Month: October 2020

Podcast advertising growth is inhibited by three major factors:

• Lack of macro distribution, consumption and audience data.
• Current methods of conversion tracking.
• Idea of a “playbook” for podcast performance marketing.

Because of these limiting factors, it’s currently more of an art than a science to piece disparate data from multiple sources, firms, agencies and advertisers, into a somewhat conclusive argument to brands as to why they should invest in podcast advertising.

1. Lack of macro distribution, consumption and audience data

There were several resources that released updates based on what they saw in terms of consumption when COVID-19 hit. Hosting platforms, publishers and third-party tracking platforms all put out their best guesses as to what was happening. Advertisers’ own podcast listening habits had been upended due to lockdowns; they wanted to know how broader changes in listening habits were affecting their campaigns. Were downloads going up, down or staying the same? What was happening with sports podcasts, without sports?

Read part 1 of this article, Podcast advertising has a business intelligence gap, on TechCrunch.

At Right Side Up, we receive and analyze all of the available research from major publishers (Stitcher, aCast), to major platforms (Megaphone) and third-party research firms (Podtrac, IAB, Edison Research). However, no single entity encompasses the entire space or provides the kind of interactive, off-the-shelf customizable SaaS product we’d prefer, and that digitally native marketers expect. Plus, there isn’t anything published in real-time; most sources publish once or twice annually.

So what did we do? We reached out to trusted publishers and partners to gather data around shifting consumption due to COVID-19 ourselves, and determined that, though there was a drop in downloads in the short term, it was neither as precipitous nor as enduring as some had feared. This was confirmed by some early reports available, but how were we to evidence our own piecewise sample with another? Moreover, how could you invest 6-7 figures of marketing dollars if you didn’t have the firsthand intelligence we gathered and our subject matter experts on deck to make constant adjustments to your approach?

We were able to piece together trends we’re seeing that point to increased download activity in recent months that surpass February/March heights. We’ve determined that the industry is back on track for growth with a less steep, but still growing, listenership trajectory. But even though more recent reports have been published, a longitudinal, objective resource has not yet emerged to show a majority of the industry’s journey through one of the most disruptive media environments in recent history.

There is a need for a new or existing entity to create cohesive data points; a third party that collects and reports listening across all major hosts and distribution points, or “podcatchers,” as they’re colloquially called. As a small example: Wouldn’t it be nice to objectively track seasonal listening of news/talk programming and schedule media planning and flighting around that? Or to know what the demographics of that audience look like compared to other verticals?

What percentage increase in efficiency and/or volume would you gain from your marketing efforts in the channel? Would that delta be profitable against paying a nominal or ongoing licensing or research fee for most brands?

These challenges aren’t just affecting advertisers. David Cohn, VP of Sales at Megaphone, agrees that “full transparency from the listening platforms would make our jobs easier, along with everyone else’s in the industry. We’d love to know how much of an episode is listened to, whether an ad is skipped, etc. Along the same lines, having a central source for [audience] measurement would be ideal — similar to what Nielsen has been for TV.” This would also enable us to understand cross-show ad frequency, another black box for advertisers and the industry at large.

Source: Tech Crunch

There are sizable, meaningful gaps in the knowledge collection and publication of podcast listening and engagement statistics. Coupled with still-developing advertising technology because of the distributed nature of the medium, this causes uncertainty in user consumption and ad exposure and impact. There is also a lot of misinformation and misconception about the challenges marketers face in these channels.

All of this compounds to delay ad revenue growth for creators, publishers and networks by inhibiting new and scaling advertising investment, resulting in lost opportunity among all parties invested in the channel. There’s a viable opportunity for a collective of industry professionals to collaborate on a solution for unified, free reporting, or a new business venture that collects and publishes more comprehensive data that ultimately promotes growth for podcast advertising.

Podcasts have always had challenges when it comes to the analytics behind distribution, consumption and conversion. For an industry projected to exceed $1 billion in ad spend in 2021, it’s impressive that it’s built on RSS: A stable, but decades-old technology that literally means really simple syndication. Native to the technology is a one-way data flow, which democratizes the medium from a publishing perspective and makes it easy for creators to share content, but difficult for advertisers trying to measure performance and figure out where to invest ad dollars. This is compounded by a fractured creator, server and distribution/endpoint environment unique to the medium.

For creators, podcasting has begun to normalize distribution analytics through a rising consolidation of hosts like Art19, Megaphone, Simplecast and influence from the IAB. For advertisers, though, consumption and conversion analytics still lag far behind. For the high-growth tech companies we work with, and as performance marketers ourselves, measuring the return on investment of our ad spend is paramount.

Because podcasts lag other media channels in business intelligence, it’s still an underinvested channel relative to its ability to reach consumers and impact purchasing behavior. This was evidenced when COVID-19 hit this year, as advertisers that were highly invested or highly interested in investing in podcast advertising asked a very basic question: “Is COVID-19, and its associated lifestyle shifts, affecting podcast listening? If so, how?”

