Tech Brew Ride Home - Mon. 12/30 - The Chinese GPS Is Nigh

Episode Date: December 30, 2019

A major internet of things data leak, China is about to turn on its GPS competitor, would you like to star in a bitmoji TV show, a look back at the year in unicorns and is the VC gravy train over for us consumers, at least? Sponsors: WeWorkRemotely GiveWell.org/ridehome Links: IoT vendor Wyze confirms server leak (ZDNet) China decouples from US in space with 2020 'GPS' completion (Nikkei Asian Review) SPOTIFY TO SUSPEND POLITICAL ADS IN 2020 (AdAge) Snapchat will launch Bitmoji TV, a personalized cartoon show (TechCrunch) The New Unicorns Of 2019 (Crunchbase News) Israel doubles number of unicorns in 2019 (Globes) Tech Startups Face New Investor Mandate: Profits Over Discounts (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the final tech meme ride home of the year for Monday, December 30th, 2019. I'm Brian McCullough. Today, a major Internet of Things data leak.

China is about to turn on its GPS competitor. Would you like to star in a Bitmoji TV show, a look back at the Year in Unicorns, and is the VC Gravy Train over for us consumers? Here's what you miss today in the world of tech. Internet of Things device vendor wise. says that a server leak has exposed user data including email addresses, camera user IDs, and Wi-Fi SS IDs for around 2.4 million customers. The leak took place from December 4th through December 26th this past month. Wise sells smart devices like security cameras, smart plugs, smart light bulbs, door locks, and even smart scales. But this is odd. The leak was confirmed

in a forum post by Wise co-founder Dongsheng Song. The leaky server was discovered by cybersecurity firm 12 security and independently verified by reporters from the blog IPVM. Founder Song complained that the researchers and the blog only informed Wise that they had found the leak 14 minutes before going public with the findings. And quoting ZDNet. Song confirmed that the leaky server exposed details such as the email addresses customers use to create wise accounts, nicknames users assigned to their Wise security cameras, Wi-Fi network SSID identifiers,

and for 24,000 users, Alexa tokens to connect Wise devices to Alexa devices. The Wise Exec denied that Wise API tokens were exposed via the server. In a blog post, 12 security claimed, they found API tokens that they say would have allowed hackers to access Wise accounts from any iOS or Android device. Second, Song also denied 12 securities claims they were sending user data back to an IPI, Alibaba cloud server in China. And third, Song also clarified 12 security claims that Wise was collecting

health information. The Wise exec said they only collected health data from 140 users who were beta testing a new smart scale product. Song didn't deny Wise collected weight, height, and gender information. He did, however, deny others. Quote, we have never collected bone density and daily protein intake, the Wise exec said. We wish our scale was that cool, end quote. On the space technology front, one of the big things to look out for next year, is the new competitor to the global positioning system coming from China. China is bringing Baidau online. It's a GPS competitor. And China says that the system will be fully complete in June and will allow for a whole new level of accuracy, centimeters level accuracy by the end of

2020, quoting the Nikai Asian Review. The final two satellites will be launched by June completing the 35 satellite network. Rang Cheng Kui, spokesperson for the Baidou navigation satellite system, told reporters in Beijing. The number of satellites in operation will trump the roughly 30 used by the U.S. owned global positioning system. From modern farming to smart ports to a text messaging service, China is trying to build an ecosystem independent of the GPS and open it to southeast Asia, South Asia, Africa, and Eastern Europe. This effort pushes decoupling between Washington and Beijing, which are poised to enter year three of a trade war to the final frontier of space. Over 70% of Chinese smartphones are equipped to tap into Beidu's positioning services, Rand said.

The system also plays a role in fifth-generation wireless communications, an area where China's Huawei Technologies is in the vanguard of technological development, end quote. Beto is named after the Chinese term for the Big Dipper, by the way, and that integration with 5G is a key component of this whole story that I wasn't aware of. Beto will support communication through its satellite network as well, which combined with 5G networks could be vital for the sooner rather than later rollout of self-driving vehicles, for example, including the self-driving buses that will apparently go into operation next year in the Chinese city of Wuhan. Spotify is suspending all political ads on its platform in early 2020, citing the lack of tools that it has in place to review and vet those ads.

