Review: Apple’s new iPad mini continues to be mini

The iPad mini is super enjoyable to use and is the best size tablet for everything but traditional laptop work. It’s very good and I’m glad Apple updated it.

Using Apple Pencil is aces on the smaller mini, don’t worry about the real estate being an issue if you like to scribble notes or make sketches. It’s going to fall behind a larger iPad for a full time artist but as a portable scratch pad it’s actually far less unwieldy or cumbersome than an iPad Pro or Air will be.

The only caveat? After using the brilliant new Pencil, the old one feels greasy and slippery by comparison, and lacks that flat edge that helps so much when registering against your finger for shading or sketching out curves.

The actual act of drawing is nice and zippy, and features the same latency and responsiveness as the other Pencil-capable models.

The reasoning behind using the old pencil here is likely a result of a combination of design and cost-saving decisions. No flat edge would require a rethink of the magnetic Pencil charging array from the iPad Pro and it is also apparently prohibitively expensive in a way similar to the smart connector. Hence its lack of inclusion on either Air or mini models.

Touch ID feels old and slow when compared to iPad Pro models, but it’s not that bad in a mini where you’re almost always going to be touching and holding it rather than setting it down to begin typing. It still feels like you’re being forced to take an awkward, arbitrary additional action to start using the iPad though. It really puts into perspective how fluidly Face ID and the new gestures work together.

The design of the casing remains nearly identical, making for broad compatibility with old cases and keyboards if you use those with it. The camera has changed positions and the buttons have been moved slightly though, so I would say your mileage may vary if you’re brining old stuff to the table.

The performance of the new mini is absolutely top notch. While it falls behind when compared to the iPad Pro it is exactly the same (I am told, I do not have one to test yet) as the iPad Air. It’s the same on paper though, so I believe it in general and there is apparently no ‘detuning’ or under-clocking happening. This makes the mini a hugely powerful tiny tablet, clearly obliterating anything else in its size class.

The screen is super solid, with great color, nearly no air gap and only lacking tap-to-wake.

That performance comes at a decently chunky price, $399. If you want the best you pay for it.

Last year I took the 12.9” iPad Pro on a business trip to Brazil, with no backup machine of any sort. I wanted to see if I could run TechCrunch from it — from planning to events to editorial and various other multi-disciplinary projects. It worked so well that I never went back and have not opened my MacBook in earnest since. I’ll write that experience up at some point because I think there’s some interesting things to talk about there.

I include that context here because, though the iPad Pro is a whole ass computer and really capable, it is not exactly ‘fun’ to use in non standard ways. That’s where the iPad mini has always shined and continues to do so.

It really is pocketable in a loose jacket or coat. Because the mini is not heavy, it exercises little of the constant torsion and strain on your wrist that a larger iPad does, making it one-handed.

I could go on, but in the end, all that can be said about the iPad mini being “the small iPad” has already been said ad nauseam over the years, beginning with the first round of reviews back in 2012. This really is one of the most obvious choices Apple has in its current iPad lineup. If you want the cheap one, get the cheap one (excuse me, “most affordable” one). And if you want the small one, get the iPad mini.

The rest of the iPads in Apple’s lineup have much more complicated purchasing flow charts — the mini does indeed sell itself.

Back even before we knew for sure that a mini iPad was coming, I wrote about how Apple could define the then very young small tablet market. It did. No other small tablet model has ever made a huge dent on the market, unless you count the swarm of super super crappy Android tablets that people buy in blister packs expecting them to eventually implode as a single hive-mind model.

Here’s how I saw it in 2012:

“To put it bluntly, there is no small tablet market…Two years ago we were talking about the tablet market as a contiguous whole. There was talk about whether anyone would buy the iPad and that others had tried to make consumer tablets and failed. Now, the iPad is a massive success that has yet to be duplicated by any other manufacturer or platform.

But the tablet market isn’t a single ocean, it’s a set of interlocking bodies of water that we’re just beginning to see take shape. And the iPad mini isn’t about competing with the wriggling tadpoles already in the ‘small tablet’ pond, it’s about a big fish extending its dominion.”

Yeah, that’s about right, still.

One huge difference, of course, is that the iPad mini now has the benefit of an enormous amount of additional apps that have been built for iPad in the interim. Apps that provide real, genuine access to content and services on a tablet — something that was absolutely not guaranteed in 2012. How quickly we forget.

In addition to the consumer segment, the iPad mini is also extremely popular in industrial, commercial and medical applications. From charts and patient records to point-of-sale and job site reference, the mini is the perfect size for these kinds of customers. These uses were a major factor in Apple deciding to update the mini.

Though still just as pricey (in comparison) as it was when it was introduced, the iPad mini remains a standout device. It’s small, sleek, now incredibly fast and well provisioned with storage. The smallness is a real advantage in my opinion. It allows the mini to exist as it does without having to take part in the ‘iPad as a replacement for laptops’ debate. It is very clearly not that, while at the same time still feeling more multipurpose and useful than ever. I’m falling in real strong like all over again with the mini, and the addition of Pencil support is the sweetener on top.

America Movil acquires Nextel in Brazil for $905M

Latin America continues to remain a focus for investors that are eyeing up its large population and growth potential. In the latest development, America Movil, the Latin American carrier that is part of the Carlos Slim empire, today announced that it would acquire Nextel in Brazil, owned by NII (formerly Nextel International), for $905 million. NII in turn said that once the deal is closed, it has received approval “to dissolve and wind up NII.”

This is a move to scale up an existing carrier in competition with existing large players like Telefonica (which co-owns Vivo with Portugal Telecom), Telecom Italia and Oi (owned by Telemar). America Movil already has an operation in the country, Claro, which it plans to merge with Nextel to “consolidate its position as one of the leading telecommunication service providers in Brazil, strengthening its mobile network capacity, spectrum portfolio, subscriber base, coverage and quality, particularly in the cities of São Paulo and Rio de Janeiro, the main markets in Brazil.”

