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Where top VCs are investing in manufacturing and warehouse robotics – TechCrunch


Robotics and automation tools are now foundational parts of warehouses and manufacturing facilities around the world. Unlike many other robotics and AI use cases, the technology has moved well beyond the theoretical into practice and is used by small suppliers and large companies like Amazon and Walmart.

There’s no doubt that automation will transform every step of the supply chain, from manufacturing to fulfillment to shipping and logistics. The only question is how long such a revolution will take.

There’s still plenty of market left to transform and lots of room for new players to redefine different verticals, even with many of the existing leaders having already staked their claim. Naturally, VCs are plenty eager to invest millions in the technology. In 2019 alone, manufacturing, machinery and automation saw roughly 800-900 venture-backed fundraising rounds, according to data from Pitchbook and Crunchbase, close to two-thirds of which were still early-stage (pre-seed to Series B) investments.

With our 2020 Robotics+AI sessions event less than two weeks away, we’ve decided to perform temperature checks across some of the hottest robotics sub-verticals to see which trends are coming down the pipe and where checks are actually being written. Just as we did with construction robotics last week, this time, we asked seven leading VCs who actively invest in manufacturing automation robotics to share what’s exciting them most and where they see opportunities in the sector:

Rohit Sharma, True Ventures

Which trends are you most excited about in manufacturing/warehouse automation robotics from an investing perspective?



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Equity is not always the answer – TechCrunch


Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a fun combination of early-stage and late-stage news, with companies as young as seed stage and as old as PE-worthy joining our list of topics.

Danny and Alex were back on hand to chat once again. Just in case you missed it, they had some fun talking Tesla yesterday, and there are new Equity videos on YouTube. Enjoy!

Here’s what the team argued about this week:

  • HungryPanda raises $20 million from 83North and Felix Capital. With a focus on Chinese food, Chinese language users and Chinese payment options like Alipay, it’s a neat play. According to TechCrunch, the service is live in 31 cities in the U.K., Italy, France, Australia, New Zealand and the U.S and is targeting $200 million in GMV by early Summer.
  • The Org raises $8.5 million, ChartHop raises $5 million. Hailing from two different product perspectives, these two org chart-focused companies both raised capital Thursday morning. That made them interesting to Alex as they formed yet another startup cluster, and Danny was transfixed by their differing starting points as businesses, positing that they will possibly move closer to each other over time.
  • DigitalOcean’s $100 million debt raise. The round — an addition of capital to a nearly profitable, SMB-focused cloud infra provider — split our hosts, with one leaning more toward a PE-exit and the other an IPO. Whether it can drive margins in the smaller-spend cloud customer segment will be critical to watch in the coming months.
  • (For more on venture debt writ large, head here.)
  • And finally, the E-Trade sale to Morgan Stanley, and what it might mean for Robinhood’s valuation. As Danny points out, the startup has found a good business in selling the order flow of its customers. Alex weighed in that the company has more revenue scaling to do before it grows into its last private valuation. So long as the market stays good, however, Robinhood is probably in good shape.

Equity is nearly three years old, and we have some neat stuff coming up that you haven’t heard about yet. Stay tuned, and thank you for sticking with us for so long.

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





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Mangrove Capital’s Mark Tluszcz on the huge mHealth opportunity and why focusing on UX is key – TechCrunch


Mangrove Capital Partners’ co-founder and CEO Mark Tluszcz is brimming with enthusiasm for what’s coming down the pipe from health tech startups.

Populations armed with mobile devices and hungry for verified and relevant information, combined with the promise of big data and AI, is converging, as he sees it, into a massive opportunity for businesses to rethink how healthcare is delivered, both as a major platform to plugging gaps in stretched public healthcare systems and multiple spaces in between — serving up something more specific and intimate.

Think health-focused digital communities, perhaps targeting a single sex or time of life, as we’re increasingly seeing in the femtech space, or health-focused apps and services that can act as supportive spaces and sounding boards that cater to the particular biological needs of different groups of people.

Tluszcz has made some savvy bets in his time. He was an early investor in Skype, turning a $2 million investment into $200 million, and he’s also made a tidy profit backing web building platform Wix, where he remains as chairman. But the long-time, early-stage tech investor has a new focus after a clutch of investments — in period tracking (Flo), AI diagnostics (K Health) and digital therapeutics (Happify) — have garnered enough momentum to make health the dominant theme of Mangrove Capital’s last fund.

“I really don’t think that there’s a bigger area and a more inefficient area today than healthcare,” he tells us. “One of the things that that whole space is missing is just good usability. And that’s something that Internet entrepreneurs do very well.”

Extra Crunch sat down for an in-depth conversation with Tluszcz to dig into the reasons why he’s so excited about mHealth (as Mangrove calls it) and probe him on some of the challenges that arise when building data-led AI businesses with the potential to deeply impact people’s lives.

The fund has also produced a healthcare report setting out some of its thinking.

This interview has been lightly edited for length and clarity

TechCrunch: Is the breadth of what can fall in the digital health or mHealth category part of why you’re so excited about the opportunities here?

Mark Tluszcz: I think if you take a step back, even from definitions for a moment, and you look around as an investor — and we as a firm, we happen to be thematically driven but no matter who you are — and you say where are there massive pockets of opportunity? And it’s typically in areas where there’s a lot of inefficiency. And anybody who’s tried to go to the doctor anywhere in Europe or around the world or tried to get an appointment with a therapist or whatever realizes how basically inefficient and arcane that process is. From finding out who the right person is, to getting an appointment and going there and paying for it. So healthcare looks to us like one of those arcane industries — the user experience, so to speak, could be so much better. And combine that with the fact that in most cases we know nothing as individuals about health — unless you read a few books and things. But it’s generally the one place where you’re the least informed in life. So you go see your GP and he or she will tell you something and you’re blindly going to take that pill they’re going to give you because you’re not well informed. You don’t understand it.

So I think that’s the exciting part about it. If I now look around and say if I now look at all the industries in the world — and of course there’s interesting stuff happening in financial services, and it continues to happen on commerce, and many, many places — but I really don’t think that there’s a bigger area and a more inefficient area today than healthcare.

You combine that with the power that we’re beginning to see in all these mobile devices — i.e. I have it in my pocket at all times. So that’s factor two. So one is the industry is potentially big and inefficient; two is there’s tools that we have easy to access it. And there has been — I think again — a general frustration on healthcare online I would say of when you go into a search engine, or you go into Web MD or Google or whatever, the general feedback it gives you is you’re about to have a heart attack or you’re about to die because those products are not designed specifically for that. So you as a consumer are confused because you’re not feeling well so you go online. The next day you go see your doctor and he or she says you didn’t go to Google did you, right? I know you’re probably freaked out at this point. So the second point is the tools are there.

