group like Interbrand Global or the S&P.

Crypto-focused investors must have over $1 billion in assets under management, while Blockchain businesses must have been in business for a year, have enterprise grade security and privacy, and custody or staking greater than $100 million in assets. And only up to one-third of founding members can by crypto-related businesses or invidually invited exceptions. Facebook also accepts research organizations like universities, and non-profits fulfilling three of four qualties including working on financial inclusion for over five years, multi-national reach to lots of users, a top 100 designation by Charity Navigator or something like it, and/or $50 million in budget.

The Libra Association will be responsible for picking recruiting more founding members to act as validator nodes for the blockchain, fundraising to jumpstart the ecosystem, designing incentive programs to reward early adopters, and doling out social impact grants. A council with a representative from each member will help choose the association’s managing director who will appoint an executive team, elect a board of 5 to 19 top representatives.

Each member including Facebook/Calibra will only get up to one vote or 1% of the total vote (whichever is larger) in the Libra Association council. This provides a level of decentralization that protects against Facebook or any other player hijacking Libra for its own gain.

The Libra Currency – A Stablecoin

A Libra is a unit of the Libra cryptocurrency that’s represented by a three wavy horizontal line unicode character like the dollar is represented by $. The value of a Libra is meant to stay largely stable so it’s a good medium of exchange since merchants can be confident they won’t be paid a Libra today that’s then worth less tomorrow. The Libra’s value is tied to a basket of bank deposits and short-term government securities for a slew of historically stable international currencies including the dollar, pound, europ, swiss franc, and yen. The Libra Association maintains this basket of assets and can change the balance of its composition if necessary to offset major price fluctuations in any one foreign currency so that the value of a Libra stays consistent.

The Libra Association is still hammering out the exact start value for the Libra, but it’s meant to somewhere close to the value of a dollar, euro, or pound so it’s easy to conceptualize. That way, a gallon of milk in the US might cost 3 to 4 Libra, similar but not exactly the same as with dollars.

The idea is that you’ll cash in some money and keep a balance of Libra that you can spend at accepting merchants and online services. You’ll be able to trade in your local currency for Libra and vice versa through certain wallet apps including Facebook’s Calibra, third-party wallet apps, and local resellers like convenience or grocery stores where people already go to top-up their mobile data plan.

The Libra Reserve – One For One

Each time someone cashes in a dollar or their respective local currency, that money goes into the Libra Reserve and an equivalent value of Libra is minted and doled out to that person. If someone cashes out from the Libra Association, the Libra they give back are destroyed/burned and they receive the equivalent value in their local currency back. That means there’s always 100% of the value of the Libra in circulation collateralized with real world assets in the Libra Reserve. It never runs fractional. And unliked “pegged” stable coins that are tied to a single currency like the USD, Libra maintains its own value — though that should cash out to roughly the same amount of a given currency over time.

When Libra Association members join and pay their $10 million minimum, they receive Libra Investment Tokens. Their share of the total tokens translates into the proportion of the dividend they earn off of interest on assets in the reserve. Those dividends are only paid out after Libra Association uses interest to pay for operating expenses, investments in the ecosystem, engineering research, and grants to non-profits and other organizations. This interest is part of what attracted the Libra Association’s members. If Libra becomes popular and many people carry a large balance of the currency, the reserve will grow huge and earn significant interest.

The Libra Blockchain – Built For Speed

Every Libra payment is permanently written into the Libra blockchain — a cryptographically authenticated database that acts as a public online ledger designed to handle 1000 transactions per second. The blockchain is operated and constantly verified by founding members of the Libra Association who each invested $10 million or more for a say in the cryptocurrency’s governance and the ability operate a validator node.

When a transaction is submitted, each of the nodes runs a calculation based on the existing ledger of all transactions. Thanks to a Byzantine Fault Tolerance system, just two-thirds of the nodes must come to consensus that the transaction is legitimate for it to be executed and written to the blockchain. A structure of Merkle Trees in the code makes it simple to recognize changes made to the Libra blockchain.

