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EC-exclusive interview with Tim Cook, Slacklash, and tech inclusion

Posted by on May 11, 2019 in Amazon Web Services, app developers, Chanda Prescod-Weinstein, Deezer, Geoff Cook, Google, Groupon, IBM, Kate Clark, kidbox, Matthew Panzarino, Microsoft, om malik, San Francisco, The Extra Crunch Daily, Tim Cook, Travis Kalanick, True Ventures, Uber, WeWork | 0 comments

An EC-exclusive interview with Apple CEO Tim Cook

TechCrunch editor-in-chief Matthew Panzarino traveled to Florida this week to talk with Tim Cook about Apple’s developer education initiatives and also meet with high school developer Liam Rosenfeld of Lyman High School. Apple wants to attract the next set of app developers like Liam into the Xcode world, and the company is building a more ambitious strategy to do so going forward:

But that conversation with Liam does bring up some questions, and I ask Cook whether the thinks that there are more viable pathways to coding, especially for people with non-standard education or backgrounds.

“I don’t think a four year degree is necessary to be proficient at coding,” says Cook. “I think that’s an old, traditional view. What we found out is that if we can get coding in in the early grades and have a progression of difficulty over the tenure of somebody’s high school years, by the time you graduate kids like Liam, as an example of this, they’re already writing apps that could be put on the App Store.”

Against the Slacklash

TechCrunch columnist Jon Evans often writes on developer tools and productivity (see, for example, his Extra Crunch overview of the headless CMS space). Now, he sets his sights on Slack, and finds the product … much better and more productive than many would have you believe, and offers tips for maximizing its value:


Source: The Tech Crunch

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Amazon’s one-two punch: How traditional retailers can fight back

Posted by on Apr 18, 2019 in 6 River Systems, Amazon, Artificial Intelligence, Column, E-Commerce, eCommerce, getvu, IBM, jeff bezos, Kiva Systems, locus robotics, magazino, merchandising, online retail, online shopping, physical retail, Retail, retailers, siemens, TC, whole foods | 0 comments

If you think physical retail is dead, you couldn’t be more wrong. Despite the explosion in e-commerce, we’re still buying plenty of stuff in offline stores. In 2017, U.S. retail sales totaled $3.49 trillion, of which only 13 percent (about $435 billion) were e-commerce sales. True, e-commerce is growing at a much faster annual pace. But we’re still very far from the tipping point.

Amazon, the e-commerce giant, is playing an even longer game than everyone thinks. The company already dominates online retail — Amazon accounted for almost 50 percent of all U.S. e-commerce dollars spent in 2018. But now Amazon is eyeing the much bigger prize: modernizing and dominating retail sales in physical locations, mainly through the use of sophisticated data analysis. The recent reports of Amazon launching its own chain of grocery stores in several U.S. cities — separate from its recent Whole Foods acquisition — is just one example of how this could play out.

You can think of this as the Amazon one-two punch: The company’s vast power in e-commerce is only the initial, quick jab to an opponent’s face. Data-focused innovations in offline retail will be Amazon’s second, much heavier cross. Traditional retailers too focused on the jab aren’t seeing the cross coming. But we think canny retailers can fight back — and avoid getting KO’d. Here’s how.

The e-commerce jab starts with warehousing

Physical storage of goods has long been crucial to advances in commerce. Innovations here range from Henry Ford’s conveyor belt assembly line in 1910, to IBM’s universal product code (the “barcode”) in the early 1970s, to J.C. Penney’s implementation of the first warehouse management system in 1975. Intelligrated (Honeywell), Dematic (KION), Unitronics, Siemens and others further optimized and modernized the traditional warehouse. But then came Amazon.

After expanding from books to a multi-product offering, Amazon Prime launched in 2005. Then, the company’s operational focus turned to enabling scalable two-day shipping. With hundreds of millions of product SKUs, the challenge was how to get your pocket 3-layer suture pad (to cite a super-specific product Amazon now sells) from the back of the warehouse and into the shippers’ hands as quickly as possible.

Make no mistake: Amazon’s one-two retail punch will be formidable.

Amazon met this challenge at a time when automated warehouses still had massive physical footprints and capital-intensive costs. Amazon bought Kiva Systems in 2012, which ushered in the era of Autonomous Guided Vehicles (AGVs), or robots that quickly ferried products from the warehouse’s depths to static human packers.

Since the Kiva acquisition, retailers have scrambled to adopt technology to match Amazon’s warehouse efficiencies.  These technologies range from warehouse management software (made by LogFire, acquired by Oracle; other companies here include Fishbowl and Temando) to warehouse robotics (Locus Robotics, 6 River Systems, Magazino). Some of these companies’ technologies even incorporate wearables (e.g. ProGlove, GetVu) for warehouse workers. We’ve also seen more general-purpose projects in this area, such as Google Robotics. The main adopters of these new technologies are those companies that feel Amazon’s burn most harshly, namely operators of fulfillment centers serving e-commerce.