The challenges of decentralized podcast ad data

We reached out to trusted partners to ask them for insights specific to their shows.

Nick Southwell-Keely, U.S. director of Sales & Brand Partnerships at Acast, said: “We’re seeing our highest listens ever even amid the pandemic. Across our portfolio, which includes more than 10,000 podcasts, our highest listening days in Acast history have occurred in [July].” Most partners provided similar anecdotes, but without centralized data, there was no one, singular firm to go to for an answer, nor one report to read that would cover 100% of the space. Almost more importantly, there is no third-party perspective to validate any of the anecdotal information shared with us.

Publishers, agencies and firms all scrambled to answer the question. Even still, months later, we don’t have a substantial and unifying update on exactly what, if anything, happened, or if it’s still happening, channel-wide. Rather, we’re still checking in across a wide swath of partners to identify and capitalize on microtrends. Contrast this to native digital channels like paid search and paid social, and connected, yet formerly “traditional” media (e.g., TV, CTV/OTT) that provide consolidated reports that marketers use to make decisions about their media investments.

The lasting murkiness surrounding podcast media behavior during COVID-19 is just one recent case study on the challenges of a decentralized (or nonexistent) universal research vendor/firm, and how it can affect advertisers’ bottom lines. A more common illustration of this would be an advertiser pulling out of ads, for fear of underdelivery on a flat rate unit, missing out on incremental growth because they were worried about not being able to get download reporting and getting what they paid for. It’s these kinds of basic shortcomings that the ad industry needs to account for before we can hit and exceed the ad revenue heights projected for podcasting.

If there’s a silver lining to the uncertainty in podcast advertising metrics and intelligence, it’s that supersavvy growth marketers have embraced the nascent medium and allowed it to do what it does best: personalized endorsements that drive conversions. While increased data will increase demand and corresponding ad premiums, for now, podcast advertising “veterans” are enjoying the relatively low profile of the space.

As Ariana Martin, senior manager, Offline Growth Marketing at Babbel notes, “On the other hand, podcast marketing, through host read ads, has something personal to it, which might change over time and across different podcasts. Because of this personal element, I am not sure if podcast marketing can ever be transformed into a pure data game. Once you get past the understanding that there is limited data in podcasting, it is actually very freeing as long as you’re seeing a certain baseline of good results, [such as] sales attributed to podcast [advertising] via [survey based methodology], for example.”

So how do we grow from the industry feeling like a secret game-changing channel for a select few brands, to widespread adoption across categories and industries?

Below, we’ve laid out the challenges of nonuniversal data within the podcast space, and how that hurts advertisers, publishers, third-party research/tracking organizations, and broadly speaking, the podcast ecosystem. We’ve also outlined the steps we’re taking to make incremental solutions, and our vision for the industry moving forward.

Lingering misconceptions about podcast measurement

1. Download standardization

In search of a rationale to how such a buzzworthy growth channel lags behind more established media types’ advertising revenue, many articles will point to “listener” or “download” numbers not being normalized. As far as we can tell at Right Side Up, where we power most of the scaled programs run by direct advertisers, making us a top three DR buying force in the industry, the majority of publishers have adopted the IAB Podcast Measurement Technical Guidelines Version 2.0.

This widespread adoption solved the “apples to apples” problem as it pertained to different networks/shows valuing a variable, nonstandard “download” as an underlying component to their CPM calculations. Previous to this widespread adoption, it simply wasn’t known whether a “download” from publisher X was equal to a “download” from publisher Y, making it difficult to aim for a particular CPM as a forecasting tool for performance marketing success.

However, the IAB 2.0 guidelines don’t completely solve the unique-user identification problem, as Dave Zohrob, CEO of Chartable points out. “Having some sort of anonymized user identifier to better calculate audience size would be fantastic —  the IAB guidelines offer a good approximation given the data we have but [it] would be great to actually know how many listeners are behind each IP/user-agent combo.”

2. Proof of ad delivery

A second area of business intelligence gaps that many articles point to as a cause of inhibited growth is a lack of “proof of delivery.” Ad impressions are unverifiable, and the channel doesn’t have post logs, so for podcast advertisers the analogous evidence of spots running is access to “airchecks,” or audio clippings of the podcast ads themselves.

Legacy podcast advertisers remember when a full-time team of entry-level staffers would hassle networks via phone or email for airchecks, sometimes not receiving verification that the spot had run until a week or more after the fact. This delay in the ability to accurately report spend hampered fast-moving performance marketers and gave the illusion of podcasts being a slow, stiff, immovable media type.

