The Future Of Real Estate Tech: How We Got Here And What’s Next In An Exploding New Ecosystem

In 2017, venture investors deployed over $5 billion in real estate technology, more than 150 times the $33 million invested in 2010. Once a sector seemingly ignored by the venture industry, real estate tech has come front and center, notably producing two of the three most valuable startups in the United States, WeWork and Airbnb.

Driving this investment explosion is the evolution of real estate tech from its initial phase of software and marketplaces complementing the incumbents to a new era where tech enabled players are going head to head against the sector’s largest incumbents (hotels, commercial landlords, brokerages) and consuming massive amounts of investor capital as they scale. As challengers mature into leading players, we believe we are entering a third phase in the evolution of real estate technology. The businesses that define the emerging third phase of real estate technology are likely to look more like the earliest technology businesses in the space – more complementary than competitive to incumbents and deriving their value proposition by utilizing new technological capabilities. This phase likely will include companies that leverage sensors and virtual reality to create smarter spaces, machine learning to standardize and draw insights from industry data and platforms to more efficiently manage transaction services as well as to design, manage and outfit physical spaces.

Given that U.S. real estate is a $35 trillion asset class, and represents a multi-faceted market generating over $1 trillion in revenue annually, according to IBISWorld Industry Reports, the strong interest in companies built to serve, arbitrage or compete with the incumbents is not surprising. Nevertheless, up until a few years ago there were only a handful of significant U.S. real estate tech success stories.

Venture investors are a thoughtful and forward-looking group, so why did it take so long for the real estate exuberance to set in? In part, despite the industry’s size, there was seemingly a general wariness of the structural issues that make it challenging:

    • Traditionally, the incumbents have made for terrible customers
      • Real estate agents and brokerages (the key intermediaries) have not historically made large investments in technology and, in some cases, were opposed to adoption out of a concern that tech driven transparency could lead to their diminished relevance
      • Landlords and developers see their primary focus as acquisition and/or asset management and have been reticent to make significant investments
  • The data is very messy
    • Real-time data relied on sub-scale self-service info entry on non-standardized technical platforms
    • Property listing data was often not updated with closing data
    • Some agents believed that maintaining proprietary listing information was advantageous
  • Creating meaningful client value and competitive barriers through tech in a space that is defined by a “real” and physical experience is difficult
  • Market demand is not “stable”- most real estate markets go through cycles that heavily impact businesses serving the industry

Real Estate 1.0: The Complementary Phase

Despite the previously mentioned obstacles, real estate tech was not absent from the prior tech booms. The VC sweet spots of software & data and marketplace companies helped fuel the success of real estate tech “1.0” in the late 1990s. For example, commercial real estate data powerhouse CoStar went public in 1998 and HomeStore (now Move.com), the residential real estate industry’s marketplace, listed the following year. Moreover, in the mid-2000s, data management business, Altus Group, which makes the industry leading asset management software Argus, went public along with commercial marketplace LoopNet. With this activity, the seeds were planted for the big winners of the post 2008 residential market growth: Zillow and Trulia, traditional tech marketplaces for the home purchase sector.

Bain Capital Ventures

The evolution of real estate tech.

Real Estate 2.0: The Challenger Phase

The second wave of real estate tech, “2.0,” has matured over the last six years, giving rise to two new categories, tech enabled services and space arbitrage. Space arbitrage businesses seek to create customer value by offering existing physical spaces either for a different use than the owner intended or for a shorter duration than previously possible. Although AirBnB fits the model of a traditional two-sided marketplace, its core value proposition is more about introducing a new way for people to use (and consume) space rather than about ease of search for traditional “real estate or hotel” inventory (like the 1.0 marketplaces). WeWork is the clearest example of a space arbitrage business, though it is increasingly seeking to offer a diversified set of tech enabled services. The 2.0 wave hit a milestone in July 2017 with the successful IPO of Redfin, a tech-enabled real estate brokerage. This was the first true real estate tech-enabled services company to go public and did so at a valuation multiple comparable to pure technology comps. The majority of the 2.0 success stories have been businesses which found opportunities to improve on the offerings of incumbents and grow at their expense. These companies generally included a technology component though also involved significant people-delivered or space-related services to monetize.

So this begs the question:  what changed to enable real estate tech 2.0?  Several factors, including:

  • More than half a decade of increasing real estate values gave startups macro tailwinds on transaction volume, investor ebullience, and propensity for landlords and brokers to invest in their businesses
  • Industry incumbents recognized that they did not want to become the “Blockbusters” of a potential “Netflix” future in real estate and that an embrace of tech likely would be important to maintain relevancy
  • The success of Uber, a business which monetizes its technology through the work of hundreds of thousands of contractors, demonstrated the huge potential value of operationally intensive businesses powered by technology

One important difference between most of the tech 2.0 versus 1.0 companies is that while rapid growth is possible in both, the capital required for expansion of tech enabled services and space arbitrage typically have a somewhat linear relationship with growth. This is because they often have to hire more people and/or secure more physical space to be able to grow revenues. WeWork (a 2.0 company) raised more capital in its Series C round of capital ($150 million) than Zillow, Trulia and LoopNet (1.0 companies) raised collectively from inception through to all three of their IPOs. Investors, and more importantly management teams of tech 2.0 companies must be cognizant of the capital needs of their businesses.  Sustaining high growth rates on increasingly large revenue bases has and will continue to require differentially larger amounts of capital than the real estate tech successes of the first wave.