The schematic below gives a broad picture of their operations and a partial list of warehouse/inventory management technologies they can adopt:

It’s impossible to say what optimizations Amazon will bring to warehousing beyond these, but that may be less important to predict than retailers realize.

The cross: Modernizing the physical retail environment

Amazon has made several recent forays into offline shopping. These range from Amazon Books (physical book stores), Amazon Go (fast retail where consumers skip the cashier entirely) and Amazon 4-Star (stores featuring only products ranked four-stars or higher). Amazon Live is even bringing brick-and-mortar-style shopping streaming to your phone with a home-shopping concept à la QVC. Perhaps most prominently, Amazon’s 2017 purchase of Whole Foods gave the company an entrée into grocery shopping and a nationwide chain of physical stores.

Most retail-watchers have dismissed these projects as dabbling, or — in the case of Whole Foods — focused too narrowly on a particular vertical. But we think they’re missing Bezos’ longer-term strategic aim. Watch that cross: Amazon is mastering how physical retail works today, so it can do offline what it already does incredibly well online, which is harness data to help retailers sell much more intelligently. Amazon recognizes certain products lend themselves better to offline shopping — groceries and children’s clothing are just a few examples.

How can traditional retailers fight back? Get more proactive.

Those shopping experiences are unlikely to disappear. But traditional retailers (and Amazon offline) can understand much, much more about the data points between shopping and purchase. Which path did shoppers take through the store? Which products did they touch and which did they put into a cart? Which items did they try on, and which products did they abandon? Did they ask for different sizes? How does product location within the store influence consumers’ willingness to buy? What product correlations can inform timely marketing offers — for instance, if women often buy hats and sunglasses together in springtime, can a well-timed coupon prompt an additional purchase? Amazon already knows answers to most of these questions online. They want to bring that same intelligence to offline retail.

Obviously, customer privacy will be a crucial concern in this brave new future. But customers have come to expect online data-tracking and now often welcome the more informed recommendations and the convenience this data can bring. Why couldn’t a similar mindset-shift happen in offline retail?

How can retailers fight back?

Make no mistake: Amazon’s one-two retail punch will be formidable. But remember how important the element of surprise is. Too many venture capitalists underestimate physical retail’s importance and pooh-pooh startups focused on this sector. That’s extremely short-sighted.

Does the fact that Amazon is developing computer vision for Amazon Go mean that alternative self-checkout companies (e.g. Trigo, AiFi) are at a disadvantage? I’d argue that this validation is actually an accelerant as traditional retail struggles to keep up.

How can traditional retailers fight back? Get more proactive. Don’t wait for Amazon to show you what the next best-practice in retail should be. There’s plenty of exciting technology you can adopt today to beat Jeff Bezos to the punch. Take Relex, a Finnish startup using AI and machine learning to help brick-and-mortar and e-commerce companies make better forecasts of how products will sell. Or companies like Memomi or Mirow that are creating solutions for a more immersive and interactive offline shopping experience.

Amazon’s one-two punch strategy seems to be working. Traditional retailers are largely blinded by the behemoth’s warehousing innovations, just as they are about to be hit with an in-store innovation blow. New technologies are emerging to help traditional retail rally. The only question is whether they’ll implement the solutions fast enough to stay relevant.


Source: The Tech Crunch

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Linear Labs’ next-gen electric motor attracts $4.5 million in funding

Posted by on Mar 26, 2019 in Automotive, Brad Hunstable, Dynamic Signal, electric vehicle, faraday future, IBM, Kindred Ventures, Lucid Motors, Recent Funding, Russ Fradin, ryan graves, Startups, Transportation, Ustream | 0 comments

Linear Labs, a startup developing an electric motor for cars, scooters, robots, wind turbines and even HVAC systems, has raised $4.5 million in a seed round led by Science Inc. and Kindred Ventures. 

Investors Chris and Crystal Sacca, Ryan Graves of Saltwater Ventures, Dynamic Signal CEO Russ Fradin, Masergy executive chairman and former-CEO Chris MacFarland, as well as Ustream co-founder Gyula Feher also participated in the round. 

The four-year-old company was founded by Brad and Fred Hunstable, who say they have invented a lighter, more flexible electric motor. The pair came up with the motor they’ve dubbed the Hunstable Electric Turbine (HET) while working to design a device that could pump clean water and provide power for small communities in underdeveloped regions of the world. 

Linear Labs currently has 50 filed patents, 21 of which are issued, with 29 patents pending.

The founders come with a background in entrepreneurship and electrical engineering. Brad Hunstable is former CEO and founder of Ustream, the live-video-streaming service that sold to IBM in 2016 for $150 million. Fred Hunstable, who comes with a background in electrical engineering and nuclear power, led Ebasco and Walker Engineering’s efforts in designing, upgrading and completing electrical infrastructure, environmental and enterprise projects as well as safety and commercial-grade evaluation programs.

