The damage of defaults

Apple popped out a new pair of AirPods this week. The design looks exactly like the old pair of AirPods. Which means I’m never going to use them because Apple’s bulbous earbuds don’t fit my ears. Think square peg, round hole.

The only way I could rock AirPods would be to walk around with hands clamped to the sides of my head to stop them from falling out. Which might make a nice cut in a glossy Apple ad for the gizmo — suggesting a feeling of closeness to the music, such that you can’t help but cup; a suggestive visual metaphor for the aural intimacy Apple surely wants its technology to communicate.

But the reality of trying to use earbuds that don’t fit is not that at all. It’s just shit. They fall out at the slightest movement so you either sit and never turn your head or, yes, hold them in with your hands. Oh hai, hands-not-so-free-pods!

The obvious point here is that one size does not fit all — howsoever much Apple’s Jony Ive and his softly spoken design team believe they have devised a universal earbud that pops snugly in every ear and just works. Sorry, nope!

A proportion of iOS users — perhaps other petite women like me, or indeed men with less capacious ear holes — are simply being removed from Apple’s sales equation where earbuds are concerned. Apple is pretending we don’t exist.

Sure we can just buy another brand of more appropriately sized earbuds. The in-ear, noise-canceling kind are my preference. Apple does not make ‘InPods’. But that’s not a huge deal. Well, not yet.

It’s true, the consumer tech giant did also delete the headphone jack from iPhones. Thereby depreciating my existing pair of wired in-ear headphones (if I ever upgrade to a 3.5mm-jack-less iPhone). But I could just shell out for Bluetooth wireless in-ear buds that fit my shell-like ears and carry on as normal.

Universal in-ear headphones have existed for years, of course. A delightful design concept. You get a selection of different sized rubber caps shipped with the product and choose the size that best fits.

Unfortunately Apple isn’t in the ‘InPods’ business though. Possibly for aesthetic reasons. Most likely because — and there’s more than a little irony here — an in-ear design wouldn’t be naturally roomy enough to fit all the stuff Siri needs to, y’know, fake intelligence.

Which means people like me with small ears are being passed over in favor of Apple’s voice assistant. So that’s AI: 1, non-‘standard’-sized human: 0. Which also, unsurprisingly, feels like shit.

I say ‘yet’ because if voice computing does become the next major computing interaction paradigm, as some believe — given how Internet connectivity is set to get baked into everything (and sticking screens everywhere would be a visual and usability nightmare; albeit microphones everywhere is a privacy nightmare… ) — then the minority of humans with petite earholes will be at a disadvantage vs those who can just pop in their smart, sensor-packed earbud and get on with telling their Internet-enabled surroundings to do their bidding.

Will parents of future generations of designer babies select for adequately capacious earholes so their child can pop an AI in? Let’s hope not.

We’re also not at the voice computing singularity yet. Outside the usual tech bubbles it remains a bit of a novel gimmick. Amazon has drummed up some interest with in-home smart speakers housing its own voice AI Alexa (a brand choice that has, incidentally, caused a verbal headache for actual humans called Alexa). Though its Echo smart speakers appear to mostly get used as expensive weather checkers and egg timers. Or else for playing music — a function that a standard speaker or smartphone will happily perform.

Certainly a voice AI is not something you need with you 24/7 yet. Prodding at a touchscreen remains the standard way of tapping into the power and convenience of mobile computing for the majority of consumers in developed markets.

The thing is, though, it still grates to be ignored. To be told — even indirectly — by one of the world’s wealthiest consumer technology companies that it doesn’t believe your ears exist.

Or, well, that it’s weighed up the sales calculations and decided it’s okay to drop a petite-holed minority on the cutting room floor. So that’s ‘ear meet AirPod’. Not ‘AirPod meet ear’ then.

But the underlying issue is much bigger than Apple’s (in my case) oversized earbuds. Its latest shiny set of AirPods are just an ill-fitting reminder of how many technology defaults simply don’t ‘fit’ the world as claimed.