Transactions on Libra cannot be reversed. If an attack compromises over one-third of the validator nodes causing a fork in the blockchain, the Libra Association says it will temporarily halt transactions, figure out the extent of the damaage, and recommend software updates to resolve the fork.

Transactions aren’t entirely free. They incur a tiny fraction of a cent fee to pay for “gas” that covers the cost of processing the transfer of funds similar to with Ethereum. This fee will be negligible to most consumers, but when they add up the gas charges will deter bad actors from creating millions of transactions to power spam and denial-of-service attacks.

Move Coding Language – For Moving Libra

The Libra blockchain is open source with an Apache 2.0 license and any developer can build apps that work with it using the Move coding language. The blockchain’s prototype launches its testnet today, so it’s effectively in developer beta mode until it officially launches in the first half of 2020. The Libra Association is working with HackerOne to launch a bug bounty system later this year that will pay security researchers for safely identifying flaws and glitches. In the meantime, the Libra Association is implementing the Libra Core using the Rust programming language since it’s designed to prevent security vulnerabilities, and the Move language isn’t fully ready yet.

Move was created to make it easier to write blockchain code that follows an author’s intent without introducing bugs. It’s called Move because its primary function is to move Libra coins from one account to another, and never let those assets be accidentally duplicated. The core transaction code looks like “LibraAccount.pay_from_sender(recipient_address, amount) procedure”. Eventually, Move will be able to create smart contracts for programmatic interactions with the Libra blockchain. Until Move is ready, developers can create modules and transaction scripts for Libra using Move IR, which is high-level enough to be human-readable but low-level enough to be translatable into real Move bytecode that’s written to the blockchain.

The Libra ecosystem and the Move language will be completely open to use and build, which presents a sizable risk. Crooked developers could prey on crypto novices, claiming their app works just the same legitimate ones, and that it’s safe since it uses Libra. But if consumers get ripped off by these scammers, the anger will surely bubble up to Facebook. Even though it’s tried to distance itself sufficiently via its subsidiary Libra and the association, many people will probably always think of Libra as Facebook’s cryptocurrency and blame it for their woes.

Using Libra In The Wild

So how do you actually own and spend Libra? Through Libra wallets like Facebook’s own Calibra and others that will be built by third-parties, potentially including Libra Association members like PayPal. The idea is to make sending money to a friend or paying for something as easy as sending a Facebook Message. You won’t be able to make or receive any real payments until the official launch next year, though.

None of the Libra Association members agreed to provide details on what they’ll build on the blockchain, but we can take Facebook’s Calibra wallet as an example of the basic experience. Calibra will launch alongside the Libra currency on iOS and Android within Facebook Messenger, WhatsApp, and a standalone app. When users first sign up, they’ll be taken through a Know Your Customer anti-fraud process where they’ll have to provide a government issued photo ID and other verification info. They’ll need to conduct due diligence on customers and report suspicious activity to the authorities.

 

From there you’ll be able to cash in to Libra, pick a friend or merchant, set an amount to send them and add a description, and send them Libra. You’ll also be able to request Libra. It’s also likely that Calibra will offer an expedited way of paying merchants, liking scanning your or their QR code.

By default, Facebook won’t import you contact or any of your profile information but may ask if you wish to do so. It also won’t share any of your transaction data back to Facebook, so it won’t used to target you with ads, rank your News Feed, or otherwise earn Facebook money directly. Data will only be shared in specific instances in aggregated, anonymized ways or due to a request from law enforcement.

Facebook just tried to reinvent money. Next year, we’ll see if the Libra Association pulls it off.

A couple of years ago London-based startup Zego realised gig-economy workers would need insurance, and went on to raise a very healthy £6 million in Series A funding, led by Balderton Capital. Its first products were pay-as-you-go scooter and car insurance for food delivery workers.

It’s now announced a $42million raise in one of the largest funding rounds for a European insurtech start-up, in a Series B investment was led by pan-European investment firm Target Global, specialists in the fintech and mobility space, with other backers including TransferWise founder Taavet Hinrikus. The proceeds will be used to for Zego’s expansion across Europe and to increase the workforce from 75 to 150.