But of course, before you give Spotify kudos for doing the right thing, which they still might deserve, it is worth noting that according to sources, political ads are not a significant source of revenue for Spotify, quoting ad age. Spotify said in a statement that it will pause political advertising in early 2020. across its ad-supported tier, which boasts 141 million users, as well as the streaming giant's original and exclusive podcasts, some of which include the Joe Budin podcast and Amy Schumer presents. The move only applies to the U.S. as Spotify doesn't run political ads in other countries. Quote, at this point in time, we do not yet have the necessary level of robustness in our

process, systems, and tools to responsibly validate and review this content, the company said in a statement to Ad Age. We will reassess this decision as we continue to evolve our capabilities, end quote. Presidential hopefuls such as Bernie Sanders and organizations such as the Republican National Committee have both advertised on Spotify, though the company declined to share how much revenue it generates from political ads. A person familiar with its advertising business said it's not a significant revenue generator for the company, especially when compared to Spotify's largest moneymakers such as entertainment ads for movies. or shows, end quote.

Are you ready for your close-up? Are you ready for Bitmoji TV? Because Snapchat is ready to give you a personalized cartoon show starring you and your friends, or at least your bitmoji and your friends bitmojis, quoting TechCrunch. Starting in February with a global release, your customizable Bitmoji avatar will become the star of a full-motion cartoon series called Bitmoji TV. It's a massive evolution for Bitmoji beyond the chat stickers and comic strip style stories where they were being squandered to date. Creating original in-house shows for its Discover section that can't be copied could help Snapchat differentiate from the plethora of short-form video platforms out there, ranging from YouTube to Facebook watch to TikTok.

Bitmoji TV could also up the quality of Discover, which still feels like a tabloid magazine rack full of scantily clad, women, gross out imagery, and other shocking content merely meant to catch the eye and draw a click. With Bitmoji TV, your avatar and those of your friends will appear in regularly scheduled adventures, ranging from playing the crew of Star Trek-y spaceships to being secret agents, to falling in love with robots or becoming zombies. The trailer Snapchat release previews and animation style reminiscent of Netflix's Big Mouth. TechCrunch asks Snap for more details, including how long episodes will be, how often they'll be released, and whether they'll include ads and if the company acquired anyone or brought on famous talent to produce the series.

A SNAP spokesperson declined to provide more details, but sent over this statement. Bitmoji TV isn't available in your network yet, but stay tuned for the global premiere soon, end quote. Over the weekend, I collected a whole bunch of year-end startup stats to share, starting with some definitive data about unicorns. According to CrunchBased news, 142 startups achieved unicorn status in 2019. That was down from 158 in 2018. But that's obviously not that much of a dip in terms of total unicorns. The real dip shows up in terms of money raised by the unicorns.

Those 142 startups raised $85.1 billion in 2019, which is down from the $139 billion raised in 2018. down even from the 93.8 billion raised in 2017. Of those 142 unicorns, 78 came from the U.S. and 22 from China. But again, there's a dip in China as the total number of Chinese unicorns is down substantially from the 58 that reached that distinction in 2018. Let's go further afield. According to Globes Online, nine Israeli startups became unicorns in 2019, bringing the total number of unicorns in that country to 20. Quoting Globes Online. Impressively, Israel's 20 unicorns are more unicorns than France, Germany, and Australia have together.

Only the U.S., China, and UK, have more unicorns than Israel. Among Israel's unicorns are taxi-hailing company Get, cybersecurity company Cyber Reason, and Team Management System Developer Monday. The pace of startups growing into unicorns is only heating up. In 2018, five Israeli startups completed financing rounds of $100 million or more, including DevOps platform J-Frog. In 2019, 16 more startups have joined that club, including Fraud Protection Company, Riskafide, 3D imaging sensor company, Veyer Imaging, Retail Imaging Company, Fabric, and InsureTech Company Lemonade, end quote. And business standard is reporting that Indian startups raised a record $14.5 billion

in 2019, which was up from $10.5 billion in 2018 and way up from only $550 million in 2010. So Indian startups have seen 25x growth in startup funding in the subcontinent over the course of the decade. Quote, there are 24 unicorns or startups valued at more than $1 billion each and 155 sunicorns or firms which hold the potential to become unicorns in the near future in the country. Out of these nine unicorns and 60 sunicorns were formed this year, according to Traxon. The latest entrance into the unicorn club include Bangaluru-based online grocery retailer Big Basket, Google Graham-based logistics startup Delhivory, and Delhi-based