Third I’d say is that artificial intelligence, machine learning, which is kind of in the process of gaining a lot of momentum, has made it that we’re able to start to dream that we could one day crunch sufficient data to get new insights into it. So I think you put those three factors together and say this seems like it could be pretty big, in terms of a space.

One of the things that that whole space is missing is just good usability. And that’s something that Internet entrepreneurs do very well. It’s figure out that usability side of it. How do I make that experience more enjoyable or better or whatever? In fact, you see it in fintech. One of the reasons, largely, that these neobanks are winning is that their apps are much better than what you have from the incumbents. There’s no other reason for it. And so I think there’s this big opportunity that’s out there, and it says all these factors lead you to this big, big industry. And then yes, that industry in itself is extremely large — all the way from dieting apps, you might think, all the way to healthy eating apps to longevity apps, to basic information about a particular disease, to basic general practitioner information. You could then break it down into female-specific products, male-specific products — so the breadth is very, very big.

But I think the common core of that is we as humans are getting more information and knowledge about how we are, and that is going to drive, I think, a massive adoption of these products. It’s knowledge, it’s ease of use, and it’s accessibility that just make it a dream come true if we can pull all these pieces together. And this is just speaking about the developed world. This gets even bigger potentially if I go to the third world countries where they don’t even have access to basic healthcare information or basic nutritional information. So I would say that the addressable market in investors’ jargon is just huge. Much more so than in any other industry that I know of today.

Is the fund trying to break that down into particular areas of focus within that or is the fund potentially interested in everything that falls under this digital health/mHealth umbrella?

We are a generalist investment firm. As a generalist investment firm we find these trends and then anything within these trends is going to pique our interest. Where we have made some investments has been really in three areas so far, and we’ll continue to broaden that base.

We’ve made an investment into a company called Flo. They are the number one app in the world for women to help track their menstrual cycles. So you look at that and go can that be big, not big, I don’t know. I can tell you they have 35M monthly active users, so it’s massive.

Now you might say, ‘Why do women need this to help them track their cycles because they’ve been tracking these menstrual cycles other ways for thousands of years?’ This is where, as an investor, you have to combine something like that with new behavioral patterns in people. And so if you look at the younger generation of people today they’re a generation that’s been growing up on notifications — the concept of being notified to do something. Or reminded to do something. And I think these apps do a lot of that as well.

My wife, who’s had two children, might say — which she did before I invested in the company — why would I ever need such an app? And I told her, “Unfortunately you’re the wrong demographic… because when I speak to an 18- year-old she says, ‘Ah, so cool! And by the way do you have an app to remind me to brush my teeth?’ So notifications is what I think what makes it interesting for that younger demographic.

And then curiously enough — this is again the magic of what technology can bring and great products can bring — Flo is a company created by two brothers. They had no particular direct experience of the need for the app. They knew the market was big. They obviously hired women who were more contextually savvy to the problem but they were able to build this fantastic product. And did a bunch of things within the product that they had taken from their previous lives and made it so that the user experience was just so much better than looking at a calendar on your phone. So today 35M women every month use this product tells you that there’s something there — that the tech is coming and that people want to use it. And so that’s one type of a problem, and you can think about a number of others that both males and females will have — for whom making that single user experience better could be interesting. And I could go from that to ten things that might be interesting for women and ten things that might specifically be interesting for men — you can imagine breaking that down. This is why, again, the space is so big. There are so many things that we deal with as men and women [related to health and biology].

Now for me the question is, as a venture investor, will that sub-set be big enough?

And that again is no different than if I was looking at any other industry. If I was in the telecommunications industry — well is voice calling big? Is messaging big enough? Is conference calling big enough? All that is around calling, but you start breaking it down and, in some cases, we’re going to conclude that it’s big enough or that it’s not big enough. But we’re going to have to go through the process of looking at these. And we’re seeing these thematic things pop up all over the place right now. All over Europe and in the U.S. as well.

It did take us a little time to say is this big enough [in the case of Flo] but obviously getting pregnant is big enough. And as a business, think about it: once you know a woman’s menstrual cycle process and then she starts feeding into the system, ‘I am pregnant; I’m going to have a child,’ you start having a lot of information about her life and you can feed a lot of other things to her. Because you know when she’s going to have a child, you can propose advice as well around here’s how the first few months go. Because, as we know, when you have your first child, you’re generally a novice. You’re discovering what all that means. And again you have another opportunity to re-engage with that user. So that’s something that I think is interesting as a space.

So the thematic space is going to be big — the femtech side and the male tech side. All of that’s going to play a big role. One could argue always there are the specific apps that are going to be the winners; we can argue about that. But right now I guess Flo is working very well because those people haven’t found such a targeted user experience in the more generic place. They feel as if they’re in a community of like-minded women. They have forums, they can talk, they have articles they can read, and it’s just a comfortable place for them to spend some time.

So Flo is the first example of a very specific play that we did in healthcare about a year and a half ago. The first investment, in fact, that we made in healthcare.

The second example is opposed to that — it’s a much more general play in healthcare. It’s a company called K Health . Now K Health looked at the world… and said what happens when I wake up at night and I have a pain and I do go to Google and I think I’m going to have a heart attack…. So can I build a product that would mimic, if you will, a doctor? So that I might be able to create an experience when I can have immediacy of information and immediacy of diagnostics on my phone. And then I could figure out what to do with that.

This is an Israeli company and they now have 5 million users in the U.S. that are using the app, which is downloadable from the U.S. app story only. What they did is they spent a year and a half building the technology — the AI and the machine learning — because what they did is they bought a very large dataset from an insurance company. The company sold it to them anonymized. It was personal health records for 2.5 million people for 20, years so we had a lot of information. A lot of this stuff was in handwritten notes. It wasn’t well structured. So it took them a long time to build the software to be able to understand all this information and break it down into billions of data parts that they could now manipulate. And the user experience is just like a WhatsApp chat with a robot.