The HET uses multiple rotors that can adapt to varying conditions, according to the company. It also produces twice as much torque density and three times the power density than permanent magnet motors. Linear Labs says its motor produces two times the output per given motor size, and minimum 10 percent more range. 

The HET design makes it ideally suited for mobility applications such as electric vehicles because it produces high levels of torque without the need for a gearbox. This helps cut production cuts, the company contends. 

“The holy grail in electric motors has always been high torque and no gearbox, and the HET achieves both in a smaller, lighter and more efficient package that is more powerful than traditional motors,” Linear Labs CTO Fred Hunstable said in a statement.

The upshot could be electric vehicles with better range and more powerful electric scooters.

The commercialization of the electric motor will result in substantial leaps in terms of energy savings, reliability enhancement, and low-cost manufacturing, according to Babak Fahimi, founding director of the Renewable Energy and Vehicular Technology (REVT) Laboratory at the University of Texas at Dallas. 

The company plans to use the seed funding to market its invention to customers. It’s also hiring talent and recently added new people to its leadership team, including John Curry as their president and Jon Hurry as vice president. Curry comes from KLA-Tencor and NanoPhotonics. Hurry has held positions at Tesla and Faraday Future.


Source: The Tech Crunch

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Venture investors and startup execs say they don’t need Elizabeth Warren to defend them from big tech

Posted by on Mar 8, 2019 in Amazon, AT&T, ben narasin, chief technology officer, coinbase, Companies, economy, elizabeth warren, entrepreneurship, Facebook, Federal Trade Commission, Google, IBM, kara nortman, Los Angeles, Microsoft, new enterprise associates, Private Equity, Social Media, Startup company, TC, Technology, Technology Development, United States, upfront ventures, us government, venky ganesan, Venture Capital, Walmart, world wide web, zappos | 0 comments

Responding to Elizabeth Warren’s call to regulate and break up some of the nation’s largest technology companies, the venture capitalists that invest in technology companies are advising the presidential hopeful to move slowly and not break anything.

Warren’s plan called for regulators to be appointed to oversee the unwinding of several acquisitions that were critical to the development of the core technology that make Alphabet’s Google and the social media giant Facebook so profitable… and Zappos.

Warren also wanted regulation in place that would block companies making over $25 billion that operate as social media or search platforms or marketplaces from owning companies that also sell services on those marketplaces.

As a whole, venture capitalists viewing the policy were underwhelmed.

“As they say on Broadway, ‘you gotta have a gimmick’ and this is clearly Warren’s,” says Ben Narasin, an investor at one of the nation’s largest investment firms,” New Enterprise Associates, which has $18 billion in assets under management and has invested in consumer companies like Jet, an online and mobile retailer that competed with Amazon and was sold to Walmart for $3.3 billion.

“Decades ago, at the peak of Japanese growth as a technology competitor on the global stage, the US government sought to break up IBM . This is not a new model, and it makes no sense,” says Narasin. “We slow down our country, our economy and our ability to innovate when the government becomes excessively aggressive in efforts to break up technology companies, because they see them through a prior-decades lens, when they are operating in a future decade reality. This too shall pass.”

Balaji Sirinivasan, the chief technology officer of Coinbase, took to Twitter to offer his thoughts on the Warren plan. “If big companies like Google, Facebook and Amazon are prevented from acquiring startups, that actually reduces competition,” Sirinivasan writes.

“There are two separate issues here that are being conflated. One issue is do we need regulation on the full platform companies. And the answer is absolutely,” says Venky Ganesan, the managing director of Menlo Ventures. “These platforms have a huge impact on society at large and they have huge influence.”

But while the platforms need to be regulated, Ganesan says, Senator Warren’s approach is an exercise in overreach.

“That plan is like taking a bazooka to a knife fight. It’s overwhelming and it’s not commensurate with the issues,” Ganesan says. “I don’t think at the end of the day venture capital is worrying about competition from these big platform companies. [And] as the proposal is composed it would create more obstacles rather than less.”

Using Warren’s own example of the antitrust cases that were brought against companies like AT&T and Microsoft, is a good model for how to proceed, Ganesan says. “We want to have the technocrats at the FTC figure out the right way to bring balance.”

Kara Nortman, a partner with the Los Angeles-based firm Upfront Ventures, is also concerned about the potential unforeseen consequences of Warren’s proposals.

“The specifics of the policy as presented strike me as having potentially negative consequences for innovation, These companies are funding massive innovation initiatives in our country. They’re creating jobs and taking risks in areas of technology development where we could potentially fall behind other countries and wind up reducing our quality of life,” Nortman says. “We’re not seeing that innovation or initiative come from the government – or that support for encouraging immigration and by extension embracing the talented foreign entrepreneurs that could develop new technologies and businesses.”

Nortman sees the Warren announcement as an attempt to start a dialogue between government regulators and big technology companies.

“My hope is that this is the beginning of a dialogue that is constructive,” Nortman says. “And since Elizabeth Warren is a thoughtful policymaker this is likely the first salvo toward an engagement with the technology community to work collaboratively on issues that we all want to see solved and that some of us are dedicating our career in venture to help solving.”


