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Test.ai nabs $11M Series A led by Google to put bots to work testing apps
For developers, the process of determining whether every new update is going to botch some core functionality can take up a lot of time and resources, and things get far more complicated when you’re managing a multitude of apps.
Test.ai is building a comprehensive system for app testing that relies on bots, not human labor, to see whether an app is ready to start raking in the downloads.
The startup has just closed an $11 million Series A round led by Gradient Ventures, Google’s AI-focused venture fund. Also participating in the round were e.ventures, Uncork Capital and Zetta Venture Partners. Test.ai, which was founded in 2015, has raised $17.6 million to date.
“Every advancement in training AI systems enables an advancement in user testing, and test.ai is the leader in AI-powered testing technology. We’re excited to help them supercharge their growth as they test every app in the world,” Gradient Ventures founder Anna Patterson said in a statement. “In a couple years, AI testing will be ingrained into every company’s product flow.”
The company’s technology doesn’t just leverage AI to cut down on how long it takes for an app to be tested; there are much lengthier processes it helps eliminate when it comes to developers readying lists of scenarios to be tested. Test.ai has trained their bots on “tens of thousands of apps” to help it understand what an app looks like and what interface patterns they’re typically composed of. From there, they’re able to build their own scenario list and find what works and what doesn’t.
That can mean, in the case of an app like our own, tracking down a bookmark button and then deducing that there are certain process that users would go through to use its functionality.
Right now, the utility is in the fact that bots scale so broadly and so quickly. While a startup working on a single app may have the flexibility to choose amongst a few options, larger enterprises with several aging products having to grapple with updated systems are in a bit more of a bind. Some of Test.ai’s larger unnamed partners that “make app stores” or devices are working at the stratospheric level having to verify tens of thousands of apps to ensure that everything is in working order.
“That’s an easy sell for us, almost too easy, because they don’t have the resources to individually test ten thousand apps every time something like Android gets updated,” CEO Jason Arbon tells TechCrunch.
The startup’s capabilities operate on a much more quantitative scale than human-powered competitors like UserTesting, which tend to emphasize testing for feedback that’s a bit more qualitative in nature. Test.ai’s founders believe that their system will be able to grapple with more nebulous concepts in the future as it analyzes more apps, and that it’s already gaining insights into concepts like whether a product appears “trustworthy,” though there are certainly other areas where bots are trailing the insights that can be delivered by human testers.
The founders say they hope to use this latest funding to scale operations for their growing list of enterprise clients and hire some new people.
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Gusto raises $140 million to go after small business payroll and benefits with more gusto
Gusto, which sells payroll, benefits and human resources management and monitoring services to small businesses, has raised $140 million in its latest round of funding.
The company said it will use the money to add new services to increase payment flexibility for employees. The company launched a new service called Flexible Pay, which gives employees a way to get paid no matter when a company’s pay schedule dictates. It seems sort of like a payday loan, where a percentage of the salary is taken by Gusto for providing money upfront.
The late-stage round was led by T. Rowe Price Associates portfolio, MSD Capital (the family investment fund for Michael Dell), Dragoneer Investment Group and Y Combinator’s Continuity Fund.
Previous investors, including General Catalyst, CapitalG, Kleiner Perkins, 137 Ventures and Emergence Capital, also participated in the round.
The company claims that it processes tens of billions of dollars in payroll and offers a range of benefits, including health insurance, 401(k) plans and college savings plans.
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What every startup founder should know about exits
The dream of a startup founder can often be summarized by the following well-intentioned, and mostly delusional, quote: “We’ll raise a few rounds and in a few years we’ll IPO on Nasdaq.”
But a more likely scenario looks something like this:
You invest a few years of hard work to build something of value. One day you receive an acquisition offer out of the blue. You’re elated. And you’re not prepared. You drop everything to focus on this opportunity. Exclusive due diligence starts. Your company is a mess (IP, contracts, burn). Days become weeks; weeks become months. You’ve neglected business and fundraising. You’re running out of money. M&A is now your one and only option. The buyer says they found a bunch of cockroaches in the walls and drops the price. Now what?
