Screenshots from the IPO filings from (clockwise from upper left) Lyft, Uber, Slack and Pinterest. What do Pinterest, Lyft, Uber and Slack have in common? Yes, they’re all newly public companies, or preparing to make their initial public offerings. But they also share something in common on the bottom line — proceeding with their IPOs with lots of revenue and growth but, so far at least, without the consistent profits to show for it. And they’re part of a trend. Eighty-three percent of IPOs in the first three quarters of 2018 . Ben Gilbert, co-founder of Pioneer Square Labs and co-host of the podcast Acquired. So what’s the future of these companies? And what do they say about the state of the tech industry? On this episode of the GeekWire Podcast, we’re joined by someone who has spent a lot of time looking at the financials of many of these companies: , co-founder of Seattle’s Pioneer Square Labs, and co-host of the podcast , which tells the stories of major tech companies, acquisitions, IPOs and other deals. “I would say we are seeing way too much similarity between these IPOs and what you would see in early stage pitch decks, which is selling on a story and selling on a narrative,” he says. At the same time, he notes, some of these companies have reached unit profitability, making money on their products and services even as marketing and related expenses make them unprofitable. And there’s a lot more in play with these companies that could impact their long-term earnings — from autonomous vehicles and electric scooters to the future of workplace collaboration. Ben Gilbert and his Acquired co-host David Rosenthal have been focusing on this new wave of public companies on their recent podcast episodes, starting with and . Subscribe to the Acquired podcast . Listen to the GeekWire Podcast above, or subscribe in your favorite app. Related Links
Members of Nonlinear Matrerials’ leadership team line up in the lab. From left: Delwin Elder, director of maerials development; Bruce Robinson, senior adviser; Paul Nye, chairman and president; Lewis Johnson, chief scientific officer; and Gerard Zytnicki, CEO. (GeekWire Photo / Alan Boyle) It’s taken 20 years, but executives at Seattle-based are finally putting the pieces in place for what they say could be a revolution in electro-optical processing. “Everything in tech is about timing,” said Nonlinear Materials CEO , a Microsoft veteran who’s served as a consultant for a wide range of tech ventures. “And we think that from all perspectives, the timing is right for this technology to basically take off.” NLM’s technology aims to turbocharge chip processing speeds by taking advantage of optical computing, which manipulates photons of light rather than electrons. That, in turn, could open up new frontiers for a field in which progress seems to be slowing down. The classic formulation to describe that progress is Moore’s Law — the observation that processing speed tends to double over the course of two years or so. That doubling curve is now leveling out, due to the physical constraints of electronic chips. “Moore’s Law is not dying, it’s actually dead,” Zytnicki told GeekWire. He and other NLM executives say switching from electrons to photons would change the equation. “When you look at the history of the computer business, it has been driven by big jumps in speed of processors, which enable next generations of applications. Great companies have been created when those big jumps have occurred,” said NLM Chairman and President , who has 35 years of experience with technology startups. In the past, great companies such as Apple, Microsoft and Amazon have all capitalized on the upside of Moore’s Law. “Now that Moore’s Law has died, the only option is optics,” Nye argued. “People have been waiting for years for optics to make sense. It hasn’t made sense because the materials haven’t been there. But now they are.” Nye said he expects the computer-chip marketplace to shift rapidly to optics over the next five years. We’ve heard that before: Back in 2000, that they said could come into wide commercial use within five years. They expected the chip to speed up processing times by more than an order of magnitude, into the range of hundreds of gigahertz (compared with today’s best electronic performance of ). The researchers assumed that they’d be able to shrink down the optical circuitry to mesh with electronics and create smoothly working electro-optical hybrid devices. Unfortunately, it didn’t work out that way. “Performance improved rapidly over the first few years, and hit a wall around 2007,” said, NLM’s chief scientific officer and a research scientist at UW’s Department of Chemistry. “It took a number of years for people to figure out how to integrate even the second-generation materials onto small components on a chip.” Now NLM and its research partners at UW and other institutions are seeing the light at the end of the plasmonic tunnel. Over the past couple of years, UW researchers have reported a of in the development of electro-optic modulators that can transform electronic signals into optical signals with low signal loss. At the same time, the materials used in optical chips have been improving. This artistic rendering magnifies a electro-optic modulator. (Virginia Commonwealth University Illustration / Nathaniel Kinsey) Working in league with UW’s , researchers like Johnson and electro-optic technology pioneers and joined forces with tech veterans like Zytnicki and Nye to incorporate Nonlinear Materials last year. NLM operated in stealth mode until last month, when it relating to electro-optical