America Movil — based out of Mexico — has been on a consolidation spree, swallowing up other smaller holdings in a variety of markets in the region. In January, it acquired Telefonica’s assets in Guatemala and El Salvador respectively for $333 million and $315 million.

The Nextel Brazil deal will include buying a 70 percent stake in the carrier from NII, as well as a remaining 30 percent stake from AI Brazil Holdings BV, NII said today. AI Brazil Holdings is controlled by Len Blavatnik’s Access Industries, the company that owns Warner Music, Deezer and a number of other assets and investments. It had reportedly also been interested in increasing its share in the carrier, before agreeing to sell its stake altogether.

The acquisition is the final chapter for the struggling business, which had originally been the international division of Nextel but had spun out as a separate company before Sprint acquired Nextel in the US in 2005. NII’s focus had been mobile carrier operations across a range of developing markets but it struggled and had been through multiple bankruptcy processes.

“The announcement of this transaction marks the culmination of an extensive multi-year process to pursue a strategic path for Nextel Brazil and provides our best opportunity to monetize our remaining operating assets in light of the competitive landscape in Brazil and long-term need to raise significant capital to fund business operations, debt service and capital expenditures necessary to remain competitive in the future,” stated Dan Freiman, NII’s Chief Financial Officer, in a statement. “Management and our Board of Directors believe the transaction is in the best interest of NII’s stockholders.”

The deal represents a final chapter of sorts for the Nextel brand, which had been a trailblazer in the mobile market through its push-to-talk, walkie-talkie-style mobile service. This was was an early mover in the bigger wave of messaging services that competed with basic carrier SMS, and some came to think of it as the first mobile social network. Over time, though, the iDEN digital network that carried the service became outmoded and most carriers that offered iDEN-based services (including Nextel) discontinued them to focus on 3G and subsequent mobile technologies.

More generally, the acquisition underscores how a number of investors, willing to ride the waves of economic and political ups and downs in Latin America, continue to view the growth opportunities in the region.

NII — which is based out of Reston, VA — was traded on Nasdaq and had a market cap as of last market close, of just $322 million. The company currently has 3.3 million subscribers. But while it was reportedly looking for a buyer of the business in Brazil, its last remaining asset, for some time, this final price — at nearly three times its market cap — is a sign of how some might see locked up value in Nextel Brazil that exceeded all that.

Last week, Paypal and Dragoneer collectively committed $850 million towards MercadoLibre, a marketplace in Argentina. The week before that, SoftBank announced that it would set up a new $2 billion fund to invest in tech companies out of the region, and to help existing portfolio companies to expand there. (By coincidence, the SoftBank venture will be led by Marcelo Claure, who is also executive chairman of Sprint, which swallowed up the US part of Nextel years ago and eventually got acquired by SoftBank.)

Google has quietly added DuckDuckGo as a search engine option for Chrome users in ~60 markets

In an update to the chromium engine, which underpins Google’s popular Chrome browser, the search giant has quietly updated the lists of default search engines it offers per market — expanding the choice of search product users can pick from in markets around the world.

Most notably it’s expanded search engine lists to include pro-privacy rivals in more than 60 markets globally.

The changes, which appear to have been pushed out with the Chromium 73 stable release yesterday, come at a time when Google is facing rising privacy and antitrust scrutiny and accusations of market distorting behavior at home and abroad.

Many governments are now actively questioning how competition policy needs to be updated to rein in platform power and help smaller technology innovators get out from under the tech giant shadow.

But in a note about the changes to chromium’s default search engine lists on an Github instance, Google software engineer Orin Jaworski merely writes that the list of search engine references per country is being “completely replaced based on new usage statistics” from “recently collected data”.

Their choices appear to loosely line up with top four marketshare.

The greatest beneficiary of the update appears to be pro-privacy Google rival, DuckDuckGo, which is now being offered as an option in more than 60 markets, per the Github instance.

Previously DDG was not offered as an option at all.

Another pro-privacy search rivals, French search engine Qwant, has also been added as a new option — though only in its home market, France.

Whereas DDG has been added in Argentina, Austria, Australia, Belgium, Brunei, Bolivia, Brazil, Belize, Canada, Chile, Colombia, Costa Rica, Croatia, Germany, Denmark, Dominican Republic, Ecuador, Faroe Islands, Finland, Greece, Guatemala, Honduras, Hungary, Indonesia, Ireland, India, Iceland, Italy, Jamaica, Kuwait, Lebanon, Liechtenstein, Luxembourg, Monaco, Moldova, Macedonia, Mexico, Nicaragua, Netherlands, Norway, New Zealand, Panama, Peru, Philippines, Poland, Puerto Rico, Portugal, Paraguay, Romania, Serbia, Sweden, Slovenia, Slovakia, El Salvador, Trinidad and Tobago, South Africa, Switzerland, UK, Uruguay, US and Venezuela.

“We’re glad that Google has recognized the importance of offering consumers a private search option,” DuckDuckGo founder Gabe Weinberg told us when approached for comment about the change.

DDG has been growing steadily for years — and has also recently taken outside investment to scale its efforts to capitalize on growing international appetite for pro-privacy products.

Interestingly, the chromium Github instance is dated December 2018 which appears to be around about the time when Google (finally) passed the Duck.com domain to DuckDuckGo, after holding onto the domain and pointing it to Google.com for years.

We asked Google for comment on the timing of the changes to search engine options in chromium. At the time of writing the search giant had not responded.

We’ve also reached out to Qwant for comment on being added as an option in its home market.