The raise takes the firm to a Toal of $51million in funding, with new investors Latitude joining existing backers Balderton Capital and Tom Stafford of DST Global. The investment comes as the company claims a whopping 900% growth over the past 12 months.

Zego caters to the new mobility services, such as ride-hailing, ride sharing, car rental and scooter sharing and offers a range of policies from minute-by-minute insurance to annual cover, providing more flexibility than traditional insurers, with pricing based on usage data from vehicles.

This means it’s become popular with scooter and car delivery drivers, plus van and taxi fleets. The firm currently insures a third of the UK’s food delivery market, largely through partnerships with Deliveroo, Just Eat and Uber Eats.

Sten Saar, CEO and co-founder of Zego, said: “When we built Zego from scratch three years ago, our mission was to transform the insurance sector by creating products which truly reflected the rapidly changing world of transport… The world is becoming more urbanized and because of this, we are moving from traditional ownership of vehicles to shared ‘usership’. This means that the rigid model of insurance that has existed for hundreds of years is no longer fit for purpose.”

Ben Kaminski, Partner of lead investors Target Global, said: “With the growth of new mobility services, Zego identified a major gap in the insurance market and created a unique business model to fill it, which the incumbents will find very difficult to replicate. The potential of this company is almost limitless, and I fully expect to see its UK success mirrored across Europe and beyond in the coming years.”

French startup Fairjungle wants to make it easier to book a flight or a hotel room for corporate purposes. The company just raised a $2 million funding round (€1.8 million) from Thibaud Elzière, Eduardo Ronzano, Bertrand Mabille and Whitestones Ventures.

If you work for a big company, chances are you book corporate flights through GBT, CWT or BCD Travel. And let’s be honest, the web interface usually sucks. It’s often hard to compare flights, change dates or even get a fair price.

Fairjungle is betting on a modern user experience and a software-as-a-service business model to change this industry. The idea is to make it feel more like you’re using a flight comparison service instead of a travel agency with a website.

“The value proposition [of legacy competitors] was historically around finding the best travel options for the business traveler, which has become obsolete today when you have tools like Skyscanner and Google Flights,” co-founder and CEO Saad Berrada told me.

In order to modernize that industry, the startup is leveraging the inventory of Skyscanner, Booking.com, Amadeus, Travelfusion and Hotelbeds. This way, you can book flights on 400 airlines and reserve hotel rooms in one million hotels.

After searching for a flight or a hotel room, you can book directly from Fairjungle. This way, employees don’t have to download invoices and file expense reports on a separate platform every time they travel. Companies can set up different rules to keep costs down. For instance, a flight that is unusually expensive requires approval from a manager.

Instead of charging per transaction, Fairjungle has opted for a SaaS model with a subscription of €5 per monthly active user.

Fairjungle currently focuses on small and mid-sized companies. The company has attracted 20 clients so far, including OVH. And it expects to generate $3.4 million (€3 million) in gross bookings by the end of the year.

Following in the footsteps of AT&T and Verizon*, Sprint is now offering an LTE tracker. The matchbook-sized device, simply called Tracker, provides real-time location tracking on Safe + Found app.

The Tracker competes with Tile, but instead of Bluetooth, Sprint’s device uses 4G LTE, GPS and Wi-Fi location services, so it can be used to track things, people or pets that might travel a significant distance away, compared to a range of 100 ft to 300 ft for Tile (depending on the version). The Tracker is manufactured by Coolpad and users need to pay $2.50 per month for 24 months to cover the cost of the device, plus an additional $5 per month to connect it.

AT&T and Verizon both launched LTE trackers over the past year and Apple is also rumored to be working on a tracking device that connects to iPhones, based on an asset package for pairing devices by proximity spotted in the first beta of iOS 13 by 9to5Mac.

*Disclosure: TechCrunch is part of Verizon Media, a subsidiary of Verizon Communications.

GuestReady, a three-year-old service that lets shared-economy hosts manage their business on Airbnb and other rental sites, has announced a $6 million Series A round.