As technology continues to permeate every facet of business, the lines investors draw around what they will support will become increasingly blurred. Questions about how much real estate exposure a venture backed business can and/or should have is no different than VCs debating whether holding cryptocurriences makes them a hedge fund and should therefore be beyond the scope of investing in new fintech.

The growth of businesses in the tech enabled and space arbitrage categories demonstrates that technology need not be at the core of a Company for it to rapidly expand and develop into a category leader. It also makes it particularly challenging to delineate between traditional real estate and real estate technology. In the process of fundraising for Compass, David frequently was asked to explain how a service business could have a high multiple of revenue and be valued like a traditional technology company. My response was that valuations should reflect a Company’s long-term growth rate, profitability and defensibility, and if a business can deliver those things the value will reflect that. Technology is a means, not the end in delivering economic value.

Looking forward, the key questions we believe investors in real estate tech 2.0 should be considering are:

  • Commissions and Fees: Will technology reduce friction costs in real estate or reallocate them (and who will be the winner in either scenario)?
  • Sustainability of Space Arbitrage: Will the premium consumers and businesses place on space flexibility and the natural conservatism of many landlords solidify real estate intermediation as a sustainable market (or like businesses in fintech subsisting on historically low interest rates, face an existential risk if market conditions change rapidly)?
  • Durability and Competitive Advantage: Which real estate service businesses have efficiencies of scale and growing competitive advantages that will allow them to beat incumbents and avoid the next wave of entrants?

The 2.0 companies are almost universally direct challengers to incumbents in the industry, whereas the 1.0 companies were complementary or at most mildly threatening to existing players. AirBnB (2.0), while creating some new demand, is taking share from hotels and hostels that had done little to innovate their core operating model; WeWork (2.0) is decimating traditional office management companies like Regus; and Redfin, Compass, OpenDoor (all 2.0) along with others are attacking the traditional real estate brokerages. The stasis of the incumbents created significant opportunities for new comers to quickly take share. Nevertheless, to survive and thrive, the 2.0 companies must stay laser-focused on how technology and the platforms they are investing heavily to build can create better operating cost structures than incumbents and barriers to entry to buttress themselves from the type of competitor attacks that they orchestrated.

There is still a ways to go; real estate tech 2.0 is still developing as quickly scaling “newish” entrants continue to fight to win share and new businesses emerge to tackle property management, commercial brokerage, real estate investor services and various other sub-segments. However, some of the companies that look highly successful today may not survive a significant recession intact if they have over-indexed on share gain at the expense of sustainable economics relative to their competitors.

Real Estate 3.0: The Synthesis Phase

Real estate 3.0, which is still in its nascent stages, may potentially look more like real estate 1.0 where the key ‘startups’ are complementary to incumbents and have technology more central to their offering. The themes of this phase will likely include:

  • Internet of Things technology and spatial visualization: Home and commercial space sensors, automation and construction planning tools.
    • Google’s purchase of Nest was a precursor to the increasing excitement and investment of consumers and businesses in technology to enhance their physical space, a trend from which companies like eero, Sonos and Ring have benefited. Even more impactful for the construction and development sectors will be the evolution in virtual reality and user intuitive spatial planning tools that could reshape how people make decisions about what they build and how they outfit the space.
  • Real estate big data: Leveraging the recent gains in the accessibility of large information sets to make decisions on real estate investment and planning
    • Entrants are now leveraging machine learning to build upon the early wins in data aggregation by companies like Zillow and CoStar and provide radically more standardized and sophisticated ways to analyze real estate data. HouseCanary, for example, has built a database that includes not only property level info across the country, but also home financing data and interior home characteristics.
  • Platforms to manage services and purchasing: Resources that help people manage real estate transaction services and the needs of their physical space.
    • Houzz illustrates how lucrative a segment this can become as its consumer home visualization tool, monetized by home services lead generation, has grown the company to a valuation of over $4 billion. WeWork, Zillow, Redfin along with their segment up-and-comers, have all invested heavily in building multi-service platforms, where clients would select home and office providers though their site, though none seem to have cracked the code to unlock the true value of the opportunity, leaving the opportunity for new startups.

Despite the increased activity, real estate tech companies as a percent of total sector value remains a small fraction of many other sectors such as financial services, healthcare, travel, etc. Over the next half decade, the 2.0 winners and up and comers are likely to start looking like incumbents and, more significantly, the positive externalities of tech companies investing in real estate infrastructure, data and visualization will help lay the groundwork for the sector’s continued growth and development. The success of the challengers has dramatically heightened the awareness of real estate owners and service providers to the importance of technology, albeit, in many cases, at the expense of the incumbents’ usefulness. The combination of this increased awareness and VC’s eagerness to continue to fund the space should lead to many successful 3.0 companies that can scale even faster than their predecessors.

What’s new in curling? High-tech brooms, buff bods, and doping allegations

Curling - Pyeongchang 2018 Winter Olympics - Men's Round Robin - Gangneung Curling Center - Gangneung, South Korea - February 19, 2018 - Curlers sweep during session 9 of the Men's Round Robin.

You might assume that little has changed in the world of curling, a winter sport tracing back to medieval Scotland. That would be wrong. As in other sports, mounting competitive pressure and new technology are taking their toll on the game.

Consider the nerve-racking broom controversy of 2015. Purists railed against the introduction of high-tech brooms—with their special fabric and carbon-fiber shafts—which they argued made it too easy to influence the stone as it headed toward the target.

Yes, curling involves brooms, which you’d know if you’d seen Men with Brooms, a 2002 Canadian film that didn’t do well. Squeegee-like brooms, to be precise. Players referred to as sweepers frantically sweep the ice in front of the slowly gliding stone. They do not look silly at all. Unfortunately the new brooms made their efforts a little too effective, so the World Curling Federation stepped in with new rules restricting the types of brooms allowed (paywall). Now, fans can rest assured that sweeping has just the right mix of futility and industriousness.