Source: The Tech Crunch

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Flawed visitor check-in systems let anyone steal guest logs and sneak into buildings

Posted by on Mar 4, 2019 in computer security, Envoy, hacking, IBM, ipad, operating system, Privacy, Security, software testing, vulnerability | 0 comments

Security researchers at IBM have found, reported and disclosed 19 vulnerabilities in five popular visitor management systems, which they say can be used to steal data on visitors — or even sneak into sensitive and off-limit areas of office buildings.

You’ve probably seen one of these visitor check-in systems before: they’re often found in lobbies or reception areas of office buildings to check staff and visitors onto the work floor. Visitors check in with their name and who they’re meeting using the touch-screen display or tablet, and a name badge is either printed or issued.

But the IBM researchers say flaws in these systems provided “a false sense of security.”

The researchers examined five of the most popular systems: Lobby Track Desktop, built by Jolly Technologies, had seven vulnerabilities; eVisitorPass, recently rebranded as Threshold Security, had five vulnerabilities; EasyLobby Solo, built by HID Global, had four vulnerabilities; Envoy’s flagship Passport system had two vulnerabilities; and The Receptionist, an iPad app, had one vulnerability.

According to IBM, the vulnerabilities could only be exploited by someone physically at check-in. The bugs ranged from allowing someone to download visitor logs, such as names, driver license and Social Security data, and phone numbers; or in some cases, the buggy software could be exploited to escape “kiosk” mode, allowing access to the underlying operating system, which the researchers say could be used to pivot to other applications and on the network, if connected.

Worse of all, the use of default admin credentials that would give “allow complete control of the application,” such as the ability to edit the visitor database. Some systems “can even issue and provision RFID badges, giving an attacker a key to open doors,” the researchers wrote.

Daniel Crowley, research director at IBM X-Force Red, the company’s pen-testing and vulnerability hunting team, told TechCrunch that all of the companies responded to the team’s findings.

“Some responded much more quickly than others,” said Crowley. “The Lobby Track vulnerabilities were acknowledged by Jolly Technologies, but they stated that the issues can be addressed through configuration options. X-Force Red tested the Lobby Track software in its default configuration,” he added.

We contacted the companies and received — for the most part — dismal responses.

Kate Miller, a spokesperson for Envoy, confirmed it fixed the bugs but “customer and visitor data was never at risk.”

Andy Alsop, chief executive of The Receptionist, did not respond to a request for comment but instead automatically signed us up to a mailing list without our permission, which we swiftly unsubscribed from. When reached, Michael Ashford, director of marketing, did not comment.

David Jordan, a representative for Jolly, declined to comment. And, neither Threshold Security and HID Global responded to our requests for comment.


Source: The Tech Crunch

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Briq, the next building block in tech’s reconstruction of the construction business, raises $3 million

Posted by on Feb 22, 2019 in blockchains, Briq, California, computing, construction, construction software, eniac, eniac ventures, General Partner, Hyperledger, IBM, machine learning, procore, Real Estate, real-time, TC, Technology, Tim Young | 0 comments

Bassem Hamdy has been in the construction business for a long time.

He spent the last few years at the construction software business Procore, now a $3 billion company developing technology for the construction industry, and now Hamdy is ready to unveil his next act as chief executive and co-founder of Briq, a new software service for the industry.

Hamdy started Briq with his own cash, amassed through secondary sales as Procore climbed the ranks of startups to reach its status as a construction industry unicorn. And the company has just raised $3 million in financing to fund its expansion.

“With enough secondaries you can afford to make your own decisions,” Hamdy says. 

His experience in construction dates back to his earliest days. Hailing from a family of construction engineers, Hamdy describes himself as a black sheep who went into the financial services industry — but construction kept pulling him back.

Beginning in the late nineties with CMIC, which was construction enterprise resource planning, and continuing through to Procore, Hamdy has had success after success in the business, but Briq is the culmination of all of that experience, he says. 

“As much as data entry helps people it’s data intelligence software that changes things,” says Hamdy. 

Briq chief executive Bassem Hamdy

The Santa Barbara, Calif.-based company is part of a growing number of Southern California technology startups building businesses to service large swaths of specific industries — specifically real estate and construction.

Already, Procore is a $3 billion behemoth, and ServiceTitan has become a billion-dollar company as well, with its software and services for air conditioning and appliance repairmen.

Now Hamdy’s Briq, with backing from Eniac Ventures and MetaProp NYC, is hoping to join their ranks.

“Bassem built and helped run the most successful construction software businesses in the world. It is rare and humbling to have an opportunity to help build a company from the ground up with an industry legend,” says Tim Young, founding general partner at Eniac Ventures . “The technology Bassem and his team are building will do something the industry has never seen before: break down data silos to leverage information in real time. Bassem has built and run the most successful construction software businesses in the world, and his knowledge of the construction space and the data space is second to none.”

