Spotify reportedly launches in India

Spotify has reportedly launched for some users in India today, with plans to officially launch on Wednesday to everyone, Variety, citing sources with knowledge of Spotify’s plans, reports.

For the first 30 days, Spotify’s premium service will be free and then cost 119 rupees (about $1.67) per month. There are also single-day, weekly, monthly, three-month, six-month and annual plans. Similar to other streaming services available in India, Spotify will also offer a free, ad-supported product.

Spotify first announced its intent to launch in India last March. In November, Spotify CEO Daniel Ek cited licensing situations as a roadblock to its launch.

Last month, Spotify inked a global content deal with T-Series, a leading Indian film and music company with a catalog of more than 160,000 songs. As TechCrunch’s Sarah Perez has noted, the Indian market won’t be an easy one for Spotify to win. That’s because Spotify is up against local player Gaana, which already has more than 80 million users, Saavn, Wynk as well as the North American likes of Google, Apple and Amazon.

This is launch is happening in light of Spotify’s legal battle with Warner Music Group. Earlier this week, WMG asked an Indian court to block Spotify from being able to play music from its catalog.

TechCrunch has reached out to Spotify and will update this story if we hear back.

Gradient Ventures, Google’s AI fund, leads $7M investment in English learning app Elsa

Google’s Gradient Ventures, the search giant’s dedicated AI fund, is casting its eye to Asia after it led a $7 million Series A round for Elsa, a startup that operates an app for English language learners.

The deal is Gradient’s first in Asia, and it includes participation from existing investors Monk’s Hill Ventures and SOSV. Elsa has now raised $12 million raised to date.

Elsa was founded in 2015 as a way to help non-English speakers improve their accent and general speaking ability. Vu Van, CEO and one half of the founding team, is a Vietnamese national who, despite being fluent in English, struggled to be understood after moving to the U.S. to study and then work. Together with speech recognition researcher Dr. Xavier Anguera — the startup’s CTO who leads its Portugal-based tech team — Van started Elsa to help people in the same predicament.

“I was very good at grammar, reading and writing but I realized people had a hard time understanding me because I had a very strong accent and my pronunciation wasn’t proper,” Van, who is based in San Francisco but travels extensively, told TechCrunch in an interview. “This impacts confidence when you apply for jobs or are even just meeting friends.”

“There are so many English learning solutions but they are mostly focused on expanding vocabulary or grammar, very few deal with pronunciation,” she added.

Elsa uses voice recognition and AI to grade a user’s speaking versus standard American English (and I thought us Brits were the global standard…) giving them a score at the end. That helps track their progress, while it focuses on pronunciation with a detailed review on how a user is speaking.

The service uses a freemium model that grants users full access to 1,000 courses for around $3-6 per month depending on the length of the package they opts for. That ranges from one month of access to 12 months. New content is added every week, Van said.

With this money in the bag, Elsa is going after growth in a number of its most promising markets.

The service has users in over 100 countries, but Vietnam is its top market with two million paying users. Partly because is it us Van’s home market, Elsa has doubled down on Vietnam with a local sales team and localized payments, including the likes of bank transfers and local wallets.

That’s the blueprint for expansion in its next three target countries; Japan, Indonesia and India. Already, Esla has opened an office in Tokyo and it is planning to introduce more localized content for Japanese users. Similar efforts will happen in Indonesia and India, where Van said the app sees strong engagement and downloads without any paid marketing efforts.

Elsa is also working on expanding its content from English to include other languages. Spanish is currently on the horizon and the company is already preparing the backend technology to make it possible.

“We have to build the voice recognition technology to recognize those languages accurately. We have the infrastructure but now just need to collect voice data to train the model,” explained Van.

Vu Van started Elsa in 2015 with Dr. Xavier Anguera to help non-English speakers improve their accent and general speaking ability.

Beyond geographic expansion, Elsa is also going after schools and classrooms. Already, in Vietnam, it is working with a handful of schools who have added the app to their classroom work. The company allows schools to upload their specific content or curriculum to Elsa to make it part of a student’s homework or assessment. Teachers can see if a student has completed oral homework, and the app grades their efforts.

“We want to help these teachers help their students,” Van said. “Even with the best intentions, they simply can’t teach speaking.”

The model for the education push sees schools pay a licensing fee per student, which Van said is subsidized while uploading their content is free.

Snagging investment from Gradient is a notable achievement for Elsa, but it will also allow the startup to tap into the company’s talent, too. That’s because Gradient operates a rotational program that allows Google employees to spend three to six months working at portfolio startups on secondment. That process hasn’t kicked off for Elsa just yet, but Van is hopeful of securing an engineer who might otherwise be prohibitively expensive for her company.

Gradient Ventures was founded in 2017 and this deal is the fund’s 18th, according to Crunchbase. Its previous investments include Canvass Analytics and Test.ai.

The Elsa team

Online learning startup Skill-Lync promises India’s mechanical engineers a job, or their money back

You might hear stories that TechCrunch favors venture-backed companies, or will only write about startups that have raised from certain VCs. Well, I can tell you that is totally untrue. In fact, it couldn’t be further from the truth. Speaking for myself, I really enjoy talking to successful bootstrapped companies. Raising money can be a validation, but it certainly isn’t a measure of success in itself… with more money comes increased responsibilities.