Curling - Pyeongchang 2018 Winter Olympics - Men Round Robin - U.S. v Norway - Gangneung Curling Center - Gangneung, South Korea - February 18, 2018 - Skip John Shuster of the U.S. shouts to his team mates as lead Haavard Vad Petersson and second Christoffer Svae of Norway watch the shot.
Seriously. (Reuters/Cathal McNaughton)

Though it survived that scandal, the sport—nicknamed “chess on ice”—has faced other threats, including this week at the Winter Olympics in South Korea. Alexander Krushelnitsky, a curling athlete from Russia who had won a bronze medal with his wife in mixed doubles at Pyeongchang, left the games after suspicions arose he used the banned substance meldonium to gain an advantage. That’s right: These days curling has its very own doping allegations, including in past competitions at the Paralympics.

The use of banned substances is egregious to the many fans for whom curling and beer-drinking go together. Chugging brews does the opposite of enhancing one’s performance, so ingesting something to boost it seems perverse. Olympic athletes can be forgiven for not drinking beer while competing for medals, of course, but surely it’s wrong to go to the other end of the spectrum.

Elite curlers, of course, want their sport to be taken seriously. “It’s not just out-of-shape people eating pizza and drinking beer to pass the winter,” Craig Brown, an alternate on the 2014 US Olympic men’s curling team, told NBC in December. As if to prove his point, there’s now the 2018 Men of Curling Calendar, featuring buff players with ripped abs (paywall).

Israeli smart software harnesses flood of data to manage diabetes care

Infographic showing how the Advisor Pro cloud-based diabetes solution developed by DreamMed Diabetes works (Courtesy)

Petah Tikva-based DreaMed Diabetes has developed cloud-based software that uses machine learning to help doctors and healthcare professionals better monitor their patients with type 1 diabetes. The firm has received a CE mark from the European Union, which means it can start marketing its product in Europe.

Type 1 diabetes is a chronic condition in which the pancreas produces little or no insulin, a hormone that allows glucose to enter cells and provide them with energy. When there is a deficiency of insulin, sugar builds up in the bloodstream, causing life-threatening complications.

The condition affects more than 90 million people worldwide and the global market for diabetes-related products is expected to reach $20.7 billion in 2022, an increase of more than 60 percent over 2017. Despite global efforts, type 1 diabetes has no cure to date and its treatment primarily focuses on managing blood sugar levels with doses of insulin.

Whereas patients used to be required to prick their fingers to monitor their blood sugar levels via glucose meters, new technology has seen the sprouting of continuous glucose monitors (CGM), whose sensors function round the clock and can generate around 288 glucose level readings a day with no finger pricking needed.

However, along with all the benefits CGMs yield, they also create a new headache for physicians: a flood of previously unavailable data to review in order to determine the best course of treatment for their patients.

To this end, DreaMed Diabetes’ product, Advisor Pro, uses algorithms, machine learning and fuzzy logic — a form of logic in which a concept can have a degree of truth between 0.0 and 1.0 —  to collect all of the data from the various insulin pumps, glucose monitors, and the patient’s food consumption. The software then processes all of this data and suggests insulin plans or changes to insulin plans to the physicians, simplifying and speeding up their work.

“As technology has changed so have the methods to optimize treatment. A decade ago glucose meters were the only way to measure blood sugar. Now with the use of CGM taking more than 288 measurements a day, there is a ton of data that we can aggregate together,” said DreaMed Diabetes CEO Eran Atlas.

Not all healthcare providers have the expertise or time to analyze the vast amounts of data available to determine optimal insulin treatment for their patients, said Atlas.

“Our mission is to simplify treatment,” Atlas said, by providing “intelligent, personalized diabetes decision support solutions.”

Infographic demonstrating how the Advisor cloud-based diabetes solution works (Courtesy)

Advisor Pro is the only diabetes decision support solution that has received regulatory approval for optimizing insulin therapy based on continuous glucose monitoring data, he said.

Pilot studies performed at the Schneider Children’s Medical Center of Israel found that the recommendations made by Advisor Pro were nearly identical to the changes in insulin therapy made by physicians.

DreaMed Diabetes is now conducting a multi-center clinical study in the US, Europe, and Israel in partnership with Glooko, a leader in mobile and web applications for diabetes, to evaluate Advisor Pro. Results of the trials are expected by the end of 2018 with an eye to getting FDA approval soon after, Atlas said.

The company said it is planning to gradually launch the product in Europe this summer.

Founded in 2014, DreaMed Diabetes has been developing solutions for people with type 1 and type 2 diabetes. The company’s first product, GlucoSitter, was  licensed to Medtronic, a US medical devices manufacturer.

This Flight Simulator Software Was Designed to Steal Pirates’ Passwords

What’s the worst a software developer should be able to do to you if you pirate their application? One bit of add-on software for Microsoft Flight Simulator—a downloadable version of the Airbus A320X produced and sold by FlightSimLabs for $100—was found to be bundled with malware capable of rifling through user’ web browsers to harvest usernames and passwords in retaliation for piracy.

The malware was analyzed by Andrew Mabbitt of Fidus Information Security, who was alerted by several Reddit threads and tipped off Motherboard to the situation. Essentially, the add-on would come with an executable titled “text.exe,” which can pore through a user’s Chrome browser data, collect passwords and usernames, and then send them off over an unsecured HTTP connection.

