Automation is Progress

I’ve had a lot on my mind this season from climate change and wealth disparity (Robert Reich has great material worth watching/reading) to the implications of emerging technologies including:

• Mixed reality
• Deep learning
• Additive manufacturing
• Brain computer interfaces
• CRISPR
• Nanobots
• Computational biology
• Quantum computing
• Blockchain technology
• Smart cities
• Gaming as a service
• etc.

While these technological advancements are independently impressive in their respective attempts to fuel humanity’s ambitions, it is unlikely that any of them would have been possible if it were not for the Industrial Revolution which has served as a catalyst for contemporary society as we know it. The chart below from Luke Muehlauser’s blog showcases that humanity’s well-being has witnessed a drastic improvement since 1840, just after the Industrial Revolution. This conclusion is evident across six variables as seen on the y-axis including life expectancy, % not living in extreme poverty, and GDP.

The aggregate scale of progress our species has made over the past ~180 years is truly awe-inspiring. To better depict the impression the Industrial Revolution has made relative to other world-changing events, let’s zoom in on the graph above and overlay a few events of historical importance. Assuming the y-axis remains static in the chart below, it’s clear that the Industrial Revolution has driven a magnitude of transformative change far greater than any other event in recorded history.

 

The Industrial Revolution, which lasted from ~1760-1840, established the factory system capable of transitioning production methods from the hands of workers to machines. In manufacturing any good, there are certain tasks that are easily repeatable and thus ripe for a machine to take over that does not tire. In essence, the Industrial Revolution led to early meaningful implementations of automation, but was constrained to manufacturing and process application. We define automation as a technique or method to control a process by automatic means. Ultimately, automation compounds efficiency wherever implemented with the goal being to reduce or replace the need for human intervention.

Artificial intelligence (AI) has become a progressively prominent enabler for the next generation of automation and its influence can be thought of on multiple levels akin to a sliding scale ranging from no automation to full automation as described below. (Source: Connell, M. L, Ph.D. 2019.)

1. Manual: No automation. Everything is made by hand.
2. Analog automation: Think early industrial era. Complex tasks performed by mechanical components gears, belts, cogs, etc. No real AI component.
3. Single-task robotics: Think 1970’s automotive industry. A single-purpose robot built for a single well-defined task. Assembly lines of this age had to be amazingly precise since there was no controlling intelligence to error-correct.
4. Single-task AI-enabled robotics: Similar to above, but with low-level AI programming able to error-correct within some parameters – this was a huge step forward. Emphasis still upon the individual robot being controlled. Characterized by a blend of mechanical and silicon (AI) controls and mechanisms.
5. AI-enabled automation: Focusing more upon the software (AI) and taking the form of modular control apps applied to multiple situations and environments. Collaborative robots and enterprise SaaS today largely fall in this category of automation. Human intervention is limited to a managerial or oversight role.
6. General AI automation: The machine/robot/software self-learns the principles of its environment. It is capable of determining and executing on any number of open-ended actions by problem solving as a human would. No human intervention beyond the decision to deploy is required.

(While we’re on the topic of General AI, let’s not forget to wish HAL from Arthur C. Clarke’s 2001: A Space Odyssey a happy birthday today!)

While automation has ushered in a new age of productivity, this increase in the global standard of living has come with baggage. Exponentially increasing population and an increase in carbon dioxide emissions are among many factors that future generations must address.

 

All of the above data points represent a small fragment of the grand narrative that is human progress, but point to a theme that has enabled us to thrive: automation.

Automation’s Impact on Society

Automation is still very much core to the global manufacturing industry and the way we think about automation’s impact on the sector has expanded to include emerging technologies like AI, as previously discussed.

There is concern here in the United States, where 8.7% of American jobs are in manufacturing, that automation is displacing jobs in the short-term. Incumbent workers are upset because this shift will take time and will disrupt their way of life. After all, it took ~60 years for the English Industrial Revolution to improve the wages of work (although, that was before the age of the internet which has made re-education accessible and affordable for the masses).

Furthermore, some Chinese manufacturers have successfully reduced up to 40% of their workforce as a result of automation and are even opportunistically shifting labor costs to cheaper surrounding economies.

The reality is that manufacturing jobs are not the only jobs at risk. (Beyond traditional industrial robots, collaborative robots are already making their way to a workforce near you!) In time, machines and computers will directly augment or replace every job across every vertical.

As the rate of technological automation increases, I personally believe that the displaced labor force would benefit from structured or subsidized unemployment to help workers transition between jobs. Workers today transition from job to job much more frequently than 100 years ago and the half-life on a given skill required for a specific job is shortening. As such, job security (or rather income security) will continue to be a relevant discussion point. Darrell M. West, thought leader at the Brookings Institute, suggests that we should consider new paradigms in our social contract with society which encompasses everything from basic income (for purposes of retirement and healthcare), to separating our benefits from jobs, and even offer learning assistance to those who are looking for a job.

Long-term, the picture brightens. Sources ranging from Gartner, the World Bank, and leading economists all agree that automation will produce two broad-sweeping benefits for society:

• Jobs will shift towards higher-skilled work and thus an increase in wages will follow.
• The number of total jobs added to the workforce will increase at a faster pace than the number of jobs displaced.

It should not go unstated that there are some who have dystopian expectations. Those who find themselves in the same camp as Alvin Toffler, author of Future Shock (1970) and well-known futurist, would suggest that an increase in wages may not follow the shift towards higher-skilled work since the skills baseline is continuously being raised. Toffler and others posit that automation could actually result in more and more people being left behind as jobs become increasingly complex. It’s worth noting that over the years, a portion of these voices have converted to the utopian perspective which equates automation with an increase in higher-skilled jobs.

Regardless of which side proves to be correct, as automation takes hold long-term, education and augmentation technologies will continue to be crucial tools for workers. I plan to elaborate on specific automation investment theses in future posts.

Living in an Automated World

Today, automation is truly industry agnostic and impacts every aspect of our present-day lives from mobility services to job recruiting. As the pace of automation increases there are many social questions that remain unresolved:

• How should we think about the way we define “work” in a world where there may be less work (in the traditional sense) to go around?
• Does a 30 hour work week make sense?
• Should there be renewed emphasis on parenting, volunteering, and giving back to the community?
• How do we remedy automation’s negative side effects such as increased carbon dioxide emissions?
• How quickly/slowly willy automation affect each industry vertical?
• etc.

Automation will increasingly play a role in empowering the progression of society. Being a realistic optimist, I believe that we should embrace automation. Every person should be free to strive towards his/her own definition of enlightenment, fulfillment, or even pursue uniquely human thought – the arts, sciences, philosophy. Basic necessities will be provided by closed-loop systems. Autonomous vehicles will offer real-time transportation anywhere. The endgame for automation is not realized until the automation of all work has been accomplished and the pursuit of learning together with one’s personal interests is a luxury anyone may access anytime.

If you share this vision of an automated world or are working to address challenges in this field, let’s chat!