Because if cash-rich Apple’s okay with promoting a universal default (that isn’t), think of all the less well resourced technology firms chasing scale for other single-sized, ill-fitting solutions. And all the problems flowing from attempts to mash ill-mapped technology onto society at large.

When it comes to wrong-sized physical kit I’ve had similar issues with standard office computing equipment and furniture. Products that seems — surprise, surprise! — to have been default designed with a 6ft strapping guy in mind. Keyboards so long they end up gifting the smaller user RSI. Office chairs that deliver chronic back-pain as a service. Chunky mice that quickly wrack the hand with pain. (Apple is a historical offender there too I’m afraid.)

The fixes for such ergonomic design failures is simply not to use the kit. To find a better-sized (often DIY) alternative that does ‘fit’.

But a DIY fix may not be an option when discrepancy is embedded at the software level — and where a system is being applied to you, rather than you the human wanting to augment yourself with a bit of tech, such as a pair of smart earbuds.

With software, embedded flaws and system design failures may also be harder to spot because it’s not necessarily immediately obvious there’s a problem. Oftentimes algorithmic bias isn’t visible until damage has been done.

And there’s no shortage of stories already about how software defaults configured for a biased median have ended up causing real-world harm. (See for example: ProPublica’s analysis of the COMPAS recidividism tool — software it found incorrectly judging black defendants more likely to offend than white. So software amplifying existing racial prejudice.)

Of course AI makes this problem so much worse.

Which is why the emphasis must be on catching bias in the datasets — before there is a chance for prejudice or bias to be ‘systematized’ and get baked into algorithms that can do damage at scale.

The algorithms must also be explainable. And outcomes auditable. Transparency as disinfectant; not secret blackboxes stuffed with unknowable code.

Doing all this requires huge up-front thought and effort on system design, and an even bigger change of attitude. It also needs massive, massive attention to diversity. An industry-wide championing of humanity’s multifaceted and multi-sized reality — and to making sure that’s reflected in both data and design choices (and therefore the teams doing the design and dev work).

You could say what’s needed is a recognition there’s never, ever a one-sized-fits all plug.

Indeed, that all algorithmic ‘solutions’ are abstractions that make compromises on accuracy and utility. And that those trade-offs can become viciously cutting knives that exclude, deny, disadvantage, delete and damage people at scale.

Expensive earbuds that won’t stay put is just a handy visual metaphor.

And while discussion about the risks and challenges of algorithmic bias has stepped up in recent years, as AI technologies have proliferated — with mainstream tech conferences actively debating how to “democratize AI” and bake diversity and ethics into system design via a development focus on principles like transparency, explainability, accountability and fairness — the industry has not even begun to fix its diversity problem.

It’s barely moved the needle on diversity. And its products continue to reflect that fundamental flaw.

Many — if not most — of the tech industry’s problems can be traced back to the fact that inadequately diverse teams are chasing scale while lacking the perspective to realize their system design is repurposing human harm as a de facto performance measure. (Although ‘lack of perspective’ is the charitable interpretation in certain cases; moral vacuum may be closer to the mark.)

As WWW creator, Sir Tim Berners-Lee, has pointed out, system design is now society design. That means engineers, coders, AI technologists are all working at the frontline of ethics. The design choices they make have the potential to impact, influence and shape the lives of millions and even billions of people.

And when you’re designing society a median mindset and limited perspective cannot ever be an acceptable foundation. It’s also a recipe for product failure down the line.

The current backlash against big tech shows that the stakes and the damage are very real when poorly designed technologies get dumped thoughtlessly on people.

Life is messy and complex. People won’t fit a platform that oversimplifies and overlooks. And if your excuse for scaling harm is ‘we just didn’t think of that’ you’ve failed at your job and should really be headed out the door.