FlightSimLab owner Lefteris Kalamaras actually confirmed that this was the case in a forum post, but asserted that this functionality was only turned against users running software that the company has deemed to be pirated.

1) First of all – there are no tools used to reveal any sensitive information of any customer who has legitimately purchased our products. We all realize that you put a lot of trust in our products and this would be contrary to what we believe.

2) There is a specific method used against specific serial numbers that have been identified as pirate copies and have been making the rounds on ThePirateBay, RuTracker and other such malicious sites.

3) If such a specific serial number is used by a pirate (a person who has illegally obtained our software) and the installer verifies this against the pirate serial numbers stored in our server database, it takes specific measures to alert us. “Test.exe” is part of the DRM and is only targeted against specific pirate copies of copyrighted software obtained illegally. That program is only extracted temporarily and is never under any circumstances used in legitimate copies of the product. The only reason why this file would be detected after the installation completes is only if it was used with a pirate serial number (not blacklisted numbers).

The malware, which has now been removed from the add-on installer in response to the backlash, was allegedly designed to target a single, specific pirate, as Motherboard notes.

In the grand scheme of digital rights management—which has included everything from the unkillable scorpion enemy designed to make pirated versions of Serious Sam 3 unplayable to a “bug” that freezes your game on the final boss of pirated versions of Earthbound and deletes your saved games—this method is particularly invasive and maybe not even particularly legal. It might be a deterrent for any prospective pirates who find out about it, but maybe prospective customers as well.

Amazon’s Soaring Healthcare Ambition: The Promise and the Problem

healthcare

Healthcare is a mess in the United States. Consumers pay more and get less than in most other developed countries. Strong comprehensive healthcare is unaffordable for most without substantial help, which is why putting the burden on the government really does not work.

If people cannot afford something, individually aggregating it under what amounts to a tax is not really any better — and given the extra overhead, arguably is worse.

What’s needed is a way to bring costs down sharply so that whether it’s funded by the state or paid for by individuals, healthcare becomes affordable.

One way to do that is to have a new player enter the market at massive scale and use its buying and political power to force the industry to reduce excessive pharmaceutical gouging, waste and excessive testing, and erect a stronger barrier to excessive litigation.

Amazon, which last week announced its entry into the healthcare market with JP Morgan and Berkshire Hathaway, could be that company. However, as I recently discovered, Amazon already has abused its power. What will happen if it gets massively more powerful?

I’ll share my thoughts on that this week and close with my product of the week, one of the most innovative smartphones in the market.

The Real Healthcare Problem

Both political parties in the U.S. are so focused on the issue of control that neither seems focused at all on the real healthcare problem, which is that the cost/benefit analysis suggests the country is in horrid shape.

If you look at the World Health Organization rankings, the U.S. is No. 1 with a bullet on cost (the most expensive of any country in the survey) but ranks a lousy No. 72 on performance.

You know which country ranks first on performance on level of health? Oman, which is No. 62 on cost. France, a country often ridiculed, ranks No. 4 on performance and No. 4 on cost. Its state-sponsored system is aligned at least. However, Italy outperforms France, ranking No. 3 on performance but No. 11 on cost. Saudi Arabia is No. 10 on performance and No. 63 on cost.

Using President Trump’s “winning” rhetoric, when it comes to healthcare, the U.S. not only is not winning, but also is arguably behind the world on cost benefit. Even North Korea is better aligned than the U.S. — it is No. 172 on cost and No. 153 on performance (North Koreans do not get much, but they pay even less).

With all of its technology and unique advancements, the United States sucks at healthcare. The real problem with Obamacare is that it does not fix the “suck” part or the cost part — it just shifts where the bill goes.

So, a whole bunch of U.S. citizens, myself included, now are paying more and getting less coverage. That is neither any way to get re-elected nor any way to run a country. Typically screwing your constituents does not work well for elections, and that played a much bigger role in the last election than most realize (or want to admit).

Amazon Benefits

I think Jeff Bezos gets this — it’s not rocket science. He likely understands that if the government really is not going to step up (it still is arguing over who pays, not the amount on the bill) then a heavy-hitting corporation must.

Amazon has the reach and capability to reduce healthcare costs massively through better records management; implementation of aggressive artificial intelligence-based diagnoses or diagnosis validation; ability to negotiate better drug prices; scalable AI-based patent monitoring; and policies that could address abuses, such as the overuse of painkillers, more effectively.

Individual benefits would include better and more comprehensive access to medical records; programmatic analysis of those records, triggering proactive medical procedures; more aggressive health monitoring; and far broader access to emerging medical technology and drugs.

Amazon has the capability both to lower healthcare costs and raise performance, so that Americans no longer would be paying the most for healthcare while being outranked in performance by 72 countries whose citizens pay less, often far less.

The Problems With Amazon

Amazon already has gained an inordinate amount of power, and there have been signs of organizational abuse. I personally experienced it when I questioned a series of charges on a little-used credit card, and Amazon suddenly dropped me, with no warning, back into the pre-Echo dark ages. I’m still rebuilding the damage it did, even though it reinstated me last year.

David Caulton covers the same topic, but Amazon is hardly the only big company to abuse its power. Our own Mick Brady got kicked in the butt by AT&T, the brand that keeps on giving.

With Amazon increasingly handling everything its customers consume, a dispute with the company could result not only in the loss of Echo functionality, but also in access to critical healthcare.

You dispute a bill and have a heart attack, you likely will be dead — and that level of control would be unprecedented except for the harshest of governments, let alone a retailer.