Their desire is not to do what some other companies are doing, which is ‘answer ten questions and maybe you should talk to a doctor via Skype.’ Because their view was that — at the end of the day — in every developed country there are shortages of doctors. That’s true for the U.K.; it’s true for the U.S. If you predict out to 2030, there’s a huge hole in the number of GPs. Part of that is also totally understandable; who would want to be a GP today? I mean your job in the U.S. and the U.K. is you’re essentially a sausage factory. Come in and you’ve got 3 minutes with your customer. It’s not a great experience for the doctor or the person who goes to the doctor.

So K Health built this fantastic app and what they do is they diagnose you and they say based on the symptoms here’s what K thinks you have, and, by the way, here’s a medicine that people like you were treated with. So there’s an amazing amount of information that you get as a user, and that’s entirely free as a user experience. Their vision is that the diagnostic part will always be free.

There are 5 million people in the US.. using the app who are diagnosing. There are 25 questions that you go through with the robot, ‘K,’ and she diagnoses you. We call that a virtual doctor’s visit. We’re doing 15,000 of those a day. Think about the scale in which we’ve been able to go in a very short time. And all that’s free.

To some extent it’s great for people who can’t necessarily afford doctors — again, that’s not typically a European problem. Because socialized medicine in Europe has made that easy. But it is a problem in the U.S.; it is a problem in Africa, Asia, India and South America. There’s about 4 billion people around the world for whom speaking to a doctor is a problem.

K Health’s view is they’re bringing healthcare free to the world. And then ultimately how they make money will be things like if you want to speak to a doctor because you need a prescription for drugs. The doctor has access to K’s diagnostic and either agrees or disagrees with it and gives you a prescription to do that. And what we’re seeing is an interesting relationship which is where we wanted it to be. Of those 15,000 free doctor visits, less than one percent of those turn into I want to speak to a human and hence pay $15 (that’s the price they’re charging in the U.S. to actually converse with a human). In the U.S., by the way, about a quarter of the population — 75 million people — don’t have complementary insurance. That when they go to the doctor it’s $150. Isn’t that a crazy thing? You can’t afford complementary insurance but you could pay the highest price to go see a doctor. Such madness.

And then there’s a whole element of it’s simple, and it’s convenient. You’re sitting at home thinking, “Okay, I’m not feeling so well” and you’ve got to call a doctor, get an appointment, drive however long it takes, and wait in line with other sick people. So what we’re finding is people are discovering new ways of accessing information…. Human doctors also don’t have time to give empathy in an ever stretched socialized medicine country [such as in Spain]. So what we’re seeing also is a very quick change in user behavior. Two and a half years ago [when K Health started], many people would say I don’t know about that. Now they’re saying convenience — at least in Europe — is why that’s interesting. In the U.S. it’s price.

So that’s the second example; much more general company but one which has the ability to come and answer a very basic need: ‘I’m not feeling well.’

We have 5M users which means we have data on 5M people. On average, a GP in his life will see about 50,000 patients. If you think about just the difference — if you come to K, K has seen 5M people, your GP Max has seen 50k. So, statistically, the app is likely to be better. We know today, through benchmarks and all sorts of other stuff, is that the app is more accurate than humans.

So you look at where that’s heading in general medicine we’ve for a long time created this myth that doctors spent eight years learning a lot of information and as a result they’re really brainy people. They are brainy people but I believe that that learning process is going to be done faster and better through a machine. That’s our bet.

The third example of an investment that we’ve made in the health space is a company called Happify . They’re a company that had developed like a gamification of online treatment if you have certain sicknesses. So, for example, if you’re a little depressive you can use their app and the gamification process and they will help you feel healthier. So so far you’re probably scatching your head saying ‘I don’t know about that…” But that was how they started and then they realized that hang on you can either do that or you can take medicine; you can pop a pill. In fact what many doctors suggest for people who have anxiety or depression.

So then they started engaging with the drugs companies and they realized that these drug companies have a problem which is the patent expiry of their medication. And when patents expire you lose a lot of money. And so what’s very typical in the pharma industry is if you’re able to modify a medicine you can typically either extend or have a new patent. So Happify, what they’ve done with the pharma companies now, is said instead of modifying the medicine and adding something else to it — another molecule for instance — could we associate treatments which is medicine plus online software? Like a digital experience. And that has now been dubbed Digital Therapeutics — DTx — is the common term being used for them. And this company Happify is one of the first in the world to do that. They signed a very large deal with a company called Sanofi — one of the big drug makers. And that’s what they’re going to roll out. When doctors say to their patients I’m diagnosing you with anxiety or depression. Sanofi has a particular medication and they’re going to bundle it now with an online experience — and in all the tests that they’ve done, actually, when you combine the two, the patient is better off at the end of this treatment. So it’s just another example of why this whole space is so large. We never thought we’d be in any business with a pharma business because we’re tech investors. But here all of a sudden the ability to marry tech with medication creates a better end user experience for the patient. And that’s very powerful in itself.

So those are just three areas where we have actually put money in the health space but there are a number of areas that one looks at — either general or more specific.

Yeah it is big. And I think for us at least the more general it stays and it’s seen the more open minded we’re going to be. Because one thing you have to be as an investor, at least early stage like ours, completely open minded. And you can’t bias your process by your own experience. It has to stay very broad.

It’s also why I think clinician led companies and investors are not good — because they come with their own baggage. I think in this case, just like in any other industry, you have to say I’m not going to be polluted by the past and for me to change the experience going forward in any given area I have to fundamentally be ready to reinvent it.

You could propose a Theranos example as a counterpoint to that — but do you think investors in the health space have got over any fallout from that high profile failure at this point?

With that company one could argue who’s fault it really was. Clearly the founder lied and did all sorts of stuff but her investors let her do it. So to some extent the checks and balances just weren’t in place. I’m only saying that because I don’t think that should be the example by which we judge everything else. That’s just a case of a fraudster and dumb investors. That’s going to continue to exist in the future forever and who knows we might come across some of those but I don’t think it’s the benchmark by which one should be judging if healthcare is a good or viable investment. Again I look at Flo, 35M active users. I look at K Health, 5M users in the US who are now beginning to use doctors, order medicine through the platform. I think the simplicity, the ease of use, for me make it that it’s undeniable that this industry’s going to be completely shaken up through this tech. And we need it because at least in the Western world are health systems are so stretched they’re going to break.

Europe vs the US is interesting — because of the existence of public healthcare vs a lack of public healthcare. What difference does that make to the startup opportunities in health in Europe vs the US? Perhaps in Europe things have to be more supplementary to public healthcare systems but perhaps ultimately there isn’t that much difference if healthcare opportunities are increasingly being broken out and people are being encouraged to be more proactive about looking after their own health needs?

