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“This is why 2017 is going to be a hell of a tough year for seed startups” plus 15 more VentureBeat

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“This is why 2017 is going to be a hell of a tough year for seed startups” plus 15 more VentureBeat


This is why 2017 is going to be a hell of a tough year for seed startups

Posted: 08 Jan 2017 11:09 AM PST

2017

In 2006, the average early-stage seed round for a startup was just under $600,000. A decade later, this has peaked at $2.2 million. In the era of mega-rounds, mega-valuations, over-funding, and mega-burn it is becoming increasingly common for startups to raise not one, but multiple seed rounds. What is driving this trend? Are startups really better off raising multiple seed rounds, and what does this mean for seed funding in 2017?

By definition, seed rounds exist for investors to be the first and earliest-stage investors (and by default take the most risk) in a startup. However, despite seed funding having dropped by 4 percent year-over-year in 2016, the ticket value of a seed round has also increased by 3x in the last decade. In 2006, a seed startup could expect to raise $700,000 tops. Today, the average ticket-size for a seed round is $2.2 million — or $2.81 million if you’re lucky enough to be located in the Bay Area.

Increasingly, this has meant early-stage VCs have had to dish out the cash for startups that have a Series A valuation but with pre-revenue risk. To counteract this hefty bias, Micro-VC funds have been gaining traction, offering pre-seed capital ranging from $150,000 to $500,000. In 2015 alone, 106 of these new ‘pre-seeders’ popped up in the US, giving early-stage startups an even greater pool of capital to pick from and eliminating the "awkwardness" that comes with raising rounds under $500,000.

micro-vcs

We heard it enough times from founders we know and trust that it's really awkward in this market to raise $500,000 as a seed round.

–Nicholas Chirls, Notation Capital

The evolution of seed capital

Before we examine seed funding trends, let’s first break down why the seed funding landscape has evolved so drastically, and why startups now feel the need to raise multiple seed rounds.

1. The early-stage funding cycle shifted. Pre-2005, as a startup, you could expect to bankroll your idea through family and friends and then tap into two major sources of capital: business angels and VCs. Basically, you could get a potentially great idea financed quite early on, before you even had any market traction or product fit. Seed was the lead-up to generating traction, and then you would score a Series A to fuel a product-market fit, then go for a Series B or C to fuel your growth. The second Internet bubble, disruptive business models, and growth of institutional funds changed all that. Suddenly startups were growing faster, becoming more capital efficient, and experiencing better unit economics, and institutional funds were becoming bigger. As Rob Go from NextView explains, this considerably altered the funding cycle. Seed investors were looking for more traction, and Series A rounds got larger. As a result, startups have to tap into multiple sources of funding to even qualify for what VCs look for in early-stage seed or Series A.

The evolution of early seed stage funding

Above: The evolution of early-stage funding rounds

2. The market for seed got saturated. Circa 2005,entrepreneurship became hip. Pure economics (affected by a number of market, financial, and policy conditions we are all familiar with) increased the demand for seed capital and startup supply. In 2005, Y Combinator launched, followed closely by TechStars. In 2008, there were 16 startup accelerators — in 2015 this peaked at 170 — growing by an average of 50 percent year-over-year. This isn’t even counting the number of entrepreneurship programs, startup grants, and funds competing to finance seed startups. The result? More than 5,000 early-stage investments accumulating to $19.5 billion in funding. With such a window of opportunity, startups had access to a pool of seed funding from multiple types of investors — each with different criteria and investment goals — which drove up the value of follow-on funding. Today, it is not uncommon for startups to go through numerous pre-seed and seed funding rounds from multiple investors before hitting up a VC; more often than not, it is expected. Which brings us to the next point.

evolution_investors

Above: The evolution of early-stage investors

3. Seed is no longer seed. You’re no longer first raising seed capital, you’re raising pre-seed. And that’s not even the first round. You’ll probably have raised from family and friends first, then perhaps hit up a business angel, then entered an accelerator program — and perhaps a second one, because why not — then some individual investors or business angels. At that point, you'll qualify for a seed round. This isn’t even including the myriad of syndicates and crowdfunding options. By this point, you may still be pre-revenue, but your numbers add up, you’re hitting your growth milestones and have gained enough traction to whet the appetite of investors. The problem? The ease of raising seed capital will make it much more difficult to raise Series A and B since these rounds have gotten inflated.

4. Series A and B are inflated. No startup decides to raise a seed round and stop there. The goal is always to raise more through Series A and B. But with seed rounds now the size of traditional Series A or B, they are much more difficult to raise — even if you hit all the metrics. In parallel, the median dollar value of a Series A or B has inflated to such a point that most startups don’t qualify. In a recent post, Tomasz Tonguz highlights that Series A and B deals fell by 20 percent in 2016, but the investment size of a Series B grew to $10-15 million. Notably, a Series A deal size now averages $3-6.6 million. In this current market, it may be the Series A round that is in the most danger.

The state of seed in 2016

To examine this trend, I used Mattermark data from all disclosed seed rounds that occurred in the Bay Area in 2016. This included both first-time and follow-on seed funding. To ensure that data wasn’t skewed, I set a minimum investment limit of $100,000 up and a maximum of $3 million (the median for a Series A).

The results show that while Bay Area startups are outperforming their global counterparts in the ticket-size of their first seed round, raising multiple seed rounds comes at a cost, with down-rounds becoming the rule not the exception.

1. The average value of total seed funding has hit $2.81 million. This accounts for all seed funding rounds, with the median being $2.3 million. Now, we can argue that the Bay Area is a bubble unto itself, however this clearly aligns to the global average of $2.2 million. With the value of seed funding having increased so drastically (3x in 10 years), it is clear why seed deal flow has dropped in 2016, out-valuing many early-stage investors. This is why we’re seeing the emergence of so many Micro-VC funds to make up for this gap.

bay-area-seed-funding

2. Bay Area startups raised an average of 1.6x seed rounds in 2016. 52.5 percent of startups were raising their first round of seed capital, while 35 percent were raising their second round. Although still a minority, just over 10 percent were onto their third round in 2016, and 2.2 percent were on their fourth.

bay-area-multiple-seed-rounds

3. Startups founded after 2014 are most likely to have raised multiple seed rounds. This is where it starts to get interesting. You would think that older startups would be the most likely to raise follow-on capital, right? It seems not. Fifty percent of startups that were on their second round of seed were founded in 2014 or later. The kicker? Fifty-two percent of early-stage startups on their third seed round were also founded in 2014 or later. This means the time frame between each seed round is getting shorter and shorter, and startups are either growing faster or losing their capital efficiency (I’m leaning towards a mix of both).

younger-startups-more-seed

Startups founded in the last two years aren’t only raising more rounds, they're raising much larger dollar amounts. When I analyzed the value of the last disclosed funding, I found that just under 70 percent of startups that raised $2 million or more were less than two years old.

seed-raise-by-founding-year

4. Raising multiple seed rounds comes at a cost. As Bay Area startups multiply the amount of seed rounds they raise, they also increase their likelihood of raising a down-round. While the average deal size for a first seed round is $1.89 million — and peaks in the second seed round at $1.93 million — by the third round, startups are losing about 8 percent in deal size on average. That’s equivalent to over $170,000, which makes it all the more difficult to graduate to raising a Series A.

losses-by-third-seed-round

The funding situation in the Bay Area may not reflect the rest of the country, but it does tell us quite a bit about how seed and Series A are going to evolve in 2017. This trend of multiplying seed rounds is going to continue, especially with the growth of Micro-VC firms, which in turn will make it much more difficult for startups to raise Series A and B rounds, primarily due to much lower valuations and the growth in median deal size. As a result, we will see a distinct segmentation in early-stage investors, with a growing gap between pre-seed and seed funding.

Put simply, startups in 2017 may find it awkward to raise anything between $750,000 and $1.5 million, finding that their capital requirements are either too high or too low as early-stage investors agglomerate at each extreme.

Tatjana de Kerros-Budkov is an entrepreneurship strategist, startup mentor, and author of 'The Startup Illusion'. Follow her on Twitter @entrprnrialist.

Porn finds a way back into CES through VR

Posted: 08 Jan 2017 10:27 AM PST

Ian Paul of Naughty America at CES 2017.

Naughty America was tucked away in the back of the cavernous South Hall of the Las Vegas Convention Center at CES 2017, the big tech trade show last week in Las Vegas. There were no signs or images to advertise the near-secret meeting room. But people found the only porn company at the show anyway.

Remember in Jurassic Park when the scientist is talking about how evolution gets living creatures around all obstacles and notes that “Life finds a way”? Well, porn finds a way. The Consumer Technology Association let Naughty America into CES, after kicking all porn out 16 years ago. That tells you something about the on-off relationship between mainstream technology and the porn content that it inevitably delivers to the masses.

“We’re showcasing the latest in adult VR content across many different devices, from the Samsung Gear VR to the Oculus Rift and the HTC Vive,” said Ian Paul, chief information officer at Naughty America.

Naughty America showed VR porn on a few different platforms. There was a safe-for-work poster board inside the room, and then the company showed a compilation 360-degree video of “not safe for work” VR content.

