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Daily Crunch: Travis Kalanick is leaving Uber’s board

Posted by | Apps, Daily Crunch, Mobile, Travis Kalanick, Uber | No Comments

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Uber founder Travis Kalanick is leaving the company’s board of directors

Uber founder and former CEO Travis Kalanick will officially resign from the board as of December 31, to “focus on his new business and philanthropic endeavors,” according to a company press release.

Kalanick, who was forced out as Uber CEO and eventually replaced by Dara Khosrowshahi, has been in the process of selling off his considerable ownership stake in the company. In fact, it looks like Kalanick has now sold all his remaining stock.

2. Plenty of Fish app was leaking users’ hidden names and postal codes

Dating app Plenty of Fish has pushed out a fix for its app after a security researcher found it was leaking information that users had set to “private” on their profiles. Before the fix, the app was silently returning users’ first names and postal ZIP codes, according to The App Analyst.

3. As DraftKings finds an exit, a reminder of what could have been

DraftKings, a betting service focused on fantasy sports, will go public via a reverse merger. Not too long ago DraftKings and its erstwhile rival FanDuel were ubiquitous on television; now the two companies are fractions of what they once were. (Extra Crunch membership required.)

4. Gift Guide: 13 last-minute subscription gifts for the people you totally didn’t forget

It’s too late to order things online, and brick-and-mortar stores are either closed for the week or absolutely slammed. So what can you do? Subscriptions!

5. Fyre Festival meets Mr. Bone Saw

Connie Loizos looks at the controversy around the three-day-long MDL Beast Festival in Riyadh, Saudi Arabia. The event, promoted by a number of celebrities and social media influencers, aimed to promote the efforts of its de facto ruler, Crown Prince Mohammed bin Salman (known as MBS).

6. A false start for foldables in 2019

A year from now, the Samsung Galaxy Fold’s turbulent takeoff may well be a footnote in the largest story of foldables. For now, however, it’s an important caveat that will come up in every conversation about the nascent product category. (Extra Crunch membership required.)

7. Micro-angelo? This 3D-printed ‘David’ is just one millimeter tall

3D printing has proven itself useful in so many industries that it’s no longer necessary to show off, but some people just can’t help themselves. Case in point: this millimeter-tall rendition of Michelangelo’s famous “David” printed with copper using a newly developed technique.

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Fintech’s next decade will look radically different

Posted by | Amazon, Andreessen Horowitz, Android, Angela Strange, bain capital ventures, Bank, BlackRock, equifax, Facebook, Finance, financial services, financial technology, GitHub, Google, instagram, Marqeta, Matt Harris, Open Banking, payments, PayPal, Shopify, stripe, TechCrunch, Uber, Venture Capital | No Comments

The birth and growth of financial technology developed mostly over the last ten years.

So as we look ahead, what does the next decade have in store? I believe we’re starting to see early signs: in the next ten years, fintech will become portable and ubiquitous as it moves to the background and centralizes into one place where our money is managed for us.

When I started working in fintech in 2012, I had trouble tracking competitive search terms because no one knew what our sector was called. The best-known companies in the space were Paypal and Mint.

fintech search volume

Google search volume for “fintech,” 2000 – present.

Fintech has since become a household name, a shift that came with with prodigious growth in investment: from $2 billion in 2010 to over $50 billion in venture capital in 2018 (and on-pace for $30 billion+ this year).

Predictions were made along the way with mixed results — banks will go out of business, banks will catch back up. Big tech will get into consumer finance. Narrow service providers will unbundle all of consumer finance. Banks and big fintechs will gobble up startups and consolidate the sector. Startups will each become their own banks. The fintech ‘bubble’ will burst.

Who will the winners be in the future of fintech?

Here’s what did happen: fintechs were (and still are) heavily verticalized, recreating the offline branches of financial services by bringing them online and introducing efficiencies. The next decade will look very different. Early signs are beginning to emerge from overlooked areas which suggest that financial services in the next decade will:

  1. Be portable and interoperable: Like mobile phones, customers will be able to easily transition between ‘carriers’.
  2. Become more ubiquitous and accessible: Basic financial products will become a commodity and bring unbanked participants ‘online’.
  3. Move to the background: The users of financial tools won’t have to develop 1:1 relationships with the providers of those tools.
  4. Centralize into a few places and steer on ‘autopilot’.

Prediction 1: The open data layer

Thesis: Data will be openly portable and will no longer be a competitive moat for fintechs.

Personal data has never had a moment in the spotlight quite like 2019. The Cambridge Analytica scandal and the data breach that compromised 145 million Equifax accounts sparked today’s public consciousness around the importance of data security. Last month, the House of Representatives’ Fintech Task Force met to evaluate financial data standards and the Senate introduced the Consumer Online Privacy Rights Act.

A tired cliché in tech today is that “data is the new oil.” Other things being equal, one would expect banks to exploit their data-rich advantage to build the best fintech. But while it’s necessary, data alone is not a sufficient competitive moat: great tech companies must interpret, understand and build customer-centric products that leverage their data.

Why will this change in the next decade? Because the walls around siloed customer data in financial services are coming down. This is opening the playing field for upstart fintech innovators to compete with billion-dollar banks, and it’s happening today.

Much of this is thanks to a relatively obscure piece of legislation in Europe, PSD2. Think of it as GDPR for payment data. The UK became the first to implement PSD2 policy under its Open Banking regime in 2018. The policy requires all large banks to make consumer data available to any fintech which the consumer permissions. So if I keep my savings with Bank A but want to leverage them to underwrite a mortgage with Fintech B, as a consumer I can now leverage my own data to access more products.

Consortia like FDATA are radically changing attitudes towards open banking and gaining global support. In the U.S., five federal financial regulators recently came together with a rare joint statement on the benefits of alternative data, for the most part only accessible through open banking technology.