A Personal Note

Although the days of my youth competing in LAN tournaments have sadly long since faded, I still enjoy keeping up with the gaming industry in the capacity of an enthusiast. One to two hours of actual game time a month signify a “win” by my present-day standards. My recent industry exposure has been more professionally inclined including 1) white papers covering mobile gaming and gaming in AR/VR/MR, 2) supporting the Havok acquisition during my time at Microsoft, and 3) the occasional video game conference trip with friends. With E3 2018 already upon us, this last point seems particularly relevant… There’s a story worth telling regarding an incredibly uncomfortable E3 road trip in a Tesla from Seattle to the Los Angeles Convention Center but I’ll save that tale for another time.

A friend at Andreessen Horowitz (a16z) recently asked that I share some of my knowledge of the eSports industry with one of his fellow partners. Given my interest in the space, I decided to explore below a few of the points I brought up with him during the conversation.

What is eSports?

My thesis as to what defines an E-Sport boils down to several key components that are mostly in-line with industry consensus. These components have analogues in traditional sports, but achieving them in the eSports scene presents unique challenges:

• Publishers/Games: Accessible and appealing games are at the core of the eSports industry. They are designed with both the casual and hardcore gamer in mind. Generally speaking, a good eSports title is one that new entrants can pick up but requires a significant investment of time to master.
• Community: Games that achieve a critical level of adoption witness the emergence of connected audiences across social media platforms including Youtube, Facebook, Twitch, and Discord. Video, specifically streaming, has been a game-changer for community building thanks to real-time interactions opportunities they offer community members. Several cross-game eSports social communities have come and gone but none of them seem to have long-term staying power. This is likely due to the fact that social communities for each eSports game feature unique cultural norms and happen to be fairly well isolated from other communities. To elaborate, Smash Bros. Melee and Dota 2 communities have about as much in common as hockey and NBA fans. Fans typically stick to their respective swim lanes.
• Competition: As a game’s community evolves, teams, events, and tournaments form. Individual players and personalities gain notoriety. Winners and losers are showcased through local, national, and worldwide levels of play. Compared to the career of a traditional athlete, professional eSports careers will likely have a much shorter life span considering that 1) new games will replace old games, 2) the fundamental rules of a game change every time a new character or rebalancing patch is released, and 3) skills required for the upper echelons of competitive play are not very transferable to other games. As a result, building long-lasting stories about individual competitors and teams that resonate across eSports communities may be difficult. Legacies built in traditional sports can last decades and are relatable to fans across generations. When a traditional sport like basketball or baseball hits the big time it has staying power and rules governing those games rarely change.
• Incentives: Players become competitors when a prize is at stake. Beyond sheer appreciation for a game, money, swag, or claim of title give players reasons to keep coming back.
• Brands: Brands are the enablers of those incentives. Consumers vote on players/teams with their viewership and brands follow the underlying consumer install base. A larger install base ultimately leads to a larger opportunity for monetization.

It’s important to note here that eSports are platform agnostic- gamers play across mobile, console, and desktop devices.

eSports Market Overview

• In 2018, eSports will grow to $906M, up 38% YoY.
• Brands will contribute 77% of this, or $694M, a 48% increase since last year.
• The global eSports audience will reach 380M this year.
• Asia ($406M) and North America ($392M) lead the market in revenue generation.

 

2018 eSports Global Revenue Streams

 

eSports Market Revenue Worldwide ($M)

 

2017 eSports Global Revenue by Region ($M Est.)

Trends and Industry Themes

• Occasional Viewership is Growing: While “Enthusiasts” continue to expand the market, “Occasional Viewers” are equally important in driving overall viewership. When you think about it, those “Occasional Viewers” have a lot of options as to how they want to spend their free time. It’s impressive to see that people are increasingly choosing to engage with eSports over the latest Westworld episode or even alternative activities like hiking and traveling. Catalysts driving this trend arguably stem from accessibility and the economics of the industry. Compared to a live Warriors game, watching professional eSports competitors like Mango and Mew2King duke it out over a stream is practically free. The barrier to entry for viewers is really quite low since you really just need a device and internet access.

 

Global eSports Audience Growth

 

• The Rise of Free to Play (F2P) Games: F2P games have introduced a business model paradigm for the industry. Most industry spectators would agree that F2P games with in-game microtransactions for skins, loot boxes, exp boosts, etc. seem to be the future of gaming. The F2P model has successfully been applied across gaming genres including Multiplayer Online Battle Arena (MOBA), Real-Time Strategy (RTS), First-Person Shooter (FPS), Battle Royale,…
• eSports Expands to the West: Asian audiences may remain the largest segment of the market but there is a fast-growing Western audience. While I want to refrain from going deep on eSports history, factors that accelerated Western audience adoption include:
  • 2009 gaming regulation in South Korea and the decline of StarCraft opened the door for other countries and games to take center stage.
  • Dota 2 and League of Legends competitions were important drivers for Western audience eSports adoption. A documentary called “Free to Play” does a great job giving you a sense of what it felt like to be an eSports competitor in the early days of Dota 2.
• Prize Pools Legitimize eSports: Just five years ago a $1M prize pool was practically unheard of. Last year, Dota 2 tournaments paid out nearly $38M and Epic just announced $100M in prize money for Fortnite tournaments this year. Prize pool expansion correlates tightly with traction in mainstream popularity and numbers like this demand attention.
• Mobile is King: Compared to consoles and the PC market, growth in the mobile ecosystem is unparalleled. Tencent reigns supreme in mobile gaming while Android and iOS still manage to capture 30% of every transaction that goes through their respective platforms. As device form factors converge, mobile will continue to expand its influence in the gaming industry and likely impact the future of eSports.

 

2018 Global Gaming Spend by Device ($ and %)

 

Where are the Pockets of Growth in eSports?

While most of the money in eSports is courtesy of B2B advertising or in team/event sponsorships, there are a few areas of the market that I anticipate will generate value in the mid-long term:

• eSports “Holding Companies”: There are several organizations in the industry that act similarly to Berkshire Hathaway. They manage a portfolio of teams across games that are comprised of a rotating roster of professional-level talent. These organizations are magnets for branding dollars. Tangentially, AAA game publishers are acquiring smaller game publishers to consolidate (and in some cases refocus) game developer talent.
• Media Rights: Exclusive rights to tournaments and games will be big money partnership opportunities for distribution platforms. In January, Twitch announced that it had signed a $90M deal with Blizzard to stream the first two seasons of the Overwatch League. How long before traditional media distributors enter the market?
• Streamer Enablement: I think of this as the tools layer of the eSports stack. What intelligent video snipping tool or innovative communication tool will simplify the life of a streamer?
• Betting/Gambling: The Supreme Court recently struck down a federal ban on sports betting so expect to see a wave of eSports betting companies. Betting was actually pretty big abroad through AlphaDraft and similar platforms but wasn’t available to domestic speculators until now.
• Hype Generators and Sponsored Merchandise: As mentioned earlier, eSports communities are disconnected and, as such, there really isn’t an ESPN equivalent that serves as a primary source of coverage for the industry. Additionally, there is opportunity for resellers and OEMs to step up their game with branded merchandise.

Conclusion

eSports titles have experienced extraordinary progress towards becoming household names in recent years and I’m excited to see how the space develops. Up-leveling the conversation to the broader gaming industry, I’ll continue to be keeping an eye on the mobile ecosystem and Gaming as a Service (GaaS) in addition to eSports. Additionally, any solution that connects gamers to other gamers or their games merits attention regardless of whether in the software or hardware layer of the stack. With that said, personal opinions and industry observations should not be interpreted as investment advice.