 

Boeing is moving to address potential issues in new 737s as Europe bans its plane

In the wake of the second fatal crash in six months involving Boeing 737 Max 8 airplanes, the European Aviation and Safety Administration is grounding the planes as Boeing said it was taking additional steps to address an issue that may have contributed to the crash.

On Sunday, a Boeing 737 Max 8 plane operated by Ethiopian Airlines crashed just minutes after takeoff, killing all 157 on board the flight. Last October, a Lion Air flight departing from Jakarta crashed in similar circumstances, killing all 189 people on board. The plane involved was also a 737 Max 8.

Responding to the incidents, the European Union Aviation and Safety Administration has banned the plane from operating in European airspace.

Here’s the statement from the EASA:

Following the tragic accident of Ethiopian Airlines flight ET302 involving a Boeing 737 MAX 8, the European Union Aviation Safety Agency (EASA) is taking every step necessary to ensure the safety of passengers.

As a precautionary measure, EASA has published today an Airworthiness Directive, effective as of 19:00 UTC, suspending all flight operations of all Boeing Model 737-8 MAX and 737-9 MAX aeroplanes in Europe. In addition EASA has published a Safety Directive, effective as of 19:00 UTC, suspending all commercial flights performed by third-country operators into, within or out of the EU of the above mentioned models.

Meanwhile, Boeing has issued a statement saying that it has been developing a software update following the Lion Air crash. “This includes updates to the Maneuvering Characteristics Augmentation System flight control law, pilot displays, operation manuals and crew training.”

Essentially, faulty sensors may have been to blame for the Lion Air crash. “The enhanced flight control law incorporates angle of attack (AOA) inputs, limits stabilizer trim commands in response to an erroneous angle of attack reading, and provides a limit to the stabilizer command in order to retain elevator authority,” Boeing said in a statement about its software update.

Essentially, the sensors think the plane is stalling and they apply an opposite remedial action which trims an airplane down, Flying Magazine columnist and small-plane pilot Peter Garrison tells me. It then takes enormous force from the pilots to hold the nose up, rendering them unable to address the problem, he adds.

“Once you are holding on to the controls for dear life you don’t have any hands left to correct the problem,” says Garrison. “You expect that confronted in an emergency the pilot will analyze what’s happening and act accordingly. Human beings don’t necessarily panic, but they lose their ability to reason clearly and to weigh alternative hypotheses when they are under basically what is a threat of death. Even though it may seem obvious that all you have to do is interrupt the autopilot, amazingly that may not occur to a pilot who is hundreds of feet off the ground and has to pull back on a control yoke with hundreds of pounds of force.”

According to Garrison, the blame on Boeing may be misplaced.

“People like to talk about this as the airplane is defective and they’re correcting it with software,” he says. “That’s all nonsense. Planes today are a mix of automatic systems — and by automatic I of course mean digital electronic systems and mechanical ones — and the natural aerodynamics of the airplane, and you can’t separate these.”

If Boeing had made any mistakes, Garrison believes it was in the company’s inability to adequately communicate the problem to pilots and get them ready for taking action in the event of a malfunction.

Even in perfectly designed systems, the transition from automated controls to manual manipulation is difficult to achieve, says Garrison. “It’s not that hard to understand that automation does not make a smooth interface with human control. There’s a break there and it’s a dangerous break,” he said.

Here’s an explanation from Business Insider over the latest thinking around the Lion Air crash that provides further detail.

At the heart of the controversy surrounding the 737 Max is MCAS, the Maneuvering Characteristics Augmentation System. To fit the Max’s larger, more fuel-efficient engines, Boeing had to redesign the way it mounts engines on the 737. This change disrupted the plane’s center of gravity and caused the Max to have a tendency to tip its nose upward during flight, increasing the likelihood of a stall. MCAS is designed to automatically counteract that tendency and point the nose of the plane downward.

Initial reports from the Lion Air investigation, however, indicate that a faulty sensor reading may have triggered MCAS shortly after the flight took off. Observers fear that a similar thing may have happened in Sunday’s Ethiopian Airlines flight.

“Boeing has been working closely with the Federal Aviation Administration (FAA) on development, planning and certification of the software enhancement, and it will be deployed across the 737 MAX fleet in the coming weeks,” the company said in a statement. “The update also incorporates feedback received from our customers.”

Boeing expects the update to be completed across its fleet by April.

In the interim, U.S. politicians have been pleading with the Federal Aviation Administration to take the same steps as countries from around the globe, including the entire European Union, China, Ethiopia, Australia, Singapore and Indonesia, as well as Norwegian Air, Aeromexico, Gol Airlines from Brazil, the South Korean airline, Easair, the South African airline, Comair and others.

No less an authority on aviation than President Donald Trump has also weighed in on the crashes and attendant controversy.

Setting aside the president’s calls to return aviation to the early part of the 20th century, several aviation administrations and airlines have grounded the Boeing 737 Max.

So the FAA is among the only civil aviation administrations in the world to keep the Boeing 737 Max 8 airborne.

“An FAA team is on-site with the NTSB in its investigation of Ethiopian Airlines Flight 302. We are collecting data and keeping in contact with international civil aviation authorities as information becomes available,” the FAA said in a statement yesterday. “The FAA continuously assesses and oversees the safety performance of U.S. commercial aircraft. If we identify an issue that affects safety, the FAA will take immediate and appropriate action.”

A spokesperson for the administration said there were no other statements from the administration available at this time.

Earlier today, politicians from both sides of the aisle — including the Republican Utah Senator Mitt Romney and Democratic Senator and presidential hopeful Elizabeth Warren — pleaded with the FAA to reverse their decision, according to Politico.

“Today, immediately, the FAA needs to get these planes out of the sky,” Warren said Tuesday.

That’s not just the view of this columnist. It’s also the opinion of Ray LaHood, the former U.S. Secretary of Transportation, who grounded the 787 Dreamliner following fires in its lithium-ion battery packs in 2013.

