Zoox co-founder Jesse Levinson is coming to TC Sessions: Mobility

Autonomous vehicle startup Zoox has a history of keeping its progressive and plans to itself. But that’s starting to change.

The venture-backed company that is creating ground-up fully autonomous electric vehicles is ready to share a bit more about its tech, strategy and plans. And who better to talk to than co-founder and CTO Jesse Levinson, the person who oversees the company’s software, artificial intelligence, computing and sensing platforms.

We’re excited to announce that Levinson will join us onstage at TC Sessions: Mobility on July 10 in San Jose. TechCrunch will discuss with Levinson the tech that is driving the company’s autonomous vehicles, recent changes at Zoox, including its new CEO Aicha Evans, challenges facing the company and its deployment plans.

Levinson is among a group of insiders who participated in early government-backed competitions aimed at pushing the development of autonomous vehicles. While completing a computer science Ph.D. and postdoc under Sebastian Thrun at Stanford University, Levinson developed algorithms for the school’s winning entry in the 2007 DARPA Urban Challenge. He went on to lead the self-driving car team’s research efforts before joining Zoox.

Levinson also co-created a popular mobile photography app, Pro HDR, that has been purchased by more than a million people.

Levinson is just one of the many leaders in autonomous vehicles, scooters and electric mobility who will participate in TC Sessions: Mobility.

The agenda is packed with some of the biggest names and most exciting startups in the transportation industry, including Mobileye co-founder and CEO Amnon Shashua, Alisyn Malek with May Mobility, Dmitri Dolgov at Waymo, Karl Iagnemma of Aptiv, Seleta Reynolds of the Los Angeles Department of Transportation and Ford Motor CTO Ken Washington. With early-bird ticket sales ending soon, you’ll want to be sure to grab your tickets. Others include Katie DeWitt of Scoot, Argo AI’s chief safety officer Summer Fowler, Uber’s engineering director for Elevate Mark Moore and Stonly Baptiste, co-founder of early-stage venture capital fund Urban Us.

We have a few surprises too, including demos showcasing some cool tech and startups coming out of stealth.

The event will feature startup founders and industry experts and partake in discussions about the future of transportation, the promise and problems of autonomous vehicles, the potential for bikes and scooters, investing in early-stage startups and more.

Early-bird tickets are now on sale — save $100 on tickets before prices go up after June 14.

Students, you can grab your tickets for just $45.

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SEC expands its war on cryptocurrency companies with a lawsuit against Kik

The Securities and Exchange Commission has sued Kik Interactive for the $100 million token sale the company announced two years ago.

It’s an expansion of legal actions that began last year as the SEC seeks to rein in companies that the regulatory agency thinks issued securities illegally.

In the lawsuit, the SEC claims that Kik conducted an illegal $100 million offering of digital tokens by selling the tokens to U.S. investors without registering their offer and sale as required under U.S. law.

The complaint alleges that Kik had been losing money for years on its online messaging application and that the company’s management predicted it would run out of money in 2017, precisely when it began laying the groundwork for the launch of its digital token, “Kin.”

The creation of an online marketplace selling through the company’s messaging service was financed by the sale of 1 trillion digital tokens to raise $100 million dollars.

Critical to the SEC’s case is the allegation that Kik marketed its Kin tokens as an investment opportunity, telling investors that rising demand would drive up the value of Kin and that Kik would work to boost that demand.

Kik was supposed to do that by building systems like a Kin transaction service, a rewards system for companies that used Kin, and by incorporating the tokens into the company’s existing messaging app. None of those features existed at the time of the offering, the SEC alleges.

The company also said that it would keep three trillion tokens that could trade on secondary markets and would increase in value as other investors speculated on the currency’s success.

“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, co-director of the SEC’s Division of Enforcement, in a statement. “Companies do not face a binary choice between innovation and compliance with the federal securities laws.”

At the heart of the case against Kik is the argument over the utility of the currency it offered. If it was simply a means of exchange on the company’s platform that customers used to conduct business between different parties, then the SEC’s argument might seem tenuous.