That’s an unusual preamble, but it sets the scene for Skill-Lync, an India-based online education company that is currently part of the Y Combinator program in the U.S. The business is bootstrapped and developing a fascinating service that helps India’s thousands of engineering graduates to turn their book smarts into employable skills and jobs.

Skill-Lync started out as a YouTube channel to share engineering tips, but today it is an online training course for mechanical engineering candidates. It operates three different types of courses, ranging from one-off modules to full-time curriculums.

With an estimated 1.5 million mechanic engineering graduates leaving India universities and colleges each year, competition for jobs is tough but equally, with many overseas markets seeking skilled talent, there are international opportunities but many students are unaware of how to pursue them.

Skill-Lync seeks to match mechanical engineers with U.S-based Masters degree courses and/or employers directly. That’s done through an online learning course that uses video content developed alongside industry companies — the goal is to help instill employable skills and experience to students.

Students watch videos independently but come together in groups on WhatsApp to work on assignments. Course teachers operate virtual ‘open hours’ on a Friday to allow interaction with students, questions and more.

The regular courses cost $250 per unit and cover specific areas related to mechanic engineering and its application in the workplace.

Last year, some 2,500 students took part in Skill-Lync courses and while the courses are demanding, with around a 22 percent completion rate, the results are impressive for those who cross the finishing line. So impressive, in fact, that Skill-Lync is launching a new and more comprehensive course that guarantees a job at the end of it or else participants get a full refund.

The new course — which guarantees employment or a refund — lasts for eight months of 40 hours per week, with a part-time option of 20 hours per week over 15 months. It is priced at Rs. 245,000 — around $3,500 — and open to qualified candidates based in India.

“Students learn in-depth technical concepts in developing a full-fledged Hybrid Electric Vehicle,” co-founders Suryanarayanan Paneerselvam and Sarangarajan Iyengar — who studied in India before getting on Masters Degrees and later jobs in the U.S. — told TechCrunch. “The course teaches students concepts such as Battery Performance Management, Electric & IC Engine Powertrain, Strength Analysis (Finite Element analysis), External Aerodynamics & Design.”

The first cohort will open in April, enrollment applications are open until March 15.

Skill-Lync founders Suryanarayanan Paneerselvam and Sarangarajan Iyengar (left and right) started with a YouTube but now have a business that helps mechanical engineers developed employable skills to get hired

Paneerselvam and Iyengar expect that the higher commitment requirement can boost their completion rate to 67%, that would be double what it is currently is for individual courses. The duo is exploring options to help students earn money during the course through crowd-sourced support.

“We believe that education is like a product,” Paneerselvam said in an interview. “In the same way that you buy a product from Amazon but if it doesn’t work you can return it for a refund.”

The company is also preparing to launch a similar program to U.S-based students in June, who currently account around 10 percent of monthly course enrollments.

But rather than guaranteeing money back, that U.S-focused course will totally free upfront other than $700 to pay for software licenses for requisite mechanical engineering services. Instead, Skill-Lync will make its money from graduates earning.

“We will guarantee anyone who finishes our course a full-time job opportunity,” Paneerselvam explained. “Once they join a company, they will pay us 15 percent of their salary for two years. Tuition will be capped at a maximum of $20,000. The student can also choose to pay $10,000 as a one time fee once they get a job after our course.”

Going forward, the ambitious company wants to apply its playbook to other industries beyond mechanical engineering.

“We want to get into biotech and chemical engineering,” Iyengar said. “We’ve basically created a playbook for mechanical engineering, now we need to apply it to other engineering disciplines.”

That’ll mean hiring experts in those disciplines and continuing to work with industry leaders to develop course content. It’s a move that is also likely to boost female participation — 98 percent of current students are male — which is something that the Skill-Lync founders are keen to make progress on.

More, widely, they believe that they could replace college-based training for skilled engineering in the future.

“In the future, we can be a college ourselves as an online platform, where a student can say ‘Hey, I don’t need 4 years of college, I’ll take this course and get a job,'” said Paneerselvam. “We know the path for this but currently we are not focusing on it.”

The more immediate goal is to scale the new courses.

Y Combinator is well known for its impressive network that connects promising startups to VCs. Skill-Lync is aiming to take advantage of that to raise something in the region of $5 million to develop its service into this wider vision.

“For what we are doing right now, we don’t need money,” Paneerselvam explained. “But the goal is in the next two years to take this masters program and scale it to 30,000 students. We seriously believe that possible across different domains.”

On the positive side, Skill-Lync has picked a good time to go after funding with a number of companies bringing digital learning to the fore. Investors have never been more keen on exploring the potential to democratize knowledge via the internet in India.

Byju’s recently raised $550 million to globalize its courses, which are aimed at grades 4-12, and spent $120 million to acquire Osmo, a startup that develops hardware to meld online and offline learning for kids. While U.S.-India company Emeritus was the beneficiary of a $40 million Series C and Topper raised $35 million in December.