The investment was led by existing backer Impulse VC — the Russian fund that is backed by billionaire Chelsea FC owner Roman Abramovich — and new addition VentureSouq from Dubai. Other past backers also took part, including Boost Heroes, Aria Group and 808 Tech Ventures. GuestReady raised $3 million in 2017 and this round takes it to nearly $10 million from investors to date.

GuestReady’s property management platform helps owners manage the intricacies of operating a shared-economy house, such as cleaning, laundry, and check-in and out services. It claims to cover over 2,000 properties across six countries: the UK, France, Portugal, UAE, Malaysia, and Hong Kong. Airbnb is the obvious platform to work with, but a sizeable volume of business comes from Expedia’s HomeAway business and Booking.com, GuestReady CEO Alexander Limpert told TechCrunch in an interview.

Limpert added that GuestReady’s annual booking volume is close to reaching $50 million on an annualized basis. Over the last year, the company’s take-home revenue has tripled with a lower burn rate, he added, although he declined to provide specific figures.

That growth has come courtesy of a series of M&A deals.

Indeed, this new infusion of cash comes months after the company completed its fourth acquisition to date, snapping up France-based rival BnbLord, a startup that it claims is the largest Airbnb host platform in France and Portugal.

That deal, which Limpert said is the company’s largest to date, was a “strategic play to become the market leader in Europe” — and it could be followed by others.

The GuestReady CEO said the company is engaged in “quite a few conversations right now” over potential acquisitions, with this new capital potentially fuelling those moves.

“We believe the market [for guest services] will consolidate,” he said, explaining that many young companies start out with promise but struggle to scale successfully once they hit 50-100 properties under management.

“They realize this is an intensive business without good processes and technology,” he added.

Still, the company is likely to retain the focus on its current markets with the potential to add “one or two” new cities further down the line.

“For now, we’re seeing so much potential in our current markets,” explained Limpert. “London and Paris are two of Airbnb’s biggest markets globally, for example, with 60,000 properties… we manage a couple of hundred of them.”

Apple TV is getting a Picture-in-Picture mode that will allow users to stream two shows at the same time, TechCrunch has confirmed. The feature’s forthcoming launch was first reported by Apple news site 9to5Mac earlier today, following today’s release of new beta software for all of Apple’s operating systems, including tvOS.

After installing tvOS beta 2, Twitter user Nikolaj Hansen-Turton noticed a new option — the ability to play content in a smaller window in the bottom-right of the screen, overlaid on top of the main Apple TV interface. Or, simply put, it’s a Picture-in-Picture mode. (See tweets below).

Several publications soon ran the news.

But what wasn’t clear at the time was whether this was just a minimized video player window or a true Picture-in-Picture experience. The tweeted photo and video, after all, seemed to show a static background on the main screen — not two programs playing simultaneously. However, we understand that Apple TV will support the ability to stream two shows at once.

There are some caveats, though.

Picture-in-Picture support will only be available for content provided by Apple. That includes content purchased through iTunes, TV shows and movies streamed the Apple TV+ subscription service launching later this year, and videos streamed through Apple TV Channels.

Channels, which arrived with the updated TV app in May, lets users subscribe to premium add-ons including HBO, Starz, Showtime, EPIX, Tastemade, Smithsonian Channel and others. The idea is similar to the premium subscriptions available through Amazon’s Prime Video Channels or the more recently added subscriptions offered through Roku’s streaming hub, The Roku Channel.

To be clear, that means if you subscribe to HBO through Apple’s Channels, you will be able to watch HBO in Picture-in-Picture mode when the new version of tvOS ships to the public later this fall. But if you subscribe to HBO through the HBONOW.com website and then watch via the third-party HBO NOW app, you won’t be able to use Picture-in-Picture mode.

Apple intends to expand its catalog of premium subscriptions in time, which will make it possible to view more programming in the Picture-in-Picture mode in the future.

Apple hasn’t yet announced plans for third-party developer tools that would allow them to customize their own apps to support Picture-in-Picture mode. If those aren’t immediately available, it gives Apple TV owners a compelling reason to subscribe to premium programming through Apple TV Channels, instead of through a third-party website or app. (Which would be a nice perk for Apple’s TV platform revenue, as well.)