Systematic aircheck collection has been a huge advent and allowed for an increase in confidence in the space — not only for spend verification, but also for creative compliance and optimization. Interestingly, this feature has come up almost as a byproduct of other development, as the companies who offer these services actually have different core business focuses: Magellan AI, our preferred partner, is primarily a competitive intelligence platform, but pivoted to also offer airchecking services after realizing what a pain point it was for advertisers; Veritone, an AI company that’s tied this service to its ad agency, Veritone One; and Podsights, a pixel-based attribution modeling solution.

3. Competitive intelligence

Last, competitive intelligence and media research continue to be a challenge. Magellan AI and Podsights offer a variety of fee and free tiers and methods of reporting to show a subset of the industry’s activity. You can search a show, advertiser or category, and get a less-than-whole, but still directionally useful, picture of relevant podcast advertising activity. While not perfect, there are sufficient resources to at least see the tip of the industry iceberg as a consideration point to your business decision to enter podcasts or not.

As Sean Creeley, founder of Podsights, aptly points out: “We give all Podsights research data, analysis, posts, etc. away for free because we want to help grow the space. If [a brand], as a DIY advertiser, desired to enter podcasting, it’s a downright daunting task. Research at least lets them understand what similar companies in their space are doing.”

There is also a nontech tool that publishers would find valuable. When we asked Shira Atkins, co-founder of Wonder Media Network, how she approaches research in the space, she had a not-at-all-surprising, but very refreshing response: “To be totally honest, the ‘research’ I do is texting and calling the 3-5 really smart sales people I know and love in the space. The folks who were doing radio sales when I was still in high school, and the podcast people who recognize the messiness of it all, but have been successful at scaling campaigns that work for both the publisher and the advertiser. I wish there was a true tracker of cross-industry inventory — how much is sold versus unsold. The way I track the space writ large is by listening to a sample set of shows from top publishers to get a sense for how they’re selling and what their ads are like.”

Even though podcast advertising is no longer limited by download standardization, spend verification and competitive research, there are still hurdles that the channel has not yet overcome.

The conclusion to this article, These 3 factors are holding back podcast monetization, is available exclusively to Extra Crunch subscribers.

Source: Tech Crunch

The goal of Sight Tech Global, a virtual, global event on December 2-3, 2020, is to gather the world’s top experts who are applying advanced technologies, notably AI, to the future of accessibility and assistive tech for people who are blind or visually impaired.

Today we’re excited to roll out most of the agenda. There are another half-dozen sessions and breakouts still to come, notably sessions on AI bias and civil rights. What we’ve discovered over the many weeks of research and conversation is a consistent, strong interest on the part of researchers, technologists and product and design thinkers to convene and talk over the future — its promises, challenges and even threats.

We’re delighted to have top-level talent from virtually every leading technology company, many research universities and some startups ready for fireside chats and small panel discussions with expert moderators. Some sessions will take questions from our audience as well.

When the event dates are closer, we will add dates and times to each of these sessions as well as announce additional speakers. Register today to get a free pass and please browse the first edition of the Sight Tech Global agenda below.

Seeing AI: Where does Microsoft’s blockbuster app go from here?

With ever more powerful computer and data resources available in the cloud, Microsoft’s Seeing AI mobile app is destined to become a steadily better ally for anyone with vision challenges. Co-founder Saqib Shaikh leads the engineering team that’s charting the app’s cloud-enabled future.

Saqib Shaikh, co-founder of Seeing AI, Microsoft
Moderator: Devin Coldewey, TechCrunch

The future according to OrCam

As AI-based computer vision, voice recognition and natural language processing race ahead, the engineering challenge is to design devices that can perceive the physical world and communicate that information in a timely manner. Amnon Shashua’s OrCam MyEye is the most sophisticated effort yet to merge those technologies in a seamless experience on a dedicated device.

Amnon Shashua, co-founder of OrCam and Mobileye
Moderator: Matthew Panzarino, TechCrunch

Accessibility from the wheels up: The Waymo self-driving taxi

If people who are blind or visually impaired find Uber and Lyft liberating, imagine how they will feel summoning a self-driving ride from an app on their mobile phones. But wait, how exactly will they locate the cars and what happens when they climb in? Presenter Clem Wright is responsible for the self-driving taxi’s accessibility, and he will be joined by leadership from two organizations closely involved in that effort: The Lighthouse for the Blind SF and the Foundation for Blind Children.

Clem Wright, Accessibility product manager, Waymo
Marc Ashton, CEO, Foundation for Blind Children
Bryan Bashin, CEO, Lighthouse for the Blind
Moderator: Kirsten Korosec, TechCrunch

Our AI future is already here

Whether it’s Alexa, Tesla or Facebook, AI is already deeply embedded in our daily lives. Few understand that better than Dr. Kai-Fu Lee, a scientist who developed the first speaker-independent, continuous speech recognition system as a Ph.D. student at Carnegie Mellon, led Google in China and held senior roles at Microsoft and Apple. Today, Dr. Lee runs Sinovation Ventures, a $2 billion fund based in China, is president of the Sinovation’s Artificial Intelligence Institute and has 50 million followers on social media.