Naughty America has dozens of VR porn videos posted already.

Above: Naughty America has more than 100 VR porn videos posted already.

Image Credit: Naughty America

There were a lot of restrictions for the exhibit. Naughty America couldn’t put up any signs. It could only have one door open. It was approved very late, and the company was placed in one of the hardest places to find at the show. It’s worth noting that CES does allow other naughty vendors into the show, such as OhMiBod, one of the many sex toy makers.

But the makers of porn films sort of spoiled their opportunity to be in the tech show after creating huge lines for porn films at booths in the early days of CD-ROMs. Porn split off into its own show, AVN, that was co-located at CES for many years. But in 2012, AVN changed its dates, as the show had grown large enough to compete with CES for exhibit space.

A spokeswoman for CES said in an email, “CES does not currently have an adult entertainment category. Naughty America qualifies to exhibit at CES in a meeting room as a VR company. It's a trial run year with this exhibitor as the porn industry is a legitimate industry that drives content.”

While porn is definitely more mainstream than it used to be, it isn’t always welcome at mainstream business events. Even so, Naughty America also made an appearance at E3, the big video game show in Los Angeles. That show helped the company define some rules for exhibiting.

“It’s odd to me that they have such rules for adult content, but violent content doesn’t have the same rules,” Paul said.

Was there much technology to talk about? Paul had some observations. The company supports many different platforms, and it has generic file formats that often work on unsupported platforms. Sony’s PlayStation VR can play porn. But Sony’s video player doesn’t support stereoscopic 3D. So it looks like you are watching a VR film as flat 2D content.

“We’ll see if they push out an update,” Paul said. “It’s a little disappointing. Maybe they were rushing it out and didn’t test enough third-party content on it.”

As a result, PSVR porn content isn’t getting much usage. The Samsung Gear VR is getting a lot of use, as is generic Google Cardboard. I viewed the compilation trailer on the HTC Vive. It creates a feeling that you are there, in the room with the porn star. Paul said that VR content got a boost when the company put faux lips on the lens so the porn star can approach the camera and kiss it.

“It feels like she’s kissing you,” Paul said.

VR porn by Naughty America

Above: VR porn by Naughty America

Image Credit: Naughty America

Naughty America has 100 VR titles, about 45 minutes each, which Paul believes makes the company the top creator of original VR porn in the world. It advertises the VR porn on its 2D sites and its affiliate networks. And it participates in Reddit forums and advertises to its paid subscribers for its 2D site. The VR films are shot with a 180-degree format, mainly because people don’t really want to turn completely around while watching VR porn, and that format helps reduce costs.

“100 percent of our VR content is originally shot in VR,” Paul said.

He added that the company is getting better at shooting VR films. He won’t talk about the production process, which is very difficult, in terms of formatting content for VR. He considers that one of the company’s main competitive advantages in VR technology.

Who watches VR porn? The U.S. is No. 1 for Naughty America’s content. People don’t exclusively look at 2D porn or VR porn. They go from one to another. It’s very situational, and consumers enjoy porn across all the devices that they have. New York and California are big porn consumers, as are Missouri and Utah.

“This market is moving fast, and augmented reality is starting to take off too,” Paul said.

CES2017

Razer’s Ariana projects game images that cover your whole wall

Posted: 08 Jan 2017 09:34 AM PST

Razer's Project Ariana.

Razer specializes in being daring when it comes to entertaining gamers. Its Project Ariana, shown off at CES 2017, the big tech trade show in Las Vegas this week, is a case in point.

With Ariana, Razer lets you play a PC title on the TV or monitor on your wall. But a gaming projector works in tandem with the TV and splashes images from the game’s periphery on the rest of the space. You get a virtual light show, with immersive imagery cast upon your entire wall and furniture. I got a hands-on demo of Ariana, which is currently an experimental technology, at CES.

The projector takes environmental information from a video game and projects it around a room, virtually engulfing a player in real-time action.

Project Ariana at CES 2017

Above: Project Ariana at CES 2017.

Image Credit: Dean Takahashi

"We see Project Ariana as the future of gaming immersion and a great showcase of what our Razer Chroma lighting technology can do," says Min-Liang Tan, Razer CEO and cofounder, in a statement. "It's great to see that consumers and editors agree on how exciting this innovation is for gamers. Project Ariana is able to offer a virtual reality experience without a headset and which can be enjoyed by everyone in a room."

Project Ariana uses Razer’s Chroma lighting technology and combines it with laser sensors, 4K video projection technology, and game code integration in partnership with publishers.

The projector experience is combined with custom lighting features on Razer gaming products and ambient smart lighting and THX-certified surround sound devices. Each element is able to react with games in real time by way of Razer Chroma software for an immersive visual and auditory experience.

Razer plans to develop Project Ariana into a consumer-ready model by the end of this year. The company is welcoming feedback on Razer's Facebook and Twitter pages for those interested in shaping the future of the projector prototype.

Here’s a video of the Project Ariana demo.

CES2017

How blockchain is impacting clean energy

Posted: 08 Jan 2017 09:34 AM PST

Brooklyn Microgrid

No one enjoys paying their electricity bill. It keeps going up and up, with a bunch of new nonsense fees thrown on top every few years. What’s worse is that many parts of the world still rely on dirty fossil fuels to produce this energy. By now we have all heard about the potential of solar and other renewables to shake up the energy market, but you might not know that blockchain technology also has its place in the mix.

Several startups are developing projects that integrate blockchain and solar energy. Their ideas range from developing alt-coins for trading and incentivizing power production to using smart contracts for administering energy transactions.

SolarCoin

SolarCoin is an eco-minded cryptocurrency that aims to incentivize solar power production. The coin was launched in 2014 and hopes to drive the generation of 97,500 terawatt hours worth of solar power over 40 years. It originally used a proof-of-work system for verification but has since switched over to a proof-of-stake-time system because it is more environmentally friendly. Anyone can mine the coins, from individuals to solar farms. For every 1 MWh of electricity generated (and verified by a third party), the producer recieves one SolarCoin. Solar farms wanting to earn extra income by generating SolarCoin coins for the power they produce don’t have to pay anything to participate, and SolarCoin does not take any of the power; it merely provides the coins as an incentive to produce clean energy.

Granted, one SolarCoin is worth under 7 cents at the time of writing, but then Bitcoin was only worth about 30 cents when it was the same age. The hope is that enough people will have confidence in the coin to give it real value and allow it to be used in transactions. While Bitcoin famously takes large amounts of electricity to mine, SolarCoin incentivizes a responsible use of energy.

ElectricChain, an affiliate of SolarCoin, is also working on a number of blockchain- and solar-based projects. Its main aim is to “build the world’s largest open scientific solar monitoring device with the SolarCoin blockchain.” It plans to use this system for various scientific and financial purposes. One of its current projects is to integrate current solar panel investors into the ElectricChain and SolarCoin. It hopes this program will speed up the transition to cleaner energy.

Smart Solar

Back in 2002, Renewable Energy Certificates (RECs) were created to incentivize investment in renewable energy. An REC is a certificate that proves 1 megawatt hour of electricity has been produced by renewable sources. Solar farms and other renewable electricity providers issue RECs to represent the amount of clean energy they have generated. They then sell them to utility companies, which are required to use certain levels of renewable power.

The problem with this system is that the amount of renewable energy produced is calculated by estimates and projections. This then leads to some very creative accounting practices, and the reality is that less renewable energy is being made and used than the certificates might say.

IDEO CoLab, along with Nazdaq and Filament, have partnered up to solve this problem. Smart Solar is their collaborative project. It uses blockchain technology and the Internet of Things to allow solar panels to calculate their own levels of energy production and then issue RECs to the owner. They have already constructed a prototype, which proves it is possible to incentivize solar energy without such a convoluted system.

Brooklyn Microgrid

Traditional grids are a logistical nightmare. Transferring power from where it is generated to where it is needed and accommodating the peaks and troughs is immensely complex. The other downside is that citywide grids are vulnerable. In an event like Hurricane Sandy, a whole network can go down, bringing an entire city to a halt and endangering people’s lives.

Microgrids are a new option for delivering electricity. They aim to promote cost-effective, secure, sustainable energy production and distribution in a local area. Brooklyn Microgrid is just one such project that is testing the waters, and it’s doing so with blockchain.

The system will use Ethereum, a public blockchain platform with a smart contract functionality that permits microgrid users to commit to contracts that cannot be falsified or misrepresented. The service will automatically update transactions and energy use in real-time using a cryptographically secure list.

Brooklyn Microgrid also hopes to boost the amount of clean energy that is produced within its local community. It can manage energy production and distribution throughout emergencies and blackouts, helping to keep the community safe and the economy running. Brooklyn Microgrid also offers financial incentives for investment in clean energy, which assists in keep the community green and helps to provide more environmentally friendly jobs.

Blockchain and solar: Just the beginning of a clean energy partnership

With the continued push towards renewable resources, blockchain technology provides a way to further incentivize and account for clean energy production. There are many startups currently experimenting with combining the two in innovative ways. Now is just the beginning, but there is potential for blockchain and solar to contribute to the world in numerous ways, from the local community to the globe on a grand scale.