Andreessen Horowitz general partner Katie Haun laid out the arguments that Kik makes in its defense in a lengthy blog post published last month.

The company responded to the SEC in a Wells notice with a few different arguments. The first, that all currencies (and therefore all cryptocurrencies) are exempt from securities laws, is a pretty big swing. This argument will depend on whether or not a court accepts that a currency is by definition legal tender (Kin ain’t that).

Beyond that, Kik needs to be able to prove that it’s not a security by showing it doesn’t fit these three criteria: that it’s an investment of money, that everyone who invested is engaged in a common enterprise and that there’s an expectation of profits that results from its efforts.

Here’s how Haun, a former federal prosecutor and clerk for Supreme Court Justice Anthony Kennedy puts it:

Kik’s best argument seems to be (2), that there’s no common enterprise between them and the Kin purchasers. Courts have held that the mere sale of something, without promising more, doesn’t give rise to a common enterprise. Based on the public information I’ve reviewed, it’s not obvious that Kik was under any contractual obligation to the purchasers other than to deliver the tokens. Once that delivery occurred, Kin holders controlled their tokens and could use them how they pleased — whether to buy items or otherwise. And plenty did. Kik created a marketplace that was open and that was meant to achieve real exchange between participants, so Kik wasn’t necessarily a participant in all transactions. Thus, the SEC may have a hard time demonstrating common enterprise between Kik and token purchasers — unless they can come up with evidence showing that Kik had obligations to purchasers after token delivery.

What about (3), the expectation of profits through the efforts of others? In its Wells response, Kik tells a good story about consumptive uses, given its integration with the messenger platform, which had millions of users at the time of the token sale. Apparently, 20% of Kin purchasers linked their wallets to Kik to buy everything from games to digital products and services. That some participants purchased as little as 9 cents in Kin also seems more consistent with for “use” than for “investment”.

Kik’s defense hinges on who used the company’s cryptocurrency to make purchases through its messaging service versus which of the 10,000 acquirers of Kin currency at the time of the token offering were speculating on the cryptocurrency’s potential rise in value.

Here again, Haun’s explanation of what Kik needs to prove about the Kin offering is helpful:

But anecdotal evidence about why purchasers bought Kin won’t matter as much as the evidence around what Kik led purchasers to expect. This is because the case law focuses less on what was in a particular purchaser’s mind at the time, and more on what the seller “offered or promised” those purchasers. So the key will be what statements can be attributed to Kik before the sale — a great example of how PR, marketing, and other company building functions really matter when it comes to many crypto projects.

Kik says its primary marketing message focused on Kin’s use rather than on Kin as an investment, which makes sense since the project would only work if people actually used Kin. If that’s true, the SEC will need to contend with some of these facts:

  • 50% of participants in the token sale purchased less than $1000 of Kin, which seems more consistent with a consumptive use vs. investment purpose argument.

  • The way in which Kik structured things encouraged broad participation and discouraged speculation, for example, by capping the amount an individual could purchase to ensure more participants used its network.

  • It delayed its token sale to ensure functionality of the network first, making sure it could be used now vs. just in the future.

  • Since the token sale, the use of Kin has increased.

For its part, the SEC has its argument laid out in the statement of its charges.

“Kik told investors they could expect profits from its effort to create a digital ecosystem,” said Robert A. Cohen, chief of the Enforcement Division’s Cyber Unit, in a statement. “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”

As the SEC notes, some companies have already settled rather than go to trial. The Commission has previously charged issuers in settled cases alleging violations of these requirements, including Munchee Inc., Gladius Network LLCParagon Coin Inc. and CarrierEQ Inc. d/b/a Airfox, according to a statement from the regulatory agency.

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“Anyone relying on LIDAR is doomed,” Elon Musk says

Today at Tesla’s first Autonomy Day event, Elon Musk took questions from the press but didn’t have time for questions about Lidar. Historically, he’s been vocal about the technology, and this time he put it as clear as he could. 