I’m looking to improve my understanding of the economics behind eSports teams/tournaments/leagues. How about you? Do you have any thoughts around eSports trends or companies in the space?

A Personal Note

One of my core responsibilities this year has been the development of an investment model to identify where Microsoft should be deploying cloud resources to maximize ROI. In an attempt to better understand the underlying fundamentals of the cloud market, there are many great articles and blogs freely available online. I found that an investor’s perspective on the industry was most helpful in refining my model. In this vein, I’m sharing a list of synthesized questions which helped me gain insight into a SaaS company’s market opportunity, competitive positioning, business health, and growth prospects. This is by no means a comprehensive list of questions to ask but may be a useful starting point.

Questions

1) Give me a sense of the market opportunity and the scale of your business within that market. Other relevant questions:

• GMV?
• Your company’s MRR (or CMRR, if readily available)? Trend over time?
• ACV?

2) What need does your company address and how do you differentiate from the competition? Other relevant questions:

• Who are your suppliers and how are they segmented?

3) What factors make up M/M change in your MRR? Other relevant questions:

• What % is new MRR? Trend over time?
• What % is renewal MRR? Trend over time?
• MRR churn %? Trend over time?
  • Note: if renewal MRR % from existing customers is higher than MRR churn %, this should be a flashing green light as it indicates a sustainable business model.

4) How diversified is your customer base? Other relevant questions:

• How is MRR segmented across your install base?
• What are the growth rates across new MRR, renewal MRR, and MRR churn in those segments?
• What % of revenues comes from the top five customers in each segment?

5) How valuable to your business is a customer within each segment and how much do you typically spend to acquire each type of customer? Other relevant questions:

• LTV all up and in each segment?
• CAC
  • Paid CAC all up and within each segment? Trend over time?
  • CAC payback period all up and for each segment?
  • CAC broken out by channel all up and for each segment? (FB vs TV?)

6) Help me understand the cash flows of your business.

• If company is FCF negative:
  • Net monthly burn rate? Rolling 3-month average?
    • Note: may need to review revenue and expense growth to pinpoint how much runway company has until its next funding round.
• If company is FCF positive:
  • FCF trend over time?

7) How do you plan to accelerate (or maintain) growth?

In Conclusion…

Feel free to comment on any key items I missed. If you have recommended reading on any of the material above for me, your suggestions would be much appreciated.

A Personal Note

This has been a particularly hectic month for my schedule. As I’m in a rush to get this out, apologies up front for any glaring grammar mistakes.

Themes in this post include:

1. AR/VR/MR
2. A.I. and Robotics
3. Cryptocurrency
4. Stocks
5. Transportation
6. Startups
7. Products
8. Industry Reports
9. Government and World News
10. Video Games and E3
11. Self-Improvement
12. Noteworthy Findings

1) AR/VR/MR

• 2.3M AR/VR headsets have shipped globally with Sony and Samsung as clear leaders each having ~20% market share.
• Microsoft’s Mixed Reality platform will operate across new 3rd party VR headsets announced at Computex.
• Apple made a number of significant VR announcements at WWDC. (For more on WWDC, see the “Stocks” section below.) On a competitive front, ARKit effectively undercut Facebook in the AR platform war and initial impressions suggest Apple’s ARKit is more enticing for serious developers than Google’s Tango. There’s still plenty of time for the competitive landscape to shift as this market grows. At the end of the day, I’d imagine that developers will ultimately migrate wherever the best tools and largest install base or profit pool reside.
• Recent AR/VR sentiment has turned South as some believe that the industry won’t live up to the hype. The case of CastAR, which recently shut its doors, certainly doesn’t help dispel any concerns. Against public opinion, game industry luminaries Michael Howse and Greg Ballard see opportunity and have launched Eleven Ventures.
• AAA titles including Fallout 4 are coming to the HTC Vive in October. While the headline sounds promising, the Vive’s core demographic has probably already played these games and only the most hardcore VR fans will want to play through them again. I don’t expect to see the adoption needle move much until AAA publishers start developing new content for HMDs. Mario Kart Arcade GP VR looks awesome but it’s an arcade exclusive.
• Samsung’s new VR display has nearly 3.5x more pixels than Rift & Vive. This comes as Varjo, a competing VR headset startup, promises “human eye-resolution”.
• Samsung’s Gear VR gets Chromecast, letting users stream VR gameplay to their TVs.
• Google releases 360-degree video heat map to determine what viewers are paying attention to, allowing developers to make better content.
• Microsoft launches Google Cardboard for AR.
• AR startup Meta sues its former head of optics and his company DreamWorld for allegedly stealing trade secrets.
• The Venture Reality Fund partners with Yahoo! Japan to support emerging AR and VR companies.
• Walking between worlds in VR.
• VC investment in AR/VR and AI:

 

2) A.I. and Robotics

• Eric Schmidt suggests that automation will mean more jobs but a change in desired labor force skill set. Exactly what I’d expect to hear from Alphabet’s Executive Chairman. I agree that robots won’t be running factories in 5 years, but expand that time horizon, and I imagine that repetitive assembly line responsibilities will eventually all be replaced. At Boeing, dozens of complex robots are already replacing humans for mundane tasks such as drilling and riveting. More importantly, robots are taking over the sushi industry!
• Element AI, featuring heavyweight talent including Yoshua Bengio, has raised $102 million. This underscores the continued rise of Montreal as a hub for AI tech. Microsoft bought Montreal-based AI startup Maluuba in January.
• Kai-Fu Lee on A.I., inequality, and the future of China and the U.S. as super powers. My views align closely with Mr. Lee’s. On that note, expect more scrutiny around China AI investments in Silicon Valley.
• IBM Research and Samsung develop transistors for a 5-nanometer semiconductor chip which could enable fingernail-sized chips with 30B transistors and perform ~40% faster than current chips.
• A machine will be diagnosing your sickness before you know it.
• Boston Dynamics and Schaft will be added to Softbank’s AI portfolio. Alphabet has had Boston Dynamics up for sell for almost a year.
• MMC Ventures A.I. investment framework.
• A.I. security companies from CBInsights:

3) Cryptocurrency

• As the cryptocurrency market finally starts cooling off, perhaps in part due to recent attacks on cryptocurrency exchanges, GDAX experienced a flash crash in its USD – Ethereum market because someone thought it was a good idea to place a multi-million-dollar sell order at market price. Bravo.
• Chris Dixon’s roundup of crypto token news.
• Bancor raises largest ICO ever at $153M.
• Former Mozilla CEO raises $35M in under 30 seconds for his browser startup Brave.
• The blockchain enters the classroom.
• 10 fastest-growing bitcoin and alternative currency companies based on the Mattermark Growth Score.
• Brad Feld on why initial coin offerings will not be the end of venture capital.
• IBM is building a blockchain-based transaction platform for seven big European banks including HSBC and Deutsche Bank. IBM is also partnering with AIG to develop an insurance policy that uses smart contracts to manage international coverage.
• The Ethereum landscape:

• Most importantly though, Blockchain-related job postings on LinkedIn have more than “trebles” in the past year!:

4) Stocks

• Market
  • Fortune 500 companies represent two-thirds of U.S. GDP with $12T in revenues, $890B in profits, $19T in market value, and employ 28.2M people worldwide.
  • Google, Apple, Microsoft, Amazon and Facebook take top five spots in BrandZ’s ranking.
  • Tech stocks account for ~23% of the S&P 500 market cap.
  • Here are the top 100 companies by revenue vs. profit:

• Amazon has dominated the news this month with the company’s $13.7B acquisition of Whole Foods. A few perspectives on the story:
  • Winners and losers in Amazon’s $13.7B purchase of Whole Foods.
  • Whole Foods will enable Amazon to scale its grocery efforts.
  • Walmart tells some tech companies to abandon AWS if they want its business. Since Amazon claims a leading 44% share of the cloud market, this could pose a serious opportunity for competitors to capitalize on.
  • Expect Amazon to make cashiers irrelevant.
  • Amazon may reduce Whole Foods prices.
  • Compared to Blue Apron, Delivery Hero isn’t threatened by Amazon… Until Amazon decides to focus on the European market. Blue Apron has already cut it’s IPO price range and rumor has it that Delivery Hero will price in the upper half of its price range.
  • Instacart, whom Whole Foods had a 5-year contract with, will be a victim in this deal.
  • Amazon’s key acquisitions and the 15 largest retail M&A deals ever:

• Amazon has made several other business venture announcements that should amplify the value proposition of its existing portfolio:
  • Amazon wants to build a giant beehive for drones. It’s seeking a patent for “multi-level fulfillment centers for unmanned aerial vehicles” that could serve urban areas.
  • Amazon announced Prime Wardrobe, a service that gives Prime members seven days to try on clothing orders at home before deciding what to buy.
  • Twitch gains exclusive broadcasting rights to 20 Blizzard tournaments including Heroes of the Storm Global Championship and the World of Warcraft Arena Championship.
  • Amazon’s “My Mix” is a new feature offering shoppers personalized suggestions of products they might like to buy.
  • The new $5.99/month Prime membership program is Amazon’s latest attempt at attracting more people in the lower-income bracket.
  • Amazon is expanding its lending to small businesses in the US, the UK, and Japan.
  • Amazon and Apple have finally come to an agreement to bring Amazon’s video app to the Apple TV streaming box.
  • Amazon is building a new smartphone that targets emerging markets like India.
  • Amazon Channels allows users to use credentials to access standalone app content for TechCrunch, Showtime, and HBO NOW. No billion dollar purchase price to pay on this deal. Well done.
  • Amazon to make its internal language translation service available to third-party developers as an Amazon Web Services product.
  • After rumors about an Amazon-Slack tie-up, Slack decides to leave Amazon’s $9B on the table and instead raise $500M at a $5B valuation.
• Apple and WWDC
  • Everything Apple announced at WWDC keynote.
  • Steven Sinofsky on Apple’s WWDC.
  • Apple launches HomePod to take on Google and Amazon. Apple is emphasizing its role as a music speaker that could “reinvent home music.”
  • Leaked Apple AR glasses.
  • Apple has paid +$70B to developers since the App Store launched in 2008. Downloads have grown +70% in the last 12 months.
  • Apple has begun manufacturing its Siri-powered smart speaker. The latest home speaker market share snapshot:
•  Facebook
  • Facebook hits the 2 billion user mark.
  • Facebook will be moving its 1.2B WhatsApp users off of IBM’s cloud to its own in-house data centers later this year. Facebook may have plans to expand its cloud presence.
  • Facebook, Twitter, YouTube and Microsoft form a partnership to tackle online terrorist activity.
  • Facebook is talking to Hollywood studios and agencies about producing TV-quality shows by Summer.
  • You will soon be able to subscribe to the news through Facebook.
  • Facebook plans a youth-oriented messaging app that gives guardians control over contacts. Let’s be honest though, kids are smart enough to figure out how to get around parental controls. The game component better be really addicting.
•  Snap
  • Snap Map allows users to view where their friends are in real-time.
  • Snap signed a $100M deal with Time Warner to bring original content and ads to the social media app over the next two years.
  • Regarding market share, Instagram Stories DAU continues to outpace Snapchat DAU:

• You may have heard that Snap Spectacles pop-up vending machines launched in Europe to improve brand awareness. I ran into one in Venice but it didn’t seem to be getting too much attention:

• Google
  • Google hit with a record €2.4B fine after EU antitrust regulators ruled the company had abused its power by promoting its own shopping comparison service at the top of search results.
  • Google adds job listings to search results.
  • Google is launching an educational program designed to teach kids about phishing, internet harassment, passwords, and other internet safety issues. Also see the Silicon Valley billionaires remaking America’s schools.
  • YouTube launches its social video watching app, Uptime (iOS), which features shared viewing sessions. Video consumption is expected to represent 82 percent of internet traffic by 2021 and has been on the rise across nearly all demographics including the 65+ segment:

•  Netflix
  • Netflix plans to spend $6B on original content in 2017, with that number substantially increasing in coming years. Keep in mind that this is a company that already has 50M U.S. subscribers- more than all major U.S. cable providers combined. Netflix realizes that content is king and plans to maintain its lead by creating quality hits across every genre while keeping in mind the preferences of its growing international markets.
  • “Why don’t Spotify and Netflix merge? Both are going to have a tough time competing with Apple & Amazon alone, which will both be a one-stop shop for music, movies, programming, etc, and have leverage to negotiate higher-margin deals with labels and content producers. Don’t think a Spotify ‘media platform’ is going to prevent that from happening.” — Jonathan Kriner, Director, TVision
• Baidu, Alibaba, Tencent, and Asia tech
  • The BAT companies are investing in themes including e-commerce and lifestyle trends.
  • The failure of Alibaba’s mobile OS isn’t surprising as Tencent’s ability to occupy a large part of smartphone users’ time and attention–thanks mainly to WeChat–is a major problem for Alibaba.
  • Alibaba invests another $1B in Lazada and acquires ZTE’s cloud division.
  • Asian companies have doubled investment in Europe’s tech sector since 2014.
  • Chinese smartphone makers are increasingly targeting overseas markets because their home market is already saturated. Onlookers will be curious to see whether any evolve into brands that are capable of competing against the likes of Samsung and Apple in the premium segment.
• Other tech news
  • Toshiba and Western Digital are still at one another’s throats over the sale of Toshiba’s flash memory unit. In the latest move, Toshiba has decided to sue Western Digital for $1.1B for interference with the sale. You can be sure that legal disputes between the two will escalate, thus delaying or even disrupting the $19B sale to the Development Bank of Japan + Bain consortium.
  • Verizon has officially closed its $4.5B acquisition of Yahoo.
  • More than 30 banks are rolling out Zelle, a fee-free peer-to-peer payments system that provides instant withdrawals. It sounds similar to other peer-to-peer payment services like Venmo but without the fee structure.
  • Samsung is set to launch the Galaxy Note 8 in August and files a patent for a smartphone case that wirelessly charges a smartwatch.