Ameer Rosic is CEO of Blockgeeks, a blockchain innovation hub. Follow him on Twitter: @AmeerRosic.

Awesome Games Done Quick’s week of speedrunning and fighting cancer starts now

Posted: 08 Jan 2017 08:47 AM PST

Sweet chin music.

One of the best weeks of the gaming year is underway.

Awesome Games Done Quick (AGDQ) 2017 has started, and the event will go on until the night of Saturday, January 14. AGDQ is a marathon of speedruns, which has players beating games as quickly as possible. It’s all broadcasted on Twitch. Best of all, the event takes donations for the Prevent Cancer Foundation. Last year, AGDQ raised $1,216,309.

You can check out the week’s schedule here. And if you’re looking for some special runs to watch, we’ve listed the five games we’re looking the most forward to during the marathon.

If you don’t care about speedruns but want to help a worthy cause, you can donate here.

And, of course, you can watch the event all week long on Games Done Quick’s Twitch page.

Lenovo is getting serious about gaming PCs and PC gamers

Posted: 08 Jan 2017 08:35 AM PST

Lenovo's gaming products.

Maybe you’ve noticed. PC gaming is hot, and every company with any presence in the computing market wants to establish itself as a brand for people who like (and spend a lot of money on) video games. Hardware manufacturer Lenovo is no different.

Will Fu of Lenovo wants to talk to you about video games.

Above: Will Fu of Lenovo wants to talk to you about video games.

Image Credit: Lenovo

After years of catering to the professional crowd with its laptop workstations or to a general audience that wants a beige box that can run Windows, Lenovo gaming boss Will Fu is taking charge of a new initiative to ensure that the company has a lineup of products that are built specifically for the needs of hardcore gamers. This requires an approach focused on processing power, but it is also forcing Fu and his team to take a more direct approach to building a relationship with the end consumer. For Lenovo, that’s a major strategic shift. And Fu made this change because the company wants to win over customers with something like the recently announced Lenovo Legion Y520 laptop that features Nvidia’s GTX 1050 graphics cards, and then Fu wants that customer to return in two to five years to buy their next upgrade.

“In our traditional business we sell to partners, retailers or whatever, and they sell to the customer,” Fu explained to GamesBeat during a chat in December. “That's a one-time deal. People buy from the shop and there's no connection to us. We're transforming that because we don't want our customers to just do one-time business with us. We want to listen to them and improve our product for them. We want a more efficient way to deliver our goods to them, saving them time and money. That's the transformation we're undergoing in our business organization, what we call customer-centric.”

To create that link between Lenovo and its customers, the company is starting something called the Lenovo gaming community.

“For the people who play games, yes, some of them are just having fun by themselves, but most of them are trying to find people who share the same interests and enjoy them same things,” said Fu. “We're creating a Lenovo gaming community, not only in specific countries, but across the world, to make sure gamers can share their experiences and talk with others. We can offer a global community. That's where we're focused right now, me and my company.”

To start, Fu plans to build up Lenovo’s presence at consumer-facing gaming events like Gamescom in Germany and China Joy in Shanghai. In the past, the PC company would’ve sat out those kinds of gatherings because it was traditionally interested in business-to-business deals. And you don’t go to Gamescom, which often attracts around a quarter of a million gaming fans, to sign contracts agreeing to provide laptops to enterprises or retailers.

“But this year, we're participating in GamesCom, and we're planning to visit more and more gaming events, which gives us a chance to directly talk to gamers locally,” said Fu. “They can see and feel the latest technology and products, and also understand the story behind it in direct communication with my team and myself. That's one major change we're working on right now.”

Lenovo is jumping in on the latest generation of mobile graphics cards.

Above: Lenovo is jumping in on the latest generation of mobile graphics cards.

Image Credit: Lenovo

Reaching out to an audience of hardcore PC gamers, however, is inherently difficult. Unlike the console gaming business, which primarily operates in a handful of similar territories, PC gaming is more globally popular. PC gaming is massive in regions like the United States, Europe, and China, but it is also growing quickly in emerging markets like Brazil, Russia, and even India. Most of South America, where tariffs and taxes make console gaming prohibitively expensive, is quickly catching onto competitive esports gaming.

Having a huge addressable market is wonderful for a company like Lenovo, but it’s also complicated because each of these regions have such different needs.

“We can't tailor our approach for just one region,” said Fu. “There's a lot more time and distance involved in engaging with these customers. We have to find a way to talk to gamers in China because that's a big market. We have to find a way to gather and participate with gamers in the U.S. That's the number one challenge for me and my team. Different customers in different countries have different preferences.”

But Lenovo and Fu still think engaging with this community is worth it because they are loud and want to get involved with the companies that they love.

“They have a lot of ideas of their own,” said Fu. “They're willing to buy a specific product that uses those ideas. They like this kind of communication, talking directly with vendors. They're eager to talk to us. That's what I'm enjoying. I don't see it as a challenge too much. It just takes time and effort from my core team.”

CES2017

How the Sleep Number 360 bed uses machine learning to help you sleep

Posted: 08 Jan 2017 06:05 AM PST

AI to help you sleep.

A mattress might be the last thing you'd dream of applying machine learning to, but your bed is where you spend a third of your life. And if it can help you sleep better, that could improve the hours of the day when you're not sleeping, as well.

Now, there’s a bed that promises to do some of the thinking for us to streamline our sleep time.

At CES 2017, as I plopped myself down on the Sleep Number 360 smart bed, I wanted to find out: Can AI really us sleep better? Sure, it was conformable, and, yes, I looked ridiculous, but it’s all for science.

As you may know, some so-called smart beds are not that smart. Some use an app that connects to the bed, but there's no actual artificial intelligence involved. A company called Kingsdown does use machine learning in its Sleep Smart series to adjust to your sleep patterns, mostly by using air to reposition the mattress as you sleep. There's also an app you use to set your preferences, but the bed can "learn" what works best for you over time.

What I liked about the Sleep Number 360 is that there's no need for an app. I've been mentioning this for a while now, but my view of AI is that it should benefit us without getting in the way. Life should be easier with AI, and we shouldn't have to "teach" a robot anything. Early speech recognition systems forced us to speak several phrases so the bot could adapt to us. Those days are obviously long gone, considering Amazon Alexa and others don't need that kind of coaching.

The bed knows when you sleep. There's a foot warmer at the end of the bed, and because the AI watches your sleep patterns, the heat can turn on and be at an optimal temp before you ever pull the covers back. In terms of the firmness, there's a new tech called Responsive Air that adjusts to how you sleep (based on your preferred firmness setting).

If you snore, the bed can raise your head slightly before the snoring becomes a problem. What’s amazing is that the AI, according to company reps, can detect when you will snore or might snore and make the adjustments beforehand, saving a lot of snooze time for anyone else in the room.

Sleep tech is becoming more of a hot market these days, because we know a lot more about brain science. Your sleep cycles can determine your mood and even your success during the day, and can impact your health. I'm not sure we need a ton of AI in a bed — as long as it is soft and we can sleep on it. Yet if the bed does all of the work and all we have to do is lie down, it's a good example of AI that helps us rather than getting in the way or (the big worry) thinking for us and making us feel like we don't have control over our decisions.

There’s no word from Sleep Number about exactly when the bed will be available. As far as price, the only note I've seen is that the cost will be similar to models currently on the market. Still, if you need help sleeping, or your snoring is a problem for someone else, this could be a good investment.

CES2017

Meet the presidential candidate who’s using the internet to reinvent French politics

Posted: 08 Jan 2017 04:20 AM PST

French presidential candidate Emmanuel Macron, leader of En Marche.

After a year in which the internet turned global politics upside down, Emmanuel Macron is trying to use it to strike a new political balance in France.

The former Minister of the Economy quit the Socialist government in August several months after founding a new political organization, En Marche! (“On the march!” or “Working!”), complete with Yahoo-style exclamation point. Macron believes there is a political center in France that is not being represented by the traditional left-right parties.

To define that center, and help him build a new political movement from scratch, Macron turned to Liegey Muller Pons, a Paris firm that bills itself as “Europe’s first campaign startup.” The firm was founded by three young Parisians who met in the United States while volunteering for Barack Obama’s campaign in 2008.

Impressed by the way Obama’s team leveraged deep data analysis to attract, organize, and motivate an army of volunteers, the firm is adapting those tactics for a country where politics and rules around privacy and data are very different. Now that Macron is officially running as an independent candidate in the May 2017 French presidential elections, he will need these digital tools to drive a groundswell of grassroots volunteers to have any hope of success.

“We don’t do digital consulting for how to use Facebook or Twitter,” said Guillaume Liegey, a firm cofounder. “We don’t do fundraising. What we really focus on is large-scale coordination of people on the ground. We like to describe what we do as combining data, digital and human.”

The confounding candidate

To understand En Marche’s digital strategy, it helps to know a bit about Macron and the place he occupies in French politics.