Helping children overcome their mobility challenges, Trexo Robotics gets a Y Combinator boost

Manmeet Maggu and Rahul Udasi didn’t know it when they met at the University of Waterloo 11 years ago, but the bond they forged in late-night study sessions as roommates has helped drive their work to create an exoskeleton that provides mobility for children with disabilities.

The fruit of that labor is Trexo Robotics, which will graduate as part of the latest batch of Y Combinator’s winter 2019 cohort.

In the three years since Udasi and Maggu launched their company, Trexo has gone through the Techstars accelerator program in New York and raised $720,000 in seed funding. But the roots of the company extend back to Maggu’s senior year at Waterloo, when he learned that his nephew in India had been diagnosed with cerebral palsy.

The disease, which affects millions around the world and at least 500,000 children in the U.S. alone, was not something Maggu knew much about. But with the diagnosis of his nephew, he began to learn.

We started looking at what cerebral palsy is and what it would mean to him,” says Maggu. “For him it meant that he would spend his entire life in a wheelchair and I knew the tremendous negative health effects associated with sitting.”

At first, the family looked at ways to encourage the child to walk outside of physical therapy, with no results.

“Initially we were like, let’s buy him a robotics system or an exoskeleton, but after looking around we saw that there was nothing out there,” says Maggu.

That’s when Maggu determined he would make the development of the exoskeleton the focus of his senior design thesis, back in 2012.

Trexo co-founders Manmeet Maggu and Rahul Udasi (Image courtesy of Trexo Robotics)

“After that, everybody went our own ways but I couldn’t stop working on this,” Maggu recalls. “I kept working on this on the side. I was just working in my apartment doing design, doing 3D printing there.”

By that time, Maggu and Udasi had gone their separate ways. Maggu worked on the project on the side while pursuing his career in the technology industry. He worked at BlackBerry and Qualcomm, but kept in touch with his college friend, Udasi, who worked for a spell at Willow Garage and a few other robotics companies, before returning to Canada to study for a master’s degree in robotics at the University of Toronto.

Maggu had also returned to Toronto to work on a masters in business administration.

But throughout that time, using a low-end printer that he bought for $600, Maggu kept prototyping. Then, when the two were living together, Maggu would ask Udasi, the robotics expert, for his help.

By 2017 the two men had developed a functioning prototype and flown to India to give it to their first test patient — Maggu’s nephew.

“The first time we tried it it didn’t work,” says Maggu. “But my brother has a factory in India in Delhi, so we made some more modifications and tried it out again and I watched my nephew try to walk with the device for the first time.”

After progressing through the Techstars accelerator and raising its seed round, Trexo now has around six versions of its exoskeletons in private homes and hospitals. The company is conducting a clinical study at the Cincinnati Children’s Hospital and has four paying customers in Canada.

These are still devices that aren’t affordable for most Americans — not by a longshot. Trexo is pursuing a direct-to-consumer approach that would see their technology selling for $899 per month through a lease model with a $1,000 down payment and financing for 36 months. Customers can also lease the product for $999 with at least a required 12-month lease period, or they can buy a Trexo exoskeleton for $29,900.

The company is marketing the device as an exercise and therapy device, which means that it can avoid some of the regulatory requirements to bring the product to market under the current regulations from the Food and Drug Administration, which oversees medical devices.

Maggu and Udasi ultimately see Trexo tackling more than just treatment for children with mobility issues. Indeed, Maggu sees opportunities for the company to begin developing products for elder care as well.

“We view this as much more of a consumer product,” says Maggu. “We strongly believe that wearable robotic systems are going to play a huge role in the future to come.”

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With China tariffs delayed, Beijing faces startup dilemma

China is facing a challenging juxtaposition in the coming years: can the government remain in control of business and media while also opening up the country to the knowledge economy?

China has uplifted more humans in a shorter period of time than any other country in the history of the planet. That mesmerizing growth engine, though, is starting to face an intense slog. Economic growth has slowed considerably, and while there are vagaries to these indicators, it is clear that China needs to rebuild its economy as it migrates from industrials into services.

The future (of course) is all the buzzwords that linger in Silicon Valley coffee shops: innovation, startups, and entrepreneurship, mixed in with some Chinese flavors like indigenous technology development. China has designs to be the world-leader in semiconductors and artificial intelligence. To get there though, it needs to create the intellectual environment to push the frontiers of science and technology.

That’s the debate happening right now. On one side, you have this discussion from the New York Times’ Asia business columnist Li Yuan from this weekend. Chinese entrepreneurs are supposedly fleeing the country and seeking safer waters as the government clamps down on dissent and further censors China’s already narrow internet.

Few are predicting a crash, but worries over China’s long-term prospects are growing. Pessimism is so high, in fact, that some businesspeople are comparing China’s potential future to another country where the government seized control of the economy and didn’t ease up: Venezuela.

Only one-third of China’s rich people say they are very confident in the country’s economic prospects, according to a recent survey of 465 wealthy individuals by Hurun, a Shanghai-based research firm. Two years ago, nearly two-thirds said they were very confident. Those who have no confidence at all rose to 14 percent, more than double the level of 2018. Nearly half said they were considering migrating to a foreign country or had already started the process.