Because the consequences for being excluded by flawed system design are also scaling and stepping up as platforms proliferate and more life-impacting decisions get automated. Harm is being squared. Even as the underlying industry drum hasn’t skipped a beat in its prediction that everything will be digitized.

Which means that horribly biased parole systems are just the tip of the ethical iceberg. Think of healthcare, social welfare, law enforcement, education, recruitment, transportation, construction, urban environments, farming, the military, the list of what will be digitized — and of manual or human overseen processes that will get systematized and automated — goes on.

Software — runs the industry mantra — is eating the world. That means badly designed technology products will harm more and more people.

But responsibility for sociotechnical misfit can’t just be scaled away as so much ‘collateral damage’.

So while an ‘elite’ design team led by a famous white guy might be able to craft a pleasingly curved earbud, such an approach cannot and does not automagically translate into AirPods with perfect, universal fit.

It’s someone’s standard. It’s certainly not mine.

We can posit that a more diverse Apple design team might have been able to rethink the AirPod design so as not to exclude those with smaller ears. Or make a case to convince the powers that be in Cupertino to add another size choice. We can but speculate.

What’s clear is the future of technology design can’t be so stubborn.

It must be radically inclusive and incredibly sensitive. Human-centric. Not locked to damaging defaults in its haste to impose a limited set of ideas.

Above all, it needs a listening ear on the world.

Indifference to difference and a blindspot for diversity will find no future here.

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How Nuro plans to spend Softbank’s $940 million

Autonomous delivery startup Nuro is bursting with ideas since SoftBank invested nearly $1 billion in February, new filings reveal.

A recent patent application details how its R1 self-driving vehicle could carry smaller robots to cross lawns or climb stairs to drop off packages. The company has even taken the step of trademarking the name “Fido” for delivery services.

“We think there’s something neat about that name,” Nuro founder Dave Ferguson told TechCrunch. “It’s friendly, neighborly and embodies the spirit of a helper that brings you things. It wasn’t intended to extend towards literal robot dogs, although some of the legged platforms that others are building could be very interesting for this last 10-foot problem.”

Another section of Nuro’s patent shows the R1 delivering piping hot pizza and beverages, prepared en route in automated kitchens.

“We tried to build a lot of flexibility into the R1’s compartment so we could serve all the applications that people will be able to think of,” Ferguson said. “A coffee machine is actually a pretty good one. If you go to your local barista, those machines are incredibly expensive. Amortizing them over an entire neighborhood makes sense.”

As automated technologies mature, companies are focusing less on simply getting around and more on how services will connect with actual customers. Delivering goods instead of passengers also means fewer regulations to navigate.

That opportunity has prompted a number of companies, including e-commerce and logistics giant Amazon, FedEx, and numerous startups to explore autonomous delivery.  At CES this year, Continental unveiled a prototype dog-shaped robot for last-yard deliveries, while Amazon has unveiled a sidewalk robot called Scout that is already delivering packages to homes.

The first company to scale automated driving and delivery could start building revenue while those aiming for autonomous taxis are stuck in a maze of laws, safety concerns and consumer skepticism.

Origin story

Softbank’s capital allows Nuro’s founders to run with its many ideas. But even in its earliest days, they benefited from an early injection of cash.

Nuro was founded in June 2016 by Ferguson and another former Google engineer, Jiajun Zhu, after they received multi-million dollar payouts from the company’s infamous Chauffeur bonus plan. Chauffeur bonuses were intended to incentivize engineers who stuck with Google’s self-driving car project. However, the plan’s structure meant that anyone who left after the first payout in 2015 would also receive a large lump sum.

Lead engineer Anthony Levandowski appears to have earned over $125 million from the plan. He used some of the money to start Otto, a self-driving truck company that was acquired by Uber and subsequently became the focus of an epic patent and trade secrets theft lawsuit.

Court filings from that case suggest that Ferguson and Zhu received around $40 million each, although Ferguson would not confirm this. (Another Chauffeur alum, Russell Smith, got a smaller payout and quickly joined Nuro as its hardware lead).