• Non-tech news
  • Jeff Immelt, GE’s chief executive, is stepping down after 16 years. “Every job looks easy when you’re not the one doing it.” GE has begun testing autonomous drones and robotic “crawlers” to inspect refineries, factories, railroads and other industrial equipment.
  • Dan Loeb’s Third Point takes a $3.5B stake in Nestlé urging the company to improve margins and spin off L’Oréal. Néstle recently took a stake in US meal-delivery startup Freshly which will compliment Néstle’s healthy foods portfolio while providing Freshly an opportunity to expand its distribution network. Using the Sony Entertainment spin-off campaign as an example, Third Point’s activist efforts abroad haven’t always worked out but Néstle seems to be more receptive towards collaborating with the firm as Dan Loeb’s pitch seemed, dare I say, management friendly. Given that Third Point’s stake is <2% of Néstle’s market cap, the firm will be viewed as a partner vs. activist investor.

5) Transportation

• Uber
  • If we’re keeping score, Uber is now missing its CEO, COO, CFO, CMO, VP of Engineering, and general counsel. Lyft has done a great job taking advantage of Uber’s current positioning including improved app features, the release of its diversity report, and the company’s Round Up & Donate campaign. Lyft’s differentiation through ethical marketing shines a spotlight on Uber’s recent failures. Time will tell how much of Uber’s install base cares enough to transition over to Lyft.
• SpaceX
  • Elon Musk shares his plans for the colonization of Mars and thinks we could be there by 2023… Which means 2028 may be a more realistic estimate given his timely track record.
  • SpaceX’s Dragon cargo capsule reaches the ISS, and more recently, successfully executes a back-to-back launch within 48 hours.
• Tesla
  • Tesla to manufacture cars in China to avoid 25% import duty as the country accounts for ~15% of sales. Additionally, the company plans to invest $32.7B in electric vehicles over the next five years. That’s 40 percent more than Daimler and Volkswagen combined.
  • The company’s model Y crossover SUV is set to launch in 2019.
• Connected cars
  • IBM is pairing with BMW to market connected car services. Last year, IBM announced a similar deal with General Motors.
  • Looking forward to testing BMW’s car-sharing service when I move back to Seattle.
  • Avis to manage Waymo’s autonomous car fleet while Apple is leasing vehicles from Hertz to test self-driving tech.
  • Operating under the Zenuity brand, Nvidia partners with Volvo and car safety firm Autoliv to develop self-driving systems. Nvidia also announces an expanded partnership with VW which expands beyond autonomous cars and into areas like robotic enterprise applications.
  • Apple is interested in an autonomous driving “system,” suggesting the company may want to power lots of cars versus build one.
  • Ride-hailing and electric cars will kill Big Oil. The cost to hail an autonomous, electric car will make gasoline obsolete.
  • Chicago taxi revenues have fallen 40% in the last 3 years.
  • >750k electric vehicles were sold last year with 40% of sales coming from China.
• Leaders and laggards in self-driving cars:

6) Startups

• Sam Altman and Reid Hoffman on scaling a startup.
• Top accelerators ranked and what’s on their mind including virtual assistants and smart buildings.
• Kauffman Fellows announces its newest class.
• Which VCs are actually succeeding in making money?
• KRFT provides musicians with a modular, digital instrument; allows users to build their own interfaces. As someone who enjoys dabbling in music production, I’m looking forward to checking this out. It plugs directly into Ableton Live, which is a plus.
• China-based bike-rental service Mobike raised $600M and is set to launch in the UK, its first overseas market. The company is aiming to launch in 200 new cities around the world by the end of the year. Bike sharing is growing so fast in China that it is hindering Didi’s growth.
• Hyperloop startup Hardt Global Mobilityhopes to launch a commercial hyperloop between Amsterdam and Paris in 2021.
• Real estate as a service companies like AirBnB and WeWork add value by decoupling the service from asset ownership. This has me wondering what other business models are ripe for disruption in a similar manner… Airlines? Shipping?
• Palmer Luckey and Peter Thiel have teamed up for “a company that is developing surveillance technology that could be deployed on borders between countries and around military bases”.
• Blue Apron hoped to raise $480M in an IPO but that number will drop drastically given the recent adjustment to the IPO’s pricing range. I’m interested in seeing how this company goes after the 45+ demographic– a segment I would argue will be much more difficult to grow provided 1) a lack of awareness awareness, 2) relative adversity to technology, and 3) many of them have families and have probably already developed a kitchen routine that works for their lifestyle.

• Vice Media has raised $450M at a $5.7B valuation.
• Houzz raises $400M round at a $4B valuation.
• Coursera raised $64M at a $800M valuation.
• Dynamic smart glass company View raises $200M and sells electrochromic windows that automatically adjust transparency level based on weather conditions.
• Drone Racing League as seen on ESPN raises $20M.

7) Products

• With wireless charging, never again will your wireless mouse run out of power. How many gamers out there actually use a wireless (vs. wired) mouse though?
• GoSmart nears the close of its Kickstarter campaign for an adjustable pillow.
• U-tec launches Ultraloq which can be unlocked using a biometric imprint, contactless key fob, or smartphone.
• QR codes are driving the end of cash in China. When I lived in China, QR codes were used for everything from exchanging cash to buying food at a vending machine. QR codes are super easy to use but the U.S. market needs a catalyst to accelerate adoption. Perhaps a banking standard or new Facebook feature could popularize this technology?

8) Industry Reports

• Mary Meeker’s 2017 internet trends report and the full video presentation.
• Goldman report temporarily spooks tech investors.
• Intel says the passenger economy, or the reinvention of transportation, will be a $7 trillion opportunity.
• China releases a report on the state of the internet.
• The US ranks 28th globally for average mobile internet speeds.
• An interactive chart for rent prices in the U.S. Rent is effectively the modern day tenant system in the mind’s of young professionals. As home ownership becomes an increasingly unlikely option for us provided the rapid escalation in real estate prices within desirable cities, many young professionals have given up on the prospect of ever actually being a homeowner. I wouldn’t be surprised if the acceptance of this social norm has played an important role in the rise of the subscription model and the gig economy. Provided this mindset shift, buying into BMW’s new car-sharing service, getting your shows through Netflix, or even purchasing clothes through StitchFix seems completely natural. Without a home to call your own, one has no roots and is freely available to move around and live where he/she prefers. Furthermore, since traditional concepts of value (like owning a home or car) are no longer realistic near-term goals, it shouldn’t come as a surprise that my generation puts an increased emphasis on travel and experiencing life.