Dr. Kai-Fu Lee, chairman and CEO, Sinovation Ventures
Moderator: Ned Desmond, Sight Tech Global

The future of AT devices and the companies that make them

Dedicated devices versus accessible platforms? Victor Reader Stream versus iPhones and Alexa? How will AT companies take advantage of a world with cloud data and edge computational power, AI algorithms and more demanding customers than ever? Humanware, eSight and APH are already looking far into that future.

Gilles Pepin, CEO, Humanware
Greg Stilson, head of Global Innovation, APH
Charles Lim, CTO, eSight
Moderator: Betsy Beaumon, CEO, Benetech

If the Jetsons had screen readers, would they be using keyboard commands?

The screen reader is arguably the most consequential digital technology ever for people who are blind or visually impaired. At the same time, screen readers depend on a dizzying array of keyboard commands, and — when it comes to reading websites in a browser — they struggle with the ugly reality of poor website accessibility. New technologies may lead the way to better outcomes.

Glen Gordon, Software fellow, Vispero; architect, JAWS
James Teh, Accessibility engineer, Mozilla; co-founder, NVDA
Léonie Watson, director, TetraLogical
Moderator: Matt King, Accessibility technical program manager, Facebook

Alexa, what is your future?

When Alexa launched six years ago, no one imagined that the voice assistant would reach into millions of daily lives and become a huge convenience for people who are blind or visually impaired. This fall, Alexa introduced personalization and conversational capabilities that are a step-change toward more human-like home companionship. Amazon’s Josh Miele and Anne Toth will discuss the impact on accessibility as Alexa becomes more capable.

Anne Toth, director, Alexa Trust at Amazon
Josh Miele, principal accessibility researcher, Lab126 at Amazon
Moderator: Devin Coldewey, TechCrunch

Augmented reality and perception: What’s the best way to get the message across?

It’s one thing for an AI-based system to “know” when it’s time to turn left, who came through the door or how far away the couch is: It’s quite another to convey that information in a timely fashion with minimal distraction. Researchers are making use of haptics, visual augmented reality (AR), sound and language to figure out the right solutions.

Amos Miller, Product strategist, Microsoft AI and Research
Ashley Tuan, VP Medical Devices, Mojo Vision
Sile O’Modhrain, associate professor, Performing Arts Technology, University of Michigan
Moderator: Nick Giudice, professor of Spatial Informatics, University of Maine

Wayfinding: Finding the mark

Map apps on mobile phones are miraculous tools accessible via voice output, but mainstream apps don’t announce the detailed location information (which people who are blind or visually impaired really want), especially inside buildings and in public transportation settings. Efforts in the U.S. and U.K. are improving accessible navigation.

Tim Murdoch, founder and CEO, Waymap
Nick Giudice, professor of Spatial Informatics, University of Maine
Moderator: Mike May, chief evangelist, GoodMaps

Computer vision, AI and accessibility: What’s missing from this picture?

For an AI to interpret the visual world on behalf of people who are blind or visually impaired, the AI needs to know what it’s looking at, and no less important, that it’s looking at the right thing. Mainstream computer vision databases don’t do that well — yet.

Danna Gurari, assistant professor and director of the Image and Video Computing Group, University of Texas
Patrick Clary, product manager, AI and accessibility, Google
Moderator: Roberto Manduchi, professor CS and Engineering, UC Santa Cruz

Keep an out for more sessions and breakouts later this month. In the meantime, registration is open. Get your pass today!

Sight Tech Global is eager to hear from potential sponsors. We’re grateful to current sponsors Amazon, Ford, Google, Microsoft, Mojo Vision, Waymo, Wells Fargo and Humanware. All sponsorship revenues go to the nonprofit Vista Center for the Blind and Visually Impaired, which has been serving the Silicon Valley area for 75 years.

Special thanks to the Sight Tech Global advisors — Tech Matters Jim Fruchterman, UC Santa Cruz’s Roberto Manduchi, Verizon Media’s Larry Goldberg, Facebook’s Matt King and Be My Eyes’ Will Butler — who are playing an invaluable role on this project.

Source: Tech Crunch

Welcome back to Extra Crunch’s Media Roundup, where I round up the stories that entrepreneurs in the content and advertising business should be thinking about — trends, larger platform shifts, as well as noteworthy funding rounds.

This time, we’ve got some bad news for movie theaters, the specter of antitrust regulation and a new career path for journalists. Let’s get started!

Movie studios and theaters face a bleak fall

In the last roundup, I pointed to “Tenet”’s global opening weekend as a sign that the theatrical movie business might be coming back to life — but I may have spoken too soon.