Minxin Pei, a well-known writer on China’s business environment and politics, was quoted by Yuan as saying:

“It’s clear to the private businesspeople that the moment the government doesn’t need them, it’ll slaughter them like pigs. This is not a government that respects the law. It can change on a dime.”

China’s government furiously denied the article’s contention, arguing in its international-focused mouthpiece that:

Because some Western media’s always tend to smear or even subvert China’s political system. Take Chen Tianyong’s story. With ulterior motives, the New York Times tells stories of certain Chinese individuals and then exaggerates the fact, thus declaring that there are serious problems in China’s economy and political system. This is their consistent practice and some foreign people who do not understand China will fall into the Western media’s trap. Chinese people always need to be on the alert for such ill-intentioned articles.

(Really, it’s fun to read the Global Times in the morning, in the way that taking a New York City subway at 8:15am on Monday morning is fun).

Yet, for all the entrepreneurs supposedly leaving, business opportunities remain robust. China’s government announced a huge economic development plan to create a “Greater Bay Area” region around Guangdong, Hong Kong, Macau and others to compete directly with California’s Bay Area (The Lesser Bay Area: Even Better Without High-Speed Rail!™). The goal is to build upon the region’s manufacturing prowess and increasingly turn it into a source for technology innovation. If the blueprint’s economic goals are achieved, the region would rival the United Kingdom in economic size.

But that’s a big “if.”

Few areas of the economy show the tension between openness and control better than the video game industry. China has once again stopped approving licenses for games in the country last week, after a brief session of approvals following last year’s nine-month long hiatus. Tencent, which produces some of the country’s most popular games, has lost nearly a quarter of its value in the meantime, even while it puts new streaming rules into effect to try to please the government.

China has incredible potential to lead in technology (and frankly beat the United States) if it can figure out how to open its economy, perhaps not to foreign competition, but at least to its own talent. Yuan quotes several entrepreneurs saying that Trump’s trade war with China may be the country’s last hope for a more open environment. Trump’s delay implementing tariffs on China this weekend, though, highlights the danger of relying on external forces to push domestic change. Only the Chinese can rebuild China’s economy.

Across the strait, Taiwan’s Silicon Valley is fizzling

Photo by keel via Getty Images

Becoming the next Silicon Valley is every government’s dream, although few seem capable of putting all the pieces together to make it happen. Take Taiwan, which has made innovation a key watchword as it attempts to survive in the penumbra of China’s overwhelming economy.

It’s Silicon Valley plans are fizzling from lack of action and a stagnant economy according to a translated article in the Taiwan Gazette:

But according to a member of the opposition Chinese Nationalist Party (KMT), the Agency’s goal is hindered by cumbersome business regulations and restrictive visas and work permits.

“Although [the government was] targeted to issue 2200 visas, the Plan so far has disbursed a mere two,” said Jason Hsu, a KMT legislator with experience in Taiwan’s innovation sector.

Hsu said the government has not succeeded in attracting any global entrepreneurs to the island since the plan was implemented. The Agency has been slow to implement the Asia Silicon Valley plan, prioritizing other aspects, or simply failing to match action with words.

Compounding Taiwan’s global talent crunch is competition from China and the US, with graduates moving house to take advantage of higher wages and better employment opportunities.

You can’t build an innovative economy if the talent can’t or won’t show up.

U.S. slowing H-1B visas

Image by Blue Diamond Gallery used under Creative Commons

Meanwhile, the United States has plenty of talent that wants to show up of course, but increasingly wants to prevent at least some of them from staying in the country.

We previously talked about how the Trump administration was attempting to simplify some elements of the H-1B process. Now, USCIS has released new data that shows a decline in the approval rate for H-1B visa applications. In 4Q18 only 75% of H1-B applications were approved, compared to 83% and 92% in 2017 and 2016 respectively.

The application process itself has also gotten more intensive, with reviewing agencies requesting additional evidence from roughly 60% of corporate applicants in the fourth quarter of 2018, compared to 46% and 28% in 2017 and 2016, respectively. The Wall Street Journal noted that Apple, Microsoft and others had a 99% approval rate, while Capgemini was much lower at 60%.

Maybe some of these applications are marginal, and protecting the wages of American workers is a fair compromise. More transparency here would be very helpful. But if the United States wants to maintain its technological edge, it needs smart and talented workers to congregate here. These new rates do not bode well.

Intel investing heavily to regain lost ground in the battle for chip supremacy

Photo via Intel Corporation

Written by Arman Tabatabai

At a press event last week, Intel’s newly appointed CEO Bob Swan reiterated the company’s strategy of investing heavily in growth markets outside of its core competencies. The company has taken heat for racking up its R&D bills, but Swan insisted that the chip giant needs to spend that money after struggling in recent years to keep up with the industry’s transition to new technologies.

Intel invested nearly $30 billion last year in R&D with a focus on memory, 5G, and graphical processing units (GPUs), which are seen as the best option for artificial intelligence, machine learning, and any use case needing strong parallelized processing capabilities. The FT quoted Swan as saying :

…“If we want to play in a much larger market we’re going to continue to invest more in R&D, there’s no question about that,” he said. “We don’t want to get too penny wise and pound-foolish so we don’t invest for the future.”