Nuro completed its first Series A funding round in China just three months later, in a previously unreported deal that gave NetEase founder Ding Lei (aka William Ding) a seat on Nuro’s board. Ding was China’s first Internet and gaming billionaire, and was reportedly once the wealthiest person in China. However, his business empire, which spans e-commerce, education and pig farming, recently laid off large numbers of staff.

“William has been a board member and a strong supporter from the very start. But he’s not directing company decisions,” says Ferguson.

A second, U.S.-based round in June 2017 raised Nuro’s total Series A funding to $92 million.

A Nuro spinout

Nuro started pilot grocery deliveries last summer with a Kroger supermarket affiliate in the Phoenix suburb of Scottsdale. The pilot initially used modified Toyota Prius sedans and transitioned in December to its R1 vehicle. “We’re super excited about the application area,” says Ferguson. “87 percent of commerce is still local and 43 percent of all personal vehicle trips in the U.S. are for shopping and running errands.”

Meanwhile, Uber’s self-driving truck program, which had begun with the acquisition of Otto, was on its last legs. Although the program was not publicly canned until July 2018, many of its key personnel left in May. The LinkedIn profiles of engineers Jur van den Berg, Nancy Sun and Alden Woodrow show them going straight from Uber to found Ike, another self-driving truck startup, the same month.

When Ike came out of stealth mode in October, Nuro characterized its relationship with the new company as a partnership, where “we gave Ike a copy of our autonomy and infrastructure software and, in exchange, Nuro got an equity stake in Ike.”

In reality, Ike was more of a spinout. California and Delaware business records show that Ike was not incorporated until July, and shared office space with Nuro until at least the beginning of September. Ike’s founding engineers actually worked at Nuro after leaving Uber. Van den Berg can even be seen in a Nuro team photo that was shot in June and reproduced in Nuro’s Safety Report, wearing a Nuro T-shirt.

Ferguson confirmed that all three Ike founders had worked at Nuro before starting Ike.

“We are always looking for opportunities where the tech that we’ve built could help,” Ferguson said. “Trucking was a really good example, but we recognized that as a company, we couldn’t spread ourselves too thin. It made sense for both sides for the Ike co-founders to build their own independent company.”

Ike CEO Woodrow told TechCrunch recently that it’s using Nuro’s hardware designs and autonomous software, as well as data logging, maps and simulation systems. It raised $52 million in its own Series A in February.

Not to be outdone, Nuro quickly followed with an announcement of a $940 million investment by the SoftBank Vision Fund, in exchange for what Ferguson calls a “very, very significant ownership stake.” Nuro had been introduced to SoftBank after talks with Cruise fell through.

Thousands of bots

Apart from robotic dogs, what does the future hold for a newly cash-rich Nuro?

“We’re very excited about the Scottsdale pilot, but it’s basically one grocery store in one ZIP code,” says Ferguson. Shortly after our interview, Nuro announced that it would be expanding its delivery service to four more ZIP codes in Houston, Texas.

“Next year and onwards, we want to start to realize the potential of what we’re building to eventually service millions of people” Ferguson said. We’re aggressively expanding the number of partners we’re working with and we’re working on how we manufacture a vehicle at a large scale.”

Nuro will likely to partner with an established auto OEM to build a fleet of what Ferguson hopes will become tens or hundreds of thousands of driverless vehicles. Last week, it petitioned the National Highway Traffic Safety Administration (NHTSA) for exemptions to safety standards that do not make sense for a driverless vehicle – like having to install a windshield or rearview mirrors.

Nuro told NHTSA that it wants to introduce up to 5,000 upgraded vehicles called the R2X, over the next two years. The electric vehicles would have a top speed of 25 miles per hour and appear very similar to the R1 prototype operating in Arizona and Texas today. The R2X will have 12 high-def cameras, radars, and a top-mounted LiDar sensor. Nuro said it would not sell the vehicle but “own and centrally operate the entire fleet of R2Xs through partnerships with local businesses.”