While the latest Christopher Nolan film has continued to do reasonably well outside the United States, it’s only grossed $45 million domestically for Warner Brothers. The film’s underwhelming performance could be blamed on U.S. audiences being afraid to return to theaters — but it might simply be a reflection of the fact that theaters in major moviegoing markets like New York, Los Angeles and San Francisco remain closed.

Either way, Warner Brothers and other studios are clearly spooked by the results and have pushed nearly all of their theatrical releases until next year, with knock-on effects for the movies that were already scheduled for 2021. For example, Warner’s “Dune” is being delayed until October 2021, and Daniel Craig’s final Bond entry, “No Time To Die,” was pushed back from November until April. Meanwhile, “The Batman” has been delayed from 2021 to 2022.

At this point, there are few Hollywood blockbusters on the calendar until Christmas, when “Wonder Woman 1984” is due for release. To be honest, I’d be surprised if it actually hits that date. (Video-game comedy “Free Guy,” starring Ryan Reynolds, is scheduled for December 11, but the cast has already created a tongue-in-cheek video acknowledging that release dates aren’t exactly set in stone right now.)

In the meantime, at least one major theater chain said it can’t justify keeping its doors open. The United Kingdom’s Cineworld, which also operates Regal Cinemas in the U.S., announced that it’s closing its theaters indefinitely. For now, AMC and Cinemark said they aren’t going to to follow suit. (AMC noted that it’s bringing in additional revenue through a deal with Universal where the theatre chain gets a cut when Universal films are released early via video-on-demand.)

Source: Tech Crunch

YouTube has long allowed its users to test new features and products before they go live to a wider audience. But in a recent change, YouTube’s latest series of experiments are being limited to those who subscribe the Premium tier of YouTube’s service. Currently, paid subscribers are the only ones able to test several new product features, including one that allows iOS users to watch YouTube videos directly on the homescreen.

This is not the same thing as the Picture-in-Picture option that’s become available to app developers with iOS 14, to be clear. Instead, YouTube says this feature allows users who are scrolling on their YouTube homepage to watch videos with the sound on while they scroll through their feed.

Two other experiments are related to search. One lets you filter topics you search for by additional languages, including Spanish, French, or Portuguese. The other lets you use voice search to pull up videos when using the Chrome web browser.

Image Credits: YouTube, screenshot via TechCrunch

None of these tests will be very lengthy, however. Two of the three new experiments wrap up on Oct. 20, 2020 for example. The other wraps on Oct. 27. And they’ve only been live for a few weeks.

In years past, YouTube had allowed all users to try out new features in development from a dedicated site dubbed “TestTube.” In more recent years, however, it began to use the website YouTube.com/new to direct interested users to upcoming features before they rolled out publicly. For example, when YouTube introduced its redesign in 2017, users could visit that same website to opt-in to the preview ahead of its launch.

Now, the site is being used to promote other limited-time tests.

YouTube says the option to test the features was highlighted to Premium subscribers a few weeks ago within the YouTube app. It’s also the first time that YouTube has run an experimentation program tied to the Premium service, we’re told.

The company didn’t make a formal public announcement, but the addition was just spotted by several blogs, including XDA Developers and Android Central, for example.

Contrary to some reports, however, it does not appear that YouTube’s intention is to close off all its experiments to anyone except its paid subscribers. The company’s own help documentation, in fact, notes this limitation will only apply to “some” of its tests. 

YouTube also clarified to TechCrunch that the tests featured on the site represent only a “small minority” of those being run across YouTube. And they are not at all inclusive of the broader set of product experiments the company runs, according to the company.

In addition, non-Premium users can opt to sign up to be notified of additional opportunities to participate in other YouTube research studies, if they choose. This option appears at the bottom of the YouTube.com/new page. 

YouTube says the goal with the new experiments is two-fold. It allows product teams to feedback on different features and it allows Premium subscribers to act as early testers, if they want to.

Premium users who choose to participate can opt into and out of the new features individually, but can only try out one experiment at a time.

This could serve to draw more YouTube users to the Premium subscription, as there’s a certain amount of clout involved with being able to try out features and products ahead of the general public. Consider it another membership perk then — something extra on top of the baseline Premium tier features like ad-free videos, downloads, background play and more.

YouTube, which today sees over 2 billion monthly users, said earlier this year it’s converted at least 20 million users to a paid subscription service. (YouTube Premium / YouTube Music). As of Q3 2020, YouTube was the No. 3 largest app by consumer spend worldwide across iOS and Android, per App Annie data.

Source: Tech Crunch

Watching the news this past week was like drinking from a firehose. Speaking of which, you probably missed a busy week in cybersecurity, so here are the big stories from the past week.

THE BIG PICTURE

Blackbaud hack gets worse, as bank account data stolen

Blackbaud, a cloud technology company used by colleges, universities, nonprofits (and far-right organizations), was hit by a data-stealing ransomware attack earlier this year. The attack was one of the biggest of the year in terms of the number of organizations affected, hitting dozens of universities, hospitals and other high-profile organizations like NPR. Blackbaud said in July that it paid the ransom — but also claimed and received “confirmation” that the stolen personal data “had been destroyed,” fooling absolutely nobody.