The data layer, when it becomes open and ubiquitous, will erode the competitive advantage of data-rich financial institutions. This will democratize the bottom of the fintech stack and open the competition to whoever can build the best products on top of that openly accessible data… but building the best products is still no trivial feat, which is why Prediction 2 is so important:

Prediction 2: The open protocol layer

Thesis: Basic financial services will become simple open-source protocols, lowering the barrier for any company to offer financial products to its customers.

Picture any investment, wealth management, trading, merchant banking, or lending system. Just to get to market, these systems have to rigorously test their core functionality to avoid legal and regulatory risk. Then, they have to eliminate edge cases, build a compliance infrastructure, contract with third-party vendors to provide much of the underlying functionality (think: Fintech Toolkit) and make these systems all work together.

The end result is that every financial services provider builds similar systems, replicated over and over and siloed by company. Or even worse, they build on legacy core banking providers, with monolith systems in outdated languages (hello, COBOL). These services don’t interoperate, and each bank and fintech is forced to become its own expert at building financial protocols ancillary to its core service.

But three trends point to how that is changing today:

First, the infrastructure and service layer to build is being disaggregates, thanks to platforms like Stripe, Marqeta, Apex, and Plaid. These ‘finance as a service’ providers make it easy to build out basic financial functionality. Infrastructure is currently a hot investment category and will be as long as more companies get into financial services — and as long as infra market leaders can maintain price control and avoid commoditization.

Second, industry groups like FINOS are spearheading the push for open-source financial solutions. Consider a Github repository for all the basic functionality that underlies fintech tools. Developers could continuously improve the underlying code. Software could become standardized across the industry. Solutions offered by different service providers could become more inter-operable if they shared their underlying infrastructure.

And third, banks and investment managers, realizing the value in their own technology, are today starting to license that technology out. Examples are BlackRock’s Aladdin risk-management system or Goldman’s Alloy data modeling program. By giving away or selling these programs to clients, banks open up another revenue stream, make it easy for the financial services industry to work together (think of it as standardizing the language they all use), and open up a customer base that will provide helpful feedback, catch bugs, and request new useful product features.

As Andreessen Horowitz partner Angela Strange notes, “what that means is, there are several different infrastructure companies that will partner with banks and package up the licensing process and some regulatory work, and all the different payment-type networks that you need. So if you want to start a financial company, instead of spending two years and millions of dollars in forming tons of partnerships, you can get all of that as a service and get going.”

Fintech is developing in much the same way computers did: at first software and hardware came bundled, then hardware became below differentiated operating systems with ecosystem lock-in, then the internet broke open software with software-as-a-service. In that way, fintech in the next ten years will resemble the internet of the last twenty.

placeholder vc infographic

Infographic courtesy Placeholder VC

Prediction 3: Embedded fintech

Thesis: Fintech will become part of the basic functionality of non-finance products.

The concept of embedded fintech is that financial services, rather than being offered as a standalone product, will become part of the native user interface of other products, becoming embedded.

This prediction has gained supporters over the last few months, and it’s easy to see why. Bank partnerships and infrastructure software providers have inspired companies whose core competencies are not consumer finance to say “why not?” and dip their toes in fintech’s waters.

Apple debuted the Apple Card. Amazon offers its Amazon Pay and Amazon Cash products. Facebook unveiled its Libra project and, shortly afterward, launched Facebook Pay. As companies from Shopify to Target look to own their payment and purchase finance stacks, fintech will begin eating the world.

If these signals are indicative, financial services in the next decade will be a feature of the platforms with which consumers already have a direct relationship, rather than a product for which consumers need to develop a relationship with a new provider to gain access.

Matt Harris of Bain Capital Ventures summarizes in a recent set of essays (one, two) what it means for fintech to become embedded. His argument is that financial services will be the next layer of the ‘stack’ to build on top of internet, cloud, and mobile. We now have powerful tools that are constantly connected and immediately available to us through this stack, and embedded services like payments, transactions, and credit will allow us to unlock more value in them without managing our finances separately.

Fintech futurist Brett King puts it even more succinctly: technology companies and large consumer brands will become gatekeepers for financial products, which themselves will move to the background of the user experiences. Many of these companies have valuable data from providing sticky, high-affinity consumer products in other domains. That data can give them a proprietary advantage in cost-cutting or underwriting (eg: payment plans for new iPhones). The combination of first-order services (eg: making iPhones) with second-order embedded finance (eg: microloans) means that they can run either one as a loss-leader to subsidize the other, such as lowering the price of iPhones while increasing Apple’s take on transactions in the app store.

This is exciting for the consumers of fintech, who will no longer have to search for new ways to pay, invest, save, and spend. It will be a shift for any direct-to-consumer brands, who will be forced to compete on non-brand dimensions and could lose their customer relationships to aggregators.

Even so, legacy fintechs stand to gain from leveraging the audience of big tech companies to expand their reach and building off the contextual data of big tech platforms. Think of Uber rides hailed from within Google Maps: Uber made a calculated choice to list its supply on an aggregator in order to reach more customers right when they’re looking for directions.

Prediction 4: Bringing it all together

Thesis: Consumers will access financial services from one central hub.

In-line with the migration from front-end consumer brand to back-end financial plumbing, most financial services will centralize into hubs to be viewed all in one place.

For a consumer, the hub could be a smartphone. For a small business, within Quickbooks or Gmail or the cash register.

As companies like Facebook, Apple, and Amazon split their operating systems across platforms (think: Alexa + Amazon Prime + Amazon Credit Card), benefits will accrue to users who are fully committed to one ecosystem so that they can manage their finances through any platform — but these providers will make their platforms interoperable as well so that Alexa (e.g.) can still win over Android users.

As a fintech nerd, I love playing around with different financial products. But most people are not fintech nerds and prefer to interact with as few services as possible. Having to interface with multiple fintechs separately is ultimately value subtractive, not additive. And good products are designed around customer-centric intuition. In her piece, Google Maps for Money, Strange calls this ‘autonomous finance:’ your financial service products should know your own financial position better than you do so that they can make the best choices with your money and execute them in the background so you don’t have to.