In 2012, Socialist François Hollande was elected president of France, defeating incumbent Conservative President Nicolas Sarkozy. Initially, Arnaud Montebourg was appointed Minister of the Economy. Montebourg may be best remembered in Silicon Valley for intervening to block Yahoo’s attempt to buy France’s Dailymotion, but it was just one of several events that left entrepreneurs in France feeling he was less than supportive of startups and innovation.

During a cabinet shakeup in 2014, Montebourg was replaced by Macron, then just 37 years old. His youth, along with his meteoric rise, is just one of many reasons he seems to confound the French establishment. He met his wife, 20 years his senior, when she was his high school French teacher. There is a lively debate among intellectuals about what claims Macron can truly make to being a scholar of philosophy, which he studied at university.

But most puzzling of all was that prior to joining Hollande’s government, Macron was an investment banker, an unusual background for a member of the Socialist Party. In government, he pushed pro-business reforms, angering unions and provoking protest, at one point even prompting a rebellion in the French parliament that almost brought Hollande’s government down. And he has become a vocal supporter of the French Tech initiative that had been launched in 2013 by then-digital minister Fleur Pellerin and expanded under her successor, Axelle Lemaire.

“To be clear about the French momentum, we are accelerating,” he said on stage at the Le Web conference in December 2014. “They key question for us is how to accelerate, and how to help create new businesses. … My job is to be sure that in the coming years we create thousands of new businesses to replace the old ones. … My job is to protect people and allow them to be innovative and take risks.”

Music to the ears of entrepreneurs, but not all French workers. During a face-to-face confrontation with striking union workers this spring, Macron told one angry striker: “The best way to pay for a suit is to work.” Macron had previously let slip that he was no longer officially a member of the Socialist Party. Earlier this year, with Hollande’s popularity slipping into single digits, Macron announced the creation of En Marche.

A political startup

Well before his break with the Socialist Party, Macron has been talking informally with Liegey. The two had met years earlier when Liegey was working as a consultant for McKinsey. Liegey had left to study at Harvard University in 2007 when he got swept up in the excitement of the Obama campaign and decided to volunteer.

While knocking on doors in New Hampshire, Liegey was amazed at the sophistication of data volunteers were given each day in terms of which doors to knock on, which routes to walk, and the profiles of people they were targeting. The experience also convinced him just how powerful face-to-face conversations with voters could be.

“There’s now been a lot of experiments organized that show that the more direct the contact with a voter, the more likely they are to show up at the polls or change their minds,” he said.

Liegey met two other French students in Boston during that time: Arthur Muller and Vincent Pons, who also volunteered for Obama. After moving back to Paris, the trio eventually approached the then-nascent campaign of Hollande in 2012. They suggested they could modernize his campaign efforts by creating more elaborate get-out-the vote efforts enlisting more volunteers, something at the time that wasn’t a standard part of the political playbook for campaigns.

The trio operated on a volunteer basis for Hollande and the Socialist Party. Eventually, they were given a small budget and grew their team to about 15 volunteers. They developed software in-house that drew heavily on the data from the party’s dues-paying membership list of about 150,000 members at the time. These party activists were connected with volunteers to go door-to-door across the country.

“The technology really helped us scale the size of the campaign,” Liegey said.

The result: Over the course of the campaign in 2012, they amassed around 40,000 volunteers who knocked on 5 million doors. Hollande narrowly won with 51.7 percent.

“If you look at campaigning in France, they don’t ask anymore if they should do this type of campaigning,” Liegey said. “They just do it.”

The Great Walk of France

Following the Hollande campaign, the three friends officially created Liegey Muller Pons. Liegey stayed in touch with Macron as he joined the French government. Early in 2016, Macron officially hired the firm to help him flesh out his concept for a new political movement.

At the start, the new team had almost literally no data. Under French privacy laws, people can’t just go down and get copies of voting record databases, or buy third-party databases from market researchers or other politicians as is standard in the U.S. Instead, the group needed people to voluntarily get people to give them their personal information, and to do it on a scale that allow for meaningful insights. That challenge was even greater given that initially, the project was being conducted under the radar.

“There was no database,” Liegey said. “It was prepared in secret. They didn’t want leaks.”

Eventually, Macron went public with En Marche, which he said would start with a “Grande Marche.” That is, a process to have conversations with citizens across the country and use their input to create a platform for the new movement. The group launched a website and invited volunteers to register.

Within a few weeks, the site attracted 30,000 registrations. The En Marche team started using that data to enlist volunteers who would go out into neighborhoods, knock on doors, and conduct interviews. Liegey said they were hoping to get 6,000 volunteers, but only got 5,000. Initially, he was disappointed, but in retrospect he feels good about the conversion rate of volunteers for such a new effort.

Those volunteers were given some basic training in interview techniques and managing other volunteers. Initially, the team tried to develop a voice app for volunteers to record interviews, but it proved to be too difficult to capture good sound in the field, and then it would require transcription. Instead, they developed an app that allowed the team to write keyword answers to a handful of general questions:

  • What works in France?
  • What doesn’t work in France? (Top two answers: education system and politics)
  • If you were to say one word about politics in France, what would it be?
  • Tell us about the best/worst experience you had in the past year? (The wave of terrorist attacks over the past two years was by far the largest response for “worst.”)
  • Can you tell us about a very concrete local initiative around you?
appli_la_grande-marche_0

Above: The “Grande Marche” app

By now, the team had managed to take the new data it had accumulated on En Marche members and merge it with aggregate and demographic data to create a more sophisticated view of the French electorate. It still didn’t allow the precision available to politicians in the U.S., but they felt they were operating on a more sophisticated level than other French political parties.

For several weeks in the spring and summer of 2016, En Marche volunteers knocked on doors to gather even more data. But just as important, the idea was to create a culture within En Marche that was more engaged, to have an impact on the volunteers as much as to attract interest from potential voters. They wanted En Marche members to interact with more than just other En Marche volunteers.

“We want to force our members to go out of their inner circle and their neighborhoods and engage with different people,” Liegey said. “We want to use that to understand what is at stake in the country right now. But we also want to send a message that we are here to listen.”

Over a three-month period, En Marche’s 5,000 volunteers knocked on 300,000 doors, spoke to 100,000 people, and filled out 25,000 questionnaires.

Words, words, words

The next step was to hand all this data over to Paris-based Proxem, a startup that does semantic analysis of text. Proxem used algorithms to sort the responses to not just rank which were the most popular responses, but to determine sentiment and strength of responses (i.e., did the respondent feel strongly or not?).

Data analysis in hand, Macron held three town halls across France in October to deliver what he called the “diagnostic.” The meetings lasted two to three hours and were livestreamed. Before Macron spoke, presenters gave fairly detailed explanations of how this process worked that included a 40-page explanatory document and results from Proxem in the form of a 176-page analysis.

According to the results, the two biggest themes that emerged were “family” and “social protection.” The most important values: solidarity and integrity. And, conveniently, the analysts detected a strong desire to see a renewal in France’s political life.

“The French appear to be suffering, because they feel they no longer control their own destiny, and that our democratic system is closed to them,” Macron said at one diagnostic. “This is not only a French malaise, but a malaise we find everywhere in Europe because we have a world that is changing brutally.”

Following a whirlwind of publicity from the town halls, Macron declared on November 16 that he would be a candidate for president in the May 2017 elections. He announced his candidacy in a livestream on Facebook, but also with a Medium blog post.

“I am convinced that our country has the strength and the desire to move forward because it has the history and the people for it,” he wrote (in French, here). “But France today has left the path of progress.”

The underdog

While political pundits still peg Macron as a long shot, his campaign has captured the imagination of many young people and entrepreneurs in France. Axelle Tessandier may be the perfect example.

Tessandier left France in 2009 on a journey that took her to startup worlds in Berlin and then San Francisco, before she returned to Paris in 2015. After helping Kickstarter launch in France, she founded her own firm, the Axl Agency, that helps companies build innovative cultures.

Last year, she was invited to moderate a debate by a group of Macron supporters. That caught the eye of En Marche’s leadership, who then asked her to participate in a more official event over the summer. As she learned more about Macron and En Marche, she found herself thinking it was the beginning of something remarkable.

“Sometimes the criticisms are really targeted toward Macron,” she said. “But they forget how new it is to have a movement that takes three months to go meet thousands of people and talk to them and to listen to them. What other political group has done this kind of open process from the beginning? They created a new movement in a very, very closed system. And suddenly, you have a 39-old innovator running for president.”

This fall, Tessandier was named one of the 11 official ambassadors of En Marche. She’s not worried about the verdicts of pundits, noting that predictions across the board have been way off this past political year. And she said the inspiration and optimism she and others feel from Macron is real.

“I want us to be the passion vote,” she said. “I want us to be the conviction vote. I want to talk about what kind of society we want to create.”

That enthusiasm was on display when En March convened in Paris on December 10 for a conference that drew a surprising 15,000 attendees.

Since then, Hollande has since decided not to seek a second term, leaving the Socialist Party to hold a primary this month to seek a new candidate. The conservative Republican party selected the hard-right François Fillon as its candidate, while Marie Le Pen is head of the even further right National Front party.