9) Government and World News

• U.S.
  • The Fed raises interest rates for the 2nd time this year.
  • Following President Trump’s withdrawal from the Paris climate accord, Elon Musk announces his departure from presidential councils and other tech leaders expressed their disappointment. With new energy expected to make up 75% of global investment (vs. fossil fuels at 25%) in power generation between now and 2040, there is concern that withdrawal from the Paris climate accord will cripple American business.
  • President Trump hopes to invest $1T in infrastructure.
  • The White House doesn’t believe that China will put pressure on North Korea which may directly impact U.S.-China trade relations- starting with steel.
  • Tech CEOs had a great time developing a “sweeping transformation” of government tech with President Trump…

• • 
  • The U.S. is stealing customers from Russia and Saudi Arabia even with prices as low as $50 per barrel.
  • 

• China
  • China was added to MSCI positively impacting domestic stocks. This is a big win for China as it further legitimizes the country’s influence in the international community.
  • China is set to spend $411B to roll out a super-fast 5G mobile phone network by 2030 with nearly 600 million predicted 5G users by 2022.
  • China’s new cyber-security laws require “important business” data to be stored within the countries border.
  • China and the U.S. account for over half of global growth:

• • 
• Canada
  • Launch Academy’s startup visa program gives entrepreneurs permanent residency in Canada. This program kicks off as the U.S. tightens its visa restrictions on immigrants.
• Greece
  • Greece negotiates another bailout. Many financial services professionals, including Byron Wien, believe that Greece bankruptcy is no longer a serious risk to the EU and that the economy has made progress towards normalizing.
• Finland
  • Finland has shaken off its label as the sick man of Europe and recorded six quarters of consecutive growth for the first time since the financial crisis.
• U.K.
  • Theresa May’s Conservative Party fails to gain a majority after calling for a snap election severely limiting her power and momentum behind Brexit. She also calls for greater regulation of internet companies following a terrorist attack in London and believes internet firms are providing a “safe space” for extremist view.
• France
  • After the Parliament win, Emmanuel Macron has redrawn France’s political landscape. The country’s consumer confidence is at a 10-year high in anticipation of Macron’s labor-market reform program.
• Russia
  • Anti-corruption rallies at the Kremlin put pressure on Russian president Vladimir Putin. The Russian leader recently proposed the privatization of the oil industry.

10) Video Games and E3

• Being in Germany, I didn’t have the opportunity to stop by E3 this year. Almost everyone I’ve spoken with, however, claimed that this year’s E3 was a step backwards with long lines, fewer hits on the show floor, and smaller VR presence than last year’s expo. Consensus among my circles of friends is that Nintendo and Ubisoft won E3. When Mario and the Rabbids makes a top-ten list though, I’m skeptical… If you hold any contrarian thoughts on the matter, feel free to share in the comments section at the bottom of this post. E3 coverage:
  • Trusted Reviews
  • IGN
  • Gamespot
  • Xbox One X will be $500 and supports Xbox One, Xbox 360 and Xbox games. Available 11/7.
  • EA announces new games including Star Wars Battlefront II.
  • Sony has sold 60+ million PS4 consoles.
• Sony gets into mobile gaming.
• Nintendo’s Switch Online service will cost $20 per year and launch in 2018.
• Pokémon Go gets co-op and new gyms.
• SNESClassic launches 9/29.
• The “valve” to (quality?) indie games has been opened… Valve launched Steam Direct which allows anyone to publish for a fee of $100 per game (recouped when earnings pass $100).
• Cloud gaming platform Shadow (aka Blade) raises $57M. The idea of outsourcing GPUs to gamers is one that really clicks with me- especially since a high-end gaming rig can cost $1,500+. Could Shadow be an acquisition target for the likes of a larger player like Sony or Nvidia?
• Tencent is considering a $3B purchase of Angry Birds developer Rovio who is contemplating an IPO.
• It’s no secret that the F2P revenue model has become increasingly popular in the mobile gaming industry. Free-to-play mobile games publisher, Scopely, raises $60M and claims +125M players across titles including “The Walking Dead: Road to Survival”.
• Discord, a gamer chat platform, raised ~$50M. As a user, I’ve been very impressed with Discord’s text and voice chat functionality- will be keeping my eye on the company’s development.
• The Esports market will evolve to include a larger audience interested in casually watching streamers or events. Not necessarily new news, but an important point to reiterate nonetheless.
• Just for the record, gaming is already a $100B market:

11) Self-Improvement

• As individuals, we are prone to overvaluing complexity because we think we are smarter and that we understand certain complex things that other people don’t. In reality, simplicity makes all the difference. Napoleon used simplicity when he was giving orders. That was one of the reasons he was so dominant on the battlefield. He was giving his troops very simple orders because he knew that they will be filtered through people and they would still be simple when they came out. Complex orders filtered through a chain of command almost never work.

12) Noteworthy Findings

• Since 1993, the percent of people living in poverty shrunk everywhere but in Africa.
• The mall of the future will have no stores.
• Youth tobacco use in the U.S. fell to historic lows in 2016. Great news on the surface, but is tobacco being replaced by a substitute?
• The sites which emerged after the Silk Road was taken down in 2013 now do more business than the original. Clearly, today’s youth simply prefer the harder stuff to tobacco.
• Need a new pair of shoes?
• Researchers in Morocco found evidence that Homo sapiens were around 100,000 years earlier than previously thought.
• How to rob a bank.
• How to explain anything to anyone, according to Neil deGrasse Tyson.
• Ancient Rome in 20 minutes and Ancient Greece in 20 minutes.
• Is the universe conscious?

A Personal Note

In the spirit of making the most of my time in Europe, I’ve lined up a fair amount of travel in June including stops in Venice, Florence, Cinque Terre, Pisa, Lucca, Milan, Lago Maggiore, Barcelona, Madrid, and London. If you have any food, sight-seeing, or must-do recommendations, let me know!

As some of you noted, there was a problem with the email subscription button when I launched my last post. If you still have issues trying to subscribe, please let me know.

AR/VR/MR

• Unity raises $400M from Silver Lake. Two-thirds of all AR/VR content and half of all new mobile games (including Pokemon Go) run on Unity. Being platform agnostic, Unity claims a defensible moat against secular trends within the gaming industry. I fully anticipate that companies like Unity and Improbable will institutionalize a new market over the next decade as massive scale simulation environments traditionally built for gaming purposes are applied to big ideas including city planning, transportation, and the very economy as we know it.
• HTC announces Link, a VR headset that connects to the U11 smartphone. Why didn’t HTC use the Vive brand? Perhaps, HTC is making an effort to differentiate branding for the mobile-phone and tethered experience? This comes off of Google’s announcement to work with HTC to create a standalone Daydream headset so it’s somewhat unclear what HTC’s intentions are at this point.
• Hasbro partners with DMG to create AR/VR experiences around Transformers. We’re witnessing the comeback of the arcade. The Imax VR arcades have received positive review.
• You won’t need your prescription glasses to use future head-mounted displays.
• Microsoft showcases it’s “near-eye” glasses and reveals more Windows Mixed Reality headsets at Computex.
• Chinese consumers aren’t meeting VR adoption expectations.
• MLB unveils its VR experience.