“The flying public has to be assured that these planes are safe, and they don’t feel that way now,” LaHood told Bloomberg. “The Secretary of Transportation should announce today that these planes will be grounded until there is 100 percent assurance from Boeing that these planes are safe to fly, because unless they can give that assurance they’re not holding up their promise to be the top safety agency in the U.S.”

Such a move could be bad for Boeing. The 737 is Boeing’s most popular aircraft and the heart of the company’s fleet.

The company has been struggling to keep up with demand for its newest model of the 737, according to reports in The Seattle Times. And the new plane was Boeing’s best seller, keeping the stock buoyant.

A report from National Public Radio showed just how robust sales were for the new aircraft. It’s the fastest-selling plane that Boeing has ever produced. Expectations from executives were for the Max model to account for 90 percent of all 737 deliveries in 2019, according to a statement from the company’s chief financial officer, Gregory Smith, NPR reported.

Boeing stock is down nearly 6 percent in trading on the New York Stock Exchange.

Who are the next billion users and what do they want?

Entrepreneurs and tech executives are widening their gazes outside of developed nations for their next source of growth. Ubiquitous cheap phones and increasingly affordable phone plans such as Jio in India are helping another billion users join the internet. What do those users want though, and how are they the same and different than existing internet users?

That’s the subject of a critical book by Payal Arora, entitled The Next Billion Users: Digital Life Beyond the West. The compact thesis encompasses a range of argumentative vignettes on how Western tech founders and non-profit executives misinterpret the needs of the global poor — and what internet access really means to them.

“Let’s drop the morality and let’s start engaging with the reality,” Arora explained in an interview with TechCrunch. “Let’s celebrate the mundane over the grand.” That’s the summation of more than two decades working with the global poor and engagement with issues of technology, social media, and entrepreneurship.

In her book, Arora, who today is a professor at Erasmus University Rotterdam in the Netherlands, argues against narratives that make it hard to see the global poor for who they really are. “The various templates about the global poor today — as blank slates, criminals, deviants, virtuous beings, entrepreneurs, self-organizers, victims, and more — is testament to the mystification strategies at play in the framing of this vast populace.”

As she discussed with TechCrunch, “[The internet is] basically an always ongoing project, and it’s constantly going to be shaped by the people who use it.”

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The global poor really want to “play”

Far from being “exotic,” these users need many of the same things found in the West: entertainment, education, and romance. In fact, there is a huge intellectual gap between what Western product leaders believe these next users want, and what they really desire. When youth (and a huge proportion of these new users are young given demographics in emerging markets) acquire digital devices, their top priorities are often listening to music and communicating on social media like Facebook .

Indeed, the entire expansion of technology in many parts of the world are driven not by necessity, but by a desire to have fun. “From Jio to Facebook, these initiatives have at least one thing in common: they promote leisure usage to motivate people to adopt these new technologies,” Arora writes.

She emphasizes the importance and challenges of notions of “play” in regard to this new digital divide. As she writes, “The concept of jugaad, or ‘frugal innovation,’ has become pervasive. How to get more from less is the name of the game.” The bottoms-up innovation seen in places like India are a positive form of play, where users remix their technology to meet their needs.

Yet, that innovation is not always looked upon favorably by Western executives. Piracy can be rampant in developing economies due to the lack of resources available to pay for Western-priced media. “Legitimizing the ingenuity of the poor in creating a marketplace for digital leisure through pirated goods comes at the cost of disrupting the core business model of the Western media industries.”

Privacy is much more complicated in these emerging markets

Every day in the West, there is news of data breaches and privacy violations. Europe has passed one of the most comprehensive policies to protect user privacy in the world with GDPR, and concerns around privacy on platforms like Facebook are hot issues in Silicon Valley policymaking circles these days.

Arora sees a much more complicated relationship with privacy for the global poor though. For these users, “privacy is not such a big issue, not because they don’t care about privacy, not because they don’t quite get it. […] But the fact that it is still — in relation to their actual lives — far more private,” she said. In her book, she writes, “They are savvy hiders when they need to be, and active seekers when they need to be, especially when seeking happiness online.”

These new users are often coming from very conservative and gendered societies, where even showing a woman’s face can be grounds for punishment. Yet, women and men often use social networks like Facebook and Twitter as pathways around these rules, purposely using technology to intermediate their social lives. Plus, they can be fun. “Facebook is a ‘happy’ place. This matters a lot in [Brazil’s slums known as] favelas, where young people’s day-to-day lives are entrenched in poverty and violence.”

Technology of course creates new sets of problems. Location-based technologies can help gangs target individuals for harassment or kidnapping. Romance scams are proliferating as young men and women try to find a relationship online. A scandalous image can be distributed to the shame of families and entire communities. Yet, these simple connections made through tech can make the burdens of living poor just a bit less hard.

For entrepreneurs, focus on the mundane

Arora’s most trenchant criticism is when she analyzes the obsessive focus of Silicon Valley and its entrepreneurs on grand projects rather than on core needs.

She heavily criticizes Nicholas Negroponte and his One Laptop Per Child program (an argument that at this point feels redundant), along with Sugata Mitra of the Hole-in-the-Wall experiment that plopped computers in villages with the belief that it would transform education. In our interview, Arora said that “I’m not saying they were not inspirational, but they were brazen in the sense that it was so deeply arrogant.”

Instead of looking for rocket ships and novel technology, she recommends that product designers simply offer the poor the dignity of meeting the needs they already express. Talking about the success of Jio in India, Arora writes that it’s strategy “was motivated by the ‘ABCD principle’ dictating the online market in India — based on the fact that most Indian consumers use most of their data to access content on the Astrology, Bollywood, Cricket, and Devotion sites.”