Traditional brand names chipmakers have lost dominant share by investing heavily in whatever was driving profits at the time, while ignoring emerging tech that has become the primary source of growth. Intel is now paying for their failure to move sooner.

Are India’s nationalist policies creating a closed internet?

Photo by MONEY SHARMA/AFP/Getty Images

Written by Arman Tabatabai

India is facing a similar dilemma to China on how open it wants to make its economy.

India’s government announced draft policies that will dictate operational requirements for ecommerce, social, and messaging companies. Following the country’s heightened focus around data localization, which we have discussed before, the set of proposals announced over the weekend would require internet companies to maintain locally-housed data centers and servers, impose a legal framework for regulating the movement of user data across borders, provide the government with access to company data stored abroad upon request, and force ecommerce websites or apps operating in India to have a locally registered business entity.

At the same time, the government also announced plans to institute policies that would require social networking and messaging platforms to swiftly remove content deemed “unlawful” or threatening to the “sovereignty and integrity of India.”

While the Indian government is trying to take a hardline approach to avoid the misconduct that has followed the expansion of big tech, they’re also putting further pressure on companies that already face a tougher, more expensive operating environment behind India’s “national champion” policy push as we’ve harped on before.

As India continues to move towards nationalist policies that make it difficult for companies to compete, a Chinese-style closed and censored internet increasingly seems likely.

Obsessions

  • We’re excited since Little Brown & Co just announced a retrospective from Netflix co-founder and original CEO, Marc Randolph, coming this fall and entitled “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea.”
  • Lots of other book coverage coming this week including Billonnaire Raj by James Crabtree, The Next Factory of the World by Irene Yuan Sun, and The Next Billion Users by Payal Arora.
  • More discussion of megaprojects, infrastructure, and “why can’t we build things”

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York

Can we ever evaluate technical debt?

Every couple of months, I talk to an entrepreneur who is interested in building a marketplace for buying and selling app businesses (i.e. the actual IP and ownership of an app or other piece of software). These markets always seem to suffer from a lack of liquidity, and one reason why is that it’s really hard to know how much technical debt is latent in a codebase.

First, the developer behind the codebase may not even be aware of the technical debt they have piled on. Second, until a software engineer really understands a codebase, they are almost certainly not in a position to answer a question on technical debt authoritatively. That makes it hard to get third-party opinions on anything but the most simple codebases.

This opaqueness isn’t unique to software though. We lack tools for understanding the maintenance quality of assets — physical or digital — across our economy. Even when we do perform maintenance or hire someone to do it for us, it can be hard to verify that the work was performed well. How long does it take for an auto mechanic to truly evaluate the maintenance of a used car?

I was thinking about this challenge of evaluating maintenance when I read this deep dive into the economics of old housing by Akron’s head of planning Jason Segedy:

It has been suggested to me, on more than one occasion, that indebted, college-educated Millennials could be lured back to the city by selling them these old, poorly-maintained houses for $1.00, and having them “fix up the house.”

People who say this do not have a realistic idea of what “fixing up” an old house entails—neither in terms of the scope of the rehabilitation work that would be required, nor in terms of the level of skill, time, and/or money needed to do the work.

Even in a low cost-of-living market like ours, $40,000 houses are generally not a “good deal.” They are almost always a liability. They are a ticking time bomb of deferred maintenance. They are an albatross.

In his own case:

All told, I have spent $93,400 on improvements to this house over the past 15 years. This works out to an additional $502 per month, above what I was paying in mortgage, taxes, and insurance. When you add all of that together, the total monthly cost works out to $1,439.

[…]

The total monthly cost for the brand-new house? $1,444. Which comes out to exactly $5.00 per month more than my 72-year-old house.

Maintenance is the secret challenge of any asset, physical or digital. We have been talking about the Tappan Zee bridge here a bit this week, and maintenance played an outsized role in forcing New York to spend even more money on a new bridge. From Phil Plotch’s book Politics across the Hudson:

However, he also recognized that the Authority probably put less money into the bridge after it decided to replace it. “When maintenance folks know that a capital project is under design and will soon deal with the problems they have been battling for years,” he said. “They often back down a bit and turn their attention and resources to other areas.”

That didn’t work out so well:

One of the reasons the Thruway Authority wanted to build a new bridge in the late 1990s was to avoid replacing the bridge’s deck. However, the environmental review process took so long that the authority had to spend $300 million dollars to do exactly that anyway — after five-foot-wide holes started opening up along the length of the bridge.

Back in the software world, we have gotten much better about quantifying test coverage over the years, but we still seem to lack any means by which to evaluate technical debt. And yet, technical debt from my limited experience is hugely determinative on how fast product features can be launched.

It would be hugely helpful to have some sort of reasonably accurate grading system that said “this codebase is really up-to-date and clean” versus “this codebase is radioactive and run away from it.” Right now, so much of product engineering seems to be making decisions in the dark and discovering software quagmires. There has to be a better way?

Why we can’t build anything? (Part 5?)

Image from Honolulu Authority for Rapid Transit

Written by Arman Tabatabai

We’ve been obsessed with the infrastructure crisis in the U.S. lately and the question of “Why can’t we build anything?”. In case you thought the California HSR shitshow was an isolated incident, think again.