Sound unlikely?
This is still a favorable situation: You had an offer! Think about how much time you invested in your various funding rounds. The hundreds of names and Google spreadsheet or Streak-powered quasi-CRM process.
Have you spent even a fraction of that on understanding exit paths? If you’d rather not live the situation described above, read along.
The E-word: A strange taboo
Investors live by exits, but many founders keep dreaming of unicornization and avoid the “E-word” until it’s too late. Yet, in 2016, 97 percent of exits were M&As. And most happened before Series B.
Exits matter because that’s when you, your team and your investors get paid. Oddly enough, and to use a chess metaphor, we hear a lot about the “opening game” (lean startup) and the “mid-game” (growth), but very little about this “end game.”
As a result, founders miss opportunities or leave money on the table. This is a shame. Our fund has more than 700 companies in portfolio. We want the best possible exit for each of them. And fortune favors the prepared! Now, how to get 700 exits (and counting)?
To explore the topic, we organized a series of Master Classes tapping corporate buyers, bankers, investors, lawyers and startup CEOs with M&A or IPO experience in San Francisco. It was a group that included the founders of Guitar Hero — bought by Activision; JUMP Bikes — a SOSV portfolio company bought by Uber, Ubiquisys — bought by Cisco and Withings — bought by Nokia. Each one for hundreds of millions.
Their observations can be summarized below.
Maximize optionality
“Founders must be aware of what contributes to an exit. This means understanding partnerships and how they are formed in the business space the entrepreneur is working in,” said one Master Class participant.
As founders, you build your product, your company and… optionality. You need to understand the options open to your company, and take steps to enable them.
The most likely one is an acquisition, but there are others like IPO (including small cap), RTO, SBO, LBO, Equity Crowdfunding and even ICO.
“Exit is not a goal per se, but as a CEO it is something you should think about as early in your cycle as possible, while being business-focused,” said the London-based investor Frederic Rombaut, of Seraphim Capital.
Indeed, most participants said that exits should always be on the chief executive’s agenda, no matter how early in the process. “Exits should be on the CEO agenda. Not front and center, but on the agenda. M&A is a by-product of a great business and targeted BD. IPOs are always an option once you’ve built significant cashflow forecasting.”
It’s important to ask questions like: How many “strategic engagements” with potential buyers have you had this month? Is your message and value clear in their eyes? Have you considered an acquisition track in parallel to a fundraise?
It doesn’t stop there:
- Equity crowdfunding might help close some gaps at seed stage.
- Early IPOs on smaller exchanges can be an option to raise over $10 million — the robotics startup Balyo went public and raised €40 million on Euronext to get rid of a critical “right of first refusal” option held by one of its corporate investors.
- Reverse mergers can work too: the medical exoskeleton company EKSO Bionics went public this way.
One thing is sure: The time to exit is not when you’re running out of money.
Companies are bought, not sold
Unicorn or not, the most likely exit is an acquisition.
As George Patterson, managing director at HSBC in New York said, “Good tech companies are bought, not sold. The question is thus: how to get bought?”
Patterson says it’s important to understand how mergers and acquisitions actually work; how to prepare a startup for an exit; and how to develop a “feel” for the market you’re exiting through and into.
How M&A works
Hearing from corp dev veterans from Cisco, Logitech, Dassault and IBM, a few key ideas emerged:
Motivations vary
It could be from least to most expensive, or as a mix, as listed by Mark Suster, managing partner at Upfront Ventures:
- Talent hire ($1 million/dev as a rule of thumb — location matters)
- Product gap
- Revenue driver
- Strategic threat (avoid or delay disruption)
- Defensive move (can’t afford a competitor to own it)
How corporates find you
Corporates find deals via the development of partnerships, investment (CVC), their business units, corp dev research, media and investor connections.
Asked about the best approach, Todd Neville, manager of Corporate Business Development and Strategy at IBM (who gave the most detailed description of the corp dev process), said, “Do something cool to one of the IBM customers. If they rave about even a POC, we’re interested.”
In other words, business development is corporate development.