“Providing services is also very expensive,” Ferguson explained. “Look at Uber or Lyft. As we scale up to the population we’re trying to serve and the number of verticals we’re looking at, it requires capital to operate until we’re profitable, which will not happen this year.”

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Startups Weekly: A much-needed unicorn IPO update

As I’m sure everyone reading this knows, female-founded businesses receive just over 2 percent of venture capital on an annual basis. Most of those checks are written to early-stage startups. It’s extremely difficult for female founders to garner late-stage support, let alone cash $100 million checks.

Maybe that’s finally changing. This week, not one but two female-founded and led companies, Glossier and Rent The Runway, raised nine-figure rounds and cemented their status as unicorn companies. According to PitchBook data from 2018, there are only about 15 unicorn startups with female founders. Though I’m sure that number has increased in the last year, you get the point: There are hundreds of privately held billion-dollar companies and shockingly few of those have women founders (even fewer have female CEOs)…

Moving on…

YC Demo Days

I spent a good part of the week at San Francisco’s Pier 48 in a room full of vest-wearing investors. We listened to some 200 YC companies make their 120-second pitch and though it was a bit of a whirlwind, there were definitely some standouts. ICYMI: We wrote about each and every company that pitched on day 1 and day 2. If you’re looking for the inside scoop on the companies that forwent demo day and raised rounds, or were acquired, before hitting the stage, we’ve got that too.

IPO corner

Lyft: This week, Lyft set the terms for its highly-anticipated initial public offering, expected to be completed next week. The company will charge between $62 and $68 per share, raising more than $2 billion at a valuation of ~$23 billion. We previously reported its initial market cap would be around $18.5 billion, but that was before we knew that Lyft’s IPO was already oversubscribed. Here’s a little more background on the Lyft IPO for those interested.

Uber: The global ride-hailing business flew a little more under the radar this week than last week, but still managed to grab a few headlines. The company has decided to sell its stock on the New York Stock Exchange, which is the least surprising IPO development of 2019, considering its key U.S. competitor, Lyft, has been working with the Nasdaq on its IPO. Uber is expected to unveil its S-1 in April.

Ben Silbermann, co-founder and CEO of Pinterest, at TechCrunch Disrupt SF 2017.

Pinterest: Pinterest, the nearly decade-old visual search engine, unveiled its S-1 on Friday, one of the final steps ahead of its NYSE IPO, expected in April. The $12.3 billion company, which will trade under the ticker symbol “PINS,” posted revenue of $755.9 million in the year ending December 31, 2018, up from $472.8 million in 2017. It has roughly doubled its monthly active user count since early 2016, hitting 265 million last year. The company’s net loss, meanwhile, shrank to $62.9 million in 2018 from $130 million in 2017.

Zoom: Not necessarily the buzziest of companies, but its S-1 filing, published Friday, stands out for one important reason: Zoom is profitable! I know, what insanity! Anyway, the startup is going public on the Nasdaq as soon as next month after raising about $150 million in venture capital funding. The full deets are here.

Seed money

General Catalyst, a well-known venture capital firm, is diving more seriously into the business of funding seed-stage business. The firm, which has investments in Warby Parker, Oscar and Stripe, announced earlier this week its plan to invest at least $25 million each year in nascent teams.

Deal of the week

Earlier this week, Opendoor, the SoftBank -backed real estate startup, filed paperwork to raise even more money. According to TechCrunch’s Ingrid Lunden, the business is planning to raise up to $200 million at a valuation of roughly $3.7 billion. It’s possible this is a Series E extension; after all, the company raised its $400 million Series E only six months ago. Backers of OpenDoor include the usual suspects: Andreessen Horowitz, Coatue, General Atlantic, GV, Initialized Capital, Khosla Ventures, NEA and Norwest Venture Partners.