The company, formerly called Brickschain, uses a combination of a blockchain-based immutable ledger and machine learning tools to provide strategic insights into buildings and project developments.

Briq’s software can predict things like the success of individual projects, where demand for new projects is likely to occur and how to connect data around construction processes.

Briq has two main offerings, according to Hamdy. ProjectIQ, which monitors and manages individual projects and workflows — providing data around different vendors involved in a construction project; and MarketIQ, which provides market intelligence around where potential projects are likely to occur and which projects will be met with the most demand and success.

Joining Hamdy in the creation of Briq is Ron Goldschmidt, an experienced developer of quantitative-based trading strategies for several businesses. Hamdy, a former Wall Streeter himself, has long realized the power of data in the construction business. And with the new tools at his disposal — including the blockchain-based ledger system that forms the backbone of Briq’s project management software, Hamdy thinks he has developed the next big evolution in technology for the industry.

Briq already counts Webcore, a major contractor and developer, as one of its clients, along with Kobayashi, Probuild, Hunter Roberts OEG and Gartner Builders. In all, the company has contracts with nearly 12 developers and contractors.

All of the insights that Briq can provide through its immutable ledger can add up to big savings for developers. Hamdy estimates that there’s roughly $1 trillion in waste in the construction industry.

Briq relies on IBM’s Hyperledger for its blockchain backbone and through that, the company has a window into all of the decisions made on a project. That ledger forms the scaffolding on which Briq can build out its projections and models of how much a building will cost, and how could conceivably be made on a project.

“Construction and infrastructure are integral to society, but the decision-making process behind how, when, where, and why we build is no longer working,” said Hamdy, in a statement. “We aren’t just solving a construction problem, we are solving a societal problem. If we are to meet the infrastructure needs of both the developed and developing world, we must improve our decision-making and analysis around the data we have. We are thrilled to have the support of Eniac Ventures as we enter the next phase of our journey.”


Source: The Tech Crunch

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Mixtape Podcast: Oracle’s alleged $400M issue with underrepresented groups

Posted by on Feb 1, 2019 in AI, facial recognition, IBM, oracle, TC, TechCrunch Mixtape | 0 comments

Screen time for kids, corporations allegedly not paying people from underrepresented groups and IBM offers some hope for the future of facial recognition technology: These are the topics that Megan Rose Dickey and I dive into on this week’s episode of Mixtape.

According to research by psychologists from the University of Calgary, spending too much time in front of screens can stung the development of toddlers. The study found that kids 2-5 years old who engage in more screen time received worse scores in developmental screening tests.” We talk a bit about this then wax nostalgically about “screen time” of yore.

We then turn to a filing against Oracle by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs that states the enterprise company allegedly withheld upwards of $400 million to employees from underrepresented minority groups. The company initially declined to comment, but then thought better of itself and returned the very next day with its thoughts on the matter.

And finally, IBM is trying to make facial recognition technology a thing that doesn’t unfairly target people of color. Technology! The positive news comes a week after Amazon shareholders demanded that the company stop selling Rekognition, its very own facial recognition tech that it sells to law enforcement and government agencies.

Click play above to listen to this week’s episode. And if you haven’t subscribed yet, what are you waiting for? Find us on Apple PodcastsStitcherOvercastCastBox or whatever other podcast platform you can find.


Source: The Tech Crunch

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How open source software took over the world

Posted by on Jan 12, 2019 in apache, author, cloud computing, Cloudera, cockroach labs, Column, computing, Databricks, designer, executive, free software, Getty, GitHub, HashiCorp, hortonworks, IBM, linus torvalds, linux, Microsoft, microsoft windows, mongo, MongoDB, mulesoft, mysql, open source software, operating system, operating systems, oracle, red hat, RedHat, sap, Software, software as a service, TC, Yahoo | 0 comments

It was just 5 years ago that there was an ample dose of skepticism from investors about the viability of open source as a business model. The common thesis was that Redhat was a snowflake and that no other open source company would be significant in the software universe.

Fast forward to today and we’ve witnessed the growing excitement in the space: Redhat is being acquired by IBM for $32 billion (3x times its market cap from 2014); Mulesoft was acquired after going public for $6.5 billion; MongoDB is now worth north of $4 billion; Elastic’s IPO now values the company at $6 billion; and, through the merger of Cloudera and Hortonworks, a new company with a market cap north of $4 billion will emerge. In addition, there’s a growing cohort of impressive OSS companies working their way through the growth stages of their evolution: Confluent, HashiCorp, DataBricks, Kong, Cockroach Labs and many others. Given the relative multiples that Wall Street and private investors are assigning to these open source companies, it seems pretty clear that something special is happening.

So, why did this movement that once represented the bleeding edge of software become the hot place to be? There are a number of fundamental changes that have advanced open source businesses and their prospects in the market.

