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from A Round to Apple Inc.
November 13, 2016

Aftershocks and Awe

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Market Snapshot

Indices Week YTD

New Zealand was greeted Monday morning with a 7.8 magnitude earthquake, sparking a tsunami with fifteen-foot waves. Fleeing residents in Christchurch were in a state of traumatized disbelief, having just seen their city reduced to rubble in an earthquake five years ago.

Shell-shocked doesn’t capture the feeling that many Americans, most pundits, and much of the World felt Tuesday evening in the wake of a 10.0 Richter Scale earthquake now known as President Elect Trump. Equities futures markets on every corner of Earth were in a free-fall as it became increasingly clear that the future President of the Free World was going to be the person best known for saying “You’re Fired” on a reality TV show.    

Then, even more unexpected things happened. The first was that the Sun came up in the East Wednesday morning and the second was that stocks actually went up, not down, as the experts had proclaimed they would (not predicted — proclaimed). In fact, the Dow Jones, which was down nearly 1,000 points Tuesday evening, had its best week in five years, advancing 5.4%.

There were many lessons learned from this election but one that can be applied to investing is to believe what you see, not what you hear. The crowds that Donald Trump was getting everywhere he went suggested he was tapping into something powerful. The fact that despite shooting himself in the foot, the head, and the heart, he wouldn’t die — his poll numbers barely moved — said that people didn’t care about the bad stuff. They wanted change. If a stock has bad news and it doesn’t go down, it means that it is going up, and that’s what happened here.

Moreover, people interjected their own beliefs and bias as opposed to analyzing the data. The Real Clear Politics Poll, which aggregates all the polls, basically had Trump within the margin of error nationally and in all the battleground states on the eve of the election. Yet the experts couldn’t imagine a President Trump, so they were in shock when what the numbers were saying actually happened.

Logic suggested that Trump support would be understated in most polls because people didn’t want to get bludgeoned for saying they were voting for Trump… after all, Trump voters were uneducated, redneck, racist and misogynist. Look at what happened to Peter Thiel for being a visible Trump supporter. There was a movement to have him removed from the Facebook Board.

The pain, fright and anger that many Americans are feeling right now is very real and it will take real leadership to help our Country move forward. I’m optimistic that our brightest days are in front of us and that’s all up to we the people.

One of the first times I learned the lesson of believing what I saw, and doing the analysis versus what the pundits were saying, was with Starbucks Coffee nearly twenty five years ago.   

I was fortunate to be one of the first research analysts to identify Starbucks as a huge opportunity following its IPO in 1992, when its market cap was $220 million. Today, its market cap is $79 billion.

Lucky? Maybe a little. Art or science? Both. Hard work? Absolutely. Let me tell you a story.

It was Thursday afternoon after a long week on the road visiting companies. I was in Seattle with one meeting to go before I flew home. My friends told me about this coffee company — named after a Moby Dick character — that had a cult following. I almost cancelled my meeting on the way to airport because I just wanted to get home and the company sounded ridiculous.

Maybe people in Seattle would embrace a coffee house as a great business, but I couldn’t imagine this concept traveling beyond the Puget Sound. But, Starbucks headquarters was just off Interstate 5 on the way to the airport and I figured, “Why not, I’ll make it quick.”

The minute I walked into the reception area, I knew something was going on there. The level of energy in the air was electric. I sat down with Howard Schultz and he crystallized how Starbucks was going to become the most important coffee company in the World. He talked about the importance of his employees, and how he was creating a partnership with them. He was passionate about the quality of the product and the customer experience. He was committed to constant innovation.

This week, Starbucks announced its quarterly earnings, narrowly beating analysts’ estimates. But buried among the ho-hum financial reporting was a remarkable development. Over 25% of the company’s U.S. transactions are now paid through the Starbucks app.

Starbucks continues to push the boundaries of innovation with a mobile payments app that is a window to the future of consumer financial technology.

For context, of a projected $5+ trillion in 2016 U.S. retail spending, only 3% will come from mobile payments. And that’s despite a flurry of mobile wallet initiatives from major banks, online payment pioneers like PayPal, technology companies like Apple and Facebook, and countless startups.