Without far stronger customer controls, I have my doubts whether Amazon’s foray into healthcare will end well rather than becoming just another, deadlier, problem for many American consumers.

Amazon’s Problems

Consumers are not the only ones with problems. Amazon is moving into one of the most heavily regulated areas in the United States and one of the areas with some of the strongest lobbies (pharmaceuticals).

In addition, thanks to also owning The Washington Post, Bezos is not exactly close to the current administration. The result is that getting through regulatory approval and not suddenly finding a whole bunch of new and old laws positioned against this effort may be problematic.

Once the government goes after one part of Amazon, the effort could spread more broadly to the overall business. So just bringing this service to market, given how many resources will be focused on stopping it, could be impossible.

Wrapping Up: Living on the Bleeding Edge

There are many billionaires who live on the bleeding edge. Massively used, not that concerned with profits, but aggressively pushing expansion, they are one blunder away from disaster. Elon Musk, Richard Branson and Jeff Bezos all have been playing this high-stakes game of musical chairs — each pushing the envelope in terms of investment, expansion and risk.

Bezos has stepped away from this risk a bit, as Amazon’s current stunning financials showcase. Offsetting this somewhat is pressure from the LGBT community that resulted from Amazon including among possible locations for its new headquarters many that were viewed as anti-LGBT. (Amazon has been supportive of LGBT issues in the past.)

Moving into healthcare is just Amazon’s latest aggressive move, but it could be a move too far. It already has been having customer care issues, it is at odds with the current administration, and it will face a ton of opposition because of the needed disruption it would cause.

Potentially, Amazon could fix healthcare — but it also could kill a bunch of people accidentally in the process. It is that latter outcome that has me very concerned.

I have been a huge fan of the modular computer concept — the idea that you could have some kind of core technology that you could accessorize, turning it into something else.

The first time I saw this concept was at an IBM ThinkPad Advisory Council Meeting in the late 1990s, and it is interesting that the Motorola Moto Z now is owned by the same company that now owns ThinkPad — Lenovo.

I think the Moto Z concept is better idea than the iPhone X concept — not only for users but also for Apple. One big reason is that it’s a ton cheaper at around US$750. (I found refurbished versions for as little as $322 on Amazon.)

This is because the Moto Z has a much stronger accessories opportunity, allowing users to customize their phones better and giving the manufacturer a stronger revenue opportunity after the phone is sold.


Moto Z2 Force

Moto Z2 Force

The Moto Z Force should outperform the new iPhone X. It has a stronger processor and none of that questionable battery- or modem-crippling software that Apple uses. It also has a screen that should be more resistant to breaking, and the broader choice of accessories the Moto line is famous for. Further, it too has a brilliant AMOLED display.

Accessories that generally attach to the back of the phone include a 360-degree camera, Polaroid-like printer, Alexa-powered smart speaker, gamepad, sound booster, JBL Speaker, several power packs, wireless charging, Hasselblad lens zoom camera back, and a projector (so you can watch Netflix on your wall).

Given this is the best modular computer I have ever tested, the Moto Z2 Force is my product of the week.

Snapchat’s Facebook-inspired redesign rolls out: Here’s what’s new

Snapchat now uses an algorithm on its new redesign of the app

Snapchat announced a redesign of its app last November. The update initially hit a few users, but on Monday it reached a global scale. While there isn’t any drastic change to the app’s design, the UI has been altered a little and a new algorithm has been put into place.

Through another update, Snapchat believes “separating social from media has allowed us to build the best way to communicate with friends and the best way to watch great content – while addressing many of the problems that plague the Internet today.”

In India, Snapchat’s redesign is available only for iOS users. You can update the app to its latest version from the App Store to get the new redesign. The new changes haven’t arrived for Android users as yet.

Snapchat redesign: What’s new

To begin with, Snapchat has removed one section on the app, which was one of its best features so far. Previously, if you swiped right you would see the ‘Stories’ section. Here, you could view your Snap Stories and your friends’ as well.

On the new Snapchat if you swipe left you will see a new ‘Friends’ page. Here, you will see your recent chats and the profile of your friends on Snapchat. You can tap on your friends’ profile icons to view their Snap Stories. This section was previously exclusive to chats on Snapchats. While it still shows your recent chats and your friends, the algorithm is “based on the way you communicate with them”.

Snapchat has merged Snap Stories on its chats section (Marcia Sekhose)

Snapchat has also tweaked its Discover section with a new algorithm. Before the update, you would see stories by publishers on the Discover section. Snapchat now shows localised Snap Stories from creators and the community. If you’ve subscribed to publishers on Snapchat, their Stories will remain on top. Below that you will see other Stories recommended by Snapchat.

Snapchat says that the Discover section will become “uniquely personalized for you”. Based on the algorithm of your Snapchat usage, it will show you related Stories. However, they would still undergo the scrutinisation of Snapchat curators.

Lastly, Snapchat now opens the app to its camera.

If you’ve received the Snapchat and do not like it, you can get the old design back till the company works on a fix for it

A step by step process has been listed on Twitter (via Mashable) which brings the old design back. However, doing so will delete all your Memories saved on Snapchat.

Hackers hijack Tesla’s cloud system to mine cryptocurrency

Juicing up the P100D on a trip to Detroit

Tesla’s cloud system was hijacked by hackers who used it to mine cryptocurrency, according to researchers.

Hackers were able to infiltrate the automaker’s Kubernetes administration console because it was not password protected, cybersecurity firm RedLock said Tuesday. Kubernetes is a Google-designed system aimed at optimizing cloud applications.