And so now we see the rebundling of services. But are these the natural endpoints for fintech? As consumers become more accustomed to financial services as a natural feature of other products, they will probably interact more and more with services in the hubs from which they manage their lives. Tech companies have the natural advantage in designing the product UIs we love — do you enjoy spending more time on your bank’s website or your Instagram feed? Today, these hubs are smartphones and laptops. In the future, could they be others, like emails, cars, phones or search engines?

As the development of fintech mirrors the evolution of computers and the internet, becoming interoperable and embedded in everyday services, it will radically reshape where we manage our finances and how little we think about them anymore. One thing is certain: by the time I’m writing this article in 2029, fintech will look very little like it did today.

So which financial technology companies will be the ones to watch over the next decade? Building off these trends, we’ve picked five that will thrive in this changing environment.

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Daily Crunch: Uber reveals sexual assault numbers

Posted by | Apps, Mobile, Uber | No Comments

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. Uber reveals thousands of sexual assault reports last year

Uber just released its first-ever safety report, stating that it received 2,936 reports pertaining to sexual assault in 2017, which went up to 3,045 in 2018 (these are U.S.-specific numbers). At the same time, Uber says there was a 16% decrease in the average incident rate.

While traditional taxis also have their safety risks, those numbers are still quite troubling. It’s worth noting, though, that the company has implemented some safety measures designed to help prevent sexual assault.

2. Niantic is working with Qualcomm on augmented reality glasses

To be clear, you’re not going to be booting up Pokémon GO on a pair of Qualcomm/Niantic AR glasses this Christmas. Moving forward, though, Niantic will be working with Qualcomm to flesh out the reference hardware for augmented reality glasses.

3. Netflix earmarks $420M to fight Disney in India

“This year and next year, we plan to spend about Rs 3,000 crores developing and licensing content and you will start to see a lot of stuff hit the screens,” said CEO Reed Hastings at a conference in New Delhi.

4. Airbnb officially bans all open-invite parties and events

The new policy seeks to prevent certain guests from hosting events not approved by hosts — such as a recent Halloween party hosted at a California Airbnb rental in which five people were killed.

5. Inside VSCO, a Gen Z-approved photo-sharing app, with CEO Joel Flory

Known to many only because of this year’s “VSCO girl” meme explosion, the company has long been coaxing the creative community to its freemium platform. Turns out, if you can provide the disillusioned teens of Gen Z respite from the horrors of social media — they’ll pay money for it.

6. This Lego Cybertruck is one even Elon can love

While Lego’s take on the Tesla Cybertruck design seemed to be purely for the LOLs, a remarkably faithful representation has been submitted to the official Lego Ideas crowdsourcing website.

7. Scammers peddling Islamophobic clickbait is business as usual at Facebook

A network of scammers used a ring of established right-wing Facebook pages to stoke Islamophobia and make a quick buck in the process, according to a new report from The Guardian. But Devin Coldewey argues that this is less a vast international conspiracy and simply more evidence that Facebook is unable to police its platform to prevent even the most elementary scams. (Extra Crunch membership required.)

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Ghost wants to retrofit your car so it can drive itself on highways in 2020

Posted by | Android, Argo AI, Automation, automotive, autonomous car, AV, california, controller, Emerging-Technologies, founders fund, Ghost Locomotion, gps, IBM, Keith Rabois, Khosla Ventures, Lyft, machine learning, Mike Speiser, National Highway Traffic Safety Administration, Pure Storage, robotics, self-driving cars, sutter hill ventures, TC, technology, Tesla, transport, Transportation, Uber, unmanned ground vehicles, waymo, zoox | No Comments

A new autonomous vehicle company is on the streets — and unbeknownst to most, has been since 2017. Unlike the majority in this burgeoning industry, this new entrant isn’t trying to launch a robotaxi service or sell a self-driving system to suppliers and automakers. It’s not aiming for autonomous delivery, either.

Ghost Locomotion, which emerged Thursday from stealth with $63.7 million in investment from Keith Rabois at Founders Fund, Vinod Khosla at Khosla Ventures and Mike Speiser at Sutter Hill Ventures, is targeting your vehicle.

Ghost is developing a kit that will allow privately owned passenger vehicles to drive autonomously on highways. And the company says it will deliver in 2020. A price has not been set, but the company says it will be less than what Tesla charges for its Autopilot package that includes “full self-driving” or FSD. FSD currently costs $7,000.

This kit isn’t going to give a vehicle a superior advanced driving assistance system. The kit will let human drivers hand control of their vehicle over to a computer, allowing them to do other activities such as look at their phone or even doze off.

The idea might sound similar to what Comma.ai is working on, Tesla hopes to achieve or even the early business model of Cruise. Ghost CEO and co-founder John Hayes says what they’re doing is different.

A different approach

The biggest players in the industry — companies like Waymo, Cruise, Zoox and Argo AI — are trying to solve a really hard problem, which is driving in urban areas, Hayes told TechCrunch in a recent interview.

“It didn’t seem like anyone was actually trying to solve driving on the highways,” said Hayes, who previously founded Pure Storage in 2009. “At the time, we were told that this is so easy that surely the automakers will solve this any day now. And that really hasn’t happened.”

Hayes noted that automakers have continued to make progress in advanced driver assistance systems. The more advanced versions of these systems provide what the SAE describes as Level 2 automation, which means two primary control functions are automated. Tesla’s Autopilot system is a good example of this; when engaged, it automatically steers and has traffic-aware cruise control, which maintains the car’s speed in relation to surrounding traffic. But like all Level 2 systems, the driver is still in the loop.

Ghost wants to take the human out of the loop when they’re driving on highways.

“We’re taking, in some ways, a classic startup attitude to this, which is ‘what is the simplest product that we can perfect, that will put self driving in the hands of ordinary consumers?’ ” Hayes said. “And so we take people’s existing cars and we make them self-driving cars.”

The kit

Ghost is tackling that challenge with software and hardware.