David Paul Morris/Bloomberg via Getty Images

From Open Source to Open Core to SaaS

The original open source projects were not really businesses, they were revolutions against the unfair profits that closed-source software companies were reaping. Microsoft, Oracle, SAP and others were extracting monopoly-like “rents” for software, which the top developers of the time didn’t believe was world class. So, beginning with the most broadly used components of software – operating systems and databases – progressive developers collaborated, often asynchronously, to author great pieces of software. Everyone could not only see the software in the open, but through a loosely-knit governance model, they added, improved and enhanced it.

The software was originally created by and for developers, which meant that at first it wasn’t the most user-friendly. But it was performant, robust and flexible. These merits gradually percolated across the software world and, over a decade, Linux became the second most popular OS for servers (next to Windows); MySQL mirrored that feat by eating away at Oracle’s dominance.

The first entrepreneurial ventures attempted to capitalize on this adoption by offering “enterprise-grade” support subscriptions for these software distributions. Redhat emerged the winner in the Linux race and MySQL (thecompany) for databases. These businesses had some obvious limitations – it was harder to monetize software with just support services, but the market size for OS’s and databases was so large that, in spite of more challenged business models, sizeable companies could be built.

The successful adoption of Linux and MySQL laid the foundation for the second generation of Open Source companies – the poster children of this generation were Cloudera and Hortonworks. These open source projects and businesses were fundamentally different from the first generation on two dimensions. First, the software was principally developed within an existing company and not by a broad, unaffiliated community (in the case of Hadoop, the software took shape within Yahoo!) . Second, these businesses were based on the model that only parts of software in the project were licensed for free, so they could charge customers for use of some of the software under a commercial license. The commercial aspects were specifically built for enterprise production use and thus easier to monetize. These companies, therefore, had the ability to capture more revenue even if the market for their product didn’t have quite as much appeal as operating systems and databases.

However, there were downsides to this second generation model of open source business. The first was that no company singularly held ‘moral authority’ over the software – and therefore the contenders competed for profits by offering increasing parts of their software for free. Second, these companies often balkanized the evolution of the software in an attempt to differentiate themselves. To make matters more difficult, these businesses were not built with a cloud service in mind. Therefore, cloud providers were able to use the open source software to create SaaS businesses of the same software base. Amazon’s EMR is a great example of this.

The latest evolution came when entrepreneurial developers grasped the business model challenges existent in the first two generations – Gen 1 and Gen 2 – of open source companies, and evolved the projects with two important elements. The first is that the open source software is now developed largely within the confines of businesses. Often, more than 90% of the lines of code in these projects are written by the employees of the company that commercialized the software. Second, these businesses offer their own software as a cloud service from very early on. In a sense, these are Open Core / Cloud service hybrid businesses with multiple pathways to monetize their product. By offering the products as SaaS, these businesses can interweave open source software with commercial software so customers no longer have to worry about which license they should be taking. Companies like Elastic, Mongo, and Confluent with services like Elastic Cloud, Confluent Cloud, and MongoDB Atlas are examples of this Gen 3.  The implications of this evolution are that open source software companies now have the opportunity to become the dominant business model for software infrastructure.

The Role of the Community

While the products of these Gen 3 companies are definitely more tightly controlled by the host companies, the open source community still plays a pivotal role in the creation and development of the open source projects. For one, the community still discovers the most innovative and relevant projects. They star the projects on Github, download the software in order to try it, and evangelize what they perceive to be the better project so that others can benefit from great software. Much like how a good blog post or a tweet spreads virally, great open source software leverages network effects. It is the community that is the source of promotion for that virality.

The community also ends up effectively being the “product manager” for these projects. It asks for enhancements and improvements; it points out the shortcomings of the software. The feature requests are not in a product requirements document, but on Github, comments threads and Hacker News. And, if an open source project diligently responds to the community, it will shape itself to the features and capabilities that developers want.

The community also acts as the QA department for open source software. It will identify bugs and shortcomings in the software; test 0.x versions diligently; and give the companies feedback on what is working or what is not.  The community will also reward great software with positive feedback, which will encourage broader use.

What has changed though, is that the community is not as involved as it used to be in the actual coding of the software projects. While that is a drawback relative to Gen 1 and Gen 2 companies, it is also one of the inevitable realities of the evolving business model.

Linus Torvalds was the designer of the open-source operating system Linux.

Rise of the Developer

It is also important to realize the increasing importance of the developer for these open source projects. The traditional go-to-market model of closed source software targeted IT as the purchasing center of software. While IT still plays a role, the real customers of open source are the developers who often discover the software, and then download and integrate it into the prototype versions of the projects that they are working on. Once “infected”by open source software, these projects work their way through the development cycles of organizations from design, to prototyping, to development, to integration and testing, to staging, and finally to production. By the time the open source software gets to production it is rarely, if ever, displaced. Fundamentally, the software is never “sold”; it is adopted by the developers who appreciate the software more because they can see it and use it themselves rather than being subject to it based on executive decisions.

In other words, open source software permeates itself through the true experts, and makes the selection process much more grassroots than it has ever been historically. The developers basically vote with their feet. This is in stark contrast to how software has traditionally been sold.