Get the house in order
Buyers typically want to know three things:
- Is your IP really yours?
- Is your team capable?
- Will your customers stick around?
For IP, they will check your contracts (staff and contractors), and run some automated code analysis for proprietary code and open source use. They will evaluate potential IP infringement. No point buying you if you end up costing more in lawsuits!
For your team skills: Sitting down with your engineers will tell them plenty enough without understanding the details of this or that algorithm. The last thing a corporate wants is to be accused of stealing!
Lawyers engaged early can help. The later the clean-up, the more costly and painful.
Develop a feel for your “market”
Develop relationships and create champions within corporates. It will help promote your deal when the time comes, and will let you keep your finger on the pulse of corporate strategy to time your moves.
Do you read the earning calls of Cisco or IBM (or others relevant to you)? This is where strategies are presented. Are your keywords coming up there or in their press releases?
Chris Gilbert, former CEO of Ubiquisys (sold to Cisco for more than $300 million) was very deliberate in planning his exit.
“Selling starts on day one and is a leadership-only function — work out who will be your buyer. Only the CEO can do this. Constantly articulate why a company should buy you,” Gilbert said. Bring clear messages into the acquiring company so it can be presented upwards: give them the presentation you would like them to show their boss! When the time is right, force decisions through competition. If you know they have to buy you, your starting position is strong.”
The dark art of price discovery
There are dozens of formulas (from DCF to comparables) to evaluate a deal — which also means none is “correct.” What matters is: How much would you sell for, and how much is the buyer ready to pay?
Gilbert, at Ubiquisys, described how close interactions with his banker helped drive the price up among the bidders assembled.
Just like buyers, we meet bankers and lawyers too rarely at startup events, but there is much to learn with them. They make deals happen, avoid value erosion and optimize price. They often also make introductions before you engage them, to build goodwill and earn your business.
And if you worry about fees, the right banker handsomely pays for itself by finding more bidders and playing “bad cop” for you, avoiding direct confrontation with your future employer. Do you want a slice of the watermelon or the whole grape?
Final twist: Exits are not exits
When asked about what happens after an M&A or IPO, buyers said they generally hoped the founders would stay with them for many years. Often using re-vesting, earn-outs or shares of the acquiring company to incentivize them. Neville, from IBM, mentioned a security company they acquired whose founder is now the head of one of the largest IBM divisions.
In the case of IPOs, supposedly the ultimate “exit,” any block of shares sold by founders would face extreme scrutiny and might cause a price drop.
So who’s exiting during those deals? Investors (and not always).
Eventually, if the average age of a startup at exit is 8-10 years, the active duty period of founders (if not replaced in the meantime) extends even more. Better love the problem you’re solving, and your customers!
Thanks to speakers, participants and supporters of this Master Class series:
London: Frederic Rombaut (Seraphim Capital), Joe Tabberer (FirstBank), Chris Gilbert (Ubiquisys), Jonathan Keeling (Crowdcube), Fred Destin, Tony Fish (AMF Ventures, James Clark (London Stock Exchange), Denise Law (SGCIB).
Paris: Frederic Rombaut (Seraphim Capital), Manuel Gruson (Dassault Systemes), Pierre-Henri Chappaz (Rothschild Global Advisory), Christine Lambert-Goue (All Invest), Olivier Younes (EXPEN), Eric Carreel (Withings), Fabien Bardinet (Balyo), Xavier Lazarus (Elaia Partners), Pierre-Eric Leibovici(Daphni). Jean de La Rochebrochard (Kima Ventures), Jeremy Sartre (SmartAngels), Gwen Regina Tan (Entrepreneur First).
San Francisco: Natasha Ligai (Logitech), Matt Cutler (Cisco),Will Hawthorne, (CODE Advisors), Ryan Rzepecki (JUMP Bikes), Charles Huang (Guitar Hero), Jeff Thomas (Nasdaq), Shahin Farshchi (Lux Capital), Ammar Hanafi (Moment Ventures), Adam J. Epstein (Third Creek Advisors), Nathan Harding (EKSO Bionics), Kate Whitcomb, Anthony Marino and Ethan Haigh (SOSV).