The kit involves hardware like sensors and a computer that is installed in the trunk and connected to the controller area network (CAN) of the vehicle. The CAN bus is essentially the nervous system of the car and allows various parts to communicate with each other.

Vehicles must have a CAN bus and electronic steering to be able to use the kit.

The camera sensors are distributed throughout the vehicle. Cameras are integrated into what looks like a license plate holder at the back of the vehicle, as well as another set that are embedded behind the rearview mirror.

A third device with cameras is attached to the frame around the window of the door (see below).

Initially, this kit will be an aftermarket product; the company is starting with the 20 most popular car brands and will expand from there.

Ghost intends to set up retail spaces where a car owner can see the product and have it installed. But eventually, Hayes said, he believes the kit will become part of the vehicle itself, much like GPS or satellite radio has evolved.

While hardware is the most visible piece of Ghost, the company’s 75 employees have dedicated much of their time on the driving algorithm. It’s here, Hayes says, where Ghost stands apart.

How Ghost is building a driver

Ghost is not testing its self-driving system on public roads, an approach nearly every other AV company has taken. There are 63 companies in California that have received permits from the Department of Motor Vehicles to test autonomous vehicle technology (always with a human safety driver behind the wheel) on public roads.

Ghost’s entire approach is based on an axiom that the human driver is fundamentally correct. It begins by collecting mass amounts of video data from kits that are installed on the cars of high-mileage drivers. Ghost then uses models to figure out what’s going on in the scene and combines that with other data, including how the person is driving by measuring the actions they take.

It doesn’t take long or much data to model ordinary driving, actions like staying in a lane, braking and changing lanes on a highway. But that doesn’t “solve” self-driving on highways because the hard part is how to build a driver that can handle the odd occurrences, such as swerving, or correct for those bad behaviors.

Ghost’s system uses machine learning to find more interesting scenarios in the reams of data it collects and builds training models based on them.

The company’s kits are already installed on the cars of high-mileage drivers like Uber and Lyft drivers and commuters. Ghost has recruited dozens of drivers and plans to have its kits in hundreds of cars by the end of the year. By next year, Hayes says the kits will be in thousands of cars, all for the purpose of collecting data.

The background of the executive team, including co-founder and CTO Volkmar Uhlig, as well as the rest of their employees, provides some hints as to how they’re approaching the software and its integration with hardware.

Employees are data scientists and engineers, not roboticists. A dive into their resumes on LinkedIn and not one comes from another autonomous vehicle company, which is unusual in this era of talent poaching.

For instance, Uhlig, who started his career at IBM Watson Research, co-founded Adello and was the architect behind the company’s programmatic media trading platform. Before that, he built Teza Technologies, a high-frequency trading platform. While earning his PhD in computer science he was part of a team that architected the L4 Pistachio microkernel, which is commercially deployed in more than 3 billion mobile Apple and Android devices.

If Ghost is able to validate its system — which Hayes says is baked into its entire approach — privately owned self-driving cars could be on the highways by next year. While the National Highway Traffic Safety Administration could potentially step in, Ghost’s approach, like Tesla, hits a sweet spot of non-regulation. It’s a space, that Hayes notes, where the government has not yet chosen to regulate.

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Senegal’s NIMA Codes to launch address app in 15 African countries

Posted by | africa, Android, api, carsharing, commuting, IBM, kenya, location based service, NIMA Codes, north america, ovi, senegal, Snap, Startups, TC, transport, Uber, United States, west africa | No Comments

Senegalese startup NIMA Codes — a digital mapping service for locations without formal addresses — has upgraded its app and plans to go live in 15 African countries in 2020.

The pre-seed stage startup launched in 2018 around an API that uses mobile-phone numbers to catalog coordinates for unregistered homes and businesses in Senegal.

NIMA Codes is adding a chat tool to its platform, to help users locate and comment on service providers, and is integrating a photo-based location identifier, NIMA Snap, in the application.

“What we offer right now is a reliable street-addressing product. Because it’s very difficult for people…to communicate location in Africa and a lot of services are using location. So we need a service that can communicate reliable locations,” NIMA Codes co-founder and CEO Mouhamadou Sall told TechCrunch.

By several rankings, NIMA Codes has become a top-three downloaded navigation app in Senegal (for Android and iOS). The platform has 16,000 subscribed users and has recorded more than 100,000 searches, according to Sall.

He and co-founder Steven Sakayroun (a software engineer and IBM alum) came up with the idea for assigning location coordinates to mobile numbers in previous software development roles.

“If you look at street addresses in North America, in the end they are just a way to name longitude and latitude, because the computer doesn’t know what 6th Avenue really means,” Sall said.

Because mobile-phone penetration in Senegal and broader Africa is high, mobile numbers serve as a useful reference point to attach location information tagged for both homes and businesses, Sall explained. Mobile-phones can also serve as an entry point for people to input location coordinates to NIMA Codes’ database.

There are advantages to assigning coordinates to digits, versus letters, in Sub-Saharan Africa with its thousands of language groupings, Sall explained. “Nima Codes is a cross-border and language-agnostic solution,” he said.

Mouhamadou Sall

Sall believes that will work to the startup’s advantage when it expands services and database building to all 15 countries of the Economic Community of West African States by the end of 2020.

NIMA Codes is still plotting prospects for its best use-cases and revenue generation. It hasn’t secured partners yet and is still identifying how those downloading the app are using it. “Right now it’s mostly people who download the app…and register locations. Some delivery companies may be using it and not telling us,” said Sall.

Ecowas Countries

The startup plans to generate revenue through partnerships and API usage fees.

Sall believes NIMA Codes’ new image-based location and chat-based business search functions could come together — akin to Google Maps and finding nearby places — to create commercial revenue opportunities across merchants in West Africa’s large, informal economies.

Another obvious plug-in for NIMA Codes’ service is Africa’s fast-growing ride-hail and delivery markets. Sall points to 2019 data that Uber paid $58 million over three years for map and search services.The U.S. ride-hail company has also tested an image-based directions app called OKHi in Kenya. And there are reports of Uber’s imminent expansion into Senegal.