Virtues of the Open Source Business Model

The resulting business model of an open source company looks quite different than a traditional software business. First of all, the revenue line is different. Side-by-side, a closed source software company will generally be able to charge more per unit than an open source company. Even today, customers do have some level of resistance to paying a high price per unit for software that is theoretically “free.” But, even though open source software is lower cost per unit, it makes up the total market size by leveraging the elasticity in the market. When something is cheaper, more people buy it. That’s why open source companies have such massive and rapid adoption when they achieve product-market fit.

Another great advantage of open source companies is their far more efficient and viral go-to-market motion. The first and most obvious benefit is that a user is already a “customer” before she even pays for it. Because so much of the initial adoption of open source software comes from developers organically downloading and using the software, the companies themselves can often bypass both the marketing pitch and the proof-of-concept stage of the sales cycle. The sales pitch is more along the lines of, “you already use 500 instances of our software in your environment, wouldn’t you like to upgrade to the enterprise edition and get these additional features?”  This translates to much shorter sales cycles, the need for far fewer sales engineers per account executive, and much quicker payback periods of the cost of selling. In fact, in an ideal situation, open source companies can operate with favorable Account Executives to Systems Engineer ratios and can go from sales qualified lead (SQL) to closed sales within one quarter.

This virality allows for open source software businesses to be far more efficient than traditional software businesses from a cash consumption basis. Some of the best open source companies have been able to grow their business at triple-digit growth rates well into their life while  maintaining moderate of burn rates of cash. This is hard to imagine in a traditional software company. Needless to say, less cash consumption equals less dilution for the founders.

Photo courtesy of Getty Images

Open Source to Freemium

One last aspect of the changing open source business that is worth elaborating on is the gradual movement from true open source to community-assisted freemium. As mentioned above, the early open source projects leveraged the community as key contributors to the software base. In addition, even for slight elements of commercially-licensed software, there was significant pushback from the community. These days the community and the customer base are much more knowledgeable about the open source business model, and there is an appreciation for the fact that open source companies deserve to have a “paywall” so that they can continue to build and innovate.

In fact, from a customer perspective the two value propositions of open source software are that you a) read the code; b) treat it as freemium. The notion of freemium is that you can basically use it for free until it’s deployed in production or in some degree of scale. Companies like Elastic and Cockroach Labs have gone as far as actually open sourcing all their software but applying a commercial license to parts of the software base. The rationale being that real enterprise customers would pay whether the software is open or closed, and they are more incentivized to use commercial software if they can actually read the code. Indeed, there is a risk that someone could read the code, modify it slightly, and fork the distribution. But in developed economies – where much of the rents exist anyway, it’s unlikely that enterprise companies will elect the copycat as a supplier.

A key enabler to this movement has been the more modern software licenses that companies have either originally embraced or migrated to over time. Mongo’s new license, as well as those of Elastic and Cockroach are good examples of these. Unlike the Apache incubated license – which was often the starting point for open source projects a decade ago, these licenses are far more business-friendly and most model open source businesses are adopting them.

The Future

When we originally penned this article on open source four years ago, we aspirationally hoped that we would see the birth of iconic open source companies. At a time where there was only one model – Redhat – we believed that there would be many more. Today, we see a healthy cohort of open source businesses, which is quite exciting. I believe we are just scratching the surface of the kind of iconic companies that we will see emerge from the open source gene pool. From one perspective, these companies valued in the billions are a testament to the power of the model. What is clear is that open source is no longer a fringe approach to software. When top companies around the world are polled, few of them intend to have their core software systems be anything but open source. And if the Fortune 5000 migrate their spend on closed source software to open source, we will see the emergence of a whole new landscape of software companies, with the leaders of this new cohort valued in the tens of billions of dollars.

Clearly, that day is not tomorrow. These open source companies will need to grow and mature and develop their products and organization in the coming decade. But the trend is undeniable and here at Index we’re honored to have been here for the early days of this journey.


Source: The Tech Crunch

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IBM Research develops fingerprint sensor to monitor disease progression

Posted by on Dec 21, 2018 in IBM, machine learning, Parkinson's Disease, TC | 0 comments

IBM today announced that it has developed a small sensor that sits on a person’s fingernail to help monitor the effectiveness of drugs used to combat the symptoms Parkinson’s and other diseases. Together with the custom software that analyses the data, the sensor measures how the nail warps as the user grips something. Since virtually any activity involves gripping objects, that creates a lot of data for the software to analyze.

Another way to get this data would be to attach a sensor to the skin and capture motion, as well as the health of muscles and nerves that way. The team notes that skin-based sensors can cause plenty of other problems, including infections, so it decided to look at using data from how a person’s fingernails bend instead.

For the most part, though, fingernails don’t bend all that much, so the sensor had to be rather sensitive. “It turns out that our fingernails deform – bend and move — in stereotypic ways when we use them for gripping, grasping, and even flexing and extending our fingers,” the researchers explain. “This deformation is usually on the order of single digit microns and not visible to the naked eye. However, it can easily detect with strain gauge sensors. For context, a typical human hair is between 50 and 100 microns across and a red blood cell is usually less than 10 microns across.”