Conventional political wisdom is that the final showdown will be between Fillon and Le Pen. But there have been some more positive polls indicating Macron is gaining ground. And meanwhile, En Marche claims to have 120,000 members registered, who have formed 3,000 local committees and hold on average 400 events each week.

Meanwhile, Macron has been on the move non-stop. The textual analysis from the Grande Marche continues to be mined for keywords Macron uses in his speeches, and to adapt them as he visits different regions and different audiences. And they are providing a wealth of anecdotes about real people and their challenges, Liegey said.

Macron’s and En Marche’s platform continues to evolve. But he has continued to make investment in technology and innovation a key part of his campaign. He has proposed work reforms that make it easier for people to start businesses and work independently. Yet those reform will likely continue to rankle those who worry that he will remove too many classic protections enjoyed by French workers.

In the next five months, En Marche and Macron will discover whether this political startup can find a center that’s large enough to propel him to victory.

“The digital revolution is doing to destroy some things, and at the same time, it creates opportunity,” Macron said in November during a visit to Toulouse. “It’s important to protect the individual, but also that society accepts risk and the failures. This is a time of revolution for everything, and that includes politics.”

France’s Click & Boat raises $1 million for its Airbnb for boats service

Posted: 08 Jan 2017 03:29 AM PST

clickboat

Click & Boat, which describes itself as an Airbnb for boats, has raised €1 million ($1.05 million) in funding from Paris-based Olma Fund.

The French sharing economy startup recently acquired its competitor Sailsharing and plans to expand its peer-to-peer boat rental services across Europe.

"The objective of such [a] fund raise is simultaneously speeding up our internationalization program in foreign countries, particularly through the recruitment of dedicated human resources, while at the same time launching new services directed to our European clients" said Edouard Gorioux, cofounder, adding that the boating sector has been slower to adopt innovation.

The startup recently launched its Click & Yacht service, dedicated to luxury boats and intends to make more acquisitions in new markets in the future for greater consolidation. It claimed to have seen €10 million effective sales turnover with around 8,000 boats listed on its site in 22 countries.

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Automakers and suppliers team up to share costs of self-driving cars

Posted: 08 Jan 2017 12:20 AM PST

An autonomous car from Delphi departs Treasure Island for a cross-country trip from San Francisco to New York City in San Francisco, California March 22, 2015. REUTERS/Stephen Lam

(Reuters) – Automotive suppliers and automakers are expanding alliances to develop self-driving car technology that can serve multiple automakers, as the race to put such vehicles on the road separates companies that can go it alone from those that need help sharing the financial and technical burdens.

While some companies, such as Tesla Motors, General Motors and Ford Motor, are trying to develop proprietary driverless systems, a larger group of automakers appears to have decided it makes more sense to develop self-driving technology in collaboration with suppliers – as many other features such as anti-lock brakes or radar-enabled cruise control already are.

“What’s going on in the industry right now is like a hyper version of musical chairs – and the music is still playing,” said Gill Pratt, chief executive officer of Toyota Research Institute. “Everyone is changing partners.”

Several suppliers – notably Mobileye, Nvidia and Delphi Automotive – are among the more popular technology partners in the self-driving race, with multiple alliances around the globe.

“If you want to build a truly autonomous car, this is a task for more than one player,” said Amnon Shashua, chief executive of Mobileye, an Israeli-based supplier of mapping and vision-based sensing systems.

“The technological challenges are immense,” Shashua told Reuters. “I would compare it to sending a man to the moon.”

Mobileye supplies cameras, chips and software for driver assist systems – the building blocks for self-driving cars – to more than two dozen manufacturers around the globe. The company was an early supplier of vision systems to Tesla, but the two companies had an acrimonious and public breakup last summer after the driver of a Tesla Model S was killed while operating his vehicle using Tesla’s Autopilot system.

Since the break with Tesla, Mobileye has secured two critical partnerships to develop self-driving systems: With German automaker BMW and U.S. chipmaker Intel, and with longtime supplier Delphi.

The Delphi-Mobileye alliance involves a turn-key system that the partners plan to offer to smaller automakers that lack the resources to develop such systems on their own. It will be ready for production by 2019, said Jeff Owens, Delphi’s chief technology officer, with a projected wholesale cost of about $8,000.

The alliance with BMW and Intel is expected to draw additional vehicle manufacturers and suppliers, according to Elmar Frickenstein, BMW’s senior vice president for automated driving.

“We would like to create a standard system for everybody to use by 2021,” Frickenstein said. “That would share the costs and speed up the process of development and adoption.”

Eventually, BMW and its partners could offer self-driving hardware and software sets or an entire driverless system on a non-exclusive basis to companies ranging from Uber [UBER.UL] to Google, Frickenstein said.

A blueprint for collaboration is BMW’s joint ownership with Daimler AG and Volkswagen AG’s <VOWG_p.DE> Audi of Here, the mapping company acquired in late 2015 from Nokia. Since then, both Intel and Mobileye have teamed with Here to pool and share data.

Chipmaker Nvidia also is ramping up its partnerships in self-driving technology and systems, this week announcing deals with Audi and Here, as well as German suppliers ZF [ZFF.UL] and Bosch [ROBG.UL].

“We’re not looking to develop a proprietary system,” said Dirk Hoheisel, the member of Bosch’s board of management who oversees autonomous driving. “We want to work with others to develop a standard platform and open standards for self-driving systems, especially around data and mapping.”

While pursuing similar partnerships with suppliers, Audi sees its role as a vehicle manufacturer evolving to that of systems integrator.

“There’s not one supplier out there who can provide the whole solution – no one who knows everything, every part of what’s needed to make an autonomous car,” said Alejandro Vukotich, Audi’s head of development for driver assistance systems.

Some key components of self-driving systems – cybersecurity, for instance – should remain the responsibility of vehicle manufacturers, said Guillaume Devauchelle, head of innovation and scientific development at French supplier Valeo.

But carmakers also will continue to rely on suppliers to provide specific self-driving technologies, he said.

“There will be a mix because it’s quite a complex system (with) sensing, data fusion, artificial intelligence, connectivity, man-machine interface and so on,” Devauchelle said. “Those are big blocks.”

(Reporting by Paul Lienert and Alexandria Sage in Las Vegas; Editing by Nick Zieminski)

Cover Me dev: Room-scale mobile VR is ‘fully doable’ with the HTC Vive’s tracker

Posted: 07 Jan 2017 07:53 PM PST

Cover Me uses the HTC Vive's new tracker.

Amid the hustle and bustle of Vive's CES booth, there's a war zone. It's a hellish battlefield in which three brave brothers are making a last stand against a hive mind of silent soldiers, uniformly marching forward. The heroes twist and turn, covering every angle, ducking and weaving out of the line of fire — but it's hopeless; the enemy never ceases in their conquest.

This memorable struggle I experienced was made possible by an HTC Vive, a couple of smartphones, and a lot of plastic.

The game, or rather the concept, was Master of Shapes' Cover Me, a unique take on VR local multiplayer that adapts to the realities of current VR tech. You're probably not going to have two Vives to play with and, even if you did, you'd walk into each other all the time. But why not take use smartphone and give a second player a window into the game? Better yet, why not attach the phone to the Vive's new tracker peripheral with a gun and have it appear within VR?

That could be interesting.

Cover Me is in the very, very early stages of development right now, but on a conceptual and mechanical level alone it shows a lot of promise. One player is experiencing the everyday Vive shooter; enemies swarming in from all sides, using your two controllers to blast away at them. If others want to join in on the action, they can grab their smartphone, attach it to a plastic gun peripheral fitted with the tracker, and then use the screen to aim and move about in the world. They're not seeing the world in VR, but they can interact with your world in a very meaningful way.

What you get is an effective workaround for local multiplayer, or at least a glimpse of it. This demo didn't have any damage enabled so it was more of a shooting gallery than an action stand-off, but you can see how this concept would quickly take shape into something more exciting. Imagine having to constantly cover each other's backs (the game's name came from one of the developers literally yelling "cover me!"), calling out enemy positions with your life on the line, perhaps having to keep out of the way of friendly fire.

"We'd been playing around with the Vive controller a couple of months ago and how it could be used for something other than just a VR tool only," creative director Adam Amaral tells me. They started looking into pairing the controller with a phone, as others have done recently, and then HTC got in touch about its tracker. A few weeks later and here we are with a working prototype.

So it's not the ultimate immersive experience for those on a smartphone, but it does give them a serious role to play in their friend's world, and gives them a very similar experience from a mechanical point of view. The Vive user will see bigger versions of the other players' arms and guns so that they know to keep their distance from them.

But, in Master of Shapes' eyes, this concept goes far beyond Cover Me. "Our hope is that this is almost like a new ecosystem for maybe the Vive or just mobile gaming in general," Amaral says. "It's like a new game dynamic. You now can fully move around but you have a small view port, which is kind of cool, it allows you to do some new things."

Amaral and co. think the applications extend beyond games too. The maker community, for example, could outline real objects in apps like Tilt Brush by running them over with the phone and tracker, though I can't help but think of the possibilities this might have for a multiplayer horror game, giving you the chance to create jump scares for friends.