Construction Dive provided some more details around the DOJ’s subpoena of the Honolulu High-Speed Rail Project (Honolulu Rail Transit) last week, which ordered the project leads to open up their books. Just like in California, after decades of debate, Hawaii’s project has been plagued by delays and cost overruns. Today, the project holds an estimated cost of around $9-10 billion, compared to initial estimates of $3-4 billion, and some academics and industry specialists are even saying that number is more like $13 billion-plus. The court order came just after a state-led audit found that much of the cost overruns could be tied to poor contracting, planning, and management practices — just as in California.

Given the similarities here, it’s possible we could see the federal government try and pull back the $1.6 billion it had earmarked for the project if it doesn’t like what it sees. Despite calls for infrastructure improvement, the feds seem to be taking a tougher stance on the use of fed funds for these projects.

Construction Dive also highlighted that the $650 million renovation of Denver International Airport’s Jeppesen Terminal was delayed indefinitely after operators found structural deficiencies in the concrete. Sound familiar? Maybe it’s because in just the last year we’ve seen “structural deficiencies” mar SF’s Transbay Terminal project and DC’s Metrorail extension. Denver’s reclamation project is expected to cost $1.8 billion in its entirety and is a year behind schedule after breaking ground less than nine months ago.

India’s general election might also determine Facebook’s future in the region

Westend61 via Getty Images

Written by Arman Tabatabai

India’s Parliamentary Committee on Information Technology announced it would be meeting with Facebook in early-March to discuss “safeguarding citizens’ rights on social or online news media platforms.” The government has approached social media with a cautious eye ahead of the country’s huge upcoming elections, as concern over the use and misuse of social and messaging platforms in global elections becomes a hot-button issue.

The topic came up in our recent conversation with The Billionaire Raj author James Crabtree. He believes the election will be a hugely important period for social platforms in India. Having experienced a number of major historical scandals, India’s citizenry has a fairly harsh — albeit somewhat selective — view on corruption, and Crabtree believes that if Facebook or others were to face blame for any alleged misconduct, the potential fallout from a political, regulatory, and public opinion standpoint could be devastating.

The prospect of such an outcome becomes even more alarming for foreign social companies as India has ticked up focus on data localization and movements towards a “national champion” policy that will increasingly favor domestic firms over external players.

I love triangulation negotiation

The trade kerfuffle between China and the U.S. is sort of just continuing at a glacial pace. Literally glaciers, because Greenland got involved over the past few months. Greenland power politics is very far afield of TC, but I wanted to point out one little nuance that offers a worthwhile lesson.

Greenland has wanted to upgrade its airports for some time (there are no roads between major cities in the sparsely-populated but huge country). But Denmark, which Greenland is a constituent country, has rebuffed those requests, that is, until the Chinese got involved. From a WSJ article:

After Kalaallit Airports short-listed a Chinese construction firm to build the new airports, Denmark conveyed its alarm to the Pentagon. After Mr. Mattis got involved, Denmark’s government asked a consortium led by Danske Bank to help assemble an alternative financing package.

Officials in Greenland were pleasantly surprised by the terms. “Even Chinese funding is not as cheap as this,” Mr. Hansen said.

Plus this quote:

“He was not into it at all—until the Chinese showed interest,” said Aleqa Hammon, Greenland’s former prime minister, speaking of [Danish Prime Minister] Rasmussen.

This is how you negotiate! Get two larger adversaries lined up on either side of the line, and just start going back and forth between them. This works with Google and Facebook, Sequoia and Benchmark, or any other competitors. At some point, the game isn’t just a deal, it’s also the face-saving that comes from not losing to the competition.

Japan joining the trend of looser fundraising rules for growing companies

Written by Arman Tabatabai

Earlier this week, we talked about how security exchanges around the world were looking to loosen fundraising rules for young companies. The softening of these rules might be indicative of a wider trend, with Japan now proposing revised rules to make it easier for startups to fundraise through traditional brokerages and trade shares of listed companies. While the motivation here may not be to attract IPO deals like it seems to be in the U.S. and China, with the creation of more funding alternatives and with companies opting to stay out of the public markets for longer, national securities industries seem to be trying to brand themselves as the best venue for young companies to grow.

Obsessions

  • More discussion of megaprojects, infrastructure, and “why can’t we build things”
  • We are going to be talking India here, focused around the book “Billonnaire Raj” by James Crabtree, who we just interviewed and will share more soon
  • We have a lot to catch up on in the China world when the EC launch craziness dies down. Plus, we are covering The Next Factory of the World by Irene Yuan Sun.
  • Societal resilience and geoengineering are still top-of-mind
  • Some more on metrics design and quantification

Thanks

To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.

This newsletter is written with the assistance of Arman Tabatabai from New York

Apple is offering interest-free financing to boost iPhone sales in China

Apple is looking to get over its sales woes in China but offering prospective customers interest-free financing with a little help from Alibaba.

Apple’s China website now offers financing packages for iPhones that include zero percent interest packages provided in association with several banks and Huabei, a consumer credit company operated by Alibaba’s Ant Financial unit, as first noted by Reuters.