This left access credentials for Tesla’s Amazon Web Services (AWS) account exposed, and hackers deployed cryptocurrency mining software called Stratum to mine cryptocurrency using the cloud’s computing power.

Cryptocurrency mining is a process whereby so-called miners solve complex mathematical problems to validate a transaction and add it to the underlying network.

RedLock did not specify which cryptocurrency was mined in the cyber breach.

Other major firms, including British insurer Aviva and Dutch SIM-maker Gemalto, were affected by similar problems, RedLock said. But the incident affecting Tesla’s cloud system was more sophisticated, and used a number of different strategies to hide the hackers from being detected.

RedLock said that it notified Tesla of the cyber exposure and that it was swiftly rectified.

Tesla said that it did not see any initial impact on customer data protection or the safety and security of its vehicles.

“We maintain a bug bounty program to encourage this type of research, and we addressed this vulnerability within hours of learning about it,” a spokesperson for Tesla said in an emailed statement.

“The impact seems to be limited to internally-used engineering test cars only, and our initial investigation found no indication that customer privacy or vehicle safety or security was compromised in any way.”

RedLock CTO Gaurav Kumar said businesses should monitor suspicious cyber activities to avoid being compromised.

“The message from this research is loud and clear — the unmistakable potential of cloud environments is seriously compromised by sophisticated hackers identifying easy-to-exploit vulnerabilities,” Gaurav Kumar, CTO of RedLock, said in a statement Tuesday.

“In our analysis, cloud service providers such as Amazon, Microsoft and Google are trying to do their part, and none of the major breaches in 2017 was caused by their negligence.”

Kumar added: “However, security is a shared responsibility. Organizations of every stripe are fundamentally obliged to monitor their infrastructures for risky configurations, anomalous user activities, suspicious network traffic, and host vulnerabilities. Without that, anything the providers do will never be enough.”

What is ‘cryptojacking’?

This incident marks another case of what is known in the cryptocurrency world as “cryptojacking.”

Cryptojacking is a process whereby hackers deploy software that exploits a computer’s CPU (central processing unit) to mine cryptocurrency.

Earlier this month, it was revealed that hackers had deployed an altered version of the popular plugin Browsealoud to a number of government websites in the U.K., the U.S. and Australia.

This version of Browsealoud infected the government websites with Coinhive code, which is used to generate units of privacy-focused cryptocurrency monero.

U.S. online news outlet Salon is even asking visitors to its site who use ad blocking plugins if it can use their computing power to mine monero instead.

Former Execs Team Up to Fight the Tech Addiction Monster

social-media-tech-addiction

A group of former Facebook, Google and Mozilla executives have joined forces with the Time Well Spent advocacy group to establish the Center for Humane Technology (CHT), a new organization dedicated to combating the growing problem of addictive behavior among social media users.

The new center, along with the children’s advocacy group Common Sense, on Monday announced a campaign to help change the social media model. Its goal is to lessen the negative impact of automation and other technologies on the development of children and young adults, who are considered highly vulnerable to the most damaging aspects of social media.

“Tech companies are conducting a massive, real time experiment on our kids, and at present, no one is really holding them accountable,” James Steyer, CEO of Common Sense.

Teenagers polled in a 2015 survey used social media for an average of nine hours of per day, Common Sense found. Half of the teens admitted to feeling addicted to their mobile devices, and 60 percent of parents felt that their kids were addicted

Campaign Launch

CHT and Common Sense will kick off the campaign Wednesday at a Washington conference called “The Truth About Tech: How Tech Has Kids Hooked.”

Social media companies — Facebook, Twitter, Google, Snapchat, YouTube and others — have been microtargeting users with millions of specific advertisements, images, videos and other elements that are aimed at driving engagement, argue the campaign’s backers, led by CHT Executive Director Tristan Harris, former design ethicist at Google.

Social media organizations aim to satisfy the goals of their advertisers, maintain support from investors, and create a model to monetize the information they gather, according to the campaign.

CHT hopes to encourage changes in mobile phone design that will help minimize screen time, unhook users from their devices, and get customers to spend more time interacting with real people instead of constantly checking for the next post. They also will push for better consumer protection policies that protect users from abuses.

Along with Harris, the CHT leadership team includes Founding Advisor Roger McNamee, cofounder of Elevation Partners and an advisor to Mark Zuckerberg in Facebook’s early days; Chief Strategy Officer Aza Raskin, former head of user experience at Mozilla; and COO Randy Fernando, former executive director of Mindful Schools.

Capitol Hill Reaction

Sen. Ed Markey, D-Mass., has been working to address the impact of social media on children. He is the cosponsor of the Children’s Online Privacy Protection Act, a communications constitution, of sorts, for protecting children who use the Web.

Markey also has given his support to the Do Not Track Kids Act, a bipartisan bill that bans Internet companies from using behavioral targeting methods for tracking children and teens. It also would require parental permission for collecting personal information and location data.

“Sen. Markey recognizes that children are immersed in a digital world that may detrimentally impact their health, development and emotional well-being,” said Giselle Barry, a spokesperson for Markey.

Markey intends to sponsor legislation to fund a study by the National Institute of Child Health and Human Development, examining the role of electronic media on the growth of children, she told TechNewsWorld.

Growing Concerns

Social media abuse has become an increasingly serious problem for children, who typically have trouble controlling their impulses, said Rob Enderle, principal analyst at the Enderle Group.

This is not a brand new issue, as smartphones underwent design changes back when distracted driving became a major concern, he told TechNewsWorld, and when online activities fueled violent behavior in society.

