Tech Brew Ride Home - Tue. 12/28 – China Is Mad At Elon’s Satellites

Episode Date: December 28, 2021

China is pissed at Elon Musk cause of his Starlink satellites. Xiaomi’s new smartphones. The delivery robots taking over college campuses. The three fund companies that made fully 12% of all venture investments this year. And why cybersecurity companies are the hot startup sector as we head into the new year. Sponsors: Coinbase.com/techmeme Schwab.com/plan Links: China berates US after ‘close encounters’ with Elon Musk satellites (The Guardian) Xiaomi 12 and 12 Pro debut with Snapdragon 8 Gen 1 chipsets, Xiaomi 12X comes with SD870 (GSMArena) Sidewalk Robots Find Foothold on College Campuses (Bloomberg Businessweek) How Tiger Global, SoftBank Vision Fund And Insight Partners Changed The Venture Landscape In 2021 (Crunchbase News) Truly Terrible Performers Multiply Among Startups Taking SPAC Route To Market (Crunchbase News) Record Number Of VC-Backed Cyber Companies Acquired in 2021, Even As Venture Funding Hits New Highs (Crunchbase News) 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 TechMeme right home for Tuesday, December 28th, 2021. I'm Brian McCullough today. China's anger at Elon Musk because of his Starlink satellites, Xiaomi's new smartphones, the delivery robots taking over college campuses, the three fund companies that made up fully 12% of all venture investments this year, and why cybersecurity companies are the hot startup sector as we head into the new year. Here's what you missed today in the world of tech. China has taken to publicly berating.

the U.S. for something that Elon Musk has done. That's a crude way of putting it, but this could end up being a bigger deal, quoting the Guardian. China has accused the U.S. of ignoring international treaty obligations and engaging in irresponsible and unsafe conduct in outer space after two near misses between the Chinese space station and satellites operated by Elon Musk's SpaceX company. Zhao Li Jian, a foreign ministry spokesperson said on Tuesday that China, quote, urges the U.S. to act responsibly after incidents involving SpaceX's Starlink satellites, which he said had posed a serious threat to the lives and safety of astronauts. In a note to the UN Committee on the peaceful uses of outer space earlier this month, China said Tian Gong, its new space station,

had to maneuver to avoid one Starlink satellite in July and another in October. Tiangang had to take, quote, preventative collision avoidance control during two close encounters after the Starlink satellites had moved into orbits that obliged Tian Gong's operators to change its course, the document said. China's note to the U.N. Space Agency in Vienna said state parties to the Outer Space Treaty, which is the foundation of international space law, quote, bear international responsibility for activities carried out by both government and non-governmental bodies in space. Evasive maneuvers to reduce the risk of collisions in space are becoming more frequent, owing to the number and speed at which satellites are being launched, said Jonathan McDowell of

the Harvard-Smithsonian Center for astrophysics. Quote, Starlink is a big part of that, McDowell said, adding that it was highly unusual for a country to lodge a complaint through an informational bulletin. Any collision would be likely to completely demolish the Chinese space station, he said. McDowell added that China was also a big contributor to space junk, quote. The U.S. Space Station has several times over the past 10 years had to dodge pieces from the Chinese military anti-satellite test of 2007, he said. It's not like the Chinese had a clean record here.

the biggest debris event ever was the Chinese anti-satellite test, end quote. Beijing's complaint prompted heavy criticism on Chinese social media of Musk, whose electric car firm Tesla sells tens of thousands of vehicles in China each month. Musk is widely admired in China, although Tesla's reputation has been tarnished after a rash of recent crashes and scandals. One hashtag on the Wibo social networking platform recorded 90 million views on Tuesday, quote, how ironic that Chinese people buy Tesla contributing large sums of money so Musk can launch Starlink, and then he nearly crashes into China's space station, one user said.