This week Blackbaud confirmed in a regulatory filing that the stolen data also included bank account data and Social Security numbers — far more personally identifiable information than the company first thought. “In most cases, fields intended for sensitive information were encrypted and not accessible,” the company claimed.

Despite Blackbaud’s claim that the data was deleted, these are malicious hackers driven by financial reward. Hope for the best, but assume the worst — Blackbaud’s data is still out there.

Facebook shuts down malware that hijacked accounts to run ads

Hackers spent about $4 million to run scammy ads on Facebook by hijacking the accounts of unsuspecting users, reports Wired. The hackers used malware, dubbed SilentFade, to compromise Facebook accounts using stolen passwords to use whatever saved credit card details on those accounts to buy ads for diet pills and fake designer handbags.

Source: Tech Crunch

On Tuesday, during TechCrunch’s annual Mobility event, we had the opportunity to interview three investors who spend much of their time focused narrowly on shifts in the transportation industry and we talked with the three — Amy Gu of Hemi Ventures, Reilly Brennan of Trucks VC, and Olaf Sakkers of Maniv Mobility — about a wide range of related issues to get their take. You can check out that interview below; in the meantime, we’re pulling out parts of the conversation that we found particularly interesting:

How the pandemic is affecting fundraising and the trends they’re watching

Olaf Sakkers: In dense cities, no one is taking transit, so you’re seeing a big shift toward micromobility, but in other cities, there’s been a big uptake in car use and secondhand and new-car demand despite of economic impacts. [You’re seeing this] trade-off between us getting out, and more goods and services that are coming to us than before, [including] food and other things. We’re also seeing a lot of geographic and culture variances, but those are things we’re seeing immediately.

Amy Gu: One thing that COVID has changed a lot is healthcare, which has become more important (during the pandemic) but also raised questions about how we make it more mobile. We’ve been looking at telemedicine companies and remote health care.

Is COVID-19 driving people to buy bikes, scooters and used cars instead of renting?

Reilly Brennan: People fell off micromobility platforms not because they didn’t like them, but they liked them so much, they wanted to buy [the scooters and bikes]. The ways a typical dealership makes money with financing, maintenance and service will come to micromobility. There isn’t much of a used market right now for e-bikes and e-scooters because there aren’t many of them, but that ecosystem will become stronger … [you can imagine] buying outright, leasing, subscriptions, wrapping in theft control … all the tricks you’ve seen carmakers bring to car financing, [meaning] not owning or renting but something in-between.

Source: Tech Crunch

Now’s the time for sustainable investments to shine. There are billions of dollars in funding in both public and private markets dedicated to new sustainable investing and demand for consumers for a more conscious capitalism has never been stronger.

As founders and investors reawaken to a sustainable morning in America a few areas are going to demand hardware, software and business model innovations.

Some of these sectors have been on the investment radar for the past year or two and others are just beginning to capture investor attention, but they all have something in common: the investor appetite for new businesses addressing the food supply chain; energy management and construction for homes and offices; carbon sequestration and monitoring and management of offsets; and new biomaterials and processes for packaging and industrial chemicals replacements have never been stronger.

If we’re going to feed the world, let’s start with the food chain.

COVID-19, the disease caused by the SARS-CoV-2 virus, has exposed significant holes in the food supply. Companies like AppHarvest, which agreed to go public through a SPAC earlier this year are only one of several companies remaking agriculture through the application of technology. There’s also Plenty, Bowery Farms, Unfold, BrightFarms and Revol Greens, working to upend the agricultural supply chain. If those companies are looking at new ways of growing crops, companies like Apeel Sciences and Hazel Technologies are trying to find ways to preserve food from spoilage. Treasure8 is looking at ways to use food waste for new food and ingredients and they’re not alone.

Then there’s the protein replacement companies that we’ve written about previously. Impossible Foods, Beyond Meat, Memphis Meats, Mosa Meat, Nuggs, Future Meat Technologies, Shiok Meats (a seafood company) are devising methods to create meaty proteins less dependent on animal husbandry. Perfect Day and its competitors are doing the same for the dairy industry.

There’s also tremendous need for new protein sources to feed the animals that people around the world still like to eat. For this there’re companies like Ynsect, which is providing insect proteins for industrial fish farms, or Grubly Farms, which is providing feed to the families raising their own chickens.

For these opportunities that are raising hundreds of millions in financing there are others that require the kind of high margin software solutions that are yet to be developed. These are visual technologies for tracking, monitoring and managing food production; sensors for improving the storage and supply chain, software for managing production and tracking produce and products from the farm to the table. Venture investors are beginning to invest in these companies as well.