Cryptocurrency

• All aboard the hype train! When Fortune releases a Bitcoin 101 video after BTC adds billions more to its market cap, you know it’s a mainstream phenomenon. More recently, Bitcoin has witnessed a pullback while Ethereum continues its growth trajectory. Brace yourself for more volatility. Recent catalysts driving cryptocurrency adoption include capital inflowing from Japan and China, the recent Ethereal Summit, Bitcoin Scaling Agreement, Japan legalizing Bitcoin, Coindesk’s Consensus 2017, and Brian Kelly’s comments around buying cryptocurrency as a hedge against “political chaos”. Way to feed the flame, Brian.
• Since Congress announced the launch of the Congressional Blockchain Caucus in February, it seems like there has been a serious effort on behalf of the federal government to consider ways that blockchain technology will improve society, including specific applications like organizing medical records and even preventing IRS fraud. As awareness grows and governments around the world acknowledge blockchain technology, many are curious as to how regulation will affect this market. I believe the cryptocurrency market is overdue for limited oversight and that some regulation will positively impact adoption given the perceived Wild West nature of this space. To illustrate this point, there is little preventing issuers from walking away with your money after an initial coin offering other than faith and the promise of asset appreciation.
• R3 CEV, which provides an open-source distributed ledger platform for recording, managing, and automating legal agreements between businesses, raises $107M from 40 banks. For this industry, that’s a large pool of capital to be fundraising.
• For those who want to invest in cryptocurrency and haven’t yet made the jump, click this link to access my referral page and get $10 worth of Bitcoin when you sign up. If you’re an accredited investor, consider Coinlist which allows you to invest in early protocol tokens like Ethereum and Auger.

AI

• The TensorFlow Research Cloud announced at the Google I/O conference represents 1) an expansion of what is already the world’s most widely used deep-learning framework and 2) is a serious encroachment on Nvidia’s GPU accelerators for training machine learning algorithms. What would require a full day of training on 32 of the best GPUs can be done in an afternoon using one-eighth of one of its TPU Pods. See more highlights from the conference in the “Google I/O” section below.
• Apple is building its own AI chip which will improve battery performance by offloading AI processes from the main processor and graphics chip. Qualcomm and Apple are both making dedicated AI chips for the phone while Google and Nvidia sell similar chips to cloud customers.
  • “Processing AI on devices is the new battleground for mobile companies, and it’s one area where Apple, at least for now, may be ahead of Google.” – Kevin McLaughlin
• Google launches an AI investment platform separate from Google Ventures.
• Frank Chen discusses cool AI projects. A company called Jukedeck is building an AI that makes music. Another project has an AI create pictures based on a text description. Who says AI is incapable of creativity?!
• Zillow launches a crowd-sourced machine learning competition to improve its home value algorithm. This will serve as a case study for others wanting to integrate machine learning into their software platforms. Most companies that are serious about improving AI presence in their stack acquire talent vs. outsourcing.
• Tech giants acquired 34 AI startups in Q1’17. Google has had the most activity, acquiring 11 since 2012, followed by Apple, Facebook, and Intel.

Stocks and Startups

• IBM takes the lead in quantum computing with a new 17 qubit model available via IBM Cloud. It’s last generation quantum computer launched in May 2016 and had 5 qubits. 50 qubits is expected to surpass capabilities of todays’ computers. There are many different approaches academic institutions and companies like IBM are taking to create the quantum computer. Since the legendary Warren Buffett just sold off 1/3 of his position in IBM, it makes me wonder whether the Oracle of Omaha has some insight into Big Blue’s realistic prospects in being the first to 50 qubits.
• 
• Apple has been hinting at new products for some time and it seems that we may see one of them hit market sooner than later. Apple has a team working on the “holy grail” of diabetes and Tim Cook was apparently spotted wearing a device connected to his Apple Watch that tracks his blood sugar. In other news, the company may soon extend it’s influence beyond the phone+OS+app ecosystem into 5G mobile broadband services that have traditionally landed on the backs of telecoms like Verizon and Sprint. Last month, the company hired a pair of Google satellite executives and joined the Next Generation Mobile Networks for 5G development. Perhaps by 2018 or 2019, Apple will bring to market its recently patented curved display featuring an embedded fingerprint sensor on Apple’s 5G network? It’s always fun to speculate.

• Amazon aims to disrupt yet another market- pharmaceuticals.
  • “Amazon is the data company that, to me, is the world’s greatest startup. All they’re doing is leveraging their data to build more startups.” – Mark Cuban at the Lerer Ventures CEO Summit
• Wal-Mart digital sales jump 63%. What’s impressive is that the growth in online sales isn’t stealing away its retail store customers, as in-store traffic grew again. Contrary to popular belief, Wal-Mart’s e-commerce strategy may still have a horse in this race.
• After loosing the NFL deal to Twitter, Facebook has turned towards live-streaming for the MLB and has announced a broadcast partnership with esports league ESL. Facebook has also signed deals with a number of millennial-focused brands including Vox Media, BuzzFeed, ATTN, Group Nine Media.
• Despite continued negative press around sexual harassment, Travis Kalanick admitting he needs leadership help, and the latest round of news from the lawsuit with Waymo, Uber still remains a company people really want to work at. Are we, the tech labor force, effectively affirming that we hold vision and ambition in higher regard than ethics? Perhaps, the media is to blame for over-scrutinizing behavior at Uber? Culture is merely the summation of the people that make up an organization and leaders, which guide those organizations, have the responsibility of setting a positive pro-equality example for their workforce. No leader will have the comprehensive set of desired traits but when he (or she) realizes they’re not up to the task of managing an organization that impacts the lives of millions of people, it’s time to find someone who is.
• After much negotiation, Microsoft is rolling out a custom version of Windows for the Chinese government. China was one of the worst hit by the WannaCry ransom attack due to the high rate of pirated Windows 7 software in the country. If you recall, 97% of computers infected were using Windows 7. When I lived in China as a foreign English teacher, each classroom in all five schools I taught at ran on some kind of pirated version of Windows. If memory serves, “GhostWin7” was the most common fake Windows boot screen title. In electronics stores and repair shops, I frequently saw fake copies of Office for less that $2.
• Facebook’s Mark Zuckerberg delivers a commencement speech at Harvard. Also entertaining were the student newspaper’s headlines.
• SoftBank took a $4B stake in Nvidia. Nvidia has some ground to cover to match Google’s new TPUs. One must question just how much of an impact the Berkshire Hathaway of tech will have on late-stage funding rounds as capital continues to flow upstream. SoftBank closes $93B for its Vision Fund as startup valuations are in alignment with their 13 year averages after having fallen from highs in 2015.
• Quarterly earnings growth appears healthy. I’d be interested in seeing analysis around how much of this is attributed to top-line growth vs. cost-cutting.
• 58% of PE firms expect to fire inherited CEOs within two years.
• Uber and Lyft return to Austin. When Uber left the city, a sketchy Facebook group popped up that connected riders with unverified drivers. I heard some crazy stories from friends who used the group including one where the driver locked the doors until my friend doubled his tip.
• Tech giants on their way to global domination:

Google I/O

• Lots of conversation and opinions on this already. Here are some of my favorite links:
  • Everything going on at day 1 of the Google I/O conference.
  • Ben Thompson discusses some of Google’s new products in Boring Google.
  • Comparison between Google I/O and Microsoft Build.
  • Google Assistant will make money from e-commerce.
  • Google Lens turns your camera into a search box.
  • Actions on Google lets developers use Assistant.
  • Google Home will have free calling. This move was expected as Amazon’s Echo and Microsoft’s Invoke now offer free calling and Skype calls respectively.
  • YouTube VR adds shared rooms and voice chat.
  • Android reaches 2B active installations vs 1.5B PCs running Windows.
  • Android O beta is open and Google announces Android Go for cheap phones.

