The document provides a regularly updated collection of interesting and important tech and VC news items. It summarizes several recent news stories, including:
- Growing calls for tools to detect, understand, and defend against AI as advances make it possible to generate indistinguishable digital media and AI impacts more decisions. There is an opportunity for startups in "explainable AI".
- Questions around whether Facebook can be "fixed" given that its advertising model creates users as the product. Changes may undermine the business model.
- The Economist argues that tech monopolies ultimately stifle innovation and consumers. Proposed solutions include greater scrutiny of mergers and enforcing consumer ownership of data.
- Despite Amazon and Alib
2. This is a regularly-updated collection of things we
(@atomico) found interesting and important in tech and VC
land, but that didn’t necessarily get the attention they
deserve. We think of them as our hidden little gems. We’ll
add to the collection over time, so bookmark the page and
keep coming back for updates or to dig into the archive.
2
3. 3
Calls for tools to detect, understand & defend against AI
Source: http://avc.com/2018/01/explainability/, https://www.darpa.mil/program/explainable-artificial-intelligence, https://bohr.atomico.com/org/d-id,
https://www.nytimes.com/2018/01/25/opinion/artificial-intelligence-black-box.html, http://notes.michaeldempsey.me/post/159418832409/audio-video-manipulation,
https://www.nytimes.com/interactive/2018/01/27/technology/social-media-bots.html
The Takeaway
Growing public awareness of influence of automated systems in
powering important decisions and actions in daily life is driving calls
for ‘explainable AI’, as well as better detection and protection
mechanisms to identify AI-generated content, decisions or actions.
There are early signs that startups see as an opportunity.
Points of Debate / Next Steps
● An area worth exploring? Are commercial models viable?
● How can public build trust in autonomous systems?
● Are our portfolio companies on top of this?
The Killer Stat or Quote
“What I want on my phone, on my computer, in Alexa, and
everywhere that machine learning touches me, is a “why” button I
can push (or speak) to know why I got that recommendation. I want
to know what source data was used to make the recommendation,
and I’d also like to know what algorithms were used to produce
confidence in it. This is coming. I have no doubt about it. And the
companies that offer it to us will build the trust that will be
critical to remaining relevant in the age of machine learning”
The Story
Top 3 Key Points
● Growing public awareness of how AI impacts our daily lives:
Autonomous systems can now perceive, learn, decide & act without human
intervention and are becoming more prevalent in daily life. At the same
time, advances now make it possible to create digital media (images,
video, text) that is indistinguishable from human-created content.
● Are AI ‘black boxes’ really any less transparent than humans?: If an
algorithm makes a patient diagnosis, is it really any less transparent than
how a Doctor reaches a conclusion? Vijay Pande: “Human intelligence can
reason and make arguments for a given conclusion, but it can’t explain the
complex, underlying basis for how we arrived at a particular conclusion.”
● Opportunity for ‘picks & shovels’ for ‘explainable AI’ era: Companies
such as D-ID & Pivitar are raising capital to build solutions to act as a
service that enables businesses to ‘protect’ consumers from potential
negative impact of use of AI
4. Top 3 Key Points
● The ad led business model of FB has created a host of issues
that have garnered increasing attention over the last year -
spambots, fake news, and an engagement trap that surrounds
you will a self-enforcing opinion
● Zuckerberg announced that his goal for 2018 is to “fix” Facebook
- this has led to recently announced changes such as promoting
more ‘meaningful’ friends and family posts and ‘trustworthy’
news in your feed
● Facebook has generated billions of dollars in revenue precisely
by using the data of its users to make the most effective
attention-based platform available to advertisers - and so could
be seen to be ‘gutting’ its own business model with these
changes
4
Can Facebook be “fixed”? The future of ad-based models
Source: https://shift.newco.co/its-the-advertising-model-stupid-b843cd7edbe9
The Takeaway
In all ad-based social network business models, advertisers are the true
customers and the audience members are the product. In a world in
which security and data ownership are becoming increasingly
important, how will these models sustain themselves?
Points of Debate / Next Steps
● If these FB changes can make it a more ‘valuable’ place to
spend time and more trustworthy, can it find different
monetization methods?
● To what extent will we see decentralized solutions replace these
platforms?
● Will these new solutions lead to a shift in the digital advertising
duopoly of FB and Google?
“You cannot fix Facebook without completely
gutting its advertising-driven business
model” - John Battelle
12 Jan 2018 - FB
announces
‘meaningful’ post
change
5. 5
The Economist leader on ‘Taming the Tech Titans’
Source: https://www.economist.com/news/leaders/21735021-dominance-google-facebook-and-amazon-bad-consumers-and-competition-how-tame
The Takeaway
Tech monopolies may ultimately stifle innovation and be harmful to
the consumer; proposed solutions such as greater tech M&A scrutiny
and enforcing consumer (rather than corporate) ownership of data
have direct impact to a future VC environment
George Soros, Davos, Jan-18
The internet monopolies have neither the will nor the inclination to
protect society against the consequences of their actions. That turns
them into a menace and it falls to the regulatory authorities to protect
society against them. In the US, the regulators are not strong enough
to stand up against their political influence. The European Union is
better situated because it doesn’t have any platform giants of its own.