It’s vintage Howard Schultz. Many people thought Starbucks was crazy for putting free Wifi in their stores in 2008. Today, we increasingly expect high speed connectivity everywhere we go.

In the same way, Starbucks is now a window to the future of consumer financial technology, or FinTech. Launched in 2011, the Starbucks app is generating six million transactions per month. And with $1.9 billion in prepaid deposits, it’s larger than many banks.


Source: Starbucks, BI Intelligence

Why has Starbucks been so successful with mobile payments, and what does it tell us about how technology will transform the long-stagnant financial industry? First, Starbucks has created a superior user experience that makes it substantially more efficient to order a cup of coffee. It speeds up the checkout process and enables customers to order ahead.

Secondly, the payment process is effectively invisible — it’s just part of the app. The same is true of wildly popular ride-sharing apps like Uber and Lyft. Beyond making it dramatically easier to find a ride, these platforms have eliminated the need to hand a driver money, swipe a credit card, or even open a digital wallet like Apple Pay. The payment just “happens.”

Finally, Starbucks is a brand people love and trust. And customers are rewarded for loyalty with perks and incentives in the app every time they make a purchase.


Source: GSV Asset Management

Looking ahead, we see four key areas at the frontier of consumer FinTech innovation: Personal Finance, Mobile Commerce, Lending, and Insurance. Innovation leaders in each category are drawing on many of the fundamentals that have propelled the success of the Starbucks app to upend an industry that Goldman Sachs estimates is worth over $4.7 trillion.


Source: GSV Asset Management

Through the first half of 2016, there were 416 VC-backed FinTech deals worth a combined $7.4 billion according to CB Insights, a trajectory in line with $14.5 billion invested in 2015. Given the deeply entrenched stakeholders involved in finance — from big banks to insurance companies — corporate VC activity is accelerating. It accounted for an estimated 23% of deals in 2015 and jumped to 32% in the second quarter of 2016.


Source: CB Insights

Notable 2016 financings include Chinese marketplace lenders Lufax ($1.2 billion) and Weidai ($153 million), insurance platforms Oscar ($400 million) and Clover Health ($160 million), and consumer financial services companies Betterment ($100 million) and Affirm ($100 million). Two leading global payment platforms — China’s Ant Financial (Alipay, a spinout from Alibaba) and India’s Paytm — raised $4.5 billion and $300 million respectively. Ant Financial was valued at $60 billion and Paytm was valued at $5 billion.


Mobile payment technology emerged as the next frontier for financial innovation as global cellphone adoption became ubiquitous.

But while the idea of using a smartphone to quickly and securely pay for things sounds appealing, mobile commerce has yet to make a dent in the United States. According to Bain & Company, mobile payments — for e-commerce and in-store purchases — represents an estimated 3% of total U.S. retail sales.

Desktop E-Commerce, Mobile E-Commerce, And Mobile In-Store Purchases as a Percentage of U.S. Retail Sales ($ Trillions)

Source: eMarketer, BI Intelligence, GSV Asset Management

Mobile commerce will surge over the next five years. Euromonitor estimates that global mobile commerce will amount to $972 billion by the end of this year. By 2021, it will reach $3 trillion. Much of this growth will be driven by expanding mobile e-commerce, which is a function of desktop e-commerce moving to smartphones. China and India are catalyzing this transformation.

China’s e-commerce market surpassed the United States in 2013 and today, Alibaba handles more transactions than Amazon and eBay combined. This week, Alibaba topped its Singles’ Day record (annual online shopping event), netting $17.8 billion in 24 hours. The average cost per order was $27 and 82% of were completed on smartphones. In 2016, mobile commerce will account for over half of online purchases in China, or $506 billion — up from $180 billion in 2014.

Key Trends

As smartphones become increasingly ubiquitous, the opportunity to create the killer payment app or “digital wallet” has proven irresistible to banks, credit card companies, and technology leaders — from Apple to Alphabet (Google), Amazon, Facebook, Tencent, and Alibaba.