The plan is to release a Unity and Unreal plug-in that allows others to quickly integrate the foundation that Master of Shapes is laying here. The team are even talking to Vive about the possibility of having a phone and tracker paired together being recognized as a SteamVR headset so that almost anyone could access the ecosystem, not just Vive owners, though it would obviously limit some content.

Of course that brings about the big question: could you make a position-tracked mobile VR headset with this tracker? "That was the first thing we thought: Cardboard, Gear VR, everything's room-scale," Amaral said, describing it as "fully doable". He joked that he bought a Gear VR just to make sure no one beat him to the idea.

It might have been a joke, but that certainly seems like a big opportunity for mobile platforms, especially with Viveport Mobile serving as a possible way to sell and highlight position-tracked games. Inside-out tracking is an increasingly closer reality for mobile VR but this could be the most viable workaround for current headsets we've yet seen.

Hands on with Amazon Alexa on the Dish Hopper

Posted: 07 Jan 2017 04:02 PM PST

Amazon Echo Dot

Say goodbye to your remote.

During a test using the Dish Hopper 3 with Amazon Alexa, at CES 2017, it became obvious to me that all of the buttons and settings on our TVs, as well as the adjustments and tweaks we make to our televisions to watch movies and sports, will be going away soon. The satellite provider is a mainstay at my house, and for millions of other viewers, but finding that one Tom Hanks movie from 2007 can be a challenge at times. Amazon Alexa is here to help, or at least will be in a future update.

For my demo, I asked if I could be the one to ask the questions. To be honest, this makes some public relations professionals a little nervous, but Dish reps were open to the idea. At this stage, with the Alexa skill in development and not fully operational, you can say key phrases like "find me" and other prompts to change the channel. I first asked Alexa to change to ESPN, and it worked surprisingly fast — faster than typing in the numbers. As an aside, this is an important aspect of voice control. If it isn't as fast as basic services, it is not as helpful, because you have to find the remote or memorize channel numbers anyway. If voice is only for complex tasks, we might not use it often, since we tend to want an all-or-nothing answer when it comes to media.

Next, I asked Alexa to find all of the Tom Hanks movies available. Again, it was speedy. About a dozen movies filled the screen. I asked Alexa to play Scully, and it worked immediately. The reason this is really important for most TV watchers is that Dish is not a set-top box like Roku or the NVIDIA Shield TV. In my test, the service was activated for all channels, so you have a much larger data set than only the streaming movies available on the Vudu app, for example. Searching with Google on the Shield produces somewhat acceptable results, but it's not like that service is searching through all of the live shows, sporting events, extensive movie archives, every reality television show in existence, and countless other live shows.

Also, this is where the idea of a bot can help in the living room. While I was playing the movie Scully, I asked Alexa about the rating for the movie. I also tried to order a DVD player. You can control the television by voice, but you also have an assistant who can do many other things. The Google search on Shield TV is only a media search tool you control by voice.

I was impressed enough to want to test the real service when it debuts sometime this year. My plan is to be able to easily find movies based on rating, search through archives of science fiction movies, do comparison by voice, find all of the movies starring one specific actor — basically, have Alexa become an all-purpose entertainment assistant.

We'll see if it’s helpful, or if it's still easier to use the remote.

CES2017

Changhong’s H2 smartphone uses a molecular sensor to identify real or fake Viagra pills

Posted: 07 Jan 2017 03:19 PM PST

Changhong's H2 uses the Consumer Physics Scio molecular sensor to identify fake Viagra.

Chinese tech company Changhong unveiled a new smartphone, the H2, that can scan objects to determine their molecular authenticity. I saw a live, hands-on demo of the smartphone’s sensor, where the company demonstrated how it could tell the difference between a real Viagra pill and a fake one.

It also told me which of two apples was sweeter and how many carbs were in a piece of cake. The H2 uses Scio molecular identification technology, developed by Consumer Physics and refined in partnership with Analog Devices (ADI).

The H2 is the first smartphone to employ this identification technology, which uses spectroscopy sensing techniques, as well as cloud computing, to identify objects. Changhong (known formally as Sichuan Changhong Electric Co.) showed the H2 at CES 2017, the big tech trade show in Las Vegas this week.

Changhong's H2 uses the Consumer Physics Scio molecular sensor.

Above: Changhong’s H2 uses the Consumer Physics Scio molecular sensor.

Image Credit: Dean Takahashi

Launching this year, the Changhong H2, with its advanced molecular material sensing and identification technology, will allow consumers to scan material and immediately receive actionable insights based on the object’s underlying chemical composition.

Remy Bonnasse, CEO of Boston-based Diet Sensor, said his company developed an app around the Scio sensor that you can use on the H2 to identify foods and their makeup. (It also works with a stand-alone Scio sensor launched as a separate device last year). The Diet Sensor app can weigh foods to get their mass, using a scale that is sold separately. Then it calculates exactly how many calories or carbs you are getting with a particular piece of food.

Bonnasse said his interest in creating the app goes back to his own family situation. His daughter has diabetes, and she has to watch her sugar intake. Bonnasse developed the app to enable her to monitor her food intake and avoid the dangerous episodes that come from ingesting too much sugar. Diet Sensor launched on iOS in November and is now making the app available on Google Play on Android. With this app, you no longer have to log your food and make estimates as to the number of calories it contains.

“I need to count calories every day for my daughter,” Bonnasse said. “We are making this information available immediately for people who need it. They get immediate access, and that can change their behavior. And it can make a difference in their lives. I know for the diabetes industry this is very important.”

Diet Sensor has begun logging a lot of different kinds of foods, making it easier to improve the results for subsequent searches and scans.

Changhong worked closely with Consumer Physics and ADI to develop and manufacture this first-of-its-kind smartphone. Since collaborating in early 2016, ADI and Consumer Physics have worked to miniaturize the Scio sensor for integration into a wide variety of connected devices.

Remy Bonasse, CEO of Diet Sensor, shows the H2 at work.

Above: Remy Bonnasse, CEO of Diet Sensor, shows the H2 at work.

Image Credit: Dean Takahashi

Using Changhong H2, consumers can analyze the properties of foods, liquids, medication, body metrics, and more. This will give consumers new ways to improve their personal wellness, select the best fruits and vegetables, stick to their diets and nutritional needs, and verify product authenticity. Changhong is also working to create a broad ecosystem of mobile applications that utilize the Scio sensor for a wide range of use cases.

Everything in the world is made of molecules and, theoretically, the H2 smartphone can be used on almost any material. When Consumer Physics showed me how to distinguish which apple of a pair was sweeter and ran the Viagra test for me, the results were instantaneous.

Compared to regular smartphones, the Changhong H2 is 20 percent more energy efficient. It has a unique, six-inch, extra-large, high-resolution screen and a 2.0GHz/8-core CPU.

Changhong was started in 1958, and it has been the biggest maker of TVs in China for 18 years. In 2015, its revenues were $15.1 billion. Dror Sharon, CEO of Consumer Physics, told me that Changhong is the first of a number of new partners coming for the Scio. Consumer Physics is also showing the Scio integrated into other products, like a smart bottle.

Here’s a demo of the H2 identifying fake Viagra.

Coway’s Airmega integrates Alexa voice controls for its air filtration systems

Posted: 07 Jan 2017 02:44 PM PST

Airmega's air-cleaning demo at CES 2017.

Coway makes Airmega air filtration systems that suck allergens out of the air in your home. And now it’s making the devices easier to control, with the integration of Amazon Alexa voice commands, starting in mid-January.

On top of that, the company will ship a graphite version of its filtration system in mid-February. The graphite unit will come in the Airmega 400 ($750) and 400s ($850) models. The Alexa integration is one more example of how much easier it can be to control devices when they become part of the Internet of Things, which is making everyday objects smart and connected.

With Alexa, you can now ask Airmega for updates on indoor air quality, filter lifetime, fan speed changes, timer setup, and more. This is the first step to integration across all voice-activated platforms. Google Home will be up and running by mid-2017.

Coway's graphite version of its Airmega 400 model.

Above: Coway’s graphite version of its Airmega 400 model.

Image Credit: Coway

Air quality is important, as people consume about 3,000 gallons of air per day, and chemicals and toxins are easily absorbed through the lungs. Respiratory illness is on the rise in the U.S., according to the Centers for Disease Control and Prevention. Some 25 million Americans (or 1 in 12 people) suffer from asthma, up 28 percent from 2001. And we spend about 80 percent of our time indoors, according to the Environmental Protection Agency.

Indoor pollution comes from a variety of sources: cooking, cigarette smoke, candles and incense, off-gassing from manufactured materials like carpet, vapors from cleanings products, pet dander, and HVAC systems. Then there are outdoor contaminants that make their way through doors and windows. These include exhaust, mold, emissions from factory vents, and pollen.

In its automated smart mode, Airmega quietly goes about filtering your air with a high-efficiency particulate air filter (HEPA). It has two Max2 activated carbon filters (with coconut extracts) to capture and reduce more than 99 percent of volatile organic compounds (VOCs) and odors.

It has a dual suction fan, which means the purifier can remain on the smaller side without sacrificing a lot of power. It traps particulates as small as 0.3 microns, or less than 1/100th the width of a human hair. Cleaned air re-circulates through a vent at the top of the purifier. South Korea’s Coway says the 400S model can cover more than 1,560 square feet of space. It’s about the size of mini fridge.