“We desperately need to moderate this behavior, as it is having an adverse impact on virtually everything we see and touch, ranging from personal priorities to who runs our government,” Enderle told TechNewsWorld.

“We are currently largely unable to tell bad actors from good, or fake from real news,” he added, “and the very young and old are most vulnerable.”

The move toward advanced automation and robotics makes addressing this issue even more urgent, Enderle said.

On the other hand, the center’s concerns appear a bit misguided to Charles King, principal analyst at Pund-IT, who argued that social media has been blamed for human behavioral issues.

“I believe CHT’s argument misses the boat in a couple of key ways,” he told TechNewsWorld. “The first is blaming and then agitating to ‘fix’ technologies for apparently related cultural and behavioral changes.”

It’s unrealistic to expect companies to change or abandon qualities that make them successful, King said.

However, CEO Mark Zuckerberg last week acknowledged that some of the changes Facebook had made, particularly to the News Feed, were designed to help improve users’ overall emotional well being.

New MIT Project to Probe Mysteries of Human Intelligence

mit-human-intelligence

MIT last week launched the MIT Intelligence Quest, an initiative to find out how human intelligence works, in engineering terms, and how a deeper grasp of human intelligence can be applied to building wiser and more useful machines.

Life scientists, computer scientists, social scientists and engineers will collaborate in the effort.

“Human intelligence is turning out to be very complex, involving emergent properties that arise from complex computational networks,” noted Michael Jude, research manager at Stratecast/Frost & Sullivan.

“It is not simply an engineering design problem,” he told TechNewsWorld.

Bringing in some of the soft sciences, such as psychology and sociology, as well as areas like medicine “would seem to be a good thing,” Jude observed

Deep Insights, Practical Tools

Some of the advances may be foundational in nature, involving new insights into human intelligence and new methods to let machines learn effectively, MIT president L. Rafael Reif said in a letter to the university community.

Others may be practical tools for use in a variety of research fields, such as disease diagnosis, drug discovery, automated system materials and manufacturing design, synthetic biology, and finance.

MIT IQ researchers also will investigate the societal and ethical implications of advanced analytical and predictive tools, Reif said.

MIT already has active groups and projects investigating autonomous systems, media and information quality, labor markets and work of the future, innovation and the digital economy, and the role of artificial intelligence in the legal system.

“The challenge of better understanding human intelligence is enormous, and … requires a multidisciplinary approach,” said Doug Henschen, principal analyst at Constellation Research.

“MIT certainly has the stature, breadth and depth to take this on, drawing on credible and well-known experts,” he told TechNewsWorld.

How MIT IQ Will Function

Two linked entities within MIT IQ will lead its work.

The Core will advance the science and engineering of both human and machine intelligence; a key output will be machine learning algorithms.

The Bridge will focus on the application of MIT discoveries in natural and artificial intelligence to all disciplines. It will host state-of-the-art tools from industry and research labs worldwide.

The Bridge will provide the MIT community with intelligence technologies, platforms and infrastructure; education about AI tools for students, faculty and staff; rich and unique data sets; technical support; and specialized hardware.

MIT IQ will connect and amplify existing excellence across labs and centers already engaged in intelligence research, establish shared spaces for group work, and directly support research.

MIT will establish additional entities within MIT IQ in partnership with corporate and philanthropic organizations to fund the project.

IBM may play a key role in MIT IQ.

The company is “proud to be a cornerstone of this expanded initiative,” said John E. Kelly III, IBM’s SVP for cognitive solutions and research.

MIT IQ “is a natural evolution of what MIT and MIT Labs have been doing in the fields of AI, deep learning and work,” said Rebecca Wettemann, VP of Research at Nucleus Research.

“Similar announcements from other higher education and research centers” can be expected, she told TechNewsWorld.

Societal and Ethical Issues, Oh My!

Prominent scientists and tech leaders, including Stephen Hawking, Elon Musk and Bill Gates, have expressed concerns about the ethical and societal implications of AI research.

Musk and some partners launched Open.AI in 2015, an effort to guide ethical AI development to benefit society.

Microsoft, Google, IBM and Amazon are among the high-tech firms that launched Partnership on AI in 2016, with the same goals.

“What if we had done the same thing with automobiles?” Frost’s Jude asked. “Would we actually have built any? Sometimes, “you just have to make tracks and fire out the solutions to problems along the way.”

Caavo review: the future of remotes, a little too soon

I have been excited to get a Caavo to review since I first saw it demoed last year — it’s a next-generation universal remote system that uses machine vision to operate all your TV devices in a simple, seamless way.

After a lengthy development cycle, a new round of funding, and some limited beta testing, the first 5,000 Caavo units go on sale today for $399. After using a review unit for several days, it’s clear that Caavo has the most interesting idea about the future of remote controls anyone’s had in years. It’s also clear that it’s a very complicated, expensive idea that isn’t quite ready yet.

Here’s the basic difference between Caavo and other universal remotes like the popular Logitech Harmony series: the Caavo can see mostly everything that’s happening on your TV, and figure out what to do next based on what it sees. Other universal remotes are actually quite dumb: they just fire off preprogrammed sequences of commands without being able to confirm if things went well, and if everything works right, you still have to find and play your shows on every device yourself.

The Caavo, in comparison, is like a little TV butler: you say “Watch The Handmaid’s Tale” and it does the work of switching inputs to the device you like to watch Hulu on, opening the right episode, and hitting play. You can actually watch it click around your various TV interfaces as it finds what you want; it’s pretty wild.

Setting up the Caavo is a bit of a process. When you first order a Caavo, you set up a Caavo account and enter in all your service logins: Netflix, Hulu, HBO Go, whatever you use. This lets Caavo build watchlists for you, and even login to services on various devices for you if needed.