New York: Todd Neville (IBM), George Patterson (HSBC), Ryan Rzepecki (JUMP Bikes), Aaron Kellner (SeedInvest), Jeremy Levine (Bessemer Venture Partners), Taylor Greene (Collaborative Fund), Adam Rothenberg (BoxGroup), Eli Curi (Fenwick & West), Ian Engstrand and Salil Gandhi (Goodwin), Warren Spar(Sparring Partners Capital), Duncan Turner, Vivian Law and Sheng Ge (SOSV).
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Autonomous-aviation startup Xwing takes flight with $4 million in funding
Marc Piette had a revelation as he buzzed in and out of the Palo Alto Airport in pursuit of his pilot’s license. Instead of freedom, he saw restraint. He also saw potential.
“It became pretty apparent that there were major issues with the general aviation industry with smaller aircraft,” Piette said in a recent interview with TechCrunch. “And yet it had enormous potential to change the way people moved around.”
Now, Piette’s two-year-old autonomous-aviation startup Xwing is ramping up to unlock that potential. The company, which has kept a low profile since its founding, isn’t building autonomous helicopters and planes. Instead, it’s focused on the software stack that will enable pilotless flight of small passenger aircraft.
The company announced Tuesday that it has raised $4 million in a seed round led by Eniac Ventures. Array Ventures, along with Stripe founders John and Patrick Collison and Nat Friedman of Xamarin, Microsoft and GitHub, also participated in the round.
The funding will be used by the San Francisco-based company to scale operations and continue to hire aerospace and software talent.
The startup has about a dozen employees, including some uniquely talented folks who have experience with optionally piloted vehicles, unmanned systems and certified avionics. For example, the company’s CTO, Maxime Gariel, worked on autonomous-aviation projects such as DARPA Gremlins and the AgustaWestland SW4 Solo autonomous helicopter. Other members of the small team previously worked at Rockwill Collins, with the Naval Research Lab, Google, and McKinsey.
Piette, whose last company Locu was acquired by GoDaddy, sees several restraints to small passenger aircraft: the skill level required to fly a plane and the cost of earning a pilot’s license and accessing a plane. The relatively puny sales volume of small aircraft — just 3,293 general aviation aircraft, including helicopters, were delivered last year worldwide, in contrast to more than 80 million cars — has depressed innovation and kept prices high.
And even when people have both a license and an aircraft, they still must travel from a small airport to their final destination.
The company is focusing on the key functions of autonomous flight, such as sensing, reasoning and control.
Xwing isn’t pinned to one kind of aircraft. Piette said the system is designed to work across different kinds of aircraft. For instance, the company spent 18 months testing on a subscale fixed-wing aircraft. It tested on a helicopter more recently.
Xwing is developing and integrating those technologies for rotorcraft, general aviation fixed-wing and the emerging electric vertical takeoff and landing (known as eVTOL) aircraft.
The company’s sensor integration software enables aircraft to perceive the world around it and reliably detect ground-based and airborne hazards and precisely determine the vehicle’s position.
This perception technology is the building block for autonomous aircraft, and also can be used to increase the operational envelope of current-day piloted aircraft, according to Xwing.
From here, the company’s Autonomy Flight Management System (AFMS) allows the aircraft to act upon the information from its surroundings. The system will integrate with air traffic control, generate flight paths to navigate the airspace, monitor system health and address all contingencies to ensure passenger safety, the company says.
Now, Xwing is in discussion with various, and still unnamed, large companies about integrating the system into their aircraft.
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CallPage lets you call your website visitors
Poland-based CallPage offers something other customer interaction apps don’t: the ability to call your website visitors as soon as they click on your page. In a world where the difference between a sale and a click past your site onto Facebook, this is a pretty cool little feature.
CallPage began in 2015 when the founders, Ross Knap, Sergey Butko, and Andrew Tkachiv, tried to figure out why website visitors would leave their sites. They started out as a consultancy and the product was born out of some after-hours tinkering by the team. Instead of messaging users, they thought, why not let managers talk to them on the phone?