Whatever the application, Sall believes NIMA Codes is cornering a central point of demand in Sub-Saharan Africa.

“The use case is so big, you need to start with something and eventually expand,” he said.

“But everything wraps around having a reliable location service for people and small business.”

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‘We are seeing volume and interest in Peloton explode,’ says company president on listing day

Posted by | Android, barnes & noble, Canada, economy, Fundings & Exits, Germany, initial public offering, john foley, linguistics, London, Lyft, Media, New York, Peloton, Pinterest, pittsburgh, Startups, tampa, Uber, unicorn, United Kingdom, United States, Venture Capital, WeWork | No Comments

This morning, Peloton (NASDAQ: PTON), the tech-enabled stationary bicycle and fitness content streaming company, raised $1.2 billion in its NASDAQ initial public offering. Despite dropping more than 10% in its first day of trading — ultimately closing down 11% at $25.84 per share — the IPO was a bona fide success. Peloton, once denied (over and over again) by VC skeptics, now has hundreds of millions of dollars to take its business into a new era. One in which, the media, hardware, software, logistics and social company attempts to become a generation-defining company akin to Apple.

Founded in 2012 — six years after Soul Cycle opened its first cycling studio in New York’s Upper East Side and two years before a Soul Cycle founder, Ruth Zukerman, jumped ship to launch her own indoor cycling business, Flywheel Sports — a man by the name of John Foley made the ambitious, some might say foolish, decision to start a company that would sell these exercise bikes direct-to-consumer. That way, you could take a Soul Cycle class, in essence, in the comfort of your own home. Even better, technology would improve the experience.

As my colleague Josh Constine recently described it, these bikes come outfitted with a 22-inch Android screen, transforming an outdated exercising experience and bringing it into 2019: “It makes lazy people like me work out. That’s the genius of the Peloton bicycle. All you have to do is Velcro on the shoes and you’re trapped. You’ve eliminated choice and you will exercise,” Constine writes.

Peloton’s ability to get people exercise — a feature driven by its talented instructors (some of whom were poached from competitor Flywheel Sports) — ultimately had venture capital investors funneling $1 billion, roughly, into the business. Today, Peloton operates dozens of showrooms across the U.S., counts 1.4 million total community members — defined as any individual who has a Peloton account — and over 500,000 paying subscribers. Why? Because the company, as stated in its IPO prospectus, “sells happiness.”

“Peloton is so much more than a Bike — we believe we have the opportunity to create one of the most innovative global technology platforms of our time,” writes Foley. “It is an opportunity to create one of the most important and influential interactive media companies in the world; a media company that changes lives, inspires greatness, and unites people.”

Peloton Bike Lifestyle 04

Peloton’s flagship product, a tech-enabled stationary bike.

Peloton’s community coupled with the high margins on sales of its $2,245 bikes had the company reporting $915 million in total revenue for the year ending June 30, 2019, an increase of 110% from $435 million in fiscal 2018 and $218.6 million in 2017. Its losses, meanwhile, hit $245.7 million in 2019, up significantly from a reported net loss of $47.9 million last year.

What’s next for Peloton? The opportunities are endless, given the company’s firm seat at the intersection of hardware, software, media content and more. A third product may be in the works, expansion to international markets or new instructors. Peloton is going after a massive market ripe for disruption. What’s certain is that we’ll see a whole lot of cash flowing into fitness tech copycats in the next couple of years.

Peloton, following a number of lukewarm consumer IPOs (Uber), nearly doubled its valuation to $8.1 billion this morning after pricing its IPO at the top of its range, $29 per share. To answer some of our most burning questions, we chatted with Peloton’s president William Lynch, the former CEO of Barnes & Noble, about the float.

The following conversation has been edited for length and clarity.

William Lynch

Peloton president and former Barnes & Noble CEO William Lynch.


Kate Clark: What’s next for Peloton?
William Lynch: We now have over a billion in capital to fuel more growth, especially in the area of product innovation.

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What lower Netflix pricing tells us about competing in India

Posted by | Amazon, Apple, Apps, Asia, China, Cred, Disney, Facebook, Finance, FreeCharge, funding, Fundings & Exits, Google India, HBO, Hotstar, iPhone, LinkedIn, Media, Mobile, Netflix, Paytm, Reed Hastings, Satyan Gajwani, SnapDeal, Spotify, Tim Cook, Times Internet, Uber, Vijay Shekhar Sharma | No Comments

At a conference in New Delhi early last year, Netflix CEO Reed Hastings was confronted with a question that his company has been asked many times over the years. Would he consider lowering the subscription cost in India?

It’s a tactic that most Silicon Valley companies have adapted to in the country over the years. Uber rides aren’t as costly in India as they are elsewhere. Spotify and Apple Music cost less than $2 per month to users in the country. YouTube Premium as well as subscriptions to U.S. news outlets such as WSJ and New York Times are also priced significantly lower compared to the prices they charge in their home turf.

Hastings had also come prepared: He acknowledged that the entertainment viewing industry in India is very different from other parts of the world. To be sure, much of the pay-TV in India is supported by ads and the access fee remains too low ($5). But that was not going to change how Netflix likes to roll, he said.

“We want to be sensitive to great stories and to fund those great stories by investing in local content,” he said. “So yes, our strategy is to build up the local content — and of course we have got the global content — and try to uplevel the industry,” he said, identifying movie-goers who spend about Rs 500 ($7.25) or more on tickets each month as Netflix’s potential customers.

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Indian commuters walking below a poster of “Sacred Games”, an original show produced by Netflix (Image: INDRANIL MUKHERJEE/AFP/Getty Images)

Less than a year and a half later, Netflix has had a change of heart. The company today rolled out a lower-priced subscription plan in India, a first for the company. The monthly plan, which restricts usage of the service to mobile devices only, is priced at Rs 199 ($2.8) — a third of the least expensive plan in the U.S.