Startup capital

Backstage Capital founder and managing partner Arlan Hamilton, center.

Debate

Axios’ Dan Primack and Kia Kokalitcheva published a report this week revealing Backstage Capital hadn’t raised its debut fund in total. Backstage founder Arlan Hamilton was quick to point out that she had been honest about the challenges of fundraising during various speaking engagements, and even on the Gimlet “Startup” podcast, which featured her in its latest season. A Twitter debate ensued and later, Hamilton announced she was stepping down as CEO of Backstage Studio, the operations arm of the venture fund, to focus on raising capital and amplifying founders. TechCrunch’s Megan Rose Dickey has the full story.

Pro rata rights

This week, TechCrunch’s Connie Loizos revisited a long-held debate: Pro rata rights, or the right of an earlier investor in a company to maintain the percentage that he or she (or their venture firm) owns as that company matures and takes on more funding. Here’s why pro rata rights matter (at least, to VCs).

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about Glossier, Rent The Runway and YC Demo Days. Then, in a special Equity Shot, we unpack the numbers behind the Pinterest and Zoom IPO filings.

Want more TechCrunch newsletters? Sign up here.

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Elon Musk defends tweets in SEC’s contempt proceedings

Tesla CEO Elon Musk argued Friday that his Twitter use did not violate a settlement agreement with the U.S. Securities and Exchange Commission and that the agency’s request to have him held in contempt is based on a “radical interpretation” of the order, according to court papers filed in Manhattan federal court.

The SEC has asked a judge to hold Musk in contempt for violating a settlement agreement reached last year over Musk’s now infamous “funding secured” tweet. Under that agreement, Musk is supposed to get approval from Tesla’s board before communicating potentially material information to investors.

Musk contends he didn’t violate the agreement and that the problem lies in the SEC’s interpretation, which he describes as “virtually wrong at every level.” The filing also reveals new details about the settlement negotiations, notably that the SEC sent Musk a draft agreement that would have required him to obtain pre-approval for all public statements related to Tesla, in any format.

Musk and Tesla never agreed to those terms. Instead, Musk says the agreement requires him to comply with Tesla own policy, which would require pre-approval for “written communications that contain, or reasonably could contain, information material to the company or its shareholders.”

The barbs traded via court filings are the latest in an escalating fight between the billionaire entrepreneur and SEC that began last August when Musk tweeted that he had “funding secured” for a private takeover of the company at $420 per share.  The SEC filed a complaint in federal district court in September alleging that Musk lied.

Musk and Tesla settled with the SEC last year without admitting wrongdoing. Tesla agreed to pay a $20 million fine; Musk had to agree to step down as Tesla chairman for a period of at least three years; the company had to appoint two independent directors to the board; and Tesla was also told to put in place a way to monitor Musk’s statements to the public about the company, including via Twitter.

But the fight was re-ignited last month after Musk sent a tweet on February 19 that Tesla would produce “around” 500,000 cars this year, correcting himself hours later to clarify that he meant the company would be producing at an annualized rate of 500,000 vehicles by year end.

The SEC argued that the tweet sent by Musk violated their agreement. Musk has said the tweet was “immaterial” and complied with the settlement.

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Extra Crunch: What’s the cost of buying users from Facebook and the other ad networks?

This post reveals the cost of acquiring a customer on every ad channel my agency has tested.

The ad channels include Facebook, Instagram, YouTube, Quora, Google Search, Google Shopping, Snapchat, LinkedIn and others.

Using this data, you can reduce your costs by identifying which channels are a likely fit for your own product. Then you can focus on testing just those channels to start.

I’m pulling data from my agency’s experience testing 15+ ad channels and running thousands of ads for dozens of Y Combinator startups.

This post leaves you with a prioritized to-do list of which channels might work for your product, and reference points for how much you can expect to pay if you get those channels to work.

Which ad channels should I use?

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