“Our widget analyzes user behavior on your website,” said CEO Knap. “Then when it sees an interested visitor, it offers him a free callback in 28 seconds. The interested visitor leaves a phone number on your site, our widget calls to the first available manager’s mobile phone and then the next one if no one picks up. After the conversation client will receive an SMS of thanks. It doesn’t require any extra work.”
The team raised a $4.5 million Series A from TDJ Pitango Ventures, Innovation Nest, and Market One Capital. They have 3,000 customers and it makes 280,000 calls monthly. The team started with a $50,000 seed check from an early investor.
Knap and the team have big plans.
“CallPage will continue the realization of our development plan,” said Knap. “The company is going to change into a product more from the perspective of ‘All your company calls in one place.’ The R&D department have already started working on using machine learning and AI which allows analyzing of hundreds of thousands of calls through the CallPage system. Thanks to this, companies will be able to run their communications more effectively.”
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Discord’s Jason Citron to chat it up at Disrupt SF
In September of 2013, Jason Citron hopped on to the Disrupt Startup Battlefield stage to pitch Fates Forever, a multiplayer online battle arena game for the iPad. Now, five years later, Citron is gearing up to join us once again on the Disrupt stage to discuss the stellar growth of Discord.
Though Fates Forever had all the components to be a great mobile game, users simply never took much interest. The company struggled to monetize, and like any good startup, the team began to reassess its own situation.
The conversation turned to communication, where the space contained a few players with lack-luster products.
“Can we make a 10X project?,” said CMO Eros Resmini, relaying the tale of the company’s pivot to TechCrunch. “Low-friction usage, no renting servers, beautiful design we took from mobile.”
That’s how Discord was born. The platform launched in 2016, and has since grown to 90 million registered users, and has raised nearly $80 million in funding.
Coming from the publishing side, the Discord team had a keen awareness of what gamers want and need: a clean, secure communications platform. Since launch, the team has launched features that let game developers integrate Discord chat into their own games, as well as video-chat and screen-sharing.
But the progress has not been without discord . The company shut down several servers associated with the alt-right for violating the terms of service, bringing Discord to the center of the on-going conversation around censorship and political bias.
That said, Discord has seemed to find its stride, forming partnerships with various esports organizations for verified servers.
There is plenty to discuss with Jason Citron at Disrupt SF, and we hope you’ll join us to check out the conversation live.
The full agenda is here. Passes for the show are available at the early-bird rate until August 1 here.
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Skyline AI raises $18M Series A for its machine learning-based real estate investment tech
Skyline AI founders Iri Amirav, Or Hiltch, Guy Zipori and Amir Leitersdorf
A mere four months after coming out of stealth mode with $3 million in seed funding, real estate investment startup Skyline AI announced that it has raised an $18 million Series A. The round was led by Sequoia Capital, a returning investor, and TLV Partners, with participation from JLL Spark, a division of real estate investment management firm JLL. The strategic funding will allow Skyline AI to add more asset classes to its platform, which uses data science and machine learning algorithms to help institutional investors make better decisions about properties.
Skyline AI says its technology is trained on what it claims is the most comprehensive data set in the industry, drawing from more than 100 sources, with market information covering the last 50 years. Its technology is meant to provide faster and more accurate analysis than traditional methods, so investors can react more quickly to changes in the real estate market.
Co-founder and CEO Guy Zipori told TechCrunch in an email that the startup decided to raise its Series A so soon after coming out of sleath because of positive response from investors, adding that the round was oversubscribed. “The timing of the round also worked out perfectly with our current deal flow and expansion plans. The round was significant, putting us in a great position to move forward,” he said.
Skyline AI has had a busy few months since emerging from stealth. In June, it teamed up with an unnamed partner in the U.S. to acquire two residential complexes in Philadelphia for $26 million. Zipori said they decided to make an unsolicited offer after Skyline AI’s platforms determined the properties were being mismanaged. Then in July, Skyline AI announced a partnership with Greystone, a real estate lending, investment and advisory firm, to collaborate on improving the dealmaking and loan underwriting processes.