Source: Tech Crunch

The news last week that NextEra Energy, a U.S. utility and renewable energy company, briefly overtook ExxonMobil and Saudi Aramco to become the world’s most valuable energy producer shows just how valuable sustainable businesses have become. It’s yet another proof point that there are billions of dollars available for companies focused on renewable energy alone — and a sign that, finally, the floodgates may be about to open for companies that build their businesses to service a sustainability revolution.

Large money managers are already returning to investing in earlier stage sustainability investments after an extended hiatus. These are institutional investors like the Canadian Pension Plan Investment Board and Caisse de dépôt et placement du Québec, which could commit billions between them to technologies focused on mitigating the impacts of climate change or reducing greenhouse gas emissions across industries. The flood of dollars into renewable energy and sustainable technologies actually began in the first quarter of the year.

Some of the largest private equity funds in the U.S. like Blackstone (with $571 billion in assets under management), announced a flood of investments into renewable power generation and storage. Blackstone alone invested nearly $1 billion into Altus Power Generation, a renewable energy developer, and NRStor, an energy storage company; while Generate Capital raised $1 billion for renewable energy infrastructure projects; and Warburg Pincus (with over $50 billion in assets under management) backed Scale Microgrids, which developed clean energy and storage projects, with another $300 million. In March, the Canadian Pension Plan Investment Board closed its investment in Pattern Energy Group, a $6.1 billion transaction that gave the massive money manager ownership of a renewable power project owner and developer with assets across North America and Japan.

Behind all of that massive investment will be a surge in demand for technologies that can orchestrate resources that will be more distributed and provide better energy storage and distribution technologies for a more complicated grid. Indeed, the beginning of the year saw venture firms like Lightspeed Venture Partners, Sequoia and Union Square Ventures begin to plant flags around sustainable investments in startup companies. Microsoft announced a $1 billion climate change-focused investment fund and in the second quarter, Amazon followed suit with the commitment of $2 billion to its Climate Pledge Fund that would invest across a range of renewable and sustainability-focused technology startups and climate-related projects.

“You’ve got all of this activity even without policy changes — and policy changes are even going in the wrong direction,” said Abe Yokell, a longtime investor in technologies addressing climate change and the managing partner of Congruent Ventures, in an interview with TechCrunch earlier this year. “Our general framework is that the venture model applies to some but not all of the solutions that will solve the problem of climate change.”

Environmental and social investing rises again

In 2007, John Doerr, then one of the world’s most successful venture investors and a leader at Kleiner Perkins Caufield and Byers (now just Kleiner Perkins), delivered an emotional speech to an early audience of TED talk attendees. In it, Doerr announced that KPCB would be investing $200 million into a range of “clean technology” companies and encouraged other investors to make similar commitments. Doerr spoke of a coming climate crisis that would reshape the globe and wreak vast economic damage on communities. He wasn’t wrong.

But the solutions that the first generation of clean tech investors backed were economically unfeasible and markets weren’t then ready to embrace massive investments required to avoid what were, at the time, future risk scenarios. Prices for solar and wind energy production technologies were too expensive and energy storage options too unreliable. Biofuels could not compete at costs that would make them competitive with existing petrochemicals, and bioplastics and chemicals suffered from the same problems (along with a consumer culture that had not awoken to the perils of plastic and chemical production).

While there were a few notable successes from that first generation of clean tech companies, including, most notably, Tesla, there were far more failures. Kleiner alone poured hundreds of millions into companies like Think and Fisker Automotive, two early electric vehicle companies. Another electric vehicle bet, Better Place, lost $1 billion for investors like VantagePoint Venture Partners. The losses weren’t confined to electric vehicles. Solar energy companies, biofuel companies, grid management companies and battery companies all racked up millions in losses for a generation of venture funds.

Yokell, who previously worked as an investor at Rockport Capital, saw the failures, but managed to persevere and raise new cash with his fund Congruent. “Things are different, but they are different for 10 different reasons — not one different reason,” Yokell said. “The preponderance of dollars went into the physical layer that would drive down the cost of accessing a product or technology. Solar is a great example; wind is a great example; batteries are a great example. [But] this time around, the venture dollars that are going into the ecosystem are being applied to products and services that are going to the end product.”

This means focusing not on the generation of electricity necessarily, but managing and monitoring how those atoms move. Or in the case of food tech, making the processes of creation and distribution more efficient in addition to making new sources of supply. “Venture is a rule of exceptions,” said Yokell. “If you use what works for the venture model and apply it to Tesla [most investors] were wrong. It only takes two massive successes to prove the rule wrong.”

More often though, the money for venture investors is in following some basic rules of investing — chiefly look for high-margin businesses with low upfront capital costs. If something is going to take $40 million or $50 million just to figure out that it might work and then you need to spend another $200 million to prove that it does work … that’s likely not going to be a good bet for a venture firm, Yokell said.