In practice, mobile commerce requires a nuanced set of relationships between merchants, banks, credit card companies, payment processors, mobile operators, and mobile device makers. As expected, many are trying to master this complex ecosystem through scale.

On a 2015 quarterly earnings call, Apple CEO Tim claimed that 2015 would be the “year of Apple Pay” — the company’s integrated digital wallet. There was reason for optimism. Apple is the second largest global smartphone maker and they have over 800 million credit cards on file through iTunes. Time to connect the dots, starting with in-store purchases, where the bulk of retail spending occurs.

Through the first half of 2016, Apple Pay represented 75% of U.S. “contactless” mobile payments in the United States. But they are the master of a tiny market. eMarketer estimates that through the end of the year, just 19% of Americans will have used their smartphones to pay at the point of sale.

Why? Not every checkout counter is equipped to talk to an iPhone. For some it’s still easier to pull out a credit card. Citi entered the mix this week with the launch of Citi Pay.

PayPal, a pioneer in online payment processing, is projects that it will complete $100 billion in mobile payment volume over the next 12 months. It has been buoyed by its acquisition of Venmo, a popular peer-to-peer payment platform that has processed nearly $15 billion year-to-date and is growing 130% per year. The app launched in 2012.


Source: Company Disclosures, Crunchbase, GSV Asset Management

In October, 19 banks, including Wells Fargo, Bank of America, Citi, Capital One, and JPMorgan, partnered to form Zelle, a money-transfer service designed to compete with Venmo and its peers. Importantly, it will enable consumers to access funds at no cost (Venmo and others typically pass on bank deposit/integration fees to their customers). The battle continues.

Alibaba spinout, Alipay (Ant Financial Services) might be best positioned to dominate the future of mobile commerce. Alipay counts over 450 million users, a group larger than the entire population of the United States, and it’s going global. In September alone, Alipay added over 80,000 retailers in 70 countries, including 10 international airports, from Munich to Tokyo.

Credit Suisse estimates that 58% of China’s online payment transactions go through Alipay. A $4.5 billion financing in April 2016 valued the company $60 billion. Look for similar growth in India where Paytm, the country’s leading mobile payments platform, already counts over 130 million users making at least one purchase per month. As you might have guessed, it is backed by Alibaba and Alipay.

What’s Next

Peer-to-Peer payment services like Venmo, which allow people to easily exchange money, will increase the velocity of mobile payments. Acquired by PayPal in 2014, Venmo is on track to process $20 billion in 2016.

Venmo launched as a free service in 2009, enabling people to link their debit and credit card accounts to the app and send money to their contacts. Venmo is now turning its attention to retailers, enabling merchants to accept payments from its network of engaged users who transact 3-4 times per week on average.

Peer-to-Peer payments will be further propelled by the rise of messaging apps integrating similar payment functionality, including Snapchat (Snapcash), Facebook Messenger, Tencent (Weixin + WeChat), and Line. Forbes estimates that Tencent’s WeChat alone will process over $556 billion in transactions in 2016 alone. (Disclosure: GSV owns shares in Snap)


Despite mass connectivity and smartphone access, the The Federal Deposit Insurance Corporation (FDIC) estimates that there are 93 million “unbanked” and “underbanked” residents of the United States. The World Bank estimates that it is over two billion globally.

PayNearMe is addressing this challenge with a next-generation, payment platform that enables people use cash to pay auto, rent, and utilities bills through 17,000 U.S. retail locations. Bill payments that would typically require a credit or debit card can be made in cash, with receipts, processing, and confirmation tracked through a mobile device. (Disclosure: GSV owns shares in PayNearMe)

We anticipate that activity to serve global unbanked populations will accelerate as key players in the mobile payments ecosystem turn their attention to this potentially open-ended opportunity.


In his signature book How, Dov Seidman argues that in an era of digital connectivity, increasing transparency, and global interdependence, how we do anything means everything.