JLL and other strategic investors in Skyline AI’s Series A will allow the startup to add analysis and underwriting for new asset classes, including industrial, retail and office properties, to its platform. “This in turn will enable us to deepen and strengthen cooperation with the leading commercial real estate investment firms across the U.S.,” said Zipori. Some of the capital will also be spent on growing its research and development, data science and AI teams in Tel Aviv, and its recently opened sales and real estate office in New York.
In a press statement, Sequoia Capital partner Haim Sadger said “Over the last few years, we’ve seen AI disrupt a number of traditional industries and the real estate market should be no different. The power of Skyline AI technology to understand vast amounts of data that affect real estate transactions, will unlock billions of dollars in untapped value.”
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Athena Club offers a cheaper way to prepare for your next period
For those of us unlucky enough to be forced to accommodate mother nature’s whims on a monthly basis, you know that — in addition to cramps, headaches and mood swings — it can be a challenge to find time in your schedule to buy the period products you need.
Desperate trips to the pharmacy when disaster hits can suffice, but the co-founders of the tampon subscription service Athena Club, Maria Markina and Allie Griswold, thought there had to be a better way to provide women the products they need in a cheap and empowering way.
“We’ve both had our fair share of tampon war stories,” Griswold told TechCrunch. “It’s something that every woman goes through at some point in her life and it’s a universal problem that we wanted to make easier. There are so many other amazing things that women can and should be doing than worrying about [where to get tampons] every month.”
Athena Club launches today after receiving $3.8 million in seed funding from investors including Henry Kravis of KKR, the Desmarais Group and Cue Ball Capital. The company currently offers two tampon types (Premium and Organic) and a variety of absorbances (ranging from light to super+ for its Premium product and regular to super for its Organic one). The company also has plans to expand its products into pads and liners as the brand progresses.
In each order, customers can decide how many bags they need (each reusable bag includes 18 tampons), what type of tampon and what mix of absorbances they want, and how frequently they need them delivered. A selection of its Premium tampons cost $6.50/bag and its Organic selections are $7.50/bag.
For the founders, this level of customization was an important part of giving women autonomy over their periods.
“[We chose] the name Athena Club because we believe Athena is a really strong, fearless, independent woman and we’re very excited to bring that essence to our brand.” said Griswold. “Like Athena, women today have many passions and talents. They can’t all fit into one box and we want to provide [the option] to find the right customized package that works for their body.”
Athena Club also recognizes that for some women, access to tampons and period products is more than just a nuisance but a critical health issue. To help provide security and education surrounding periods and women’s health to women in need, Athena Club is committed to supporting groups like Period.org and Support the Girls. To date, Athena Club has already donated 10,000 tampons to women in need through Period.org and has plans to continue that support on a yearly basis.
Athena Club is joining a fairly crowded feminine care subscription space, but the founders say that its price point will help it stand apart from the crowd. Tampon subscription companies like LOLA offer a subscription plan priced at $10/box for 18 plastic applicator tampons (the same type and count as Athena Club) and Cora offers 18 tampons for $13/box. Other more extravagant boxes, like Hello Flo incorporate add-ons like chocolate or underwear in their boxes and can be priced upwards of $40.
And, all of these models are up against long-term, reusable period solutions like Thinx period underwear (which can cost up to $39 for two tampons worth of absorption per use) and plastic menstrual cups like the Diva Cup (which retails for $40.99.)
With so many options, Athena Club presents itself as the cheap, no-fuss solution for women who are through letting periods disrupt their lives.
Updated to reflect seed round funding contributions
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Tractable is applying AI to accident and disaster appraisal
“Happy to spend 10 minutes on our vision and the journey we’re on, but then, really, 15 minutes on what we’ve got today, what it is we’ve achieved, what it is our AI does,” says Tractable co-founder and CEO Alexandre Dalyac when I video called him a couple of weeks ago. “You can probably speed up all of that,” I quip back.
The resulting conversation, lasting well over an hour, spanned all of the above and more, including what is required to build a successful AI business and why he and his team think they can help prevent another “AI winter.”