Some founders, government agencies, and aid groups find that conclusion hard to accept. They want to castigate such leisure pursuits and frivolity, arguing that users should be educating themselves and trying to “rescue themselves” out of poverty. Arora argues passionately that self-expression, the ability to explore sexuality, to engage with political opinions in a safer space, and more are absolutely the right of the poor to pursue. Memorizing molecular biology facts can take a back seat.

Next Billion Users doesn’t have a single thesis to offer, to its credit and also detriment. Instead, Arora offers a selection of anecdotes, data, and perspectives to try to open the reader to a wider world. In that project, she has succeeded, and it is worth anyone who has users outside of SoMa to take in her cultivated point-of-view.

Our infrastructure problem is also a data problem

Image by 31moonlight31 via Getty Images

Written by Arman Tabatabai

We’ve been trying to dig deeper into how we got to such a broken system of infrastructure development and why we can’t build anything.

This week, we spoke to Benjamin Schmidt, CTO of RoadBotics, a startup that collects visual imagery from a smartphone or dashcam and uses an AI / ML platform to identify all the deficiencies in the surrounding infrastructure. RoadBotics helps over 100 different governments in the U.S. — from big cities like Detroit all the way down to small towns — monitor, manage and understand the state of their roads and infrastructure.

The conversation offered great background on the misinformation – or the lack of information altogether – that muddies the infrastructure development process in the U.S.

Traditionally, governments monitor the state of their physical infrastructure manually – as in they literally have someone drive around and mark down how things look. So monitoring an entire system of infrastructure can be quite costly, and collecting clean data can be incredibly time-consuming. Given the expense, Schmidt said that some governments wait five and even ten years to resurvey their infrastructure, meaning they’re planning, developing, and operating on outdated information.

The most poignant takeaway from the conversation came when Schmidt lamented how, after talking to more than 200 governments, he was shocked that practically none had a complete understanding of the state of their road networks. “Yet, when governments are asked how much money would be needed to upgrade their roads, they still offer up some definitive number even though they could not possibly know the cost.”

The misinformation governments have on the state of their infrastructure, as Schmidt observed, is a huge issue for infrastructure planning and costs:

  • On the planning side, without accurately knowing what and where specific deficiencies lie throughout their systems, governments can’t really develop infrastructure through the “minimal operable segments” model we discussed recently – where they work on smaller projects that can be built cheaper, more quickly and more efficiently. Instead, policymakers opt for megaprojects and overhauls of entire systems, which are hard to coordinate and have huge costs and geographic exposure that lead to the scope creep and political gamesmanship infrastructure expert Phil Plotch described in our recent conversation.
  • Schmidt pointed out that since many governments are severely behind collecting data on their infrastructure, it’s now a massive undertaking for them to try to resurvey and understand it. Therefore, projects are often proposed and started without a fully comprehensive execution plan in place, with developers instead surveying and studying the infrastructure after approval, leading to the route and plan revisions that inflate costs by billions of dollars seen with California’s high-speed rail project.
  • Even at a higher level, if governments don’t know the state of their infrastructure, they don’t know how much it’s going to cost to fix. With no accurate idea of what the real bill may ultimately come out to, policymakers underestimate costs to push projects through and we see the drastic cost overruns that dwarf estimates in initial proposals or early plans.

Silicon Valley loves to analogize data as the “new oil,” but governments still need to build their first wells if they are ever to bring infrastructure costs back to earth.

Obsessions

  • Perhaps some more challenges around data usage and algorithmic accountability
  • We have a bit of a theme around emerging markets, macroeconomics, and the next set of users to join the internet.
  • 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 [email protected].

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

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SoftBank launches the Innovation Fund, committing $2B to invest in Latin America

While SoftBank continues to make big bets on startups out of its $100-billion Vision Fund, it has also launched another investment vehicle to invest in tech opportunities specifically in Latin America.

Today the group announced the SoftBank Innovation Fund, which is starting out with a $2 billion commitment to invest in tech startups in Central and South America, specifically starting in the countries of Argentina, Brazil, Chile, Colombia and Mexico, covering areas like e-commerce, digital financial services, healthcare, mobility and insurance.

Alongside this, it’s establishing a group called the SoftBank Latin America Local Hub, which will partner with companies that are already in SoftBank’s investment portfolio to help them break into the region.

The effort in Latin America is a big win for Marcelo Claure, who has been named CEO of SoftBank Latin America. Claure is already COO of SoftBank Group Corp., as well as CEO of SoftBank Group International and executive chairman of Sprint Corporation — all roles he will continue to keep as he takes on this new challenge.

“Growing up in Latin America I witnessed firsthand the creativity and passion of the people,” said Claure in a statement. “There is so much innovation and disruption taking place in the region, and I believe the business opportunities have never been stronger. The SoftBank Innovation Fund will become a major investor in transformative Latin American companies that are poised to redefine their industries and create new economic opportunities for millions of people.”

This is the first time that SoftBank has created a fund of this kind focused on a single region — although it has spearheaded big bets into specific countries like India in the past — and it appears to the be first time that it has formally established a group to help other portfolio companies expand in a region, although this is likely something that SoftBank would have been doing on an informal basis before now.

News of the this fund had been trickling out for some time, although a report in Bloomberg from January that broke the news had underestimated the amount that SoftBank would invest in it (it predicted $1 billion, while the actual starting amount is $2 billion).

SoftBank says that it has yet to determine where it will establish its HQ for this new effort. I don’t imagine this question will take on the heated race that we saw unfold around Amazon’s HQ2 decision-making process. Likely candidates will probably be cities where SoftBank has already established operations in the region.