Quote, prepared to boycott Tesla, said another Webo user, echoing a common response in China to foreign brands perceived to be acting contrary to national interests, end quote. Chinese tech company, Zhaomi, has announced a 6.28-inch Zhaummi-12 smartphone, as well as a 6.73-inch Xiaomi 12 Pro smartphone with Snapdragon 8, 5 megapixel camera sensors, and up to 12 gigabytes of RAM and 256 gigabytes of SSD, all coming in January starting at around 580 bucks, quoting GSM Arena. Xiaomi 12 comes with the smallest screen on a Xiaomi flagship since the Xiaomi Me 8 days, which is a welcome move for compact flagship enthusiasts.

The Samsung made 6.28-inch Amelad panel supports FHD Plus resolution and refreshes at up to 120 hertz. There's an under-display fingerprint scanner, while Corning's Gorilla Glass Victus is here to fend off scratches. The Pro model's 6.73-inch panel comes with 1440P resolution and uses an LTPO 2.0 backplane, which allows for variable refresh rates of 1 to 120 hertz depending on the task at hand. Xiaomi 12 Pro also comes with an in-display fingerprint scanner and Gorilla Glass Victus protection. Both Xiaomi 12 phones output 12-bit colors and can crank out up to 1,500 nits of brightness. The Xiaomi 12 Pro retails at around $738, while the top spec, 256-gabyte model for the 12 comes in at $848. Xiaomi 12 series will be available from December 31st in China.

International pricing and availability will be detailed at a later. date, end quote. One big thing we were talking about over the last year and even the year before was the potential of delivery robots. Remember my, when will I be able to order a burrito to be delivered to me for lunch by an ankle bot? That wager, well, it turns out, if I were a college student, that wager would already have paid out, because this could already be a reality. From Bloomberg, a look at how college campuses are proving to be an ideal use case for those Death Star-style drone bots, but the question is, is this situationally the only use case that makes sense? Quote, Robot 50 Starship robots servicing James Madison, one of 22 colleges where the

company now operates. Students pay $1.99 per delivery. KiwiBot, another sidewalk droid startup signed a deal in August with SOTX, SA, to deploy 1,300 robots on 50 of the campuses where the food service provider runs the dining halls and cafes. KiwiBot, has several pricing structures, but it generally charges $1,300 per robot per month, which works out to less than $2 an hour. Yandex NV in Moscow operates 50 robots at Ohio State University. The economics are promising compared to human-staffed delivery services, which have long struggled to turn a profit. DoorDash, which controls about half of the U.S. market for food delivery, fulfilled 816 million orders last year, posting about $3.50 in revenue for

each. To make those deliveries, DoorDash relies on about 1 million delivery people. Despite using controversial strategies like classifying workers as independent contractors to keep labor costs low, it still ends up losing almost $2 per transaction. Meanwhile, each of Starship's 1,200 robots cost about as much as a high-end laptop can run for 18 hours on a single charge and often operates for days without any human interaction. The hourly wage of a robot is zero, says Starship chief executive officer Alistair West Garth, so I can do a milk run and do it profitably, end quote. In November, DoorDash unveiled DoorDash Labs, an in-house research and development unit that's already secured two patents for an autonomous delivery pod. One of its main competitors, Uber-owned Postmates, spun out its own

robotics unit, serve robotics in March. The company expects sidewalk droids to handle 5% of U.S. food deliveries by 2026. Dense urban areas or even sidewalk-less suburbs may prove beyond the navigational capabilities of most robots for years, says Sagi Evan Betta, senior research analysts at Guidehouse Insights, even if they do figure out the technical challenges, drones, or larger delivery capsules that can travel on the streets may work better in large cities. The use case is quite limited, Evan Betta says, I still think we're several years away from it being mainstream, end quote. But the company's making sidewalk drones respond to such skepticism by pointing to other use cases. When they're not serving Ohio's college students, Yandex's robots are shuttling packages around

Moscow for Russia's postal service. The devices which the company has been working on since 2018 are arguably the largest and toughest in the market. Each can carry six large pizzas and two liters of soda. With snow tires or tank treads, they crawl across snow banks and curbs. Their batteries can be swapped out in seconds, avoiding downtime for charging. Quote, it's basically a small electric car, says Artem Fokin, head of business development for Yandex's self-driving division. If we look 10, 15 years down the road, it's a business that's tens of billions of dollars, he says, and that's just on our serviceable market, end quote. The bots are learning their worlds quickly, their algorithms adjusting and improving on every trip.