eyewear firm Lenskart, whose valuation recently crossed one and a half billion dollars with the soft bank deal, end quote. Indeed, the article does go on to note how very many of these funding rounds were led by SoftBank or the Vision Fund, including mega rounds for Oyo Rooms, Del Hivory, and Ola Electric. Finally, today, I'm skeptical of things changing absolutely wholesale. But then again, things are always changing in tech all the time, so you never know. But over the weekend, the Wall Street Journal had a piece up looking at how one of the key pages in the startup playbook from the past decade or so might be falling out of favor.

Essentially, the gravy train of gobs and gobs of VC money, essentially subsidizing the cost of stuff in order to achieve scale might be coming to an end, meaning a lot of that stuff that we've all been buying and signing up for might not be so cheap for much longer, quoting the piece. The proliferation of subsidized products and services from venture capital-backed startups over the past decade reflected a rush by investors. to fund the next behemoth consumer tech company. The thesis? Create a market leader with loyal customers hooked by attractive deals delivered at the touch of a smartphone app. Once the company got big enough, profits would flow and the subsidies could end. Startup investors are re-evaluating that approach. Following a year of dismal performances from companies that were heavily subsidized by venture capital, investors and board members are pressuring companies to figure out a more profitable business model, tech dealmakers and startup founders say, investors say, investors,

investors want startups to become less dependent on raised capital to cover the cost of consumer discounts, such as e-commerce startups brandless, selling home and beauty products for a fraction of the cost of shipping, ride-hailing companies Uber and Lyft discounting the cost of their rides, and meal delivery service postmates offering coupons for $100 off delivery fees. Quote, the subsidy bubble for raising new money is over, said Wesley Chan, managing director of Felicit Ventures. What you are seeing is a realization that subsidies often lead to disaster. for startups that rely on them, end quote.

Meal delivery service door dash, Uber, Lyft, and Wii, the parent of the office renting company WeWork, this year will lose well over $13 billion combined. All became top industry players after raising billions of dollars from investors who subsidized the company's costs, but none is profitable. Quote, you can manufacture growth and you can't manufacture product, said Ryan Culp, who formerly worked in venture capital and now runs a marketing startup. FOMO, end quote. Now, the piece does not actually go into much detail in terms of stats, proving that the music has indeed stopped playing for this sort of business model. And also, I would point out that we've been here before, see the dot-com bubble, Pets.com losing money on every bag of dog food it shipped, etc. Things like this, strategies like this tend to come back. They're cyclical. But the piece did elicit this tweet from Bill Gurley.

quote, extremely well-written article on the shifting wins in tech. Important to realize that until subsidization stops, you have no idea if growth is real. The old adage is true. The startup that sells $1 for $85 will have record-setting growth. Healthy, difficult transition, end quote. Indeed, something something subscription models, annual recurring revenue being the new hotness, maybe one of the lasting legacies of the 2010s in tech will be the fact that this was the decade that consumers were finally convinced to start paying up for digital services, for web services,

for online goods, for offline goods and services at a fair value. As a startup, you no longer have to do this sort of weird jujitsu to try to trick people into buying your stuff by subsidizing it, offering it for less than its worth, and hoping to make it all up in volume, or else find revenue through some orthogonal means like ads or surveillance capitalism or strip mining data. Nowadays, if your stuff is good enough, people will buy. That's a really important change for startups to absorb. It will lead to better companies with better aligned incentives and values. It will lead to leaner, healthier startups.

And frankly, I'd rather live in a world where cash flow is king and we can stop using that stupid word scale. That is all for today, and again, that's all for this year. The next episode will be coming at you on Thursday. Real quick before then, I've got that thing that happens every now and then where it's in between calendar quarters, and so I have a handful of ad slots open next week. So if you or your company want to jump on them, as always, I'll be making them available for basically half off the going rate for listeners. If you want to sponsor the show next week, as I report from CES in Las Vegas, get in touch at podcast at techmeam.com.

As always, first come first serve. Otherwise, I will talk to you in 2020.