Founded in 2014 by Dalyac, Adrien Cohen and Razvan Ranca after going through company builder Entrepreneur First, London-based Tractable is applying artificial intelligence to accident and disaster recovery. Specifically, through the use of deep learning to automate visual damage appraisal, and therefore help speed up insurance payouts and access to other types of financial aid.
Our AI has already been trained on tens of millions of these cases, so that’s a perfect case of us already having distilled thousands of people’s work experience Alexandre Dalyac
Dalyac launches into what is clearly a well-rehearsed and evidently polished pitch. “We are on a journey to help the world recover faster from accidents and disasters. Our belief is that when accidents and disasters hit, the response could be 10 times faster thanks to AI. So what we mean there is, everything from road accidents, burst piping to large-scale floods and hurricane. Whenever any of these things happen, things get damaged.”
Those things, he says, broadly break down into cars, homes and crops, roughly equating to $1 trillion in damage each year. But, perhaps more importantly, livelihoods get impacted.
“If a car gets damaged, mobility is reduced. If a home gets damaged, shelter is reduced. And if crops get damaged, food is reduced. Across all of those accidents and disasters, we’re talking hundreds of millions of lives affected.”
It is here where a little lateral (and non-artificial) thinking is required. Accident and disaster recovery starts with visual damage appraisal: look at the damage, say how much it’s going to cost, unlock the funds and rebuild. The problem (and Tractable’s opportunity) is that having an appraiser look at a car, house or field can take days to weeks depending on availability — and therefore so can accessing funds to start rebuilding — whereas the claim is that computer vision and AI technology can potentially do the same job in minutes.
“When you assess, that is basically a very powerful but very narrow visual task, which is, look at the damage, how much is it gonna cost? Today, as you can imagine, these kind of assessments are manual. And they take days to weeks. And so you instantly know that with AI that can be 10 times faster,” says Dalyac.
“In some sense this is a perfect class of AI tasks, because it’s very heavy on image classification. And image classification is a task where AI can surpass human performance as of this decade. If you have instant appraisal, that means faster recovery. Hence the mission.”
Dalyac says that part of Tractable’s secret sauce is in the many millions of proprietary labels the company has produced. This has been aided by its patented “interactive machine learning technology,” which allows it to label images faster and cheaper than typical labeling services.
The team’s focus to date has been to train its AI to understand car damage, technology it has already deployed in six countries, seeing the startup work primarily with insurers.
Related to this I’m shown a simple demo of Tractable’s car damage appraisal tool. Dalyac opens a folder of car images on his laptop and uploads them to the software. Within seconds, the AI has seemingly identified the different parts of the car and determined which parts can be repaired and which parts need to be entirely written-off and therefore replaced fully. Each has an AI-generated estimated cost.
It all happens within a matter of minutes, although I have no way of knowing how difficult the pre-determined and fully controlled task is. It’s also unclear how an AI can possibly do the full job of a human assessor based on a limited set of 2D images alone, and without the ability to peek under the hood or undertake further investigations.
“We’re trying to figure out how much damage there is to a vehicle based on photos,” explains Dalyac. “There’s some really tough correlations to pick out, which are: based on the photos of the outside, what’s the internal damage? When you’re a human you are going to have seen and torn down maybe about a thousand to two thousand cars in your whole life of 20 or 30 years of doing that. Our AI has already been trained on tens of millions of these cases, so that’s a perfect case of us already having distilled thousands of people’s work experience. That allows us to get hold of some very challenging correlations that humans just can’t do.”
You need to find real-world use cases that will make a difference, where you can surpass human performance Alexandre Dalyac
With that said, he does concede that a photo doesn’t always contain all of the necessary information, and that it might only have a certain level of accuracy. “You might need to then get a tear-down of the car and get photos of the internal damage. You might even want to get some data from the dashboard. And you can think that as cars get more sensors… the appraisal will be not just visual but also based on IoT data. But that doesn’t detract from the fact that we are convinced that it will be AI that will be doing this entirely.”