At a press conference in New Delhi today, Netflix executives said that the lower-priced subscription tier is aimed at expanding the reach of its service in the country. “We want to really broaden the audience for Netflix, want to make it more accessible, and we knew just how mobile-centric India has been,” said Ajay Arora, Director of Product Innovation at Netflix.

The move comes at a time when Netflix has raised its subscription prices in the U.S. by up to 18% and in the UK by up to 20%.

Netflix’s strategy shift in India illustrates a bigger challenge that Silicon Valley companies have been facing in the country for years. If you want to succeed in the country, either make most of your revenue from ads, or heavily subsidize your costs.

But whether finding users in India is a success is also debatable.

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Uber riders now earn rewards for shopping during their trip with new Cargo app

Posted by | Amazon, Android, cargo, carsharing, commuting, driver, eCommerce, line, Nintendo, operating systems, Software, TC, transport, Transportation, Uber, universal studios | No Comments

Uber is launching a new shopping app with commerce partner Cargo, a startup with which it signed an exclusive global partnership last year. The app will feature items curated by Uber, including products like Nintendo Switch, Apple hardware, Away luggage, Glossier cosmetics and more, and will be available to download for Uber riders making trips in cars that have Cargo consoles on board. The Cargo app will also provide in-ride entertainment, including movies from Universal Studios available to purchase for between $5 and $10 each (with bundle discounts for multiple movies), which are then viewable in the Movies Anywhere app.

Uber riders will also benefit by receiving 10% of their purchase value back in Uber Cash, which they can then use either on future trips or on other purchases made through the Cargo app while riding. Uber drivers also benefit, earning 25% of the value of items purchased from the Cargo Box in-car, and an additional $1 for each first purchase by a passenger through the new app.

Riders just need to grab the iOS or Android app and then scan the QR code located on the Cargo Box in their driver’s car. Cargo’s app only allows purchases while on the trip, and then the item will be automatically shipped to a rider’s home address for free with an estimated delivery time of between two and five business days.

Cargo App Home Screen

This tie-up is a natural evolution for Uber’s business — the company hosts millions of riders every week, and many of those are taking relatively long trips to and from airports and other transit hubs, which provides ample opportunity to get them buying stuff or watching purchased content. Cargo, in which Uber has some equity stake, has a good opportunity to figure out how best to make the most of those trips.

This is hardly without precedent — airlines have attempted to capture consumer interest in the skies with onboard duty-free and other sales, as well as content for purchase. The big question will be whether Uber and Cargo together can provide enough additional purchase incentive versus riders just opening the Amazon app or other commerce options they have available on their own personal devices to make it a sustainable extension of their business.

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Uber Eats invades restaurants with Dine-In option

Posted by | allset, Apps, eCommerce, food, Mobile, OpenTable, payments, resy, TC, Uber, ubereats | No Comments

Tired of cleaning up after take-out or getting hangry waiting at your table in restaurants? Well Uber Eats is barging into the dine-in business. A new option in some cities lets you order your food ahead of time, go to the restaurant, then sit down inside to eat, a tipster from competing dine-in app Allset tells us. We tested it, and Uber Eats Dine-In even waives the standard Uber delivery and service fees.

Adding Dine-In lets Uber Eats insert itself into more food transactions, expand to restaurants that care about presentation and don’t do delivery and avoid paying drivers while earning low-overhead revenue. Uber’s Dine-In option is now available in some cities, including Austin, Dallas, Phoenix and San Diego, where it could save diners time and fees while helping restaurants fill empty tables and waiters earn tips. But it also could coerce more restaurants to play ball with UberEats if their competitors do, eating into their margins.

UberEats Dine In Option

Uber confirmed the existence of the Dine-In option, telling me, “We’re always thinking about new ways to enhance the Eats experience.” They also verified there are no delivery or service fees, and restaurants get 100% of tips left in-app by users. However, we found some items were silently marked up from restaurants’ listed prices in both Uber Eats Delivery and Dine-In options, which could help it make some money directly from these purchases. We also discovered this buried Uber Help Center FAQ with more details.

Uber has been rapidly experimenting with Uber Eats, trying discounted specials, Uber Eats Pool, where you pay less for slower delivery, and $9.99 unlimited delivery subscriptions. It’s steadily becoming an omnivore.

How Uber Dine-In Works

Dine-in appears next to the Delivery and Pick-Up options across the top of the Uber Eats app in select cities. You order from the menu and can choose to go eat “ASAP” or in some cases schedule when you want to arrive and sit down. You’ll be shown how long the food will take to prep, distance to the restaurant, your price and the restaurant’s rating. You’ll then be notified as the order is prepared and approaches readiness. Then you just deliver yourself to the restaurant and the food is ready to be served as soon as you sit down. You can add a tip in-app or on the table.

Uber Eats should obviously make it easy for you to hail an Uber with the restaurant as the pre-set destination. An Uber spokesperson called that a good idea but not something it’s doing yet. Back in 2016, Uber tried a merchant-sponsored rides option where you’d get a rebate on your travel if you spent money at a given store. You could imagine restaurants that want to show off their ambiance giving customers some money back if they come across town to eat there.

Uber Dine In

The new feature could spell trouble for other dine-in apps like Allset that’s been in the business for four years. Users might also opt for Uber Eats Dine-In over restaurant reservation apps like OpenTable and Resy. Why waste time waiting to order and for your food to be cooked when you could just show up as it comes out of the oven?

“I think that more delivery players will be tapping into dine-in space. It’s all about convenience and time saving. But it’s going to be very difficult for them, given their focus on delivery,” Allset CEO Stas Matviyenko said of Uber becoming a competitor. He believes dedicated apps for different modes of dining will succeed. But Uber Eats’ ubiquity and its one-stop-shop model for all your dining needs could make it stickier than a dine-in only app you use less frequently.