When the hardware arrives, you’ll notice that it’s rather large, and you’ll need to make room for it. The good news is that you can put it out someplace visible without ruining your decor — it has a number of nice-looking interchangeable wood covers. On the back, you’re looking at 8 HDMI inputs, HDMI out, two USB ports, and IR blaster port, and an Ethernet jack. (Caavo recommends connecting to your network over Ethernet, but it has WiFi as well.) You unplug everything from your TV, plug everything into the Caavo, and plug the Caavo into your TV. If you have a home theater setup with a receiver, you plug the Caavo into that instead and it’ll sort out volume control; that’s what I did. It took about 20 minutes from opening the box to having all the cables plugged in correctly and the Caavo situated in a reasonable place.

Caavo with the lid open
Caavo remote buttons UI
Caavo remote

When you boot up the Caavo after all that, it will auto-detect all your devices and run through some basic steps to confirm that it can control them — and it uses a variety of methods to control everything, from regular old IR to network control to HDMI-CEC. And it can use them all together: it might send a power-on signal over CEC, click through the interface using IR, and then pass a deep link to an app using an API. It’s all very clever.

I set the Caavo up with a TiVo Roamio Pro, an Xbox One, a Chromecast, and an Apple TV, and it figured everything out and was ready to go in about 20 minutes, save a glitch with the Apple TV that resolved itself after a restart.

Actually, it would have been ready to go, but getting it to work properly with my Apple TV and TiVo required a few phone calls and a handful of device resets. My review unit was still wearing a beta software label, so hopefully these early issues get ironed out over time, but it definitely took some effort to get everything going.

If you need an IR extender, the Caavo comes with a neat trick: there’s a custom adapter that sends IR along HDMI, so you just need to run one cable to your device, with a little IR dongle at the end. It’s nice. All of the hardware is nice, in thoughtful ways: the HDMI cable in the box has little LED buttons at both ends, so you can press one and see where the other end is plugged in. It’s all very nice.

Once you’re up and running, you can just use the Caavo remote to control all your devices like normal, you can issue voice commands, and you can install a Caavo Alexa skill to control things that way. You can also use your original remotes at will; because the Caavo knows what’s going on on-screen, it never gets confused. I do wish the actual remote had a slightly better button layout, though; volume buttons should never be at the top, where they require a reach. The “sources” button is labeled with the iOS “share” icon, which is confusing. And the remote isn’t backlit; instead just resting your thumb on a button pops up a button label on your TV. It’s clever, but I’d prefer backlighting.

Caavo on-screen interface

Using the on-screen menus, you can do a broad search across devices and apps, switch devices or apps, or open your watchlist that tracks what you’re watching across services. Just being able to select apps and have them open on your preferred devices is great: you can set Vudu to open on a Roku, Prime Video to open on a Fire TV, and iTunes Movies to open on an Apple TV, and you never have to think about switching — you just pick the app icon from the Caavo menu and off you go. When you send something to a Chromecast, the Caavo just figures it out, switches inputs, and enables you to play and pause video from the remote, which is very nice.

You can just say “watch NBC” and have the Caavo switch inputs and change the channel to NBC. It’s a small thing, but no other universal remote can consistently get this right.

Caavo is also very high on its watchlists, which are exactly what they sound like: the company tracks what you’re watching across every device and service, and you can jump straight into the next episode from the Caavo interface. The machine vision stuff really shines here: the Caavo literally runs a lightweight web browser that logs into all your services and checks what you’ve been watching to update the lists, and if you have a compatible DVR, it clicks through your recordings at night to build a database of shows. And then when you pick a show, it can just launch the right device and drops you right in.

(I asked about privacy and data collection, and Caavo told me it doesn’t keep your viewing history — just enough data to show watchlists and perform the watch command. The company also says Caavo doesn’t read the screen to identify what you’re watching, as many smart TVs do.)

These basics all generally worked, but I ran into various small stumbles. The Caavo could be a little slow sometimes — I can click around my TV apps pretty fast, and sometimes watching the Caavo do it for me slightly slower was maddening. The Caavo software doesn’t yet know how to read a TiVo interface, so it wasn’t able to index my recorded shows the way it can with various cable and satellite DVRs. An HDMI-CEC issue with my Panasonic TV meant that it popped up its HDMI source labels whenever the Caavo displayed its menus or switched inputs. The on-screen interface wasn’t perfectly centered on my TV. And there’s just no way for the Caavo to control smart TV apps the way it can control a set-top box — it can’t see those apps over an HDMI connection, after all.

Caavo box and remote

And in the biggest limitation, the Caavo supports 4K, but not HDR. There just isn’t a chipset that can handle it right now, the company says. I used the Caavo just fine with my 1080p setup at home, but every mainstream TV worth buying has HDR now. If you’re buying a $400 universal remote system, you’re either the sort of person who already has an HDR set, or you’re the sort of person who might buy one in the next couple years. I don’t know about investing in an expensive remote system that can’t grow with your next TV purchase, both in terms of smart TV app control and HDR.

All that said, I found myself wanting to use the Caavo remote more often that not these past few days. It’s obviously smarter and more capable than other universal remotes, and Caavo’s ability to see what’s happening on your screen means that it can connect things like Alexa and an Apple TV in a way no other device can possibly do. But making all that happen requires a lot of complicated systems to work together seamlessly, and there’s still more polish needed to make the Caavo live up to its lofty potential. These first 5,000 buyers are definitely going to live through some growing pains.