Indeed, SoftBank no stranger to investing in Latin America as part of its bigger “BRIC” strategy. As a developing market with a growing middle class (more than 50 million people in the region have entered the middle class generating increased disposable income, SoftBank said), it is one of the fastest-growing regions for tech products and services. SoftBank estimates that the region accounts for 10 percent of the world’s population and 8 percent of the world’s GDP. Notably (given SoftBank’s previous focus on Asia) it points out that this means it has “two times the GDP of India and half that of China.”

So far, SoftBank’s investments in the region have focused on e-commerce and related consumer services. It was one of the early investors in Uber rival 99 in Brazil (which eventually was taken over by Didi, the Chinese transportation giant that SoftBank also partly owns). It has also put at least $100 million into Loggi, another startup out of Brazil that focuses on delivery services. In Mexico, it is also embarking on a joint venture with Didi to establish transportation services there.

It’s likely the strong track record it has had in those investments so far that have led SoftBank to extend its activities there, particularly since it has already established a strong bulkhead in different regions across Asia, including China and India.

“Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead,” said Masayoshi Son, Chairman & Chief Executive Officer of SBG, in a statement. “SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans. I am grateful to our Chief Operating Officer Marcelo Claure for leading this initiative, in addition to his other responsibilities at SBG.”

As with other SoftBank investments that do not come out of its Vision Fund, the latter will potentially use this as a springboard to get involved as well. “Latin America presents significant opportunities for SoftBank Group, and the Vision Fund will have the ability to co-invest alongside the innovation Fund,” said Rajeev Misra, CEO of SoftBank Investment Advisers, who runs the Vision Fund. “Marcelo and team will offer invaluable expertise to help Latin American companies scale their operations, benefit from the greater SoftBank ecosystem, and grow into global market leaders.” The Vision Fund has come under some scrutiny because of its ties to Saudi money and the controversy surrounding that government’s human rights policies.

For investors like SoftBank, putting a lot of attention on this region makes a lot of sense. Not only does it help diversify by focusing on another (rapidly growing) region, but it gives the group one more way to sweeten the deal to invest in any fast-growing startup, by offering a helping hand in their efforts to expand to other regions by way of their network of contacts and existing services.

In addition to people getting more well off in the region, it has shown other indication of it being a healthy market for tech investment. It has 375 million internet users and 250 smartphone users, putting it ahead of the US in terms of sheer numbers. And retail e-commerce has nearly doubled in the last three years, going to $54 billion in 2018 from $29.8 billion in 2015.

Similarly, there is a big opportunity ahead with some 400 million people still without bank accounts or credit histories; and 79 percent of population living in urban areas but without great access to public transport. Healthcare has also been an area of underinvestment up to now, opening the door to building and expanding medical, wellness and other related solutions.

To be clear, there are already a ton of companies in the region, and so this is as much about getting closer to them, and helping them grow with funding, as it is about bringing in startups from outside the region to tap these opportunities. SoftBank hopes that by setting out its stall in the heart of it, it will have a shot at profiting from both.

Challenger bank N26 plans to expand to Brazil

Fintech startup N26 plans to launch its bank service in Brazil in 2019. The company announced the news on stage at MWC in Barcelona.

N26 has already announced that its next market would be the U.S. at some point during the first half of 2019. Brazil should launch after that.

Right now, N26 is available in 24 European countries, including all of the Eurozone, the U.K., Denmark, Norway, Poland, and Sweden, Liechtenstein and Iceland.

The company reached 2 million customers back in November 2018. N26 says that it now has 2.5 million customers. It has processed €20 billion in transaction volume since its creation in 2013, and customers currently hold over €1 billion in N26 accounts.

Eduardo Prota will be the General Manager for Brazil. He’s worked for Santander, Cielo and various startups. N26 will compete with another challenger bank in Brazil, Nubank. The startup already has 5 million customers and has raised hundreds of millions of dollars.

N26 also recently raised $300 million at a $2.7 billion valuation. It’s clear that the company doesn’t want to stop at Europe. Let’s see if N26 can reproduce the same success on another continent.

Contabilizei raises $20 million to ease Brazilians’ tax pain

Online tax filing and accounting service, Contabilizei, has raised $20 million in a new round of financing led by Point72 Ventures, the early stage investment arm associated with hedge fund guru Steven Cohen’s Point72 Asset Management.

Smart money in both the venture and private equity space has been long Brazil for a bit, and the new investment provides even more firepower to the thesis that Brazil’s startup ecosystem is on the move.

“For the Brazilian ecosystem, the investment represents the trust and the opportunity that we have here in the Brazilian market. For quite some time it was difficult to attract this kind of investment from abroad,” says Contabilizei chief executive Vitor Torres. Even though we had a recession there are technology companies that are growing,” Torres says, saying that the company has already staved off acquisition offers and will eventually eye a potential public offering in U.S. or domestic markets.

Though it was only founded five years ago, the company already has 200 employees and more than 10,000 customers throughout Brazil.

Contabilizei has already audited more than 2 billion reals in customer revenue and saved its users over 500 million reals in taxes. For new companies, Contabilizei will also offer free business registration and formation filings. So far, the company has helped 5,000 new businesses get their paperwork done around the country.

“In Brazil, one of the greatest frictions for a small company is meeting its tax reporting requirements,” said Pete Casella, Head of Fintech & Financial Services Investments at Point72 Ventures. “By building an automated tax accounting service that can deliver services at a fraction of the cost of a traditional accountant, we believe that Contabilizei has established the high trust relationships that will enable it to serve customers in many new ways over the coming years.”

New investors also contributed to the round including the International Financial Corp., an investment arm of the The World Bank, and Quona Capital, Quadrant, and the Fintech Collective. They joined existing company backers Kaszek Ventures, e.Bricks, Endeavor Catalyst, and Curitiba Angels.