Yeah. Take K Health — where you look at it and say from a use example it’s clear that everywhere in the world, including US and Europe, people are going to recognize the simple ease of use and the convenience of it. If I had to spend money to then maybe make money then I would say maybe the US is slightly better because there’s 75M people who can’t afford a doctor and I might be able to sell them something more whereas in Europe I might not. I think it becomes a commercial question more than anything else. Certainly in the UK the NHS [National Health Service] is trying to do a lot of things. It is not a great user experience when you go to the doctor there. But at the end of the day I don’t think the difference between Europe-US makes much of a difference. I think this idea that what these apps want to tend towards — which is healthcare for everybody at a super cheap or free price-point — I think we have an advantage in Europe of thinking of it that way because that’s what we’ve had all our lives. So to some extent what I want to create online is socialized medicine for the world — through K Health. And I learnt that because I live here [in Europe].

Somebody in the US — not the 75M because they have nothing — but all the others, maybe they don’t think there’s a problem because they don’t recognize it. Our view with K Health is the opportunity to make socialized medicine a global phenomenon and hoping that in 95% of the cases access to the app is all you need. And in 5% of the cases you’re going to go the specialists that need to see you — and then maybe there’s enough money to go around for everybody.

And of course, as an investor, we’re interested in global companies. Again you see the theme: Flo, K Health, Happify, all those have a potential global footprint right off the bat.

I think with healthcare there are going to be play that could be national specific and maybe still going to be decent investments. You see in that in financial services. The neo banks are very country specific — whenever they try to get out of their country, like N26, they realize that life isn’t so easy when you go somewhere else. But healthcare I think we have an easier path to going global because there is such a pent up demand and a need for you to just feel good about yourself… Most of the people who go through [the K Health diagnostic] process just want peace of mind. If 95% of the 15k people who go through that process right now just go, “Phew, I feel okay” then we’ve accomplished something quite significant. And imagine if it’s not 15,000 it’s about 150,000 a day, which seems to be quite an easy goal. So healthcare allows us to dream that TAM — in investor terms, target addressable market — is big. I can realistically think with any one of the three companies that I’ve mentioned to you that we could have hundreds of millions of users around the world. Because there’s the need.

There are different regulatory regimes across markets, there are different cultural contexts around the world — do you see this as a winner takes all scenario for health platforms?

No. Not at all. I think ultimately it’s the user — in terms of his or her experience in using an app — that’s going to matter. Flo is not the only menstrual cycle app in the world; it just happens to be by far the biggest. But there’s others. So that’s the perfect example. I don’t think there’s going to be one winner takes it all.

There’s also (UK startup) Babylon Health which sounds quite similar to K Health…

Babylon does something different. They’re essentially a symptom checker designed to push you to have a Skype call with a human doctor…. It answers a bunch of questions, it’ll say, “Well, we think you have this, let’s connect you to a real doctor.” We did not want to invest in a company that ever did that because the real problem is there just aren’t enough doctors and then frankly you and I are not going to want to talk to a doctor from Angola. Because what’s going to happen is there aren’t enough doctors in the Western countries and the solution for those type of companies — Babylon is one, there’s others doing similar things — but if you become what we call lead generation just for doctors where you get a commission for bringing people to speak to a doctor you’re just displacing the problem from in your neighborhood to, broadly speaking, where are the humans? And I think as I said humans, they have their fallacies. If you really want to scale things big and globally you have to let software do it.

No it’s not a winner takes all — for sure.

So the vision is that this stuff starts as a supplement to existing healthcare systems and gradually scales?

Correct. I’ll give you an example in the U.S. with K Health. They have a deal with the second largest insurance company called Anthem. Their go-to-market brand is called Blue Cross, Blue Shield. It’s the second largest one in America… so why is this insurance company interested? Because they know that

  1. There’s not enough doctors.
  2. That the health system in the U.S. is under stress
  3. If they could reduce the amount of doctor’s visits by promoting an app like K, that’s financially beneficial to them.

So they’re going to be proposing it, in various forms, to all their customers by saying, “Before you go see a doctor, why don’t you try K?”

In this particular case with K there’s revenue opportunities from the insurance companies and also directly from the consumer, which makes it also interesting.

You did say different regions, different countries have different systems — yes absolutely and there’s no question that going international requires work. However, having said that, I would say a European, an Indonesian and a Brazilian are largely similar. There’s sometimes this fallacy that Asians, for instance, are so different from us as Western Europeans. And the truth is not really — when you look at it down into the DNA and the functions of the body and stuff like that. Which you do have to do, though. If we were to take K to Indonesia, for example, you do have to make sure that your AI engine has enough data to be able to diagnose some local stuff.

I’ll give you an example. When we launched K in the U.S. and we started off with New York, one of things you have to be able to diagnose is called Lyme disease which is what you get from a tick that bites you. Very, very prevalent in the Greater New York area. Not so much anywhere else in the States. But in New York, if you don’t have it it looks like a cold and then you get very sick. That’s very much a regional thing that you have to have. And so if we were to go to Indonesia we’d have to have thing like Malaria and Dengue. But all that is not so difficult. But yes, there’s some customization.

There are also certain conditions that can be more common for certain ethnicities. There are also differences in how women experience medical conditions vs men. So there can be a lot of issues around how localized health data is…

I would say that that is a very small problem that is a must to be addressed, but it’s a much smaller problem than you think it is. Much smaller. For instance, in the male to female thing — of course medical sometimes plays differently — but when you have a database of 5 million of which 3 million are women, and 2 million are men, you already have that data embedded. It is true that medications work better with certain races also. But again very tiny, very small examples of those. Most doctors know it.

At the big scale that may look very small but to an individual patient if a system is not going to pick up on their condition or prescribe them the right medicine that’s obviously catastrophic from their point of view…

Of course.

Which is why, in the healthcare space, when you’re using AI and data-driven tools to do diagnosis there’s a lot of risk — and that’s part of the consideration for everyone playing in this space. So then the question is how do you break down that risk, how do you make that as small as possible and how do you communicate it to the users — if the proposition is free healthcare with some risk vs. not being able to afford going to the doctor at all?