materials. Johnson said advances in materials science have boosted the theoretical capabilities for optical computing well beyond what was predicted a couple of decades ago. “The material itself is capable of potentially 10 to 15 terahertz,” he said. “If anything, the biggest limiting factors with speed are the drive electronics, not the optical components.” Nye said NLM aims to sell the materials for optical processing to device manufacturers. “We want to be able to show people how to make devices, and in some cases joint-venture with them going into some of these markets,” he said. Johnson said the model would be similar to the way Microsoft built up a wider software ecosystem, or the way ARM created a hardware ecosystem. Toward that end, NLM has a pilot fabrication facility on the UW campus and is working on a product development kit, or PDK. The company is about halfway through a , “mostly with local investors, angels and those kinds of people,” Zytnicki said. Even though Nye is giving out the standard five-year prediction for commercializing the technology, neither he nor anyone else at NLM expects the rollout to come all at once. Zytnicki said optical computing is more likely to , perhaps starting with internet trunk networks, network hardware for data centers and electro-optical connections embedded in computer chips. Zytnicki said optical computing will eventually find its way into telecommunications, cloud computing and healthcare data processing, as well as military and aerospace applications. But he acknowledged that it’s likely to take significantly more than five years to get to that point. So what will be the “aha moment” for the optical revolution? “These are all aha moments, right?” Zytnicki said. “Our first aha moment was, ‘Hey, we signed with the UW.’ The second aha moment was, ‘Hey, we raised half the money we said we were going to raise.’ … The next aha moment is going to be, well, obviously, finishing the round, that’s a big one. Then it’ll be our first contract.” Meanwhile, Johnson said he and other researchers are preparing for the next set of technical aha moments — on a time frame that’s much shorter than 20 years. “It’s all happening at once,” he said.
Geophysicists Walter Alvarez (at left) and Mark Richards (in the background) examine a piece of impact ejecta at the North Dakota fossil site. (University of Kansas Photo) After days of puzzling over secondhand reports, anyone with an internet connection can now read a that appears to document the day nearly 66 million years ago when an asteroid pushed the dinosaurs and many other species into extinction. Even scientists who criticized acknowledged that the discovery, as described in the Proceedings of the National Academy of Sciences, was astounding. “I am very much looking forward to the crowd-sourced opinions of everyone,” University of Edinburgh paleontologist Steve Brusatte . “There is a real thrill and a real mystery around this discovery, and it is EXCITING! Let’s see where the evidence leads.” The study documents fossil evidence for a catastrophic fish kill that did in many other organisms as well. Intermixed with the fossilized remains were tiny beads of glass that had turned to clay. Some of those beads were found embedded in the gills of the fish. The evidence led the research team, headed by paleontologist Robert DePalma, to conclude that the Cretaceous creatures were washed up onto a sandbar by a giant wave of water. Then they were pelted by hot droplets of molten rock, known as tektites, which were thrown up into the stratosphere by an asteroid impact thousands of miles away. In the paper, the research team lays out a scenario suggesting that the impact produced a magnitude 10 to 11 earthquake, which sparked a standing wave in the body of water where the fish had lived. Such a wave, known more scientifically as a seiche (pronounced like “saysh”), could have done as much damage as a tsunami within an hour after the asteroid hit. That scenario would leave enough time for the tektites to deliver the coup de grace. One of the study authors who came up with that scenario is , a geophysicist who left the University of California at Berkeley last July to become the University of Washington’s provost and executive vice president for academic affairs. Today, Richards said the seiche scenario isn’t the only possibility for explaining what happened in North Dakota during what’s known as the Cretaceous-Paleogene or Cretaceous-Tertiary extinction. “I think that the surge, unless it was some freak coincidence with something else, was likely seismically induced,” Richards told GeekWire. “Now, it could have been from a seiche. Also, for example, you could have had a local landslide that was triggered by seismic waves. We have to be pretty cautious.” A leading theme of the criticism on Friday had to do with the way DePalma’s findings were portrayed in a . Some felt that DePalma was portrayed as an incautious, publicity-grabbing Indiana Jones wannabe, dwelling on the dinosaur angle and talking up finds that didn’t end up being mentioned in the peer-reviewed paper. Researchers Jan Smit, Robert DePalma, Walter Alvarez and David Burnham collect a box core sample of the Cretaceous-Paleogene boundary layer at the Tanis site in North Dakota. (University of Kansas Photo) Richards, however, said he’s had “nothing but good relations with Robert.” DePalma is still working on his Ph.D. at University of Kansas, but has been doing field work for years and currently serves as a curator of paleontology at the Palm Beach Museum of Natural History in Florida. “I’ve found him