Fundamentally, there are three ways to drive human action. You can coerce, incentivize, or inspire. Coercion and incentives rely on external rewards (carrots) and punishments (sticks). In the hyper-connected World pioneered by Millennials, a generation of digital natives, the limitations of carrots and sticks are quickly becoming clear. Rules and directives cannot not keep pace with technology innovation — a challenge that China will continue to grapple with as it seeks to limit the ability of social networks to amplify political unrest.

On the other end of the spectrum, the “Return on Incentives” is declining as increasing access to information enables people to find better “deals” elsewhere — from the products they buy to the jobs they pursue and the cities they live in. It is getting harder to buy loyalty, and the World of finance is finally taking notice.

Key Trends

In a far-reaching study by PR powerhouse Edelman, consumers reported that when quality and price are a wash in competing products, a company’s “social purpose” is the most important factor in selecting a brand. Nearly 44% of people are even willing to pay a premium for the products of companies that support a “good cause.” Among Millennials, over 89% indicate that they actively aim to make purchases from companies that are committed to solving societal issues, from pollution to poverty.

Companies like Aspiration are creating a new breed of financial services firms that are born of these new fundamentals. Co-Founded by CEO Andrei Cherny (a former Clinton White House aide and the youngest White House speechwriter in American history) and Joe Sanberg (a former Managing Director at Tiger Global Management and a founding investor in Blue Apron), Aspiration offers banking and investment services based on trust. (Disclosure: GSV owns shares in Aspiration)


Source: Aspiration

The key characteristic of the Aspiration model is that customers choose what fees to pay. They don’t make a cent from bank accounts or the mutual funds the offer beyond what customers are willing to pay. The bet is that if they deliver outstanding service, customers will compensate them. Since launching in the fall of 2014, Aspiration has over 20,000 customers with an average age of 33.


Source: Company Disclosures, Crunchbase, GSV Asset Management

SoFi, which launched in 2011 with an emphasis on more friendly and transparent student loans, is branching out into a range of financial services. It remains squarely focused on creative customer engagement as a competitive advantage, providing everything from career counseling, to wine tastings and home-buying workshops.

In 2016 to date, SoFi has lent out $5.5 billion, up from the $5.2 billion it originated all of last year, and the $1.3 billion it did in 2014. The company has now issued loans to over 175,000 customers.

What’s Next

The frontier of personal finance is harnessing powerful new technologies to provide a range of automated services that are both engaging and value added.

Chatbots — programs designed to conduct an intelligent conversation with human users — are becoming increasingly effective with the application of new Artificial Intelligence principles. Using Machine Learning, Chatbots are increasingly able to observe and learn from patterns of communication, escalate critical issues to customer service representatives, and anticipate questions and problems.


Source: GSV Asset Management

Financial services behemoths are beginning to deploy chatbots to better manage customer relationships. MasterCard, for example, is launching its own banking bot in partnership with AI company Kasisto, which users can contact through Facebook Messenger. The bot will enable users to review their accounts, monitor spending levels, and access financial literacy resources in real time.

The application of Artificial Intelligence to investment management itself will further transform the financial services industry. Business Insider estimates that “Robo-Advisors” will manage $8 trillion in assets globally by 2020.


In Shakespeare’s Hamlet, Polonius famously warns his son Laertes to, “Neither a borrower nor a lender be.” In recent years, markets have seemingly signaled to consumers, “Neither a saver nor a borrower be.”

How did we arrive at this strange paradox? Typically, when it’s bad to be a borrower, it’s because interest rates are high — which should mean that it’s a good time to be saver. But a prolonged period of record-low interest rates following the global financial crisis has left savers starving for returns.

A different logic has prevailed for individual borrowers. As faltering banks pulled back on consumer lending to lick their wounds, would-be borrowers were left with few sources of credit outside of credit cards — a lifeline with double digit interest rates that tend to remain high through economic cycles. The net result is that while savers have never had a worse deal, for most individual borrowers, credit is scarce and costly.

Key Trends

These fundamentals have sparked the rise of a new breed of “marketplace” lenders that are challenging established banks by offering consumer loans at more competitive rates, financed by individuals seeking to put their savings to work or Wall Street institutions looking lend money.