Support for Picture-in-Picture mode wasn’t announced earlier this month at Apple’s Worldwide Developer Conference where the company previews its upcoming software releases, which made today’s reveal a pleasant surprise for Apple TV fans.

Picture-in-Picture mode will be supported on both Apple TV 4K and Apple TV HD, we understand.

Many investors in Silicon Valley are waiting the next big platform. That’s fine with Lior Susan, a former Flex exec who in 2015 cofounded Eclipse Ventures with the legendary venture capitalist Pierre Lamond, long of Sequoia Capital.

The duo, along with a team that has now grown to 13 people — happen to think the Next Big Thing is not whatever comes after social networks and flying cars; they think the biggest opportunities that too few VCs recognize is the chance to augment or else build from scratch the next Honeywell or GE Johnson & Johnson through full tech stacks that enable speed and efficiencies that are hard for incumbents to rival. 

As Susan likes to note, pointing to the runaway success of companies like Apple and Amazon that do it all, “Software is not enough.” He’s also quick to point out that the average tenure of the biggest U.S. companies — those on the S&P 500 — was 33 years back in 1965 and soon, it’s expected to shrink to 14 years.

Certainly, Eclipse is putting its money where its mouth is. It has already helped to create and fund one company — Bright Machines — which primarily develops software for robotic systems that manufacturing companies already have in place, and that Eclipse enticed numerous Autodesk executives to lead.

Now Eclipse, which also makes early-stage bets on startups, is working on creating another company. And Susan suggests that more companies will follow.

It’s an ambitious strategy. But because investors seemingly approve — committing $500 million to Eclipse’s third fund earlier this year (up from its second, $185 million fund) — we sat down with Susan recently to learn more about both who he is and what Eclipse is trying to do. Our chat has been edited lightly for length.

TC: You grew up in Israel on a kibbutz. How do you think that shaped you?

LS: I grew up in a family of four — three boys and a girl. I grew up on the north part of the country, on farmland, growing bananas. My grandfather was one of the early establishers of the [Israel Defense Forces] so I thought i was going to be a soldier all my life. I didn’t think I needed to go to high school. And I joined the military in 2000 and was in the special forces until 2008.

After that, my brother and I started a networking company, Intucecell. He was always more of a brain than me, to be honest, but from an early age, I was very curious about mechanical systems, and he was always curious about software, and we started Intucell in 2008, raised $5 million from Bessemer [Venture Partners] in 2009, and we sold the company to Cisco in 2012 for $475 million.

It’s funny, because we grew up in this community where no one has a bank account, it’s all about sharing. Maybe because we were raised in a very socialism pathway environment, we became the other extreme as adults.

TC: How did you wind up in Silicon Valley?

LS: They didn’t need me [at Cisco] because he was the brains, so I thought I’d come to Silicon Valley for three months and I wound up randomly meeting Mike McNamara, who at the time was the CEO of Flextronics. I had a little man crush [right away]. I was like, damn, I can learn a lot from this guy. He told me [Flex, as the company has been rebranded] needed someone to build a special operations tech team inside of the Flex. I was thinking I might go kite surfing in Brazil. Working in an American corporation didn’t sound like the right thing to me. But we liked each other and so I [joined the company].

TC: What was that like? What were you focused on?

LS: For the first 10 months, I actually moved to Zhuhai, China, where one of the main facilities of Flex was [situated], and there I saw firsthand high manufacturing at scale. And the interesting thing, what got me thinking about [the path that led to Eclipse] is that Flex had 12 segments: aerospace, automotive, consumer, yadda yadda. And each of them will do more than a billion dollars [a year in revenue]. And I would see them talking about how their industries are changing because of software. I mean, the language was identical across these very different markets. And I started to understand that three or four decades of technology innovation were coming together to create what we now call full stack, so networking and clouds for infrastructure and open source and DevOps tools and open source hardware and supply chain and manufacturing — they were coming together. 