The Reuters report further explains the packages on offer:

On its China website, Apple is promoting the new scheme, under which customers can pay 271 yuan ($40.31) each month to purchase an iPhone XR, and 362 yuan each month for an iPhone XS. Customers trading in old models can get cheaper installments.

Users buying products worth a minimum of 4,000 yuan worth from Apple would qualify for interest-free financing that can be paid over three, six, nine, 12 or 24 months, the website shows.

Apple is also offering discounts for customers who trade in devices from the likes of Huawei, Xiaomi and others.

The deals are an interesting development that comes just weeks after Apple cut revenue guidance for its upcoming Q1 earnings. The firm trimmed its revenue from the $89 billion-$93 billion range to $84 billion on account of unexpected “economic deceleration, particularly in Greater China.”

Offering attractive packages may convince some consumers to buy an iPhone, but there’s a lingering sense that Apple’s current design isn’t sparking interest from Chinese consumers. Traditionally, it has seen a sales uptick around the launch of iPhones that offer a fresh design and the current iPhone XR, XS and XS Max line-up bears a strong resemblance to the one-year-old iPhone X.

The first quarter of a new product launch results in a sales spike in China, but Q2 sales — the quarter after the launch — are where devices can underwhelm.

It’ll be interesting to see if Apple offers similar financing in India, where it saw sales drop by 40 percent in 2018 according to The Wall Street Journal. Apple’s market share, which has never been significant, is said to have halved from two percent to one percent over the year.

Finance is a huge issue for consumers in India, where aggressively priced by capable phones from Chinese companies like Xiaomi or OnePlus dominate the market in terms of sales volume. With the iPhone costing multiples more than top Android phones, flexible financing could help unlock more sales in India.

China, however, has long been a key revenue market for Apple so it figures that this strategy is happening there first.

On-demand logistics startup Lalamove raises $300M for Asia growth and becomes a unicorn

Lalamove, a Hong Kong-based on-demand logistics startup, has closed a $300 million Series D round as it seeks expansion across Asia. In doing so, the company has officially entered the unicorn club.

Founded in 2013 by Stanford graduate Shing Chow, Lalamove provides logistics and delivery services in a similar style to ride-hailing apps like Uber but it is primarily focused on business and corporate customers. That gives it more favorable economics and a more loyal customer base than its consumer-focused peers, who face discount wars to woo fickle consumers.

This new round is split into two, Lalamove said, with Hillhouse Capital leading the ‘D1’ tranche and Sequoia China heading up the ‘D2’ portion. The company didn’t reveal the size of the two pieces of the round. Other investors that took part included new backers Eastern Bell Venture Capital and PV Capital and returning investors ShunWei Capital — the firm founded by Xiaomi CEO Lei Jun — Xiang He Capital and MindWorks Ventures .

The deal takes Lalamove to over $460 million raised to date, and it follows a $100 million Series C that closed in late 2017. Lalamove isn’t disclosing a valuation but Blake Larson, the company’s head of international, told TechCrunch that it has been “past unicorn mark for quite some time [but] we just don’t talk about it.” That figures given the size of the round and the fact that Lalamove was just shy of the $1 billion mark for that Series C.

The Lalamove business is anchored in China where it covers over 130 cities with a network of over two million drivers covering vans, cars and motorbikes.

Beyond China, Lalamove is present in its native Hong Kong — where Uber once briefly tried a similar service — Taiwan, Vietnam, Indonesia, Malaysia, the Philippines and Thailand, where it works with popular chat app Line. All told, it covers 11 cities outside of China and this new capital will go towards expanding that figure with additional city launches in Southeast Asia and entry to India.

“If we do this well, then we are in countries that are more than half the world’s population,” Larsen said in an interview, although he didn’t rule out the potential for Lalamove to expand beyond Asia in the future.

There are also plans to grow the business in mainland China in terms of both geography and new services. Already, Lalamove has begun to offer driver services, starting with financing packages to help drivers with vehicle purchasing, and it is developing dedicated corporate offerings, too.

Lalamove CEO Shing Chow started Lalamove in late 2013, his past roles have included time with Bain & Company, a number of startup ventures — including a Hong Kong-based skin center — and a stint as a professional poker player

Overall, the business claims to have registered 3 million drivers to date and served more than 28 million users across all cities. With its headquarters in Hong Kong, it employs some 4,000 people across its business.

Rival GoGoVan exited through a merger with China-based 58 Suyun in 2017, at a claimed valuation of $1 billion, but Lalamove has remained independent and stuck to its guns. Larson said that already it is profitable in “a significant amount” of cities and typically, he said, the blueprint is to reach profitability within two years of opening a new location.

“The focus has always been on sustainable growth and we’re very strong on the cash flow front,” the former Rocket Internet executive added.

Larson and Lalamove have been very forthcoming in their desire to go public in Hong Kong, noting so publicly as early as 2017 at a TechCrunch China event in Shenzhen. That desire is still evident — “we’re very proud to be from Hong Kong and Hong Kong would be a good place for an IPO,” Larson said this week — but still the company said that it has no particular plan on the cards, despite its consumer-focused peers Uber and Lyft lining up IPOs in the U.S. this year.

“We don’t spend maybe even five minutes a year talking about it,” Larsen told TechCrunch. “The discussion is really ‘Let’s make sure we’re IPO ready’ because sometimes there are macroeconomic conditions you can’t control.”