Pioneers like Prosper and Lending Club harnessed the same models that propelled the rise of the “sharing economy.” Like Uber and Lyft with cars, and Airbnb with homes, these companies created marketplaces for a commodity they do not provide themselves — in this case, money. (Disclosure: GSV owns shares in Lyft)

Rates are lower because marketplace lenders don’t share the massive overhead of a traditional banking operation. Instead of a bank intermediating between savers and borrowers, the two parties are able to connect directly. The platforms do the credit-scoring and earn a profit from arrangement fees, not from the spread between lending and deposit rates.


Source: GSV Asset Management, CrunchBase, New York Times, Wall Street Journal, Company Disclosures

Though still dwarfed by the $3 trillion of consumer debt outstanding in America alone, the Morgan Stanley estimates that the Marketplace lending sector is on track to surpass $286 billion by 2020, representing a 76% Compound Annual Growth Rate (CAGR) since 2010.

Global Marketplace Loan Issuance ($ Billion)

Source: Morgan Stanley

To date, marketplace lenders have primarily focused on unsecured consumer credit, with roughly 80% of loans used to consolidate debt, and small business loans. But attention is quickly turning to the $1.2 trillion student loan market, auto loans and mortgages.

What’s Next

Next generation lenders have struggled in recent months — particularly Lending Club, whose CEO Renauld Laplanche resigned in May 2016 following reports of improprieties in the company’s lending processes. Adding to the negative perception is an increasing anxiety that underwriting has been too lax, with marketplace lending pools primed for default should broader market conditions worsen. Briefly valued at $10 billion following its 2014 IPO, the company has languished and now has a market cap of $2.4 billion.

The episode underscores the central challenge — and opportunity — for marketplace lenders. Freed from the costs of brick-and-mortar branches and federal regulations requiring that they reserve money against their loans, marketplace lenders have been able to grow quickly and with fewer expenses.

Institutional investors like hedge funds, insurance companies and pension funds initially clamored to buy large pools of these loans, which offered an attractive returns at a time of record low interest rates. But as institutional interest has waned, Marketplace lenders have not been able to fall back on reserves of capital that are the foundations of banks and insurance companies.


Source: GSV Asset Management

Moving forward, the leading marketplace lenders will continue to diversify their services. SoFi, for example, which has raised $1.4 billion from a syndicate of leading investors including IVP and Softbank, has moved from student loans to investment products and value-added services. Some marketplace lenders may capitalize on their brand equity and proprietary underwriting processes to evolve into banks with permanent capital bases. The “Peer-to-Peer” aspect of these services — individuals buying loans from other individuals — will continue to recede.


The first written insurance policy appeared in 1750 B.C. in ancient Babylonia on an obelisk recording the famous Code of Hammurabi. Debtors that offered lenders an extra sum did not have to repay their loans if an unforeseen catastrophe struck — think death, disability, fire, or flooding.


Source: American Historical Association

Global insurance premiums reached $4.6 trillion in 2015 with the United States representing at $1.4 trillion — of that figure. While it has grown in scale and sophistication, the consumer experience has evolved very little.

The industry has been especially slow to modernize due to historically high barriers to entry — from regulatory burdens to product complexity. But consumers are increasingly seeking ease of use, transparent pricing, and on-demand services in all aspects of their lives— values that are contrary to the basic premise of insurance, which is to deny claims to make money. But entrepreneurs are rising to the challenge. CB Insights estimates that funding for for insurance technology companies rose from $740 million in 2014 to $2.7 billion last year.

Key Trends

The traditional insurance industry is comprised of three main segments: brokers (distributors), which interact with clients; insurers, which perform operational tasks like underwriting and claims processing, and reinsurers, which insure the insurers.


Source: GSV Asset Management, Business Insider

The obvious area for innovation, with the fewest barriers to entry, has been replacing the individual brokers with transparent, efficient marketplaces that apply the design principles of successful e-commerce platforms. Companies like CoverHound, Cover, FinanceFox, PolicyBazaar, and PolicyGenius have all gained strong traction and blue chip backing.