In its current version, the researchers glue the prototype to the nail. Since fingernails are pretty tough, there’s very little risk in doing so, especially when compared to a sensor that would sit on the skin. The sensor then talks to a smartwatch that runs machine learning models to detect tremors and other symptoms of Parkinson’s disease. That model can detect what a wearer is doing (opening a doorknob, using a screwdriver, etc.). The data and the model are accurate enough to track when wearers write digits with their fingers.

Over time, the team hopes that it can extend this prototype and the models that analyze the data to recognize other diseases as well. There’s no word on when this sensor could make it onto the market, though.


Source: The Tech Crunch

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IBM Africa and Hello Tractor pilot AI/blockchain agtech platform

Posted by on Dec 21, 2018 in africa, AgTech, Artificial Intelligence, blockchain, Column, Hello Tractor, IBM | 0 comments

IBM Research and agtech startup Hello Tractor have developed an AI and blockchain-driven platform for Africa’s farmers. The two companies will pilot the product in 2019 through an ongoing partnership co-financed by IBM.

Dubbed Digital Wallet in beta, the cloud-based service aims to support Hello Tractor’s business of connecting small-scale farmers to equipment and data analytics for better crop production.

“Agriculture is a complex industry that can have so many different variables. We’re bringing a decision tool to the Hello Tractor ecosystem powered by AI and blockchain,” Hello Tractor CEO Jehiel Oliver told TechCrunch.

The startup joined IBM Research to demo the new service at Startup Battlefield Africa in Lagos.

Available to Hello Tractor clients, the online platform will use a digital ledger and machine learning to capture, track, and share data, while “creating end-to-end trust and transparency across the agribusiness value chain,” according to an IBM release.

Digital Wallet will draw on remote and IoT-based weather-sensing methods and AI to help farmers determine crops and inputs, choose when to plant and optimize and predict crop yields.

The cloud-based dashboard also employs a blockchain ledger to improve multiple points of Hello Tractor’s business.

“We’re an agricultural technology company. Our platform connects farmers who need tractor services to tractor owners who own these assets as a business. We create that marketplace to bring supply and demand together,” said Oliver.

The demand stems from the 80 percent of Sub-Saharan Africa’s crops harvested without tractors or machinery and the 50 percent of the continent’s farmers who suffer post-harvest losses annually, according to IBM and the Food and Agricultural Organization.

IBM and Hello Tractor’s Digital Wallet will also loop in data from fleet owners regarding tractor use, track and predict repairs and servicing and build credit profiles to open bank financing for farmers.

Hello Tractor is a connecting service — neither the startup nor its farming clients own tractors. Founded in 2014, the venture began operations in Nigeria and has expanded into Kenya, Mozambique, Senegal, Tanzania and Bangladesh within the last year, according to its CEO. A for-profit entity, Hello Tractor has raised funding from private investors, DFI grants and a seed round.

The company currently generates revenue by selling the tractor-monitoring devices and software subscriptions for its app, according to Oliver. Hello Tractor doesn’t yet charge transactional fees for connecting tractors to farmers, “but we’ll be testing that next year,” he said.

The startup also plans to create broader revenue opportunities from data analytics.

“At this phase we focus primarily on mechanization, but coupling the insights being generated through that device with the IBM platform solutions specifically for agriculture can extend the value we offer our customers and…be monetized,” said Oliver.

He estimates the business of connecting small-scale farmers to tractors as a “multi-billion market” globally and pointed to Nigeria as the African nation with “the largest inventory of arable-uncultivated farmland,” 37 percent of the country, according to World Bank data.

IBM Research’s co-financing to build Digital Wallet does not include any equity stake in Hello Tractor, IBM confirmed.

The collaboration aligns with IBM’s global agricultural strategy, embedded largely in its Watson AI business platform and global agtech partnerships. As TechCrunch covered, IBM partnered with Kenyan agtech startup Twiga earlier this year to introduce to Twiga’s network of vendors a blockchain-enabled working capital platform.

IBM Research views the partnership “as scientific research collaboration,” according to VP Solomon Assefa.

“Through all its touch points — farmers, machinery, dealers, crop yields, data inputs — Hello Tractor is convening the whole agricultural ecosystem,” he said.

As discussed at Startup Battlefield Africa, Africa is shaping its own blockchain-focused startups and use cases — characterized more by utility than speculation. On the crypto-side, there were several 2018 ICOs, including remittance startup SurRemit’s $7 million token launch, payments venture Wala’s $1 million offering and one by South African solar energy startup Sun Exchange.

IBM Research and Hello Tractor teams will continue to build out the blockchain-enabled Digital Wallet on a lab, engineer and business level throughout 2019.

“We’re cultivating the partnership… including the executive and go-to-market side. You also have to focus on how you scale,” said Assefa.


Source: The Tech Crunch

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