YSL Europe/Israel Enterprise/Tech Weekly

Issue #14: February 12, 2018

Good morning from London, happy Monday, and welcome to issue #14. I'm going to experiment with releasing this on Mondays - I think that's possibly better timing than Thursdays - especially for Israelis who are off on Fridays. It also gives me the weekend to put it together...  I've also switched the sending address to [email protected] - so please add that to your address books. 

The biggest headline this week was the return of volatility to financial markets around the world. It's hard to know exactly what to make of this and impossible to know what the future holds, but it does seem clear that the Era of Easy Money is Ending. The low-interest rate environment we've experienced over the past several years has propped up the global VC eco-system and caused billions of dollars to flow into the startup world that, otherwise, might not have. As this era of easy money comes to a close, the effects will hit startup land (and VC land) hard - but this is exactly the wake-up call we all need to stay sharp. 

Please feel free to email me with comments - and if you like this - please forward to friends and subscribe if you haven't already. Thanks!

From the blog

Recent: The Evolution of the AI/ML Application Space.

2018 EU+IL VC Data. $20.3B of VC investment summarized in 74 slides. 

Europe/Israel Enterprise/Tech

• Barcelona/Growth. Pedro Magrico, Director of Growth at Barcelona-based Typeform on how that company has maintained a very high growth rate despite some complex marketing/positioning challenges due to its very wide range of use cases: "We are here to make the web more human. That’s our brand. You see it in our product, but you also see it in our content, our emails and even our tweets. We strive to make all of our marketing more engaging, beautiful and human."

• Berlin/Vertical Farming. Berlin-based Infarm (founded by Israelis) raised $25M for its hydroponic systems. The units are apparently deployed at a number of locations around Berlin, and the company plans to expand from herbs to fruits and vegetables.

• Israel/China. Alibaba partnered with Israeli cloud DB company Sqream to resell its GPU-based cloud DB and invest $20M into the company. This comes alongside news that Jack Ma, Alibaba's founder and chairman, will be visiting Israel in May. We're going to see increasing ties between Israel and China - and increasingly in the enterprise space. 

• France/Adtech. A look at some of the challenges facing French adtech giant Criteo in the wake of an increasingly challenging regulatory environment. Key challenges are the EU's GDPR, Apple's new Intelligent Tracking Prevention (ITP) standard, a general trend towards in-sourcing some of the targeting tech at some customers, and the migration of some of the value stack to the ad platforms themselves (Facebook and Google) at the expense of adtech vendors such as Criteo. It's a really interesting piece, well worth reading. 

• Finland/Feedback. The New Yorker with a long piece on HappyOrNot, the Finnish company behind those green/yellow/red feedback buttons at Heathrow and many other consumer-facing businesses. It's a confoundingly simple idea - but the company has demonstrated that masses of time-stamped data (however simple) can be very valuable in certain settings.

• Israel/Healthcare. MDClone, founded by the team behind DBMotion and based in Beer Sheva, raised $15M for a healthcare data management platform. 

• Germany/Automotive Crypto. Bosch believes crypto-currencies will find automotive applications.

• Germany/Softbank. A close look at Softbank's strategy through its investment in German auto retailer Auto1.

• Tel Aviv/Relocation. Nexar announces a plan to actively recruit hires from overseas and bring them to live and work in Tel Aviv. It will be an interesting early test of Israel's startup visa. 

Worth reading

• State of the Cloud. Bessemer released their 2018 State of the Cloud deck. Almost all of the 57 slides in the deck are keepers, but one of the highlights is the valuation analysis that Bessemer conducted. Basically, they argue for the "ARRG" metric: ARRG = [ARR Multiple] / growth rate. They show that this multiple has stayed relatively constant suggesting that the valuations of many private SaaS businesses are justified by their high growth. Other key takeaways: Serverless, APIs, enterprise blockchain, voice, and innovation outside the valley. 

• Semil Shah wrote a great post on the psychology of running/investing in an early-stage business: "The optimism helps us all plan and get through the days with hope, but it’s the paranoia that keeps us honest — to make sure every detail is set in place to win the customer, to win the term sheet, to win the next LP’s interest. Our minds are powerful muscles, and the assumptions we create in our minds can, if unchecked, metastasize into the harshest kind of gravity."

• Department of Actually Useful Crypto Tokens. Numeraire is quintupling the payouts for ML models built on its platform. It's worth noting that one of the best examples of a genuinely useful/functioning crypto-token was built without an ICO. I'm pretty sure that's not a coincidence. 

• Infrastructure 3.0. My friend Lenny Pruss at Amplify (an SF-based VC) was on Cloudcast discussing infrastructure 3.0. (If you prefer text, you can read Lenny on infrastructure 3.0 here.)

• Quantum skeptic. Gil Kalai of Hebrew University on why quantum computing is "something of a mirage:" His skepticism has to do with the "noise" generated by quantum computation and his view that this noise can not be "error-corrected away" faster than it is generated. 

• Uber's Mike Brown on four key elements for growth. 

• Broadcom upped the ante. The semiconductor giant raised its bid for Qualcomm to $121B, or $82/share for a company trading at $64/share. Qualcomm has so far rejected the offer, but seems open to talks (or, at the least, obligated to appear open-minded at such a premium).

• The emperor's clothes. Americans are just not spending very much on fashion, and its not all Amazon's fault. 

• Virtual Reality on Aisle 29. Walmart acqui-hired a 10-person VR startup. No details were released on the size of the acquisition or why it was made. Separely, the retail giant announced that it was adding Sarah Friar, CFO of Square and former tech equity analyst at Goldman Sachs, to its board. 

• The case for optimism. Harvard professor Steven Pinker takes the long view and argues that the currently fashionably pessimistic zietgeist is inaccurate. 

• A difficult jam. The New Yorker on why paper jams persist 600 years after the invention of the printing press. 

• A new non-paradigm? Kelsey Hightower launches nocode. 

Portfolio News

SiSense is expanding its workforce by 150 across Ramat Gan and New York. 
Crate is hosting a meetup on distributed databases at Heavybit in SF on February 21. 
Cloud66 joins CNCF.
Siemplify announced deeper interoperability with RSA, bringing ML to security operations. 
Snyk announced general availability of its Heroku add-on for managing open source vulnerabilities. The company is hiring tech support in London and Tel Aviv.
SwiftShift is profiled by AlleyWatch as it launches is healthcare employment marketplace network. 
Shoppimon is hiring a director of product management. Apply here.