A second key group of companies is taking the industry head on, raising larger war chests to create next-generation, regulated insurance companies for Digital Natives. Clover Health and Oscar, which have raised $295 million and $728 million respectively, have focused on healthcare as it is ripe for applying superior technology, data, and customer service to more effectively price premiums, reduce costs, and deliver services.


Source: GSV Asset Management, CrunchBase, Financial Times, Company Disclosures

A final category of companies has found traction with specialized services. Metromile, for example, is delivering pay-per-mile auto insurance. Trov enables consumers to insure individual possessions. Simplesurance provides a platform for point-of-sale insurance sales for e-commerce platforms. It is focused on technology products like smartphones.

What’s Next

Moving forward, insurance startups will continue to partner with established providers to provide a regulatory halo for their services. But as newcomers establish their own brands, they will seek to create their own regulated vehicles to cut out the middleman. We’re beginning to see this dynamic play out with companies like Metromile.


Source: GSV Asset Management

We also expect to see a proliferation of new insurance models. Sequoia backed Lemonade for example, is charging a fixed fee to customers that join insurance “pools.” If the pool is unable to pay for the claims of its members, the Lemonade will pay the excess from reinsurance and capital reserves. If the pool is “profitable”, funds are donated to a social cause members care about. In this model, there’s no incentive to withhold payouts. The times they are a-changin.

Contrary to conventional wisdom, stocks surged last week on news that the 45th President of the United States would be Donald Trump. The Dow had its best week in five years and advanced 5.4%, with the S&P 500 and NASDAQ both rising 3.8%. Investors liked the proposed $1 trillion in infrastructure spending and tax cuts.

World Indices

Source: Yahoo Finance, GSViQ

Despite significant upward moves in traditional sectors like defense, banks and basic materials, big tech mainly didn’t join the Trump Rally. Amazon, Microsoft, Apple, Alphabet (Google), and Facebook all finished the week lower. Bucking the negative tech action, Nvidia reported a blow out quarter, with its EPS rising 91% and its stock jumping 30% for the week.

Priceline also reported a strong quarter, with EPS up 23% and its stock rising over 8%. As a paired trade, Priceline competitor Trip Advisor reported less-than-stellar numbers, with its shares sinking 20%.

We remain BULLISH on the outlook for Growth Stocks. We see an environment of strong fundamentals, modest valuations, and low interest rates — all good characteristics for strong performance.


by Luben Pampoulov

It’s a Spectacle

It was literally a spectacle! Not one, but many…

In a highly surprising move, Snap began selling its Spectacle sunglasses from a vending machine in Venice Beach, CA on Thursday. Without any pre-announcement, a yellow “Snapbot” was placed right in-front of Snap’s original office by the beach at 6.30am local time. Within an hour, the word had gone viral and hundreds of Snapchat fans lined up in what was later a 3-hour queue. (Disclosure: GSV owns shares in Snap).

Source: LA Times

Everybody had high expectations for the upcoming new gadget, but no one could have predicted the vending machine point of sale. What’s crazy — the location of Snapbot is being announced on Snap’s website, with a local map showing its current location. What’s even crazier — Snapbot stays in one location for just 24 hours, just like a Snapchat Story, and then moves on to the next location. And what’s craziest — the new location will be displayed on Snap’s website at the time it is ready and set. In other words, Snapchat fans will be chasing ghosts :)

Snap’s Website Showing Snapbot’s Location Last Thursday

Snap’s Website Showing Countdown to Snapbot’s New Location

CEO Evan Spiegel had previously said that the Spectacle glasses will be an experiment. The fact that there was an instant line of hundreds of people, and that Spectacles sold out in just over five hours, implies that the experiment is on to a good start.

Due to the limited supply, Snap is trying to limit the number of glasses sold per person. Therefore, Snapbot only dispenses one pair of glasses per credit card. But that didn’t prevent people to use multiple cards, and in one case, one person bought four Spectacles before Security asked him to move on.

Also, due to the limited supply, Spectacles were soon selling on eBay for prices ranging between $500-900, which is a multiple of their $129 retail price. While not in the same category, but a good comparison nevertheless, when Tesla unveiled its Model S in 2012, it was selling at a 30-50% premium on the Chinese “black market.”