In Europe, Starship bots are already delivering groceries, and Westgarth expects the company to deploy almost 3,000 new robots in 2022, end quote. Lots of data points vis-a-vis the startup. ecosystem as we bring 2021 to a close, so I've got a bunch of them for you. Today I'm going to focus on where VC money has been going and

how over the last year, sort of has a lens to think about what will continue to constitute startup success in the coming year. For years on the show, we have covered SoftBank's Vision Fund and the way it revolutionized startup investing with its sheer scale.

But 2021 was the year that SoftBank got some serious company. In fact, according to a crunch-based analysis, Tiger Global and Insight Partners, along with SoftBank-led, led or co-led funding rounds totaling $73 billion in 2021, which represents fully 12% of all venture and PE money invested in startups this year. Three firms represented 12% of global venture funding. That's crazy. This is important because it is either the new normal that startups, need to consider, or else this is the fuel of a bubble that could potentially blow up at some point.

Quoting Crunchbase. For every week in 2021, Tiger led a funding on average every four working days out of five. Insight Partners was not far behind, leading on average around more than three working days in a week, and SoftBank led on average more than two investments per week on par with Andreson Horowitz, the most active venture firm in 2021. Tiger and the SoftBank Vision Fund have increased their pace of fundings led by more than 400% crunch-based data shows, while Insight Partners has increased its pace by more than 190%. Despite the increased activity and record funds raised, the investment approach for each of these firms is quite different. The SoftBank Vision Fund led larger and more highly valued rounds, crunch-based data shows, leading rounds that tallied up to $35 billion. Tiger Global,

meanwhile, led almost double the number of fundings compared to SoftBank. It led rounds in companies that raised a total of $29 billion in 2021. Insight partners led rounds totaling $14 billion, still a large number, but less than half of the amount of the other two leading growth equity firms. For context, Andresen Horowitz and Sequoia Capital, two of Silicon Valley's best known and most deep-pocketed venture firms, led rounds adding up to $6.9 billion and $7.6 billion in 2021, respectively, per crunch-based data, end quote. Meanwhile, 2021 was also the year of the SPAC, especially in the first half of the year. This blank check, old but functionally new way to reach public markets, provided liquidity events for a lot of unicorn startups this year, especially in the self-driving or electric car space.

And yet, according to CrunchBase yet again, most VC-backed startups that went public via a SPAC in 2021 have seen their stocks drop. Metro Mile View, Allette and Clover Health are among the worst performers so far. This is important because, was the SPAC craze a case of startups getting out while the getting was good, were a lot of marginal companies dumped on public investors? If that's the case, will that sour the investing public's appetite for tech startups, thereby making it harder for other startups to have liquidity events, even traditional IPOs in coming months? quote, the overwhelming majority of venture-backed companies that went public via special purpose acquisition companies or SPACs this year are trading far below their former highs. The list of

truly terrible performers, meanwhile, has expanded in recent months as sell-offs accelerate. Those were the broad findings from a crunch-based news review of SPAC offerings this year. Several high-profile names in sectors from insurance to autonomous driving to baby care have performed particularly awfully. Many of the most recognizable names, including WeWork, Grab, and BuzzFeed are are also down markedly. So which are the worst performers? Using a combination of crunch-based data and spec merger records, we set out to cherry-pick a few. And it turns out that was hard to do. That's because the list of SPACs down more than 30% since announcing a merger is rather long, end quote. And they do go on to list a lot of the worst performers. But the broader stock market