Over time, the app helps you become a lot more knowledgeable about the air quality in your home. It can track the level of pollution over time — providing a cross-section of the pollutants in your home over a 24-hour period or showing you a year’s worth of data. The Airmega notifies you via the app when the filter needs to be replaced.

I’ve also recently written about the Uhoo, Molekule, and Sprimo air filters. And there were lots of other air-cleaning solutions at CES 2017.

Here’s a video of how quickly Airmega can clean air.

CES2017

How Cable Labs is paving the way for lightning-fast broadband

Posted: 07 Jan 2017 02:03 PM PST

Phil McKinney, CEO of Cable Labs, the research arm of the cable TV industry.

Phil McKinney’s job as CEO of Cable Labs is to lead the cable TV industry forward into new technologies that can help with the delivery and adoption of cable TV services.

The company is the research arm of the cable TV industry, and its job is to push new technologies such as Docsis 3.1, which enables 10-gigabit-per-second download speeds and 1-gigabit upload speeds for cable TV broadband delivered over coaxial cable. That will change to full duplex, or 10 gigabits-per-second in both directions, over time.

I frequently interviewed McKinney in his previous job, when he was vice president and chief technology officer for Hewlett-Packard’s personal systems group. He was responsible for strategic planning and research and development for HP’s PCs. Now he’s helping to figure out how cable can stay competitive around the world against competitive threats such as 5G wireless, which will bring cable-like speeds to wireless data.

I caught up with McKinney at CES 2017. Here’s an edited transcript of our conversation.

VB: How did you wind up at Cable Labs?

Phil McKinney: When I retired out of HP, I thought I was retired for good. My book was coming out. My wife and I were planning on going to Nashville. About three weeks in I got a phone call from a headhunter, looking for a new CEO. They said, "Phil, this is the perfect job for you." I wasn't interested. I thought they were calling me for a reference for someone at HP to fill a recruiting role. I said, "What makes you think that?" They said, "It's a CEO role." Um, you know I'm an innovation guy? I'm not interested in being a CEO, where I have to manage P&Ls and do all that stuff. "But it's a CEO role with no profit and loss responsibilities." How do you get one of those?

When they told me it was Cable Labs, I turned them down. Tony Warner, who's the CTO at Comcast, and Mike LaJoie, who was CTO for Time Warner, persuaded me to come to New York. I met with them, with Neil Smit, who's the CEO at Comcast, and Brian Roberts, the chairman at Comcast. They persuaded me to at least consider it. I spent five months in conversations with the CEOs. They were focused on transforming Cable Labs along an innovation agenda. It had fallen into a very tactical, almost staff augmentation, very applied research, things on one-year-out time horizons.

After five months, I agreed to come in. I originally committed to three years. Now that's been renegotiated. I'm committed to Cable Labs for the long haul.

VB: What are you doing?

It's about transforming Cable Labs, and at the same time—the cable industry did not have a multi-gigabit strategy at that time. We had Docsis 3.0, where the top speed is one gig. We kicked off what became Docsis 3.1, which is now 10 gigs download and one gig upload. That's now being deployed in the market – Atlanta, Chicago, all the members have some form of Docsis 3.1 deployment underway now. Then we did full duplex, which is 10 gigs symmetrical. That's in specification work right now. It's on track.

We're trying to build Cable Labs from near term to more long term. Today, the way we think about Cable Labs, 50 percent of our technical spend is in one to three years out, and 50 percent is in three to eight years out. That three to eight years was almost zero dollars four years ago. It's about Cable Labs taking that much longer view, to be the source of those intellectual properties and innovations that drive the cable industry.

We do work in wireless access networks, like high-bit fiber coax, the traditional cable plant, fiber deep, fiber technologies. A lot of people don't think of us as doing fundamental core research on everything from lasers to fiber materials and so on. We do a lot of work in security. We design and maintain the security infrastructure of the cable plant. That infrastructure is now being used by other industries. We provide those capabilities to open ADR, the automated demand response. These are the models going into heating and air-conditioning units. Utilities can tell you not to turn on your air conditioner, because it's a brownout day. That's an ADR module with an exclusive security key. We also do that now for health care and a variety of other industries.

We also have a broad influence on the industry standards organizations. We currently sit on 32 standards bodies, everything from IEEE to Open Daylight to OCF, you name it. In those cases, it's about our contribution back to the broader industries around those technologies. Either the cable industry is directly interested, or they could impact the cable industry, like IOT devices that aren't secure. All of a sudden they're punching a hole in the network.

We also have a lot of work in AR and VR. We've been doing that for almost three and a half years now. We're not inventing the AR and VR space, but we're making sure that the networks those are going to run on are equipped and architected in such a way to take advantage and deliver great, compelling experiences. High speed, low latency tends to be a big area for us.

VB: How many people are in the R&D area?

McKinney: Cable Labs today, total staff, I think it's roughly 200 people worldwide. When I took over we were about a dozen members in about 18 countries. Today we're 57 members in 33 countries. We now have some of our largest members in China. We have Japan, Singapore, other parts of Asia. Pretty much all of central and western Europe, a big chunk of eastern Europe. The U.S., Canada. We have 75 percent of Mexico and reach into Latin and South America. We've extended our international footprint.

Total technical resources, out of the 200, if you count all lab services into that number, you're talking about 125, 130 total technical resources. A good chunk of those are all deep specialists with master's degrees or PhDs. We don't do the traditional "have a position, find someone to match it." We just go find the best people in areas of interest. Then we create teams around them.

Take Peter Smyth, who's now what we call VP of core innovation. We brought him in because he headed up all of wireless research for BT Research in the U.K. We have some of the top people in the world in their areas of expertise. We've spent the last four years building what I'd put on par with any of the top research labs out there.

Sony's Cledis TV at CES 2017

Above: Sony’s Cledis TV at CES 2017

Image Credit: Dean Takahashi

VB: How do you look at things that would be considered competitive threats to cable?

McKinney: In many cases they may not be competitive. Everybody automatically associates Docsis with Cable Labs. It was invented at Cable Labs. It's what gives you high speed over coax. And so people assume we must hate fiber. It's actually not competitive, because we do a lot of work in fiber. We're not pitting one technology against another. It's about us deriving capabilities so that our members, the people who fund us – we're funded by the capable operators – to give them the choices, based on their strategy, that will allow them to be the provider of choice in the markets they serve. Those markets can be high-speed data, wireless services, and so on.

Wireless is becoming one of the fastest-growing and biggest research areas for us. If you look at our 57 members in 33 countries, 24 of those cable operators also operate mobile networks. That's Rogers and Shaw in Canada, JCI in Alaska, Liberty Global in Europe. Vodafone acquired two of our members, so now Vodafone sits on our board. Our involvement is really not about coax, coax, coax. All of our members have different strategies. Altice just announced that they're going heavy fiber. We have great fiber updates. Comcast, Charter, they're focused on Docsis 3.1 and eventually full duplex Docsis.

The only thing I'd probably say we're not interested in is DSL. [laughs] Because of the copper pairs and the challenges there, that's not an architecture that has a play with our members.

VB: What about 5G in general?

McKinney: Again, almost half our members are in the wireless space. Of those, they all have a 5G strategy. 5G has extreme low latency and extreme high speed. It'll open up areas of innovation we can't imagine. Mobile World Congress last year, we were there. At CES, you look at remote surgeries, remote control of robotics where you need that low-latency loopback through the network. All those things are great capabilities.

The thought that you're going to deploy 5G in neighborhoods to be the broadband bypass—the challenge, one, is cost. How much do you pay for your 300 gigs a month on your cable bill versus 400 gigs on your cellular bill? Second is the challenge of cell strategies. 5G will be more of a small cell strategy. If you deploy those in neighborhoods, you have to look at the economics. You have to either acquire network assets somewhere in the asset base, local network assets, or you're going to be doing a lot of trenching to go deep and serve those capabilities.

In our case, we have cable operators who are mobile network operators. You could argue – I don't have any inside knowledge – why did Vodafone buy Kabel Deutschland in Germany? If you're going to deploy 5G in Germany, you need network assets. Why is Liberty continuing to push on their wireless deployment? Both Charter and Comcast in the U.S. have announced that they've activated their relationship with Verizon. You'll see some interplay with them between cable having coverage to 93 percent of all U.S. homes and where those 5G cell towers will be deployed.

Netflix

Above: Netflix

Image Credit: Netflix

VB: What about other directions, like over the top?

McKinney: Netflix, those kinds of guys? Again, a lot of people think OTT is a competitor. In reality it's not. If you're going to have OTT services, you're probably going to step up your data package. If you look at where the biggest growth is in the cable industry, it's around the growth of subscribers buying data services. You still see a slow decline of people dropping their video packages, but you see growth in data services.

Comcast announced their deal with Netflix. Now, if you're on a Comcast X1, you have Netflix right in your set-top box. You can do integrated search using the voice remote, and when you pick a movie, it'll ask whether you want to watch on a premium cable channel or on your Netflix account. It's all the things consumers want. You're going to see other cable operators do integrated work with Netflix and Hulu and all of those. It'll become a bucket of everything the consumer wants.