Snap’s innovative retail strategy is very smart. It might be unsustainable over the long-term, but it is highly effective as a starting point. The limited supply, in quantity and in location, is creating an enormous buzz and marketing ROI, as well as a cultural trend. Snapchat fans from around the World will be patiently waiting for Snapbot’s updated location every day. Instant lines of people are guaranteed. And a startup/app that will let you hire someone to go buy and send your Spectacles is certainly getting created as we speak.

There are no official numbers from Thursday, but assuming that it takes ~3 minutes per purchase (people can chose between three different colors when standing in-front of Snapbot), and knowing that Spectacles sold from 7am until 12pm before they sold out, we can estimate the total number of glasses purchased in Venice on Thursday was around 300. At $129, that’s about $39K in revenue.

It’s obviously not meaningful on a grand scale of things, but looking at it on a sales per square foot basis, it is astonishing. Snapbot takes just over 10 square feet of space, so Snap did about $3,700 in sales per square foot in just 5 hours. As a comparison, Apple does $6,050 in sales per sq. foot annually. And on top of that — Snap’s personnel included two safety guards, and a few guys to refill the Snapbot. No salespeople, no “Geniuses”, no cashiers. Talk about maximizing profit and minimizing cost.

Spectacles are a cool pair of sunglasses equipped with mini cameras. They sync with the Snapchat app via Bluetooth and allow users to record and simultaneously upload snaps on the go. Unlike other cameras, the Spectacles have a 115 degree, wide-angle camera which captures circular video from a point-of-view perspective, enabling videos to be viewed in landscape or in portrait mode (or a mixture of both, if you rotate the phone). Watch a Spectacles review video here.

Maybe Snap will have several Snapbots selling simultaneously across different cities. While we don’t know the total Supply of Spectacles, we know it will be far less than the total Demand. 

Pioneer Notes

by Li Jiang

10 Tech Products To Get Psyched About In 2017

While the election this week introduced new unrest (on more sides than one), please try to remember that even in times of uncertainty and change, technology can still makes progress. Moore’s Law has survived for over 50 years through wars, recessions, and everything else our world has been through.

Without further ado, here are the products coming into the mainstream in 2017 that we can be excited about. These are all specific products, not just drawing board concepts.

Number 10: Snap Spectacles

Snap Spectacle concept image.

The Snap Spectacles, which are already available in the company’s hometown of Venice, CA, will be getting a much broader roll out in 2017. Spectacles may succeed where Google Glass failed. It combines a much easier to use product with fun, goofy and more natural use cases connected to Snapchat. Plus it’s been 3 years (an eon in tech time), smartglasses get to be cool again.

Number 9: Starship Technologies

Starship delivery robot roaming around Washington D.C.

While you don’t get to make a Superman “it’s a bird, it’s a plane, it’s a drone” references, this little delivery robot has its wheel planted firmed on the ground. In late 2016, Starship Technologies rolled out their delivery robots in Washington D.C. and then Redwood City, CA. These delivery assistants have rolled around 11,600 miles and encountered 1.8 million people. Let’s hope Ahti Heinla (@ahtih) and team will lead a fleet of these little carriers to save us from the empire of big box stores.

Here’s a bonus close-up picture of Starship Technologies at the 2016 GSV Pioneer Summit:

Starship Technologies at the 2016 GSV Pioneer Summit

Number 8: Electron (Rocket Lab)

Rocket Lab Epic from Rocket Lab on Vimeo.

Space, the final frontier, is about to get a bit more crowded. While this isn’t a product you can pick off the shelves, the Electron rocket from Rocket Lab is dramatically decreasing the cost of accessing space.

For $50,000 you could hitch a ride (for your satellite, not for yourself) into space. Each Electron Rocket uses less fuel than a 737 airliner flying from SFO to LAX and the company has the ambitious goal of launching more than 100 rockets a year. Fast Internet beamed from space, real-time climate monitoring around the world, instant tracking of key economic assets, the possibilities are endless.

