Latest Research
Lyft Is Showing Us the Future of Augmented Reality

Lyft Is Showing Us the Future of Augmented Reality

When a new generation of products and services are unveiled, it’s easy to get caught up in the novelty and advances of the underlying technology. We see it all the time at conventions like CES where LG displayed an array of 268 curved OLED TVs from floor to ceiling called the “waterfall.”

Samsung recently debuted a foldable smartphone too. While no doubt impressive, these products fail to answer a basic question, would this really be both practical and, most importantly, useful? We frequently see what Charlie Munger would call “man with a hammer syndrome” in Silicon Valley where entrepreneurs think that have discovered a way to change the world, but the public has the opposite view.

Google Glass Lesson

Google Glass had this same issue when it launched back in 2013. Google was bringing a digital interface to your real-world point of view and enabled hands-free picture and video capture from a true first-person perspective. Despite these innovations, Google Glass failed. The reasons are complex but can be summed up like this: the utility of the device did not outweigh all the drawbacks such as privacy concerns, price, etc.   

Our Experience with Smart Glasses

We have tried many of the early augmented reality (AR) wearables from the Microsoft Hololens and Magic Leap One to ODG and DAQRI smart glasses. Each headset gave a glimpse into what could be possible when adding a digital overlay onto the world but was otherwise an underwhelming experience and lacked any compelling use cases to warrant the price tag.

Beyond hardware, AR software companies like Blippar have floundered after raising capital at a billion dollar plus valuation on impressive demos and initial customer interest. Problem was, just like everything mentioned above, the utility of their experiences was limited.

A Compelling AR Use Case from Lyft

After numerous failed promises of the wonders of augmented reality glasses over the last few years (see the infamous Magic Leap whale video), a patent from Lyft caught our attention. Lyft is using augmented reality to develop a feature that allows a driver and passenger waiting to be picked up to be highlighted in their real-world point of views so they can easily find each other.

Here’s what the patent looks like in action from the rider’s perspective:

And based on historical data, Lyft will identify and highlight an ideal pickup location based on the passenger’s current location, traffic conditions, and road restrictions.

This is leaps and bounds better than using a 2-D map on a 5-inch smartphone screen.

Blue Vision Acquisition

In order to bring these concepts to reality, Lyft acquired UK-based augmented reality startup Blue Vision Labs for a reported $72 million. Blue Vision had spent the last two years developing city-scale AR Cloud technology in which users can see the same digital content in real-time (shown below) and interact with each other in augmented reality.

Blue Vision has some pretty impressive mapping tech that powers their AR experiences. Built using fleets of vehicles equipped with smartphones, Blue Vision created centimeter-accurate 3D maps that cover entire cities. These maps of the city become canvases for digital paintings that will revolutionize how we interact with information.

In addition to overlaying a city with helpful holograms, this technology helps cars know where they are, what is around them, and what they should do next. This is obviously an important factor in self-driving car tech, which is why Blue Vision’s team will be placed within Lyft’s Level 5 autonomous car division.

Tip of the Iceberg

It’s examples like this one from Lyft that make it hard to deny the potential and practicality of augmented reality. It’s only a matter of time before the user interfaces of our mobile devices are projected onto the world around us. The exciting part of this is that we will begin to reverse the trend of evolution as we hunch over our screens all day. With augmented reality glasses, humanity will begin standing up a little straighter.

More use cases like Lyft’s will continue to drive initial smartphone AR usage. Apple and Google launched AR development kits, and reportedly, one of Apple’s 2019 smartphones will have 3 cameras on the back which will dramatically enhance AR tracking functionality. Apple, Facebook, Google and Microsoft are all investing heavily their own AR glasses. The race towards mainstream adoption of these wearables will drive stock prices up and down over the next decade-plus. And thanks to compelling use cases like Lyft’s and much-improved hardware, AR glasses of the 2020s will be a much easier sell than Google Glass.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

Apple, Artificial Intelligence, Augmented Reality, Facebook, Google, Microsoft, Snapchat
3 min. read Show less
Apple Retail’s Leadership Change
Source: Apple

Apple Retail’s Leadership Change

Angela Ahrendts, head of Apple Retail, is leaving the company in April after a five-year tenure.