“LIDAR is a fool’s errand,” Elon Musk said. “Anyone relying on LIDAR is doomed. Doomed! [They are] expensive sensors that are unnecessary. It’s like having a whole bunch of expensive appendices. Like, one appendix is bad, well now you have a whole bunch of them, it’s ridiculous, you’ll see.”

The topic was brought up by a question about if Tesla’s just-revealed self-driving hardware could handle input from LIDAR. Tesla’s vehicle’s currently uses several sources of data to acquire autonomous driving: radar, GPS, maps, ultrasonic sensors and more. But not LIDAR like some of Tesla’s chief competitors. Elon Musk previously explained that he views LIDAR as a crutch for self-driving vehicles. For Tesla, cameras are the keys to the future and its CEO sees a future when cameras will enable Tesla to see through the most adverse weather situations.

Andrej Karparthy, Senior Director of AI, took the stage and explained that the world is built for visual recognition. LIDAR systems, he said, have a hard time deciphering between a plastic bag and a rubber tire. Large scale neural network training and visual recognition are necessary for Level 4 and Level 5 autonomy, he said.

“In that sense, LIDAR is really a shortcut,” Karparthy said. “It sidesteps the fundamental problems, the important problem of visual recognition, that is necessary for autonomy. It gives a false sense of progress, and is ultimately a crutch. It does give, like, really fast demos!”

Uber, Waymo, Cruise and several others use the technology in their self-driving technology stack. As proponents of the technology, they point to LIDAR’s ability to see through challenging weather and light conditions better than existing cameras. They’re expensive. And often hungry for power. That’s where Tesla’s solution around cameras comes in.

The company today detailed its current generation self-driving computer that works with all existing Tesla vehicles. Once the software is ready, it will enable all Teslas to drive autonomously with their existing sensor set — at least that’s what the company says — and that sensor set doesn’t include LIDAR. Instead, the sensors inside Tesla vehicles lean on a neural network that’s trained by data collected by all Tesla vehicles.

“Everyone’s training the network all the time,” Musk said. “Whether autopilot is on or off, the network is being trained. Every mile that’s driven for the car that’s hardware 2 or above is training the network.”

The resulting data is kind of scary, Musk mused later in the press conference. But presumably not as scary as relying on LIDAR.

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Proof of Capital is a new $50M blockchain fund that’s backed by HTC

It’s often said that the dramatic fall of crypto prices last year ushered in a new era for technology-focused startups in the blockchain space, and the same argument can be made for the venture capitalists who fund them. Proof of Capital is the latest fund to emerge after it officially announced a maiden $50 million fund today.

The fund is led by trio Phil Chen, who created HTC’s Vive VR headset and is currently developing its Exodus blockchain phone (he spent time as a VC with Horizons Ventures in between), Edith Yeung, who previously headed up mobile for 500 Startups, and Chris McCann, a Thiel Fellow whose last role was head of community for U.S. VC firm Greylock Partners.

The firm — and you have to give them credit for the name — has an LP base that is anchored by HTC — no big surprise there given the connections — alongside YouTube co-founder Steve Chen, Taiwan-based Formosa Plastics, Ripple’s former chief risk officer Greg Kidd (who is also a prolific crypto investor) and a number of undisclosed family offices.

“For HTC, it’s obvious, they already have a product to go with it,” Yeung told TechCrunch in an interview, referencing the fact that HTC is keen to invest in blockchain services and startups to build an ecosystem for its play.

The fund also includes a partnership with HTC which, slightly hazy on paper, will essentially open the possibility for Proof of Capital portfolio companies to work with HTC directly to develop services or products for Exodus and potentially other HTC blockchain ventures. But other LPs are also keen to dip their toes in the water in different ways.

“Some of these backers are curious at the possibilities of blockchain,” continued Yeung. “For example, they’re giving us some ideas on how tokenization and gamification could be applied on different platforms.”

Proof of Capital founding partners (left to right) Edith Yeung, Chris McCann and Phil Chen

The fund itself is broadly targeted at early stage blockchain companies in fintech, infrastructure, hardware and the “consumer layers of the blockchain ecosystem.” Its remit is worldwide. Although Chen and Yeung have strong networks in Asia, the fund’s first deal is an investment in Latin America-based blockchain fintech startup Ubanx.