The Story
Top 3 Key Points
● Downplays tech backlash around e.g. links between smartphone usage
and unhappiness, or fake news. Instead focuses on the monopoly-like
status of largest platforms such as Facebook, Google, Amazon. Soros had
similar comments at Davos
● Past ‘giants’ such as Alta Vista or Myspace were toppled, but moats driven
by greater data and scale are now increasingly hard to break. This
smothers competition and consumers will suffer
● Previous solutions such as breaking up companies cripples the economies
of scales and harm the consumer experience. Instead proposed ideas
include 1) improving competition law (e.g. greater scrutiny of tech M&A like
FB / Insta, Google / Waze) ; 2) returning ownership of personal data to
consumers
Points of Debate / Next Steps
● What new business models can emerge from users owning
and monetising their own data? A live example is how new
companies will form around PSD2 (EU regs to allow users to
control their banking data). Neobanks are one example of
startups taking advantage of returning this data
● How would greater tech M&A scrutiny impact VC exits
6. The Takeaway
Amazon & Alibaba have a combined market cap of $1.2T, major
chain stores are closing at record levels (Cushman & Wakefield
predict a peak in 2018 of 12k+ in US alone). In some respects it feels
like the worst time to start a retail company, and yet there’s a
compelling argument to say the timing’s never been better.
Top 3 Key Points
● Online retail is dead. Long live retail: The boundaries between physical
and online retail are so blurred as to be irrelevant. Today’s leading retail
models - and newly-founded models - now inherently bridge between the
two worlds, using data to create optimised experiences for consumers
● Greatest toolkit in history for a retail entrepreneur?: Any founder
starting out in retail can tap a powerful and maturing technology stack that
encompasses everything from logistics, payments, digitised supply chains,
data capture & analytics (onsite, instore, etc), on-demand store space.
● There is still white space in retail: Amazon is a $675B gorilla, but it
cannot compete everywhere. There’s still white space for new models to
emerge that build on today’s new retail tech stack to create differentiated
propositions for the retail value chain, from consumers to manufacturers
6
Is it the best or the worst time to start a retail company?
Source: https://blog.usejournal.com/the-future-is-local-f4590d5b7b30, https://www.ft.com/content/9bc49da4-023f-11e8-9650-9c0ad2d7c5b5,
Points of Debate / Next Steps
● What will it take for these new models to scale sustainably?
● What interesting companies have we seen recently?
● What can we learn from China on how retail is evolving?
Today’s tech stack is creating white space in retail
“At Indigo Fair, we are applying the democratizing power of
technology to retail. Stores working with us have access to
capabilities previously available only to the biggest chains. Big-box
stores have analysts constantly pulling together data across all their
locations to identify trends and optimize inventory. Indigo Fair
integrates with the POS systems of our retailers so we can leverage
sales data from hundreds of stores to help all of them make more
informed buying decisions.”
New retail models recently funded (L6M) by T1 VCs
Company Stage; Funding; Investors Description
Indigo Fair S; $4M; Sequoia, Khosla Wholesale for local stores
NewStore B; $90M; Gen Cat, Activant Mobile-first Shopify
Dote A; $9M; Lightspeed Mobile shopping mall
Tulip Retail B; $51M; KPCB, Uncork, App for in-store staff
Brandless B; $50M; NEA, GV, Redpoint Mobile-first (three) dollar store
Today B; $30M; Sequoia, China Equity Automated convenience stores
Packagd A;$8M;KPCB, GV, Forerunner Video review-centric commerce
Bulletin S; $2M; KPCB, YC, Flybridge WeWork for retail space
7. In case you missed it
7
Footnotes
Companies What happened?
Ripple/Omni Omni, raised $25M from Highland Capital Partners & Ripple, who invested via XRP tokens
Amazon Launched Amazon Go, cashier-free grocery store in Seattle. Plans claim 2k location over next 10 years
Stripe Announced it will end support for Bitcoin payments due to low usage, blames Tx cost, price volatility, speed
Robinhood Launched commission-free trading of BTC & ETH. Exchange fees are heading down.
Apple Stat: Apple claims Siri has 500M active users, up from 375M in June 2017. Voice search has scale.
Facebook
Jerome Pesenti named as new VP of AI, replaces Yann LeCun (takes role as Chief AI Scientist). Facebook
doubling number of AI scientists in Paris to 60. Also investing $12M in French doctoral scholarships for AI. Also
shut down M, its AI-Messenger assistant.
Facebook Acquired ID auth co Confirm.io, an API to validate govt-issued IDs via facial recognition & mobile biometrics
Dropbox/Adyen IPOs Dropbox has quietly filed to IPO. Adyen also said to be planning IPO, rumoured to hit €5-10B valuation
BlackRock $6T fund manager wrote to companies to say they need to focus on positive social contributions, not just profits