“Our goal is to simplify the entrepreneur’s routine so they can focus on their own business and not on bureaucracy. We are only at the beginning, and in three years we want to grow 15 times more,” said Vitor Torres, chief executiver and founder of Contabilizei, in a statement. “We were pioneers in the debureaucratization of accounting in the country and we managed to do it with a quality that surpasses 98% of our customers’ satisfaction.”

Why Silicon Valley needs more visas

When I hear protesters shout, “Immigrants are welcome here!” at the San Francisco immigration office near my startup’s headquarters, I think about how simple a phrase that is for a topic that is so nuanced, especially for me as an immigrant entrepreneur.

Growing up in Brazil, I am less familiar with the nuances of the American debate on immigration legislation, but I know that immigrants here add a lot of jobs and stimulate the local economy. As an immigrant entrepreneur, I’ve tried to check all of those boxes, and really prove my value to this country.

My tech startup Brex has achieved a lot in a short period of time, a feat which is underscored by receiving a $1 billion dollar valuation in just one year. But we didn’t achieve that high level of growth in spite of being founded by immigrants, but because of it. The key to our growth and to working towards building a global brand is our international talent pool, without it, we could never have gotten to where we are today.

So beyond Brex, what do the most successful Silicon Valley startups have in common? They’re also run by immigrants. In fact, not only are 57% of the Bay Area’s STEM tech workers immigrants, they also make up 25% of business founders in the US. You can trace the immigrant entrepreneurial streak in Silicon Valley from the founders of SUN Microsystems and Google to the Valley’s most notorious Twitter User, Tesla’s Elon Musk.

Immigrants not only built the first microchips in Silicon Valley, but they built these companies into the tech titans that they are known as today. After all, more than 50% of billion dollar startups are founded by immigrants, and many of those startups were founded by immigrants on H-1B visas.

Photo courtesy of Flickr/jvoves

While it might sound counterintuitive, immigrants create more jobs and make our economy stronger. Research from the National Foundation of American Policy (NFAP) has shown that immigrant-founded billion-dollar companies doubled their number of employees over the past two years. According to the research, “WeWork went from 1,200 to 6,000 employees between 2016 and 2018, Houzz increased from 800 to 1,800 employees the last two years, while Cloudflare went from 225 to 715 employees.”

We’ve seen the same growth at Brex. In just one year we hired 70 employees and invested over $6 million dollars in creating local jobs. Our startup is not alone, as Inc. recently reported, “50 immigrant-founded unicorn startups have a combined value of $248 billion, according to the report [by NFAP], and have created an average of 1,200 jobs each.”

One of the fundamental drivers of our success is our international workforce. Many of our key-hires are from all over Latin America, spanning from Uruguay to Mexico. In fact, 42% of our workforce is made up of immigrants and another 6% are made up of children of immigrants. Plenty of research shows that diverse teams are more productive and work together better, but that’s only part of the reason why you should bet on an international workforce. When you’re working with the best and brightest from every country, it inspires you to bring forth your most creative ideas, collaborate, and push yourself beyond your comfort zone. It motivates you to be your best.

With all of the positive contributions immigrants bring to this country, you’d think we’d have less restrictive immigration policies. However, that’s not the case. One of the biggest challenges that I face is hiring experienced, qualified engineers and designers to continue innovating in a fast-paced, competitive market.

This is a universal challenge in the tech industry. For the past 10 years, software engineers have been the #1 most difficult job to fill in the United States. Business owners are willing to pay 10-20 percent above the market rate for top talent and engineers. Yet, we’re still projected to have a shortage of two million engineering jobs in the US by 2022. How can you lead the charge of innovation if you don’t have the talent to do it?

What makes matters worse is that there are so few opportunities and types of visas for qualified immigrants. This is limiting job growth, knowledge-sharing, and technological breakthroughs in this country. And we risk losing top talent to other nations if we don’t loosen our restrictive visa laws.

H1-B visa applications fell this year, and at the same time, these visas have become harder to obtain and it has become more expensive to acquire international talent. This isn’t the time to abandon the international talent pool, but to invest in highly specialized workers that can give your startup a competitive advantage.

Already, there’s been a dramatic spike in engineering talent moving to Canada, with a 40% uptick in 2017. Toronto, Berlin, and Singapore are fastly becoming burgeoning tech hubs, and many fear (rightfully) that they will soon outpace the US in growth, talent, and developing the latest technologies.

This year, U.S. based tech companies generated $351 billion of revenue in 2018. The U.S. can’t afford to miss out on this huge revenue source. And, according to Harvard Business School Professor William R. Kerr and the author of The Gift of Global Talent: How Migration Shapes Business, Economy & Society, “Today’s knowledge economy dictates that your ability to attract, develop, and integrate smart minds governs how prosperous you will be.”

Immigrants have made Silicon Valley the powerhouse that it is today, and severely limiting highly-skilled immigration benefits no-one. Immigrants have helped the U.S. build one of the best tech hubs in the world— now is the time for startups to invest in international talent so that our technology, economy, and local communities can continue to thrive.

President Bolsonaro should boost Brazil’s entrepreneurial ecosystem

In late October following a significant victory for Jair Bolsonaro in Brazil’s presidential elections, the stock market for Latin America’s largest country shot up. Financial markets reacted favorably to the news because Bolsonaro, a free-market proponent, promises to deliver broad economic reforms, fight corruption and work to reshape Brazil through a pro-business agenda. While some have dubbed him as a far-right “Trump of the Tropics” against a backdrop of many Brazilians feeling that government has failed them, the business outlook is extremely positive.

When President-elect Bolsonaro appointed Santander executive Roberto Campos as new head of Brazil’s central bank in mid-November, Brazil’s stock market cheered again with Sao Paulo’s Bovespa stocks surging as much as 2.65 percent on the day news was announced. According to Reuters, “analysts said Bolsonaro, a former army captain and lawmaker who has admitted to having scant knowledge of economics, was assembling an experienced economic team to implement his plans to slash government spending, simplify Brazil’s complex tax system and sell off state-run companies.”