UberEatsheader

With Dine-In, Uber could aid restaurants that are empty at the start or end of their open hours. Last year we reported that Uber Eats was giving restaurants prominence in a Featured section of the app to drive up demand if they offered discounts to customers. Similarly, Uber could let restaurants entice more Dine-In customers, especially when foot-traffic was slow, by providing discounts on food or subsidized Uber transportation. Better to knock a dollar or two off an entree if it means filling the restaurant at 5:30 or 9:30 pm.

And now that Uber Eats does delivery, take-out and dine-in, it’d make perfect sense to offer traditional restaurant reservations through the app as well. That would pit it directly against OpenTable, Resy and Yelp. Instead of trying to own a single use case that might only appeal to certain demographics in certain situations, Uber Eats’ strategy is crystallizing: be the app you open whenever you’re hungry.

[Postscript 7pm PT: You could view the minutes typically spent being seated, perusing the menu, and waiting for your food to be served as either “friction” to eliminate for efficiency, or quality time you should spend with your meal mates. Both are valid perspectives, but I don’t think there’s anything wrong with being given a choice. For some people who eat alone, it could be quite nice to be able to cut down the wait, perhaps encouraging them to dine in public more often. And really, hasn’t Uber always been about “saving” time that could have been spent meaningfully if not for its raw pursuit of delivering convenience?]

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Higher Ground Labs is betting tech can help sway the 2020 elections for Democrats

Posted by | america, Barack Obama, Betsy Hoover, Brad Parscale, Brandwatch, breitbart news, Cambridge Analytica, campaign manager, Chris Sacca, Civis Analytics, communication tools, computing, CRM, democratic party, donald j trump, Facebook, Forbes, Google, greylock, Higher Ground Labs, Hillary Clinton, Insight Venture Partners, LinkedIn, mitt romney, Mobile, ngp van, online tools, paris, PayPal, president, presidential election, Reid Hoffman, republican national committee, republican party, republicans, Ron Conway, Shomik Dutta, social media, social media tools, Software, sv angel, TC, technology, Uber | No Comments

When Shomik Dutta and Betsy Hoover first met in 2007, he was coordinating fundraising and get-out-the-vote efforts for Barack Obama’s first presidential campaign and she was a deputy field director for the campaign.

Over the next two election cycles the two would become part of an organizing and fundraising team that transformed the business of politics through its use of technology — supposedly laying the groundwork for years of Democratic dominance in organizing, fundraising, polling and grassroots advocacy.

Then came Donald J. Trump and the 2016 election.

For both Dutta and Hoover, the 2016 outcome was a wake-up call against complacency. What had worked for the Democratic party in 2008 and 2012 wasn’t going to be effective in future election cycles, so they created the investment firm Higher Ground Labs to provide financing and a launching pad for new companies serving Democratic campaigns and progressive organizations.

As the political world shifts from analog to digital, we need a lot more tools to capture that spend,” says Dutta. “Democrats are spending on average 70 cents of every dollar raised on television ads. We are addicted to old ways of campaigning. If we want to activate and engage an enduring majority of voters we have to go where they are (and that’s increasingly online) and we have to adapt to be able to have these conversations wherever they are.”

Social media and the rise of “direct to consumer” politics

While the Obama campaign effectively used the internet as a mobilization tool in its two campaigns, the lessons of social media and mobile technologies that offer a “direct-to-consumer” politics circumventing traditional norms have, in the ensuing years, been harnessed most effectively by conservative organizations, according to some scholars and activists.

“The internet is a tool and in that sense it’s neutral, but just like other communication tools from the past, people with more power, with more resources, with more organization, have been able to take advantage of it,” Jen Schradie, an assistant professor at the Observatoire sociologique du changement at Sciences Po in Paris, told Vox in an interview earlier this month.

Schradie is a scholar whose recent book, “The Revolution That Wasn’t,contends that the internet’s early application as a progressive organizing tool has been overtaken by more conservative elements. “The idea of neutrality seems more true of the internet because the costs of distributing information are dramatically lower than with something like television or radio or other communication tools,” she said. “However, to make full use of the internet, you still need substantial resources and time and motivation. The people who can afford to do this, who can fund the right digital strategy, create a major imbalance in their favor.”

Schradie contends that a web of privately funded think tanks, media organizations, talk radio and — increasingly — mobile applications have woven a conservative stitch into the fabric of social media. The medium’s own tendency to promote polarizing and fringe viewpoints also served to amplify the views of pundits who were previously believed to be political outliers.

Essentially, these sites have enabled commentators and personalities to create a patchwork of “grassroots” organizations and media operations dedicated to reaching an audience receptive to their particular political message that’s funded by billionaire donors and apolitical corporate ad dollars.

Then there’s the technology companies, like Cambridge Analytica, which improperly used access to Facebook data for targeting purposes — also financed by these same billionaires.

“The last six years have witnessed millions and millions of dollars of private Koch money and Mercer money that have gone to pretty sophisticated data and media efforts to advance the Republican agenda,” says Dutta. “I want to even the scale.”

Dutta is referring to Charles and David Koch and Robert Mercer, the scions and founder (respectively) of two family dynasties worth billions. The Koch brothers support a web of political advocacy groups, while Mercer and his daughter were large backers of Breitbart News and Cambridge Analytica, two organizations that arguably provided much of the policy underpinnings and online political machinery for the Trump presidential campaign.

But there’s also the simple fact that Donald Trump’s digital strategy director, Brad Parscale, was able to effectively and inexpensively leverage the social media tools and data troves amassed by the Republican National Committee that were already available to the candidate who won the Republican primary. In fact, in the wake of Romney’s loss, Republicans spent years building up profiles of 200 million Americans for targeted messaging in the 2016 election.

“Who controls Facebook controls the 2016 election,” Parscale said during a speaking engagement at the Romanian Academy of Sciences, according to a report in Forbes.

Parscale, now the campaign manager for the president’s 2020 reelection campaign recalled, “These guys from Facebook walked into my office and said: ‘we have a beta … it’s a new onboarding tool … you can onboard audiences straight into Facebook and we will match them to their Facebook accounts,’ ” according to Forbes .