I thought, if those [big] companies could use those tools, could small companies use those tools and essentially accelerate and go faster? So I started building those companies inside Flex, inside this division. And surprisingly enough, I saw it was doable, that the cost of capital is going down and you actually can move much faster.

TC: What were some of those companies?

LS: One is Elementum, a supply chain management company that has now raised close to $200 million. Another is Bright Machines, which is actually in our [Eclipse] portfolio now. We had six companies when I left.

TC: Were these funded solely by Flex at the outset?

LS: Flex was 100 percent funding the companies at the beginning — and giving them resources and connections and customers — and we’d either spin out the company and get outside capital, or just keep it internal.

TC: Why leave that role to start a venture firm?

LS: I was living in Palo Alto and started having investor friends and was making some angel investments, and I saw most of my friends just looking for the next dating apps. I was like, ‘What about supply chain stuff?’ but they wanted easy stuff that explodes very fast.

So between seeing what I did at Flex and realizing that few investors were interested in this opportunity, I decided to do something. My original idea was to take $10 million of our own [family] money and be a kind of super angel. But when I told Mike [McNamara], ‘I’m going to leave’ and ‘Thank you very much, I learned a lot,’ he said, ‘Hey, do a fund.’ And we launched and started investing and we saw the size of the market that we had in mind was growing fast. [Editor’s note: After spending 12 years as CEO of Flex, McNamara joined Eclipse four months ago as a partner, along with Sanjay Jha, who was most recently the CEO of Global Foundries and was both CEO and co-CEO of Motorola Mobility before that.]

TC: You have an interesting team. Among others, you have McNamara and Jha. You also last year brought aboard Greg Reichow, who was previously Tesla’s VP of production. These are not necessarily the usual suspects when it comes to people joining VC. Does Eclipse operate like a traditional venture firm?

LS: Our style of investment is slightly different than other people; we maybe look more like private equity than venture, including that we’re very involved; we do nine to 10 deals a year with eight partners. We also aim for a much higher ownership than firms usually have and our heavy operational backgrounds is our tool to win those deals. We have some idea of what a complex operation looks like, even while we’re investing in industries to which we didn’t have exposure before, like health care and real estate — places where we didn’t expect to invest but that are being impacted by the same paradigm shift.

TC: How did the Bright Machines deal work? The startup started as an internal project at Flex, so do you co-own it with the company?

LS: It started internally at Flex. There were 400 poeple working on it internally, and I went to [Flex management and its board] and I said, ‘I want the team.’ Flex said, ‘Absolutely no.’ But I went back with a better argument why they should, including that they needed to hire talent that wasn’t going to come to work for Flex, and that the company could be worth $5 billion, $7 billion some day. And after 12 months, we carved out the company, with its [intellectual property] and the $350 million in contracts it had, and we created a new company, and we own 20 percent, Flex owns 28 percent, and the team owns the rest. And it’s on a $100 million annual revenue run rate already in less than a year as an independent company.

TC: What do you see happening with Bright Machines?

LS: it will go public, I’d guess in sub five years. The model is pretty compelling if you’re doing it right.

TC: How does the deal underscore your broader thesis?

LS: Think of it this way. It’s really hard for me to compete with LinkedIn, LinkedIn has very smart people. For me to compete with Honeywell or Dupont or Rockwell . . . I’m not saying they aren’t smart, but they have a different mindset. There are many companies that Silicon Valley has never heard of but are $17 billion market cap companies with little to no technology. So if we now have the talent internally, we can use the talent to create these platform companies. In fact, we’re building our second one, though I can’t share more just yet.

TC: So Eclipse is an investment firm and an incubator.

LS: We debating this name constantly, but we aren’t an incubator.

My two cents is that public equities are getting destroyed, so limited partners want to go into private markets. Some of the hedge funds like Coatue understand this, and they’ve created vehicles to [invest in private companies]. But in the private equity world, a fund that manages $400 billion and used to buy assets with financial engineering [meaning debt] is [not wringing the same kind of returns out of these bets]. If you’re buying Avis, you’re going to lose your shit because people are using Uber.