Public markets and large corporations now lead the way

Even as most venture capital dollars shied away from investments in technology that could move the needle on climate (one large exception being Vinod Khosla and Khosla Ventures … another story), the world’s largest investment firms, money managers, publicly traded energy and agriculture companies began stepping up their commitments.

In part, that’s because the economic viability started to become more apparent for decades-old technologies like wind and solar. The costs of these energy-generating technologies made sense to develop because they were, in many cases, cheaper than the alternative. A June report from the International Renewable Energy Agency showed that renewable power generation projects were cheaper than the cost to operate existing coal-fired plants. Next year, the energy agency said, the 1.2 gigawatts of existing coal capacity could cost more to operate than the cost of new utility-scale solar photovoltaics. According to the agency:

Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power system costs by up to USD 23 billion every year and reduce annual emissions by around 1.8 gigatons (Gt) of carbon dioxide (CO2), equivalent to 5% of total global CO2 emissions in 2019. It would also yield an investment stimulus of USD 940 billion, which is equal to around 1% of global GDP.

Beyond that, the real effects of climate change began to be felt in rising insurance payouts as a result of increasingly frequent natural disasters and money managers beginning to realize that you can’t have a functioning economy if you don’t have a functioning society thanks to social unrest brought about by rising populations consuming increasingly limited resources thanks to climatological collapse. 

In early January, BlackRock, one of the world’s largest investment firms, pledged to refocus all of its investment activities through a climate lens. The investment bank Jefferies has declared 2020 to be the shot from the starting gun for what will be a decade of investments focused on environmental, social and corporate governance. Big energy companies were already picking up the slack where venture investment left off, with firms like National Grid Partners, Energy Investment Partners and others committing capital to new energy technologies even as venture investors pulled back. In 2016, Bill Gates launched a $1 billion investment fund that would focus on climate-related investing, backed by several of his billionaire buddies (including Kleiner Perkins’ John Doerr and former Kleiner Perkins managing director, Vinod Khosla) and take the big swings that many venture firms were unwilling to take at the time.

Opportunities beyond energy

Investments in clean tech and sustainability were never just about energy, although that captured a fair bit of the imagination and some of the earliest returns — in biofuels companies and electric vehicles. Now, the breadth of the thesis is being expressed in a deluge of exits and millions invested in areas like novel proteins for food production, new technologies for a more sustainable agriculture, new consumer food products, new technologies for managing power and distributing it, and fantastic new ways to generate that power.

Last week, AppHarvest, a company using greenhouse farming techniques to grow tomatoes more sustainably, agreed to go public through a special purpose acquisition vehicle, and just today, a bioplastics manufacturer is taking the same tack. With the world awash in capital and looking for high-growth companies to generate returns, sustainability looks like a good bet.

Those are the companies that have managed to access public markets in the last week. Beyond Meat captured the attention of institutional investors and the investing public with its better-tasting hamburger substitute, and Perfect Day snagged a massive investment from the Canadian Pension Plan Investment Board to make an alternative to cow’s milk. In fact, Perfect Day was the inaugural investment in the national pension fund’s climate strategy. Other deals should follow.

Meanwhile, as carbon emissions monitoring, management and sequestration gain broader commercial and consumer traction, other investment opportunities will begin to open up for digital solutions.

Source: Tech Crunch

As investing whirlwind Chamath Palihapitiya continues to make headlines with his full-court press to take private tech companies public via SPACs while markets are hot, one of his targets has disclosed financial information that helps us better understand the transaction it is undertaking.

Palihapitiya’s Social Capital Hedosophia Holdings Corp. II (a public, blank-check company, or SPAC) is combining with Opendoor, a San Francisco-based tech startup that facilitates real estate transactions. Opendoor often buys homes from sellers, later selling them itself. Given the complexity present in the residential real estate market and its scale, the company is an interesting play.

TechCrunch covered the Opendoor-SPAC tie-up in mid-September, when it was announced. Yesterday we got a fuller look into Opendoor’s financial results. So, this morning, let’s peek at the numbers to see if we can spy what Palihapitiya talked about in his investment thesis concerning the company’s future prospects.

The results

Opendoor’s 2020 results are not stellar. But that fact is not a surprise. The company went through a round of layoffs in April, impacting around 35% of its staff at the time.

However, even then, TechCrunch reported that “home sales haven’t fallen as far or as fast as one might imagine.” Indeed, in many markets the real estate market has proved surprisingly durable during the COVID lockdowns as some leave major cities for smaller municipalities.

Opendoor says plainly in its SEC filing concerning its combination with the SPAC that COVID has “adversely affected our business.” Its results, then, are framed by a changing market and a pandemic, even if areas of residential real estate have held up better than we might have anticipated.

Here are Opendoor’s raw numbers, for your perusal:

You have to read right-to-left to follow the flow of time correctly.

Source: Tech Crunch