Yeung clarified that the fund is held in fiat currency and that it is focused on regular VC deals, as opposed to token-based investments.

“It’s a VC fund so the setup is traditional,” she explained. “There’s been a lot of interesting movements in the last two years, [but] we come from a more traditional VC background and are excited about the technology.”

“It’s still really early [for blockchain] and a lot of the hype — the boom and bust — is down to the crypto market and ICOs, but the reality is that a lot of these technologies are really nascent. Now, projects are raising equity, even if they have a token,” Yeung added.

Indeed, last year we wrote about the rise of private sales and that even the biggest blockchain companies took on VC fundingcrypto didn’t kill VCs despite the hype — and Yeung said that blockchain startup founders in 2019 are “taking a more concerted approach” to raising money beyond simply issuing tokens.

“Many projects that raised ICO really smelt like equity,” said Yeung. “We are seeing companies today delaying token issuance as much as possible; the whole thing has gone a little more back to earth.”

HTC is an anchor LP in Proof of Capital, and it is working with the fund to help its portfolio companies develop services for its Exodus blockchain phone, pictured above

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Grab moves to offer digital insurance services in Southeast Asia

Grab is Southeast Asia’s top ride-hailing firm, thanks in no small part to its acquisition of Uber’s local business last year, but the company also houses an ambitious fintech arm, too. That just added another vertical to its business after Grab announced it is teaming up with China’s ZhongAn to introduce insurance.

Grab and ZhongAn International, the international arm of the Chinese insurance giant, said today they will create a joint venture that will provide digital insurance services across Southeast Asia. Grab said the new business will partner with insurance companies to offer the services via its mobile app. Chubb — a company that already works with Grab to offer micro-loans to its drivers — is the first partner to commit, it’ll offer insurance for Grab drivers starting in Singapore.

ZhongAn is widely-lauded for being China’s first digital-only insurance platform. It’s backed by traditional insurance giant PingAn and Chinese internet giants Tencent and Alibaba.

Grab’s move into digital insurance comes a day after Singapore Life, an online insurer in Singapore, closed the second part of a $33 million funding round aimed at expanding its business in Southeast Asia.

This ZhongAn partnership adds another layer to Grab’s services and fintech business, which already includes payments — both offline and online — and is scheduled to move into cross-border remittance and online healthcare, the latter being a deal with ZhongAn sibling PingAn Good Doctor.

The push is also part of a wider strategy from Grab, which was last valued at over $11 billion and is aiming to turn its app from merely ride-hailing to an everyday needs app, in the style of Chinese ‘super apps’ like Meituan and WeChat.

Indeed, Grab President Ming Ma referenced that very ambitious calling the insurance products “part of our commitment to becoming the leading everyday super app in the region.”

Last summer, Grab opened its platform to third-parties which can lean on its considerable userbase — currently at 130 million downloads — to reach consumers in Southeast Asia, where the fast-growing ‘digital economy’ is tipped to triple to reach $240 billion by 2025. Grab’s platform has welcomed services like e-grocer HappyFresh, deals from travel giant Booking and more.

Grab has also made efforts to develop the local ecosystem with its own accelerator program — called ‘Velocity’ — which, rather than providing equity, helps young companies to leverage its platform. It has also made investments, including a deal with budget hotel brand OYO in India, a fellow SoftBank portfolio company that has designs on expansion in Southeast Asia.

Grab itself operates across eight markets in Southeast Asia, where it claims to have completed more than two billion rides to date. The company is currently raising a massive Series H fund which has already passed $3 billion in capital raised but has a loftier goal of reaching $5 billion, as we reported recently.

Go-Jek, Grab’s chief rival, is expanding its business outside of Indonesia after launching in Vietnam, Thailand and Vietnam. Like Grab, it, too, offers services beyond ride-hailing and the company — which is backed by the likes of Meituan, Google and Tencent — is close to finalizing a new $2 billion funding round for its battle with Grab.

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