Products

• Andy Rubin’s company Essential releases its new Android phone. Essential also announced a smart assistant device and clip-on phone camera. Verizon, T-Mobile, Sprint, and AT&T will all support the phone.
• Microsoft launches an updated Surface Pro. Microsoft also offers the Surface Laptop at $999, the Surface Book at $1,499, and the Surface Studio at $2,999. Last quarter’s Surface revenue came it $831M  vs. Apple’s $5.8B. We still have some catching up to do, especially after last quarter’s 26% drop in Surface revenues, but public consensus seems to agree that the Surface Pro is a solid machine.
• Nest has a new camera that can tell the difference between residents and strangers.
• mssg.me allows users to keep messages from across apps in one platform.
• Robosea is a wireless underwater drone.
• Interactive AR windows are here.
• The copy-cat game continues as Instagram introduces face filters and launches Direct.
• Weibo is bigger than Twitter:

• Medium offers narrated posts for paid members.
• Google begins selling Jamboard in the US.
• Ikea’s smart light system to be compatible with Alexa, Siri, and Google Assistant. Where is Cortana?
• The LIDAR battle.

Government and World News

• Net Neutrality and Privacy
  • The FCC proposed rolling back net neutrality protections put in place under Obama. A final vote will take place in a couple months. To see the view from the other side, read a few arguments against net neutrality. I believe that an open and fair internet is a fundamental right. If you value your access to the internet and enjoy watching “goats singing Taylor Swift songs“, I would urge you to take action by sharing your opinion with the FCC at gofccyourself.com.
• 2016 U.S. exports:

• The Federal Budget
  • Trump promises to balance the budget within a decade by increasing spending on military and border security while cutting off access to food stamps, jobs for vets, and student loan subsidies. Not to mention the $2T accounting error.

• The Federal Reserve
  • The Fed will raise rates “soon”. No update on a target for the $4.5T balance sheet but markets reacted positively.
• OPEC
  • OPEC agrees to extend production cuts into 2018 but investors were disappointed that OPEC did not take a more aggressive measures. Goldman expects oil prices to stay around $50.
• NAFTA
  • Instead of walking away from NAFTA, it looks like the U.S. will sit at the negotiation table in August.
• NATO
  • Trump was silent on Article 5. NATO is weakening and the U.S. is viewed as an entity that cannot be relied upon.
• TPP
  • The 11 remaining members will pursue a trade deal without the U.S.
    • “Bilateral negotiations are better for the U.S. than multilateral negotiations.” – U.S. Trade Representative Robert Lighthizer
• Saudi Arabia
  • The US signs deals worth more than $400B with Saudi Arabia.
•  China and Hong Kong
  • The Bond Connect program, which connects international investors with China’s $9T bond market, has been formally approved. Meanwhile, Moody’s has lowered China’s credit rating to A1 from Aa3.
  • In a “freedom of navigation” operation, a US battleship challenged Beijing’s claim in the South China Sea. If this was an attempt to give allies in the region a boost of confidence, it seems like too little too late. China announces it will modernize its Navy. This all comes as China continues to expand artificial islands in the South China Sea and as the U.S. urges China to pressure North Korea on its missile program. China’s import of North Korean goods have fallen and the country’s Foreign Minister publicly asked North Korea to “not do anything again to violate U.N. Security Council resolutions”. North Korea ignored this advice and launched another missile test. Japan and South Korea have promised “concrete action” and “strong punishment from our military”.  The situation does not look good.
•  Japan
  • Private consumption is finally kicking into gear resulting in Japan’s longest growth streak in a decade.
• Germany
  • Trump says “the Germans are bad, very bad” for contributing to a lopsided trade surplus and threatened a 35% import duty for foreign built cars sold in the U.S. Considering that Germany’s main export product is the car and that the U.S. is Germany’s largest trading partner, it’s no surprise that Angela Merkel recently came out saying that Europe can no longer rely on the U.S.

Video Games

• Microsoft is doing with Mixer (formerly Beam) what Facebook is doing with Instagram. Compared to Snapchat, Instagram is more convenient given its proximity to and clean integration with Facebook’s social platform and Instagram has been rapidly improving the end-consumer experience through new (and sometimes unoriginal) features. Similarly, when compared to Twitch, Mixer will be more accessible to gamers on the PC, mobile systems, and consoles. Additionally, it has the benefit of lower latency, co-streaming, and interactivity. The question here is whether or not ease of access and a better experience for gamers will result in install base shift. As much as I like Twitch, my (admittedly biased) bet is on Mixer.
• Supercell builds out its talent pool by acquiring 62% of British game developer Space Ape Games for $55.8M. This is Supercell’s second investment in two months and I’d like to hope they’re bringing in talent for something big. As mobile gaming developers are oftentimes dependent on the success of one big hit (similar to the pharmaceuticals industry), its not uncommon to see small teams breakout with very successful apps. Seeing the talent pool in the industry expanding, it makes sense that Supercell is looking to acquire upcoming shops before they become competitors.
• Epic Games’ CEO Tim Sweeney worries that industry giants will try too hard to own the platforms upon which those games are built, and that will lead to toll booths, a lack of open standards, and a loss of privacy. The industry is still developing and while this may not be an immediate concern, it’s never too early to raise awareness.

Music

• Spotify acquires Niland to improve music discovery and remain competitive with Apple and Pandora. There is speculation that the company will be going public soon and will soon compete as a broader media platform. This industry became quite fragmented in recent years and faced a tough period of declining sales as a result. It seems that more recently, competitors have been pushed out of the market on pricing, lack of content, or by acquisition. Apple Music, Spotify, and SoundCloud look to be fairly well positioned relative to their competitors and long-term I’m not sure that consumers will care to keep track of more than one or two services. My gut tells me that the industry is stabilizing. We’ll see how much more consolidation there is before the survivors are left standing.
• Pandora turned down an acquisition bid in July for $3.4B and is now considering an offer from Sirius XM for for just over half that amount.

Science

• 3D-printed ovaries allow infertile mice to give birth.
• Microbots and micromotors will eventually move through your body to perform medical tasks.

Self-Improvement

• “Rightness and goodness aren’t objective constructs that, once attained, we achieve forever. They do not exist independently in nature. They are concepts that evolve with the rest of it, with us, and so must we always evaluate our actions in light of the new knowledge and understanding we acquire along the way.”

Noteworthy Findings

• Who wants to help me renovate a castle? For free. This actually kind of a serious question.
• Sotheby’s sold a pair of diamond earrings for $57M.
• A painting sold in 1984 for $19K just sold for $110M.
• PharmaBro Martin Shkreli is the subject of a musical.
• The average Lithuanian drinks the equivalent of 910 bottles of beer per year.
• A Chinese chemical company paid $1B for the maker of the Talking Tom app. Talking Tom is a cat that makes farting noises. I guess buying expensive apps is the new growth strategy for chemical companies?
• Dutch king reveals double life as an airline pilot.
• ColdFusion’s latest video talks about the history, scale, and influence of YouTube. I’d recommend skipping to 2:22.
• Walt Mossberg’s last weekly column for The Verge and Recode on the evolution of personal technology and ambient computing.
• The legendary Steve Cohen will be making a return as he seeks to raise $20B for a new fund launching in 2018. Steve Cohen has been operating under Point72’s family office structure since 2013 when SAC was forced to shut down due to allegations of the firm’s “black edge” practices.