Admittedly, there are some challenges as well. Most notably, pension-system reform tops the list of priorities to get on the right track quickly. A costly pension system is increasing the country’s debt and contributed to Brazil losing its investment-grade credit rating in 2015. According to the new administration, Brazil’s domestic product could grow by 3.5 percent during 2019 if Congress approves pension reform soon. The other issue that’s cropped up to tarnish the glow of Bolsonaro coming into power are suspect payments made to his son that are being examined by COAF, the financial crimes unit.

While the jury is still out on Bolsonaro’s impact on Brazilian society at large after being portrayed as the Brazilian Trump by the opposition party, he’s come across as less authoritarian during his first days in office. Since the election, his tone is calmer and he’s repeatedly said that he plans to govern for all Brazilians, not just those who voted for him. In his first speech as president, he invited his wife to speak first which has never happened before.

Still, according to The New York Times, “some Brazilians remain deeply divided on the new president, a former army captain who has hailed the country’s military dictators and made disparaging remarks about women and minority groups.”

Others have expressed concern about his environment impact with the “an assault on environmental and Amazon protections” through an executive order within hours of taking office earlier this week. However, some major press outlets have been more upbeat: “With his mix of market-friendly economic policies and social conservativism at home, Mr. Bolsonaro plans to align Brazil more closely with developed nations and particularly the U.S.,” according to the Wall Street Journal this week.

Based on his publicly stated plans, here’s why President Bolsonaro will be good for business and how his administration will help build an even stronger entrepreneurial ecosystem in Brazil:

Bolsonaro’s Ministerial Reform

President Temer leaves office with 29 government ministries. President Bolsonaro plans to reduce the number of ministries to 22, which will reduce spending and make the government smaller and run more efficiently. We expect to see more modern technology implemented to eliminate bureaucratic red tape and government inefficiencies.

Importantly, this will open up more partnerships and contracting of tech startups’ solutions. Government contacts for new technology will be used across nearly all the ministries including mobility, transportation, health, finance, management and legal administration – which will have a positive financial impact especially for the rich and booming SaaS market players in Brazil.

Government Company Privatization

Of Brazil’s 418 government-controlled companies, there are 138 of them on the federal level that could be privatized. In comparison to Brazil’s 418, Chile has 25 government-controlled companies, the U.S. has 12, Australia and Japan each have eight, and Switzerland has four. Together, Brazil-owned companies employ more than 800,000 people today, including about 500,000 federal employees. Some of the largest ones include petroleum company Petrobras, electric utilities company EletrobrasBanco do Brasil, Latin America’s largest bank in terms of its assets, and Caixa Economica Federal, the largest 100 percent government-owned financial institution in Latin America.

The process of privatizing companies is known to be cumbersome and inefficient, and the transformation from political appointments to professional management will surge the need for better management tools, especially for enterprise SaaS solutions.

STEAM Education to Boost Brazil’s Tech Talent

Based on Bolsonaro’s original plan to move the oversight of university and post-graduate education from the Education Ministry to the Science and Technology Ministry, it’s clear the new presidential administration is favoring more STEAM courses that are focused on Science, Technology, Engineering, the Arts and Mathematics.

Previous administrations threw further support behind humanities-focused education programs. Similar STEAM-focused higher education systems from countries such as Singapore and South Korea have helped to generate a bigger pipeline of qualified engineers and technical talent badly needed by Brazilian startups and larger companies doing business in the country. The additional tech talent boost in the country will help Brazil better compete on the global stage.

The Chicago Boys’ “Super” Ministry

The merger of the Ministry of Economy with the Treasury, Planning and Industry and Foreign Trade and Services ministries will create a super ministry to be run by Dr. Paulo Guedes and his team of Chicago Boys. Trained at the Department of Economics in the University of Chicago under Milton Friedman and Arnold Harberger, the Chicago Boys are a group of prominent Chilean economists who are credited with transforming Chile into Latin America’s best performing economies and one of the world’s most business-friendly jurisdictions. Joaquim Levi, the recently appointed chief of BNDES (Brazilian Development Bank), is also a Chicago Boy and a strong believer in venture capital and startups.

Previously, Guedes was a general partner in Bozano Investimentos, a pioneering private equity firm, before accepting the invitation to take the helm of the world’s eighth-largest economy in Brazil. To have a team of economists who deeply understand the importance of rapid-growth companies is good news for Brazil’s entrepreneurial ecosystem. This group of 30,000 startup companies are responsible for 50 percent of the job openings in Brazil and they’re growing far faster than the country’s GDP.

Bolsonaro’s Pro-Business Cabinet Appointments

President Bolsonaro has appointed a majority of technical experts to be part of his new cabinet. Eight of them have strong technology backgrounds, and this deeper knowledge of the tech sector will better inform decisions and open the way to more funding for innovation.

One of those appointments, Sergio Moro, is the federal judge for the anti-corruption initiative knows as “Operation Car Wash.” With Moro’s nomination to Chief of the Justice Department and his anticipated fight against corruption could generate economic growth and help reduce unemployment in the country. Bolsonaro’s cabinet is also expected to simplify the crazy and overwhelming tax system. More than 40 different taxes could be whittled down to a dozen, making it easier for entrepreneurs to launch new companies.

In general terms, Brazil and Latin America have long suffered from deep inefficiencies. With Bolsonaro’s administration, there’s new promise that there will be an increase in long-term infrastructure investments, reforms to reduce corruption and bureaucratic red tape, and enthusiasm and support for startup investments in entrepreneurs who will lead the country’s fastest-growing companies and make significant technology advancements to “lift all boats.”