Clearly, investors are bullish and it is notable that Lalamove’s new round comes at a time when many Chinese companies are downsizing their staff, with the likes of Didi, Meituan and JD.com announcing cuts and refocusing strategies in recent weeks.

“[Lalamove CEO and founder] Shing is a role model for Hong Kong’s new generation of innovative entrepreneurs,” said Sequoia China founder and managing partner Neil Shen. “Raised in Hong Kong and educated at Stanford University, Shing returned and plunged himself in the entrepreneurial wave of ‘Internet Plus,’ becoming a figure of entrepreneurial success.”

Uber fixes bug that exposed third-party app secrets

Uber has fixed a bug that allowed access to the secret developer tokens of any app that integrated with the ride-sharing service, according to the security researchers who discovered the flaw.

In a blog post, Anand Prakash and Manisha Sangwan explained that a vulnerable developer endpoint on Uber’s back-end systems — since locked down — was mistakenly spitting back client secrets and server tokens for apps authorized by the Uber account owner.

Client secrets and server tokens are considered highly sensitive bits of information for developers as they allow apps to communicate with Uber’s servers. For its part, Uber warns developers to “never share” the keys with anyone.

Prakash, founder of Bangalore-based AppSecure, told TechCrunch that the bug was “very easy” to exploit, and could have allowed an attacker to obtain trip receipts and invoicesBut he didn’t test how far the access could have given him as he immediately reported the bug to Uber.

Uber took a month to fix the bug, according to the disclosure timeline, and was considered serious enough to email developers last week warning of the possible exposure.

“At this time, we have no indication that the issue was exploited, but suggest reviewing your application’s practices out of an abundance of caution,” Uber’s email to developers said. “We have mitigated the issue by restricting the information returned to the name and id of the authorized applications.”

Uber did not respond to a request for comment. If that changes, we’ll update.

Prakash was paid $5,000 in Uber’s bug bounty for reporting the bug, and currently ranks in the top five submitters on Uber’s bug bounty.

The security researcher is no stranger to Uber’s bug bounty. Two years ago, he found and successfully exploited a bug that allowed him to receive free trips in both the U.S. and his native India.

Xiaomi’s Mi 9 includes a triple lens rear camera and wireless charging

Mobile World Congress, the mobile industry’s annual shindig, is next week but Xiaomi can’t wait reveal its newest top-end phone. The Chinese company instead picked today to unveil the Mi 9.

Once again Xiaomi’s design ethic closely resembles Apple’s iPhone with a minimal bezel and notch-like front-facing camera but Xiaomi has gone hard on photography with a triple lens camera.

There are two models available with the regular Mi 9 priced from RMB 2999, or $445, and the Mi 9SE priced from RMB 1999, or $300. A premium model, the Transparent Edition, includes beefed-up specs for RMB 3999, $595.

The phone runs on Qualcomm’s Snapdragon 855 chipset and the headline feature, or at least the part that Xiaomi is shouting about most, is the triple lens camera array on the back of the device. That trio combines a 48-megapixel main camera with a 16-megapixel ultra-wide-angle camera and a 12-megapixel telephoto camera, Xiaomi said. The benefits of that lineup is improved wide-angle shots, better quality close-up photography and performance in low-light conditions, according to the company.

The premium Mi 9 model, the Transparent Edition, sports 12GB of RAM and 256GB internal storage and features a transparent back cover

There’s also a ‘supermoon’ mode for taking shots of the moon and presumably other night sky images, while Xiaomi touts an improved night mode and, on the video side, 960fps capture and advanced motion tracking. We haven’t had the chance to test these out, which is worth noting at this point.

Xiaomi also talked up the battery features of the Mi 9, which ships with an impressive 3300mAh battery that features wireless charging support and Qi EPP certification meaning it will work with third-party charging mats. Xiaomi claims that the Mi 9 can charge to 70 percent in 30 minutes, and reach 100 percent in an hour using 27W wired charging.

Alongside the Mi 9, it unveiled its third three wireless charging products — a charging pad (RMB 99, $15), a car charger (RMB 169, $25) and a 10,000mAh wireless power bank (RMB 149, $22.)

Xiaomi, as ever, offers a range of different options for customers as follows:

  • Mi 9 with 6GB and 128GB for RMB 2999, $445
  • Mi 9 with 8GB and 128GB for RMB 3299, $490
  • Mi 9 with 12GB and 256GB for RMB 3999, $595 (Transparent Edition)
  • Mi 9SE with 6GB and 128GB for RMB 1999, $300
  • Mi 9SE with 6GB and 128GB for RMB 2299, $342

Notably, the Mi 9 goes on sale February 26 — pre-orders open this evening — with the SE version arriving on March 1. As expected, the launch market is China but you can imagine that India — where Xiaomi is among the top players — and other global launches will follow.

Xiaomi said it plans to announce more products on Sunday, the eve of Mobile World Congress. It recently teased a foldable phone so it’ll be interesting to see if it will follow suit and join Samsung, which had its first foldable phone outed by a leak.

Note: The original version of this article was updated to correct the Transparent Edition price and specs.