Number 7: Zipline

Zipline making a medical delivery

While the U.S. Federal Aviation Association has cautioned Icarus (reference), some countries are saying “let ’em fly” when it comes to drones delivering important life saving medicine. Zipline, a startup that announced a $25 million round with top Silicon Valley investors, are working in Rwanda and other markets to drop medical supplies. The drones fly at 60 miles per hour and they never have to worry about getting a speeding ticket.

Number 6: Remedy

Want to talk to your doctor at a moment’s notice just by tapping your phone. Now you can. The long awaited promise of on-demand and personalized healthcare will take a leap forward in 2017 with apps like Remedy. Using data from numerous other cases and its AI engine, Remedy can treat 70% of cases remotely and quickly find additional help for you as needed. On the doctor side, Remedy helps with the administrative burden, which is a staggering $250+ billion a year in U.S. hospitals, or 25% of total hospital spending. Hopefully the true stories of hospitals that have more billing employees than number of patient beds will be stories of yesteryears.

Number 5: Tesla Solar

Tesla is making roofs cool again. The new lineup includes attractive roofing tiles that contains solar cells inside. With over 5 million new roofs installed each year, integrating solar cells inside roofing materials is a natural way to accelerate solar adoption. Their goal is to roll out the roofing solar products at a price equivalent or lower than non-solar roofs plus the cost of electricity. You never thought we’d get to the point of designating smart versus dumb roofs did you?

These roof tiles comes in 4 types to accommodate various house styles. Can you tell that these roofs below all have solar cells in them?

Except for Smooth Glass Tiles, it’s a little obvious those have solar cells in them. The rest look really normal.

Number 4: Anki Cozmo

If you grew up watching Wall-E or Star Wars, you’ll appreciate Anki Cozmo which is already on the market and should make a big showing in 2017. These little robots can form expressions and interact with you in a human way. Beyond just fun and games, these smart toys aspire to inspire a new generation of builders and makers. Cute, and highly educational.

Number 3: Octane AI

As a stand-in example for the entire chatbot industry (yes, it’s an industry now), Octane AI lets any business create a basic chatbot that will showcase products, answer customer service questions and perform a range of standard tasks that free up the business owners to focus on bigger strategy work. Soon, bots unleashed by numerous startups and the American MAFIA (Microsoft, Alphabet, Facebook, IBM, Amazon) and Global STABS (Softbank, Tencent, Alibaba, Baidu, Samsung) will become your assistants and perhaps, if you are lucky, your friends.

Number 2: Tesla Model 3

You now no longer have to build the future, the future will build itself. Just kidding, but at least all Tesla Model 3s come with full autopilot hardware and can receive ever improving self-driving software updates over the air. So at least on your way to work building the future, your car can drive you there by itself. Model 3s are slated to roll out of the massive factories in late 2017. One key point that you may have missed, Elon and team are focused on making the machines that make the machines much better, meaning they aim to make the factories that produce cars, batteries, solar panels to be much more efficient and faster. This drives up volume and drives down cost. Let’s hope they do this as fast as humanly possible.

Yes, Tesla got to double dip on this list because saving the world from climate change doesn’t have one silver bullet solution.

Number 1: Magic Leap

It would truly be a magical leap forward if Magic Leap releases its consumer product in 2017 and it works the way these teaser videos show. It’s number 1 on my list both for how cool it could be and the broader implications. Computing will be smack center on your face and things you used to do on your computer, your tablet, your phone, and even your watch can be done by swerving your head, blinking once for yes, twice for no, and so on. Who am I kidding, I don’t know exactly what kind of user interface Magic Leap will roll out, but whatever it may be, it could radically change humanity’s relationship to technology.

From Spectacles to Magic Leap, “a computer on your face” is the theme that bookends my list of next year’s big ideas. Sandwiched in the middle are robots, toy robots, flying robots, driving robots. It’s an exciting time to be alive not because these will be life changing products in our future, these are the life changing products now.

Thank you to Slater, Abhi, Suzee, Michele, Betty, Harry for reading drafts of this.

Market Update

Week ending November 13, 2016

World Indices

U.S. Indices Snapshot

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