During the 2016 campaign, Hillary Clinton’s team made 66,000 visual ads, according to Parscale, while the Trump campaign made 5.9 million ads by leveraging social media networks and the language of memes. And in the run-up to the 2020 election, Parscale intends to go back to the same well. The Trump campaign has already spent more than $5 million on Facebook ads in the current election cycle, according to The New York Times outspending every single Democratic candidate in the field and roughly all of the Democrats combined.

Reaching higher ground

Dutta and Hoover are working to offset this movement with investments of their own. Back in 2017, the two launched Higher Ground Labs, an early-stage company accelerator and investment firm dedicated to financing technology companies that could support progressive causes.

The firm has $15 million committed from investors, including Reid Hoffman, the co-founder of LinkedIn and a partner at Greylock; Ron Conway, the founder of SV Angel and an early backer of Google, Facebook and Twitter; Chris Sacca, an early investor in Uber; and Elizabeth Cutler, the founder of SoulCycle. Already, Higher Ground has invested in more than 30 companies focused on services like advocacy outreach, polling and campaign organizing — among others. 

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The latest cohort of companies to receive backing Higher Ground Labs

“It is vitally important that Democrats learn to do their campaigns online,” says Dutta. “The way you recruit volunteers; the way you poll sentiment; the way you target and mobilize voters has to be done with online tools and has to improve in the progressive movement and that’s the job of Higher Ground Labs to fix.”

For-profit companies have a critical role to play in election organizing and mobilization, Dutta says. Thanks to government regulation, only private companies are allowed to trade data across organizations and causes (provided they do it at fair market value). That means advocacy groups, unions and others can tap the information these companies collect — for a fee.

The Democratic Party already has one highly valued private company that it uses for its technology services. Formed from the merger of NGP Software and Voter Activation Network, two companies that got their start in the late 1990s and early 2000s, NGP VAN is the largest software and technology services provider for Democratic campaigns. It’s also a highly valued company, which received roughly $100 million in financing last year from the private equity firm Insight Venture Partners, according to people familiar with the investment. Terms of the deal were not disclosed.

“Our vision has been to build a platform that would break down the painful data silos that exist in the campaigns and nonprofit space, and to offer truly best-in-class digital, fundraising and organizing features that could serve both the largest and the smallest nonprofits and campaigns, all with one unified CRM,” wrote Stu Trevelyan, the chief executive of NGP VAN + EveryAction, in an August blogpost announcing the investment. “We’re so excited that others, like our new partners at Insight, share that vision, and we can’t wait to continue innovating and growing together in the coming years.”

Can startups lead the way?

Even as private equity dollars boost the firepower of organizations like NGP VAN, venture capitalists are financing several companies from the Higher Ground Labs portfolio.

Civis Analytics, a startup founded by the former chief analytics officer of Barack Obama’s 2012 reelection campaign, raised $22 million from outside investors, and counts Higher Ground Labs among its backers. Qriously, another Higher Ground Labs portfolio company, was acquired by Brandwatch, as was GroundBase, a messaging platform acquired by the nonprofit progressive advocacy organization ACRONYM.

Other companies in the portfolio are also attracting serious attention from investors. Standouts like Civis Analytics and Hustle, which raised $30 million last May, show that investors are buying into the proposition that these companies can build lasting businesses serving Democratic and progressive political campaigns and corporate businesses that would also like to rally employees or personalize a marketing pitch to customers.

These are companies like Change Research, an earlier-stage company that just launched from Higher Ground Labs accelerator last year. That company, founded by Mike Greenfield, a serial Silicon Valley entrepreneur who was the first data scientist working on the problem of fraud detection at PayPal, and Pat Reilly, a communications professional who worked with state and local Democratic politicians, is slashing the cost of political polling.

“I wanted to do something for American democracy to try and improve the state of things,” Greenfield said in an interview last year.

For Greenfield, that meant increasing access to polling information. He cited the test case of a Kansas special election in a district that Donald Trump had won by 27 points. Using his own proprietary polling data, Greenfield predicted that the Democratic challenger, James Thompson, would pose a significant threat to his Republican opponent, Mike Estes.

Estes went on to a 7% victory at the ballot, but Thompson’s campaign did not have access to polling data that could have helped inform his messaging and — potentially — sway the election, said Greenfield.

“Public opinion is used to ween out who can be most successful based on how much money they’re able to raise for a poll,” says Reilly. It’s another way that electoral politics is skewed in favor of the people with disposable income to spend what is a not-insignificant amount of money on campaigns.

Polls alone can cost between $20,000 to $30,000 — and Change Research has been able to cut that by 80% to 90%, according to the company’s founders.

“It’s safe to say that most of the world was stunned by the outcome [of the presidential election] because most polls predicted the opposite,” says Greenfield. “Being a good American and as a parent of a 10-year-old and a 12-year-old, providing forward-thinking candidates and causes with the kind of insight they needed to win up and down the ballot could not only be a good business, but really help us save our democracy.”

Change Research isn’t just polling for politicians. Last year, the company conducted roughly 500 polls for political candidates and advocacy groups.

“The way that I’ve described Change Research to investors is that we want to simultaneously move the world in a better direction and having a positive impact while building a substantial business,” says Greenfield. “We’re only going to work with candidates and causes that we’re aligned with.”

Being exclusively focused on progressive causes isn’t the liability that many in the broader business community would think, says Dutta. Many Democratic organizations won’t work with companies that sell services to both sides of the aisle.

For Higher Ground Labs, a stipulation for receiving their money is a commitment not to work with any Republican candidate. Corporations are okay, but conservative causes and organizations are forbidden.

“We’re in a moment of existential crisis in America and this Republican party is deeply toxic to the health and future of our country,” says Dutta. “The only path out of this mess is to vote Republicans out of office and to do that we need to make it easier for good candidates to run for office and to engage a broader electorate into voting regularly.”

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