While we view Apple’s physical retail experience as the best in tech, there’s room for improvement. The Genius Bar is a victim of its own success and wait times are lengthy; the time it takes to make a purchase in-store is also too long.

That said, we believe the move is more Ahrendts’ decision than it is Apple’s. She is 58 years old, she’s been financially successful, and she’s unlikely to be CEO.

Ahrendts will be replaced by Deirdre O’Brien who is currently Apple’s head of People. O’Brien will assume dual roles, running both Retail and People, reporting directly to Tim Cook. The combination of Retail and People makes sense to us, given Retail is Apple’s largest group by headcount accounting for just over half of all full-time equivalent employees. Based on O’Brien’s 30-year tenure at Apple, we expect her role to be permanent.

Ahrendts’ signature accomplishment has been the unification of Apple’s offline and online retail experiences; she also advanced the Today at Apple in-store experience. Apple Retail took big steps forward under her leadership, but we’re excited to see what’s next for Apple Retail under new leadership.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.

Apple, Retail
2 min. read Show less
Google Will Remain Oxygen of the Internet

Google Will Remain Oxygen of the Internet

Google shares traded off ~3% in after-hours trading as investors weighed the benefits of impressive revenue stability (essentially 21% in each of the past 12 quarters) against the prospect of increased costs related to mobile traffic acquisition and YouTube TV content.

Bottom Line: Google remains the oxygen of the internet and will maintain that distinction as the company brings the benefits of AI to all of its nearly 50 consumer-facing products in the years to come. Separately, the company is prudently balancing between near-term earnings and investing for long-term revenue growth.

Our takeaways:

  • Google is the definition of revenue growth stability. Revenue was up in 22% in Dec-18, 23% in 2018, 23% in 2017 and 20% in 2016. The company is investing to support long-term revenue and earnings, particularly in machine learning to support new and existing (Cloud, Hardware, and YouTube) businesses.
  • In 2018, operating expense grew faster than revenue, 31% compared to 23%. In 2019, the Street expects that to reverse, with roughly a 10% growth in cost and 20% growth in revenue. While the company’s exact expectations about the mix of revenue and expense growth for 2019 were unclear, we remain confident that revenue will grow faster than expenses. In the coming quarter, we expect investors will increasingly view this shift as a positive.
  • We believe Ruth Porat’s comments support such a shift. In particular, the comment: “On the other hand, expect Capex and hiring rate to slow meaningfully this year.”
  • Overall, the call had a subtle tone of confusion from the analysts, as there was a mixed message on the pace of investments. On one hand, Google is investing more in Cloud, Hardware, and YouTube. On the other hand, Capex and hiring rate growth is expected to slow as outlined above.
  • The most important metric is paid clicks which were up 66% y/y vs 62% in Sep-18. While click growth increased, price per click was essentially flat at 29%. The mix of these metrics is on a positive trend.
  • Google shared that it now has 8 products with more than 1 billion users each.
  • Privacy is going to be an important concern for tech in 2019. Google’s comments on the call today:

“Providing accurate and trusted information at the scale the Internet has reached is an extremely complex challenge and one that is constantly getting harder. But we have 20 years of experience in these information challenges and it’s what we strive to do better than anyone else. As we do this, we feel a deep sense of responsibility to do the right thing and are continuing to build privacy and security into the core of our products keeping users data safe and secure with the industry’s best security systems and giving people better and clearer controls. You’ll see us continue to do a lot more here in 2019.”

  • Sundar Pichai opened up his portion of the call with: “Last year, we set out to bring the benefits of AI to everyone through our products, and I’m proud of the tremendous progress we made… AI is helping people get things done every day.” AI was mentioned 15 times on the call today, the lowest number since we began tracking a little over two years ago. Here’s how the use of AI on Google earnings calls has trended over the past two years.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Artificial Intelligence, Google
3 min. read Show less