performance of a lot of high-flying tech companies has been downright miserable of late, especially in the fourth quarter of 2021. So maybe it's not just the SPACs, maybe it's SaaS and recently IPO tech companies generally. But CrunchBase concludes by saying this, quote, It's been a record-setting year for private companies crossing the $1 billion valuation threshold into Unicorn territory as well. So it seems natural to presume that public markets would also be receptive to venture and growth stage companies in hot sectors with compelling business models, even if they are far from profitability. But the great spack boom of 2021 seems to tell a different story. While many mergers with blank check acquirers do

okay initially, it's quite common for these companies to see share selloffs in subsequent months. Could they bounce back? Sure. But so far, things are largely not off to a great start, end quote. So is the great spec window of 2021 slamming shut? And finally today, one more data point in terms of what we see as the hotness in VC at the moment in terms of what sort of of startups folks are interested in backing lately. I think I've told you, at least as I've observed personally and anecdotally, cybersecurity is hot. Lots of checks being written to various security companies, maybe because it seems like everybody got religion about cybersecurity during the great ransomware wave of 2021. Everybody, no matter what the industry, seems to have realized

they need to gear up and secure their stuff. As proven by the fact that 129 VC-backed cybersecurity companies were acquired in 2021, shattering 2020's record of 79 deals, while more than $20 billion in funding poured into cybersecurity startups this year. Once more from CrunchBase. There is no one feature, tool, or platform driving the vast amounts of money and interest the sector is seeing. Hot areas include identity management, privileged access and governance features, and network security platforms. The other interesting aspect is who is buying, 15 Strategics or investment firms made multiple buys of venture-backed cybersecurity companies this year. Interested parties ranged from private equity firms like TPG to consulting firms like Deloitte

to those more closely associated with cybersecurity such as Fortinette and Rapid 7. The fact that M&A took off this year in cybersecurity probably should not shock anyone. The year was marked with cyber attack after cyber attack from the colonial pipeline attack discovered in May to the more recent concern of a critical flaw found in the Java-based software known as Log 4J, which companies use to configure their applications. That does not even mention the fact that many of us are now working from home, or possibly both home and the office, thus creating a wider attack surface that companies must protect and secure as more of them and their workers move to the cloud.

While no one would think dealmaking in cyber is slowing down, it is interesting to note that through mid-December, there were only 19 M&A deals involving venture-back companies in the fourth quarter. That number is down significantly from 47 deals in the previous quarter. Is that a harbinger of what 2022 may hold, or were acquirers exhausted after such a robust third quarter? Time will tell, although with the amount of cash the sector is flush with, it's hard to imagine 2022 not being a new record year for dealmaking, end quote. Over the weekend, I tweeted about how obsessed I've become with the show Station 11, which is airing right now on HBO Max.

It is, as I said, the best thing I've seen, either TV or movies in about a day. decade. It's magical. No media I've consumed recently has so completely absorbed me. But as I said in my tweets, I don't blame anyone for being skeptical of a show about a pandemic apocalypse when we're in the midst of a pandemic. But here's the thing. Because of an accident in downloading on my HBO Max app, I became hooked on Station 11 while accidentally watching the third episode first. And it actually didn't trip me up at all. The third episode is maybe one of the greatest episodes of television I've ever seen. So here's my suggestion. If you're wary of giving Station 11 a try, maybe just give episode three of viewing. If the humanity and artistry of that episode end up thrilling you,

then there's a good chance you'll enjoy the entire series. You can go back to episode one and catch up without feeling lost by starting with episode three. So maybe try that, starting with episode three, because it's my favorite, though. My second favorite was episode one. So, you know, just sample. Each episode of this show feels self-contained in a way, and each episode has the same tone and feel throughout. So if you like either, the third episode or the first one, you'll know what you're in for,

and you might become a convert like me. So give it a chance. Talk to you tomorrow.