What is abundantly clear is Dalyac’s commitment to developing AI technology with real-world use that is commercially viable. If that doesn’t happen, he believes it won’t just be Tractable that will suffer, but the continued belief and investment in AI as a whole. Here, of course, he’s talking about the prospect of another so-called “AI winter,” citing a recent Crunchbase report that says funding for artificial intelligence companies in the U.S. has levelled off and even started to decline at seed stage.
“If you’re trying to make the $15 billion that has been invested into AI not fuck up and lead to something successful that will prevent an AI winter that will lead to continuous improvement, you need a really good return on that asset class. And for that you need those businesses to be successful.
“To make an AI company successful, really successful — not just an acqui-hire, not just an IP exit but a real commercial success that’s going to prevent an AI winter — you need to find real-world use cases that will make a difference, where you can surpass human performance, where you can change the way things work,” he says.
The reference to acqui-hire or IP exit takes on more meaning when you consider that Tractable was in the same cohort at Entrepreneur First as Magic Pony Technology, the AI startup acquired by Twitter for up to $150 million for its image enhancing technology. And most recently, the team behind Bloomsbury AI, another EF company, was acqui-hired by Facebook for $20-30 million.
To ensure that Tractable can continue its mission of applying AI to accident and disaster recovery — and presumably not sell too early — the startup has closed $20 million in Series B investment in a round led by U.S. venture capital firm Insight Venture Partners. Existing investors, including Ignition Partners, Zetta Venture Partners, Acequia Capital and Plug and Play Ventures, also participated. The new capital is to be spent on accelerating growth, expanding its research and development and entering new markets.
(The Series B also included an additional $5 million in secondary funding, seeing some investors at least partially exit. I understand Tractable’s founders sold a relatively small number of shares as they were permitted to take money off the table. Dalyac declined to comment.)
As we wrap up our call, I note that all of Tractable’s main investors, not including EF, are from the U.S. — something Dalyac says was a deliberate decision after he discovered the gulf between European and U.S. valuations.
“That’s a shame, isn’t it?” I say with my European tech ecosystem hat on.
“It isn’t; it’s enormous exports for the U.K.,” says the Tractable CEO who is French-born but raised in the U.K. “We have, as of today, the vast majority of our headcount in London. The entire product team is in London. The entire R&D team is in London. But most of the revenue comes from the United States. We are making AI an export industry of the U.K.”
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Optoro raises $75 million more to make it easier for brands to manage and resell returned and excess inventory
As the economy has chugged along, so have retail sales, which last year capped their strongest year since 2014. Online sales have been especially brisk, growing 16 percent between 2016 and 2017 alone, according to the U.S. Commerce Department, which estimates that consumers spent $453.5 billion online last year.
Of course, with every booming market comes supporting cast members that benefit. Such is the case with eight-year-old, Washington, D.C.-based Optoro, which itself just rang up $75 million in new funding. A logistics company, Optoro’s software helps retailers — both online and off — more easily re-sell inventory that has been returned by customers.
That’s a big number. The overall amount of merchandise returned as a percent of total sales last year was 10 percent in 2017, according to the National Retail Federation. In dollars, that’s $351 billion.
Right now, that includes sales from big box retailers and many other “legacy” companies that allow shoppers to buy items — and return them — in their stores. But as online sales rise, so do online returns. Indeed, Optoro co-founder and CEO Tobin Moore tells the WSJ that the “return rate from e-commerce sales is two to three times the return rate of brick-and-mortar” and “sometimes higher in fashion and apparel.” And with most retailers also paying for shipping on returns — after all, a happy customer is a repeat customer — it’s a major logistics cost for these online brands.
Little wonder that Optoro, which uses data analytics and multi-channel online marketing to determine the best path for each item (ostensibly maximizing recovery and reducing environmental waste in the process) is a hit with a growing base of customers.
A growing number of investors is getting behind the company, too. Optoro’s newest round was led by Franklin Templeton Investments, but the company has now raised at least $200 million altogether, including from Revolution Growth, Generation Investment Management, Grotech Ventures and even the UPS Strategic Enterprise Fund.
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