At Cable Labs we hold two conferences a year, summer and winter. Winter conference last year, a friend of mine is a senior executive at Netflix. He came out and gave the whole Netflix, what they're working on, their streaming strategies, all that. We have 400 or 500 members in the audience asking questions, understanding Netflix, and he asked questions of us.

Silicon Valley has the typical "frenemy" thing going on, right? You're a friend today and an enemy tomorrow, depending on the issues. But everybody has this perception about the cable industry and who their competitors are. I came in from the outside and had that same perception. People think of cable as being ESPN, CNN, Turner, whatever. It's not. MSOs are the distributors. Cable programmers and the programmers. Distributors have to buy their content, and then they get the right to distribute.

When people complain about their cable bill—the average cost of content is increasing 8-12 percent per year. What Comcast pays for that content from ESPN or ABC or whatever, that goes up 8-12 percent per year. But on average, at best, they can pass on maybe four percent of that cost to consumers. That's what consumers will accept. They still gripe and complain, but four percent, you can get that through. Who eats the difference? It's the Comcasts and Charters of the world. They get squeezed. The cost of goods goes up, but they don't have the price elasticity to pass that on. You're seeing the margins on video products shrinking. But everyone likes to blame Comcast or Cox when their cable bill goes up.

VB: How does this wind up being a good business in the long run?

McKinney: It throws off a lot of cash. You look at any of the big cable guys, the cable stock, it's stable. It's predictable. Not a lot of downside risk. You're not seeing anybody hitting a cliff. The cable industry is positioned very well competitively. It's the leading broadband provider. Broadband becomes the thing that everybody wants access to, whether it's in the home or even outside the home. Everybody wants access to Facebook or Twitter or whatever.

The ability for the cable industry to continue to invest in its network and maintain its leadership position in broadband services—you think about what the cable industry has invested over the last 10 years into networks, it's hundreds of billions of dollars. It's the largest privately-funded real estate project in the history of the United States, the cable network. Zero dollars from the government. From that perspective, the barrier to entry from somebody else to come into that market is high. Google tried. It was harder than they thought. These guys have been doing it since the '60s, or some of them back in the '40s, stringing coax.

New LG OLED TV at CES 2017.

Above: New LG OLED TV at CES 2017.

Image Credit: Dean Takahashi

VB: I asked Gary Shapiro what he thought about the Trump administration and net neutrality. His answer was, "It'll come up, but I'm a little more interested in seeing other problems solved, like why the U.S. has high broadband costs compared to other countries, why there isn't more competition."

McKinney: Well, I think there's a misunderstanding on pricing. We always see quotes asking why U.S. broadband speed is so slow compared to Japan or wherever. Here's the thing you have to be careful with. The U.S. is viewed as one country, the same as Japan or Korea. If you take the U.S. and treat each state as a country and look at average broadband speeds by state, eight of your top 10 "countries" are U.S. states. Try to do high-speed broadband in Montana, Idaho, it's tough. You have more cows than residents. When you dig deeper, we're actually in a good position.

Now, with full duplex in the near future, 10 gigs symmetrical and no need to retrench anybody's yard, that's transformative. It's not limited to the U.S. I was in China just three weeks ago, meeting with our members. They're very focused on gigabit services. Every country in the world is focused on delivering the most efficient methods. There was a big study put out in the EU about the fastest way to get to gigabit services for residents in the EU. Docsis 3.1 with full duplex became the number one option in this study, because it uses the network that's already invested. It requires zero construction. Change the cable modem, upgrade the CMTS and the other end, and you have 10 gigs symmetrical.

Everybody's on the path. It's this perception of one country against another country—what we did at Cable Labs, when I first got here, there were three versions of Docsis based on geography. There was North America, Europe, and C-Docsis in China. The vendor community had to build three different products for three different parts of the world. When we rolled out 3.1, we got every region of the world, for the very first time, to agree on one version of that product. A vendor can build one product and ship it anywhere in the world. It'll work on any cable network. That starts driving down cost, which is eventually passed to consumers.

When you can get this kind of global scale brought to delivering the technology solutions—I can sell an HP laptop anywhere in the world. 40 million laptops a year. I get that volume benefit and you see prices drop. That's what we're trying to bring to the cable industry. How do I lower those costs so I can get broadband services to a whole different level of demographics in the world today? A kid's not going to be competitive on a global basis without access to broadband. We have to bring that cost down.

What 2017 holds for esports

Posted: 07 Jan 2017 01:53 PM PST

MLG features a Call of Duty esports battle.

Mainstream sports are finally recognizing the untapped potential in video games as spectator sports. Three NBA team owners recently bought stakes in esports teams, and other investors are clamoring to invest as the industry is soaring. With this growth comes a slew of questions on how to best manage revenue and growth, in an industry already valued at nearly $500 million.

Leveling up

Sponsors and advertisers eager to monetize massive viewership numbers are propelling the growth of esports. According to market research firm Newzoo, the global esports audience was 226 million in 2015, indicating a year over year growth of 27.7 percent.  As professional gaming teams have grown in popularity, the number of unique users playing the multiplayer online battle arena strategy game League of Legends has gone from 11.5 million in 2011 to 100 million in 2016.

In a world with so much content to choose from, where are fans finding the time to watch eSports matches, to the tune of 20 billion minutes a year? eSports fans spend less time on other activities – almost 50 percent spend less time watching online content, TVs, and movies, while 50 percent of fans spend less time watching sports. Most of these fans are men, but almost 20 percent of esports followers are women, a number which has been consistently growing within the industry as a whole.

Aging down

Eighty percent of 115 million esports enthusiasts are 25 and under.  Millenial hHabits among this age group, which include watching less traditional television, consuming more content on mobile devices, and connecting globally rather than locally, are well suited to esports viewing consumption. The world's top competitive teams do not reside in the U.S. today; most are in Asia and Europe, unlike the NFL and NBA, where the best teams are in the United States. This allows for a broader audience that's not limited to one main geographical area. Another attractive element of esports is that fans enjoy the accessibility of players, who are readily available for fan photos at events, and connecting with other fans through platforms like Twitch and Twitter.

Conquering brand loyalty

Still, esports faces some barriers in its race to success. One of the biggest problems is the lack of long-term contracts with players and regional teams, which makes building team loyalty next to impossible.  While efforts to engage fans ensue by creating behind-the-scenes content, without these contracts, fans follow the players and not the teams.

Other ways that the industry can ramp up viewership and support is to build more collegiate and amateur leagues on a community level, like those that exist for traditional sports. Every league will be able to sell physical merchandise, digital goods, and subscription services, which will build the monetization efforts for the eSports industry. In addition, the opportunity to create unique reality content, documentaries and commentary will pique interest for the casual viewer.

Monetizing live events through ticket sales, especially nonplayoff tournament competitions, will help generate revenue. Typically, tickets for live events are sold quickly and then resold on secondary ticketing sites for much higher prices, indicating a lost opportunity to generate more revenue by the teams and industry themselves.

Publishers’ playbook

Industry associations will wield more influence and demand rights and standards from publishers as eSports momentum gains. Publishers are already responding to the gaming community's demands for new features. For instance, Riot Games added a practice tool feature for individual training. Soon, publishers will need to rely on outsourcing to third party operators to run leagues for their games.

Enforcers

As esports gains popularity, the need for rules and regulations becomes more apparent to provide stability within the industry. Currently, players are able to train for an unlimited number of hours per day, which ultimately hurts the them. Increasing regulation for players should include putting a cap on training hours, guaranteeing minimum salaries, and creating guidelines around salaries and termination.

Protecting players' rights will help to lengthen their careers, and increase their value ,which will enable the players to negotiate long-term contracts. By doing this, viewers will be more loyal to teams than the individual players themselves. On a team level, there should be a minimum spend on teams and a minimum number of support staff, including coaches and analysts.

Regulations for publishers would likely include guaranteeing franchising spots, setting a number of games per season, and a lockdown of game play for a certain period of time before a match. At times, publishers patch games last minute before a match. Certain game characters are buffed (made stronger) or nerfed (made weaker). These patches can change things on the game map that affect gameplay and can cause problems for players who have practiced under a certain set of rules and expectations. This would be akin to the NFL changing the gameplay so a first down was earned on 15 yards and not 10 yards, right before Super Bowl, or if the NBA raised the basket 3 inches before playoffs.

Next level

It is likely that more industry associations, like the Professional eSports Association, will form as investments begin to flood the space.

Will esports viewing eventually eclipse traditional sports viewing in sponsorship opportunities and monetization? It is too early to tell, but new games are entering the eSports arena at a rapid clip, with live events happening in sold-out stadiums. Stakeholder protection is crucial to managing growth of the industry wisely. Once a hobby, video game play is entering a level of professionalism and revenue generation that is serious business.

Gregory Milken is the managing director at March Capital Partners, where he focuses on investments in digital media, gaming and esports, and has led March Capital's investments in Genvid Technologies and Dojo Madness.

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