I appreciate that, as a journalist, you’re trying to say this is a massive risk. I can tell you that as somebody who’s involved in these businesses it is a business risk we have to take into consideration but it is, by far, not insurmountable. We clearly have a responsibility as businesses to say: if I’m going to go to South East Asia, I need to be sure that I cover all the ‘weird’ things that we would not have in our database somewhere else. So I need to do that. How I go about doing that, obviously, is the secret sauce of each company. But you simply cannot launch your product in that region if you don’t solve — in this case Malaria and Dengue disease. It doesn’t make sense [for a general health app]. You’d have too many flaws and people will stop using you.

I don’t think that’s so much the case with Flo, for instance… But all these entrepreneurs who are designing these companies are fully aware that it isn’t a cookie-cutter, one-size fits all — but it is close to that. When you look at the exceptions. We’re not talking about I have to redo my database because 30% or 20% — it’s much, much smaller than that.

And, by the way, at the end of the day, the market will be the judge. In our case, when you go from an Israeli company into the U.S. and you have partners like Blue Cross, Blue Shield, they’ve tested the crap out of your product. And then you’re going to say well I’m going to do this now in Indonesia — well you get partners locally who’re going to help you do that.

One of the drawbacks about healthcare is, I would say, making sure that your product works in all these countries. And doesn’t have holes in the diagnostic side of it.

Which seems in many cases to boil down to getting the data. And that can be a big challenge. As you mentioned with K Health, there was also the need to structure the data as well — but fundamentally it’s taken Israeli population data and is using it in the U.S. You would say that model is going to scale? There are some counter examples, such as Google-owned DeepMind, which has big designs on using AI for healthcare diagnostics and has put a lot of effort into getting access to population-level health data from the NHS in the U.K., when — at the same time — Google has acquired a database of health records from the U.S. Department of Veterans Affairs. So there does seem to be a lot of effort going into trying to get very localized data but it’s challenging. Google perhaps has a head start because it’s Google. So the question then is how do startups get the data they need to address these kinds of opportunities?

If we’re just looking at K Health then obviously it’s a big challenge because you do have to get data in a way. But I would say again your example as well you have a U.S. database and does it match with a UK database. Again it largely does.

In that case the example is quite specific because the dataset Google has from the department of Veterans Affairs skews heavily male (93.6%). So they really do have almost no female data.

But that’s a bad dataset. That’s not anything else but a bad dataset.

It’s instructive that they’re still using it, though. Maybe that illustrates the challenge of getting access to population-level healthcare data for AI model making.

Maybe it does. But I don’t think this is one of those insurmountable things. Again, what we’ve done is we’ve bought a database that had data on 2.5 million patients, data over 20 years. I think that dataset equates extremely well. We’ve now seen it in U.S. markets for over a year. We’ve had nothing but positive feedback. We beat human doctors every time in tests. And so you look at it and you say they’re just business problems that we have to solve. But what we’re seeing is the consumer market is saying holy shit this is just such a better experience than I’ve ever had before.

So the human body — again — is not that complex. Most of the things that we catch are not that complex. And by the way we’ve grown our database — from the 2.5M that we bought we now have 5M. So we now have 2.5M Americans mixing into that database. And the way they diagnose you is they say based on your age, your size, you don’t smoke and so on — perhaps they say they have 300,000 people in their database like you and they’re benchmarking my symptoms against those people. So I think the smart companies are going to do these things very smartly. But you have to know what you’re using as a user as well… If you’re using that vs just a basic symptom checker — that I don’t think is a particularly great new user experience. But some companies are going to be successful doing that. At the end the great dream is how do you bring all this together and how do you give the consumer a fundamentally better choice and better information. That’s K Health.

Why couldn’t Google do the same thing? I don’t know. They just don’t think about it.

That’s a really interesting question — because Google is making big moves in health. They’re consolidating all their projects under one Google Health unit. Amazon is also increasingly interested in the space. What do you make of this big tech interest? Is that a threat or an opportunity for health startups?

Well if you think of it as an investor they’re all obviously buyers of the companies you’re going to build. So that’s a long term opportunity to sell your business. On the shorter term, does it make sense to invest in companies if all of a sudden the mammoth big players are there? By the way, that has been true for many, many other sectors as well. When I first invested in Skype in the early days people would say the telecom guys are going to crush you. Well they didn’t. But all of a sudden telecom, communication became the current that the Internet guys wanted — that’s why eBay ultimately bought us and why they all had their own messenger.

What the future’s made of we don’t know, but what we do know is that consumers want just the best experience and sometimes the best experience comes from people who are very innovative and very hungry as opposed to people who are working in very large companies. Venture capitalists are always investing in companies that somehow are competing one way or another with Amazon, Facebook, Google and all the big guys. It’s just that when you focus your energy on one thing you tend to do it better than if you don’t. And I’m not suggesting that those companies are not investing a lot of money. They are. And that’s because they realize that one of the currencies of the future is the ability to provide healthcare information, treatment and things like that.

You look at a large retail store like Wal-mart in America. Wal-mart serves largely a population that makes $50k or less. The lower income category in North America. But what are they doing to make you more loyal to them? They’re now starting to build into every Wal-mart doctor’s offices. Why would they do that? Is it because they actually know that if you make $50k or less there’s a high chance you don’t have an insurance and there’s a high chance that you can’t afford to go see a doctor. So they’re going to use that to say, “Hey, if you shop with us, instead of paying $150 for a doctor, it’ll be cheaper.” And we’re beginning to see so many examples like this — where all these companies are saying actually healthcare is the biggest and most important thing that somebody thinks about every day. And if we want to make them loyal to our brand we need to offer something that’s in the healthcare space. So the conclusion of why we’re so excited it we’re seeing it happen in real life.

Wal-mart does that — so when Amazon starts buying an online pharmacy I get why they’re doing that. They want to connect with you on an emotional level which is when you’re not feeling well.

So no, I don’t think we’re particularly worried about them. You have to respect they’re large companies, they have a lot of money and things like that. But that’s always been the case. We think that some of these will likely be bought by those players, some of those will likely build their own businesses. At the end of the day it’s who’s going to get that user experience right.

Google of course would like us all to believe that because they’re the search engine of the world they have the first rights to become the health search engine of the world. I tend to think that’s not true. Actually if you look at the history of Google they were the search engine of the world until they forgot about Amazon. And nowadays if you want to buy anything physical where do you search first? You don’t search on Google anymore — you search on Amazon.

But the space is big and there’s a lot of great entrepreneurs and Europe has a lot to offer I think in terms of taking our history of socialized medicine and saying how can tech power that to make it a better experience?

So what should entrepreneurs that are just thinking about this space — what should they be focusing on in terms of things to fix?