What’s happening for the first time in the last two decades is that someone made the music to start, so there’s musical chairs where there were none empty before. It was always the same five or six firms winning the best deals, and that was about it. Someone like us had no chance to grab a chair — no freakin’ chance. But public equity dollars started showing up SoftBank style, and now they are reacting. And you learn that when you react in the military, you jeopardize the house. You go outside of your discipline, and you go outside of your comfort zone, and I’m attacking the chair. I wonder if I can sit.

Valo Ventures, a new firm focused on social, economic and environmental megatrends, has closed on $175 million for its debut venture capital fund.

The effort is led by Scott Tierney, a co-founder of Alphabet’s growth investing unit CapitalG, as well as Mona ElNaggar, a former managing director of TIFF Investment Management and Julia Brady, who previously worked as a director at The Via Agency, a communications workshop.

“Google is like being a kid in a candy store,” Tierney tells TechCrunch. “It’s a great place to be. For me, I thought, ‘alright, I’ve been here for seven years, I have this opportunity to create my own fund and be more entrepreneurial and take all the learnings I was fortunate to have inside of Google and apply them.’ ”

Tierney joined Google in 2011 as a director of corporate development after five years as a managing director at Steelpoint Capital Partners. In 2013, he co-founded CapitalG, where he served as a partner for the next two years. He completed his Google stint as a director of corporate development and strategic partnerships at Nest Labs, a title he held until mid-2018.

The Valo Ventures partners plan to participate in Series A, B and C deals for startups located in North America and Europe. Specifically, Valo is looking for businesses solving problems within climate change, urbanization, autonomy and mobility. 

The goal is to bring an ESG (environmental, social and corporate governance) perspective to venture capital, where investors infrequently take a mission-driven approach to deal-making. To date, Valo Ventures has deployed capital to Landit, a career pathing platform for women, and a stealth startup developing an AI platform for electricity demand and supply forecasting.

Get ready for summer in the city, TechCrunch -style. We just released a fresh batch of tickets to the 14th Annual TechCrunch Summer Party. Available on a first-come, first-served basis, tickets to our popular event sell out quickly, and they’ll be gone before you know it. Don’t wait — buy your ticket today.

Join us for TechCrunch’s fabulous summer fete at Park Chalet — San Francisco’s coastal beer garden — where you can enjoy ocean views, refreshing drinks and delicious appetizers. It’s a wonderful way to relax and celebrate the entrepreneurial spirit with more than 1,000 members of the startup community.

It’s also a wonderful way to meet your next investor, co-founder or — who knows? You’ll find startup magic in between the drinks, the games, the food and the fun. Opportunity happens at TechCrunch parties.

Check out the party particulars:

• When: July 25 from 5:30 p.m. – 9:00 p.m.
• Where: Park Chalet in San Francisco
• How much: $95

Come and join the summer fun. Connect with community and opportunity. As always, you’ll have a chance to win great door prizes — like TechCrunch swag, Amazon Echos and tickets to Disrupt San Francisco 2019.

Tickets sell out quickly, so don’t wait. Buy your 14th Annual Summer Party ticket today.

Did you try to buy a ticket and come up empty? We release tickets to the Summer Party on a rolling basis. Sign up here, and we’ll let you know when the next batch goes on sale.

Is your company interested in sponsoring or exhibiting at the TechCrunch 14th Annual Summer Party? Contact our sponsorship sales team by filling out this form.

Artificial intelligence (AI) is allowing us all to consider surprising new ways to simplify the lives of our customers. As a product developer, your central focus is always on the customer. But new problems can arise when the specific solution under development helps one customer while alienating others.

We tend to think of AI as an incredible dream assistant to our lives and business operations, when that’s not always the case. Designers of new AI services should consider in what ways and for whom might these services be annoying, burdensome or problematic, and whether it involves the direct customer or others who are intertwined with the customer. When we apply AI services to make tasks easier for our customers which end up making things more difficult for others, that outcome can ultimately cause real harm to our brand perception.