Right now the hottest are the three that I mentioned — because those are the ones that we’ve put money into and we’ve put money in because we think those are the hottest areas. I just think that anything where you feel deep conviction about or you’ve had some basic experience with the issue and the problem.

I simply do not think that clinicians can make this change — in any sector. If you look at those companies I mentioned none of the founders are clinicians in any way shape or form. And that’s why they’re successful. Now I’m not suggesting that you don’t have to have doctors on your staff. For sure. At K Health, we have 30 doctors…. What we’re trying to do is change the experience. So the founder, for instance. was a founder of a company called Vroom that buys and sells cars online in the States. When he started he didn’t know a whole lot about healthcare but he said to himself what I know is I don’t like the user experience. It’s a horrible user experience. I don’t like going to the doctor. I can change that.

So I would say if you’re heading into that space your first pre-occupation is how am I going to change the current user experience in a way that’s meaningful. Because that’s the only thing that people care about.

How is possible that two guys could come up with Flo? They were just good product people.

For me, that’s the driving factor — if you’re going to go into this, go into it saying you’re there to break an experience and make it just a way better place to be.

On the size of the opportunity I have seen some suggestions that health is overheated in investment terms. But perhaps that’s more true in the U.S. than Europe?

Any time an investor community gets hold of a theme and makes it the theme of the month or the year — like fintech was for ten years — I think it becomes overfunded because everybody ploughs into that. I could say yes to that statement sure. Lot of players, lot of actors. Money’s pouring in because people believe that the outcome could be big. So I don’t think it’s overheated. I think that we’ve only scratched the surface by doing certain things.

Some of the companies in the healthcare space that are either thinking of going public or are going public are companies that are pretty basic companies around connecting you with doctors online, etc. So I think that the innovation is really, really coming. As AI becomes real and we’re able to manage the data in an effective way… But again you’ve got to get the user experience right.

Flo in my experience — why it’s better than anything else — one is it’s just a great user experience. And then they have a forum on their app, and the forum is anonymized. And this is curious right. I think they anonymized it without knowing what it would do. And what it did was it allowed women to talk about stuff that perhaps they were not comfortable talking about stuff if people knew who they were. Number one issue? Abortion.

There’s a stigma out there around abortion and so by anonymizing the chat forum all of a sudden it created this opportunity for people to just exchange an experience. So that’s why I say the user experience for me is just at the core of that revolution that’s coming.

Why should it be such a horrific experience to be able to talk about that subject? Why should women be put in that position? So that’s why I think user experience is going to be so key to that.

So that’s why we’re excited. And of course the gambit is large. You think about the examples I gave — you can think of dietary examples, men’s health examples. When men turn 50 things start happening. Little things. But there’s at least 15 of those things that are 100% predictable… I just turned 50 and given there’s so much disinformation online I don’t know what’s true. So I think again there’s a fantastic opportunity for somebody to build companies around that theme — again, probably male and female separate.

Menopause would be another obvious one.

Exactly… You don’t know who you can talk to in many cases. So that’s another opportunity. And wow there are so many things out there. And when I go online today I‘m generally not sure if I can believe what I read unless it’s from a source that I can trust.

For 50 year old men erectile dysfunction is another taboo — a bit like the abortion taboo is for women. Men don’t even talk to their male friends about it… So if there was a place where you could go and learn about it I think there’s a big opportunity. I don’t think erectile dysfunction is a business, but I think how men age is one.

So it’s opportunities for communities around particular health/well-being issues.

Exactly. Because we’re looking for truths when we’re going through that experience ourselves.

The addressable market is massive. There’s men turning 50 every year and they’re probably all pretty interested to find out what are the ten or 15 things that could go wrong for them. There’s a lot of opportunities. It’s so broad. The challenge is you have to think about building it for people who are 50. You’re not building it for an 18-year-old. So the user experience again has to be somewhat different probably. And the healthcare goes all the way to the seniors. What are you looking for when you’re 75? So you see it treats anywhere from certainly from 18 all the way up across a broad-based spectrum of things. So it’s one of our major themes for the next five to ten years.

And so the idea of it being overheated in investment terms is a bit too abstract because there are specific areas that are very underinvested — like femtech. So it’s a case of spotting the particular bits of the healthcare opportunity that need more attention.

Yes. You’ve described it perfectly. In our more simpleton terms, we look at it and say if I look at the previous hot industry — fintech — you would end up with companies doing credit cards, companies doing bank accounts, companies doing lending, companies doing recovery — so many pieces of the value chain. In this case the value chain is humans.

We are even more complex than financial services have ever been, so I think the opportunities are even broader to break it down and build businesses that are going to satisfy certain sexes, maybe certain demographics, certain ages and all these kind of things that are out there. We are just so different.



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Coronavirus causes likely PC shipment decline – TechCrunch


The coronavirus outbreak continues to impact the tech industry, Facebook’s Libra Association signs up a new partner and short-form video service Quibi is available for pre-order. Here’s your Daily Crunch for February 21, 2020.

1. PC shipments expected to drop this year because of coronavirus outbreak

The coronavirus outbreak could result in at least a 3.3% drop — and as high as a 9% dip — in the volume of PCs that will ship globally this year, according to research firm Canalys.

“In the best-case scenario, production levels are expected to revert to full capacity by April 2020, hence the biggest hit will be to sell-in shipments in the first two quarters, with the market recovering in Q3 and Q4,” the firm said.

2. Shopify joins Facebook’s cryptocurrency Libra Association

After eBay, Visa, Stripe and other high-profile partners ditched the Facebook-backed cryptocurrency collective, Libra scored a win with the addition of Shopify. The e-commerce platform will become a member of Libra Association, contributing at least $10 million and operating a node that processes transactions for the Facebook-originated stable coin.

3. Quibi’s streaming service app launches in app stores for pre-order

Quibi, the mobile-only streaming service from Jeffrey Katzenberg, is now open for pre-orders. The company declined to fully show off its app only a month ago at CES — instead, demos focused on its “TurnStyle” technology — but it appears the app is ready nonetheless.

4. Volocopter extends Series C funding to $94M with backing from logistics giant DB Schenker and others

With this new funding, Volocopter brings its total raised to around $132 million, and it says it will use the newly acquired capital to help certify its VoloCity aircraft, an air taxi designed to transport people, which is on track to become the company’s first-ever vehicle licensed for commercial operation.

5. Where top VCs are investing in manufacturing and warehouse robotics

With our 2020 Robotics + AI sessions event less than two weeks away, we’ve decided to perform temperature checks across some of the hottest robotics sub-verticals to see which trends are coming down the pipe and where checks are actually being written. (Extra Crunch membership required.)

6. How ‘The Mandalorian’ and ILM invisibly reinvented film and TV production

While a successful live-action Star Wars TV series is important in its own right, the way this particular show was made represents a far greater change, perhaps the most important since the green screen.

7. Shogun raises $10M to help e-commerce brands build faster websites

The company’s first product, Page Builder, offers a drag-and-drop interface to make it easier for e-commerce brands to build their storefronts on Shopify, BigCommerce, Salesforce and Magento. And there’s a new product, Shogun Frontend, which allows brands to create a web storefront that’s entirely customized while still using one of the big commerce platforms as their back end.

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.



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Personal Budgeting: Tracking Spending, the Golden Ticket to Financial Freedom

I’ve noticed that one of the biggest financial challenges that many of my clients face is keeping track of where their money goes. Here’s what often happens: They receive their paycheck and deposit it in the bank, and then a few weeks later it’s somehow mysteriously disappeared. For all they know, it’s been consumed by the black hole in the financial universe. Personal budgeting can provide financial help to married female entrepreneurs.

To make matters worse, they still have necessities to pay for: groceries, gas and utility bills, not to mention credit card payments. Somehow they manage to be surprised when once again there isn’t enough money to cover the necessities. So, they turn to the good ole’ credit cards or take out loans from friends and family to make up the difference. They heave a sigh of relief and say, “Thank goodness, we made it through another month.”

But in truth, they haven’t really made it. They’ve only acquired more debt that will have to be paid off in the future-more debt that continues to quietly whittle away at the hard-earned paycheck they bring home each month.

But I Don’t Do That!”

“That’s not me,” you say, “I don’t borrow money from friends or family, and besides, I pay my credit card bill off in full each month.” And I say, “wonder­ful, great… but, is any of your money going towards important things like your retirement, emergency savings or saving up for your big dreams?” If you are like many people, I would guess that it probably isn’t. I’m willing to bet that all of your income is going towards supporting your current level of lifestyle as well as debt.

What I’m talking about is spending money on things that make you feel good in the moment but keep you in debt and without sufficient retirement or emergency savings. Maybe you like to buy nice clothes, cool gadgets, new music, a weekly manicure or magazines.

If you do manage to put money into your savings account you may likely be one of those people that ends up having to dip into it regularly after discovering that you don’t have enough to make it through the month. Many of us walk around in what I call “blissful, financial ignorance.” Another appropriate word for this is denial.

You also need to become aware of your spending patterns. When I speak of tracking your spending, I’m talking about using a system that tells you where your money is going (how much you spend each month for things like groceries, transportation, utilities, gifts, dining, etc.)

Awareness is the critical first step towards changing our money behaviors. If we don’t have a clue as to where our money is going, how much and for what, we won’t have the necessary knowl­edge to motivate us to change our behaviors.

Why should you be motivated to spend less money on magazines, lattes or clothing, if you don’t know how much you’re actually spending on these items each month, and how much you have left over, if any, for savings or paying off debt? Because real numbers inspire real motivation.

Remember: if we always do what we’ve always done, we’ll always get what we’ve always got.

This means if we continue to unconsciously spend money the way we’ve always spent it, it’s no surprise that we’ll continue to have in­creasing credit card debt and little or no money in our savings accounts for our important financial dreams and goals.

We may experience a fun, carefree lifestyle. But it is a lifestyle that is acquired on borrowed money that we’ll have to pay extra for, both now and long into the future-a lifestyle devoid of the financial security and deep peace of mind that all of us desire.



Source by Leslie Cunningham

SpaceX said to be seeking around $250 million in funding, boosting valuation to roughly $36 billion – TechCrunch


SpaceX is looking to raise around $250 million in new funding according to a new report from CNBC’s Michael Sheetz. The additional cash would bring SpaceX’s total valuation to around $36 billion, according to CNBC’s sources — an increase of more than $2.5 billion versus its most recently reported valuation.

The rocket launch company founded and run by Elon Musk is no stranger to raising large sums of money — it added $1.33 billion during 2019 (from three separate rounds). In total, the company has raised more than $3 billion in funding to date — but the scale of its ambitions provides a clear explanation of why the company has sought so much capital.

SpaceX is also generating a significant amount of revenue: Its contract to develop the Crew Dragon spacecraft as part of the NASA commercial crew program came with $3.1 billion in contract award money from the agency, for example, and it charges its customers roughly $60 million per launch of one of its Falcon 9 rockets. Last year alone, SpaceX had 13 launches.

But SpaceX is also not a company to rest on its laurels, or its pre-existing technology investments. The company is in the process of developing its next spacecraft, dubbed “Starship.” Starship will potentially be able to eventually replace both Falcon 9 and Falcon Heavy, and will be fully reusable, instead of partially reusable like those systems. Once it’s operational, it will be able to provide significant cost savings and advantages to SpaceX’s bottom line, if the company’s projections are correct, but getting there requires a massive expenditure of capital in development of the technology required to make Starship fly, and fly reliably.

Musk recently went into detail about the company’s plans to essentially build new versions of Starship as fast as it’s able, incorporating significant changes and updates to each new successive version as it goes. Given the scale of Starship and the relatively expensive process of building each as an essentially bespoke new model, it makes perfect sense why SpaceX would seek to bolster its existing capital with additional funds.

CNBC reports that the funding could close sometime in the middle of next month. We reached out to SpaceX for comment, but did not receive a reply as of publication.



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Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million – TechCrunch


Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures, and strategic investors like Irelandia Aviation, Kairos, Altabix, and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures Partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels  with the best cost-benefit relationship, guests can travel more frequently accelerating the economy”, says Declan Ryan, Managing Partner at Irelandia Aviation.

The company hopes to have over 1 million guests in 2020 in their hotels. With rooms listing at $20 per-night including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times  published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank  Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.



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Trump’s Election Day YouTube takeover plan feels very different in 2020 – TechCrunch


According to a report from Bloomberg, the Trump campaign called dibs on some of the most prized ad space online in the days leading up to the 2020 U.S. election.

Starting in early November and continuing onto Election Day itself, the campaign will reportedly command YouTube’s masthead, the space at the very top of the video sharing site’s homepage. YouTube is now the second most popular website globally after the online video platform overtook Facebook in web traffic back in 2018. Bloomberg didn’t report the details of the purchase, but the YouTube masthead space is reported to cost as much as a million dollars a day.