Let’s consider one personal example taken from my own use of Amy.ai, a service (from x.ai) that provides AI assistants named Amy and Andrew Ingram. Amy and Andrew are AI assistants that help schedule meetings for up to four people. This service solves the very relatable problem of scheduling meetings over email, at least for the person who is trying to do the scheduling.

After all, who doesn’t want a personal assistant to whom you can simply say, “Amy, please find the time next week to meet with Tom, Mary, Anushya and Shiveesh.” In this way, you don’t have to arrange a meeting room, send the email, and go back and forth managing everyone’s replies. My own experience showed that while it was easier for me to use Amy to find a good time to meet with my four colleagues, it soon became a headache for those other four people. They resented me for it after being bombarded by countless emails trying to find some mutually agreeable time and place for everyone involved.

Automotive designers are another group that’s incorporating all kinds of new AI systems to enhance the driving experience. For instance, Tesla recently updated its autopilot software to allow a car to change lanes automatically when it sees fit, presumably when the system interprets that the next lane’s traffic is going faster.

In concept, this idea seems advantageous to the driver who can make a safe entrance into faster traffic, while relieving any cognitive burden of having to change lanes manually. Furthermore, by allowing the Tesla system to change lanes, it takes away the desire to play Speed Racer or edge toward competitiveness that one may feel on the highway.

However, for the drivers in other lanes who are forced to react to the Tesla autopilot, they may be annoyed if the Tesla jerks, slows down, or behaves outside the normal realm of what people expect on the freeway. Moreover, if they are driving very fast and the autopilot did not recognize they were operating at a high rate of speed when the car decided to make the lane change, then that other driver can get annoyed. We can all relate to driving 75 mph in the fast lane, only to have someone suddenly pull in front of us at 70 as if they were clueless that the lane was moving at 75.

For two-lane traffic highways that are not busy, the Tesla software might work reasonably well.   However, in my experience of driving around the congested freeways of the Bay Area, the system performed horribly whenever I changed crowded lanes, and I knew that it was angering other drivers most of the time. Even without knowing those irate drivers personally, I care enough about driving etiquette to politely change lanes without getting the finger from them for doing so.

Another example from the Internet world involves Google Duplex, a clever feature for Android phone users that allows AI to make restaurant reservations. From the consumer point of view, having an automated system to make a dinner reservation on one’s behalf sounds excellent. It is advantageous to the person making the reservation because, theoretically, it will save the burden of calling when the restaurant is open and the hassle of dealing with busy signals and callbacks.

However, this tool is also potentially problematic for the restaurant worker who answers the phone. Even though the system may introduce itself as artificial, the burden shifts to the restaurant employee to adapt and master a new and more limited interaction to achieve the same goal – making a simple reservation.

On the one hand, Duplex is bringing customers to the restaurant, but on the other hand, the system is narrowing the scope of interaction between the restaurant and its customer. The restaurant may have other tables on different days, or it may be able to squeeze you in if you leave early, but the system might not handle exceptions like this. Even the idea of an AI bot bothering the host who answers the phone doesn’t seem quite right.

As you think about making the lives of your customers easier, consider how the assistance you are dreaming about might be more of a nightmare for everyone else associated with your primary customer. If there is a question regarding the negative experience of anyone related to your AI product, explore that experience further to determine if there is another better way to still delight them without angering their neighbors.

From a user experience perspective, developing a customer journey map can be a helpful way to explore the actions, thoughts, and emotional experiences of your primary customer or “buyer persona.” Identify the touchpoints in which your system interacts with innocent bystanders who are not your direct customers. For those people unaware of your product, explore their interaction with your buyer persona, specifically their emotional experience.

An aspirational goal should be to delight this adjacent group of people enough that they would move towards being prospects and, eventually, becoming your customers as well. Also, you can use participant ethnography to analyze the innocent bystander in relation to your product. This is a research method which combines the observations of people as they interact with processes and the product.

A guiding design inspiration for this research could be, “How can our AI system behave in such a way that everyone who might come into contact with our product is enchanted and wants to know more?”

That’s just human intelligence, and it’s not artificial.