The Trump campaign’s ad buy is likely to rub the president’s many critics the wrong way, but it isn’t unprecedented. In 2012, the Obama campaign bought the same space before Mitt Romney landed the Republican nomination. It’s also not a first for the Trump campaign, which bought banner ads at the top of YouTube last June to send its own message during the first Democratic debate.

Screenshot of the Trump campaign’s June 2019 YouTube ads via NPR/YouTube

In spite of the precedent, 2020 is a very different year for political money flowing to tech companies — one with a great degree of newfound scrutiny. The big tech platforms are still honing their respective rules for political advertising as November inches closer, but the kinks are far from ironed out and the awkward dance between politics and tech continues.

The fluidity of the situation is a boon to campaigns eager to plow massive amounts of cash into tech platforms. Facebook remains under scrutiny for its willingness to accept money for political ads containing misleading claims, even as the company is showered in cash by 2020 campaigns. Most notable among them is the controversial candidacy of multi-billionaire Mike Bloomberg, who spent a whopping $33 million on Facebook alone in the last 30 days. In spite of its contentious political ad policies, much-maligned Facebook offers a surprising degree of transparency around what runs on its platform through its robust political ad library, a tool that arose out of the controversy surrounding the 2016 U.S. election.

On the other end of the spectrum, Twitter opted to ban political ads altogether, and is currently working on a way to label “synthetic or manipulated media” intended to mislead users — an effort that could flag non-paid content by candidates, including a recent debate video doctored by the Bloomberg campaign. Twitter is working through its own policy issues in a relatively public way, embracing trial-and-error rather than carving its rules in stone.

Unlike Twitter, YouTube will continue to run political ads, but did mysteriously remove a batch of 300 Trump campaign ads last year without disclosing what policy the ads had violated. Google also announced that it would limit election ad targeting to a few high-level categories (age, gender and ZIP code), a decision the Trump campaign called the “muzzling of political speech.” In spite of its strong stance on microtargeting, Google’s policies around allowing lies in political ads fall closer to Facebook’s anything-goes approach. Google makes a few exceptions, disallowing “misleading claims about the census process” and “false claims that could significantly undermine participation or trust in an electoral or democratic process,” the latter of which leaves an amphitheater-sized amount of room for interpretation.

In recent years, much of the criticism around political advertising has centered around the practice of microtargeting ads to hyper-specific sets of users, a potent technique made possible by the amount of personal data collected by modern social platforms and a strategy very much back in action in 2020. While Trump’s campaign leveraged that phenomenon to great success in 2016, Trump’s big YouTube ad buy is just one part of an effort to see what sticks, advertising to anybody and everybody in the splashiest spot online in the process.

YouTube declined to confirm to TechCrunch the Trump campaign’s reported ad buy, but noted that the practice of buying the YouTube masthead is “common” during elections.

“In the past, campaigns, PACs, and other political groups have run various types of ads leading up to election day,” the spokesperson said. “All advertisers follow the same process and are welcome to purchase the masthead space as long as their ads comply with our policies.”





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Do AI startups have worse economics than SaaS shops? – TechCrunch


A few days ago, Andreessen Horowitz’s Martin Casado and Matt Bornstein published an interesting piece digging into the world of artificial intelligence (AI) startups, and, more specifically, how those companies perform as businesses. Core to the argument presented is that while founders and investors are wagering “that AI businesses will resemble traditional software companies,” the well-known venture firm is “not so sure.”

Given that TechCrunch cares a lot about startup business fundamentals, the notion that one oft-discussed and well-funded category of venture-backed startup might sport materially less attractive economics than we expected captured our attention.

The Andreessen Horowitz (a16z) perspective is straightforward, arguing that AI-focused companies have lesser gross margins than software companies due to cloud compute and human-input costs, endure issues stemming from “edge-cases” and enjoy less product differentiation from competing companies when compared to software concerns. Today, we’re drilling into the gross margin point, as it’s something inherently numerical that we can get other, informed market participants to weigh in on.

If a16z is correct about AI startups having slimmer gross margins than SaaS companies, they should — all other things held equal — be worth less per dollar of revenue generated; or in simpler terms, they should trade at a revenue multiple discount to SaaS companies, leaving the latter category of technology company still atop the valuation hierarchy.

This matters, given the amount of capital that AI-focused startups have raised.

Is a16z correct about AI gross margins? I wanted to find out. So this week I spoke to a number of investors from firms that have made AI-focused bets to get a handle on their views. Read the full a16z piece, mind. It’s interesting and worth your time.

Today we’re hearing from Rohit Sharma of True Ventures, Jeremy Kaufmann of Scale Venture Partners, Nick Washburn of Intel Capital and Ben Blume of Atomico. We’ll start with a digest of their responses to our questions, with their unedited notes at the end.

AI economics and optimism

We asked our group of venture investors (selected with the help of research from TechCrunch’s Arman Tabatabai) three questions. The first dealt with margins themselves, the second dealt with resulting valuations and, finally, we asked about their current optimism interval regarding AI-focused companies.





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Hot Wheels made two remote-controlled Tesla Cybertruck toys – TechCrunch


Hot Wheels will ship you a Cybertruck long before Tesla is likely to make any deliveries on their electric retro-future wheeled trapezoid: The toy maker just unveiled two different RC Cybertruck models, including a 1:64 scale model at just $20, and a much larger 1:10 scale version for $400.

These are available to pre-order now, but like most of Tesla’s cars, just because they’re introduced doesn’t mean you can go out and buy one immediately. They’re set to ship in time for the holidays, however, with a December 15, 2020 estimated availability date, according to the Hot Wheels website.

These look like very faithful representations of the Cybertruck that Tesla unveiled at a special event back in November, and the large version includes a “reusable cracked window vinyl sticker” that you can use to recreate the onstage flub that happened at the actual reveal. You’ll have to supply your own large metal medicine ball.

Other features of the 1:10 scale Cybertruck include functioning headlights and taillights, all-wheel drive, true to form “Chill” and “Sport” modes, a removable tonneau cover, a working telescopic tailgate and more.

The smaller and much more affordable version is just three inches long, which is basically what you’d expect from a traditional Hot Wheels mini model, and it can achieve an “up to 500mph scale speed,” which someone who is better than me at math can figure out what that translates to.

These are available to people in the U.S. and Canada, but I expect them to be pretty hot sellers based on the general fervor and interest around all things Cybertruck to date.



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