to be very spirited, very generous,” Richards said. “Obviously, it’s somewhat unusual for somebody who hasn’t received their Ph.D. to be thrust into the limelight like this, but let’s keep the story about the science.” Richards suspects that the newly published findings “will make a lot of people more attracted” to the killer-asteroid hypothesis as an explanation for the dinosaurs’ doom. One of Richards’ co-authors, Berkeley geologist Walter Alvarez, laid out that explanation nearly 40 years ago in league with his Nobel-winning father, Luis Alvarez. But Richards — and Walter Alvarez, for that matter — don’t rule out the possibility that other factors, , could have played a part. Now that the paper is out, Richards suspects that other scientists will take a closer look at the more than 200 other sites around the world that show the signs of the Cretaceous-Paleogene boundary. “At least two of those of which I’m aware involve deposits have been interpreted as being tsunamis,” Richards said. “If you take Robert’s paper and findings at face value, this is a truly sensational finding from a paleontological standpoint,” he said. “My guess is that people are going to go all over the world looking for things that are similar. To which I would say, ‘Good luck.’ Obviously this is a pretty unique circumstance.” Bottom line? Richards says paleontologists, and the people who follow their work, “really need to keep a pretty strong sense of humility at this point.” “This is apparently a really significant discovery — and yet I’m guessing that five years from now, we’re going to be seeing things at this particular site, and perhaps at other sites, that are going to go far beyond what we understand right now,” he said. “I would say this is the beginning of a process, and certainly not the end.” In addition to DePalma, Richards and Alvarez, the authors of the PNAS paper, include Jan Smit, David Burnham, Klaudia Kuiper, Phillip Manning, Anton Oleinik, Peter Larson, Florentin Maurrasse, Johan Vellekoop and Loren Gurche.
Team Tenta Browser. (Tenta Browser Photo) The founders of Seattle startup want to help banish your digital doppelganger. Or least take control of it. People’s behavior online these days “is not just about sharing your cat videos and family photos. You’re having this long digital shadow,” said Tenta co-founder and CEO . “People are starting to realize this is my own digital clone, and it’s betraying me and it’s following me.” Tech companies and retailers are collecting vast amounts of information about what you view, buy and post online. They can use that data to target ads and news content and if their systems are breached, that personal data falls into criminal hands. Governments in numerous countries such as China, Russia, Turkey and many others that’s available online. So in 2016, Adams and co-founders , chief operating officer, and chief technology officer, launched Tenta, a secure browser that protects privacy and can skirt censorship controls. The company has 100,000 active users, 16 employees and recently raised seed funding (they’re not disclosing the amount). A decade ago, the trio co-founded the popular adult-content app store MiKandi, which is billed as the first and largest app store of its kind — and an enterprise in which privacy protections are paramount to most users. Tenta Browser CEO and co-founder Jesse Adams. (Tenta Browser Photo) Tenta Browser prevents internet service providers (ISPs) and others from seeing which websites a user visits, but is just as easy to use and as fast loading as other browsers, Adams said. Tenta, which is currently available as an app for Android users, encrypts everything: browsing history, downloaded and local files, bookmarks, videos, documents and other media. And for people who like to keep their browsing sessions separate, say for work, personal use and depending on where they’re currently located, Tenta has a “zone” function to organize different uses. Tenta doesn’t store users’ data, and all of the information is decentralized. Competition includes browsers that are basically “Chrome reskinned” with limited privacy blockers, Tor Browser for more “hardcore” users, and tools from Norton and McAffee, said Adams. Opera used to utilize a VPN-based tool like Tenta’s, but removed it. Over the next year, the Tenta team is working to expand to other devices and keep improving their speed. With Tenta, the core browsing function is free, and the company offers subscriptions of $1 to $5 per month for added protection of your devices. Adams said they’re aiming for subscriptions that are as cheap as possible, but people still need to pay something. That’s because Tenta doesn’t follow the more standard approach where handing over personal data is the price for using “free” services. “You are not the product,” he said. We caught up with Adams — who co-founded the MiKandi app store for adults — for this . Explain what you do so our parents can understand it: Today’s browsers need your data to survive, resulting in constant privacy violations and browser spying. Tenta is a crypto browser that takes the complete opposite approach and protects your personal data instead of exploiting it. The Tenta Broswer interface. (Tenta Browser Photo) Inspiration hit us when: Previous to Tenta, we built the world’s first and largest app store for adults. From this experience, we learned three major trends from our customers. First, internet freedom around the world declined for the past eight years, and censorship and network interference were becoming mainstream. Second, cyber security was no longer solvable for the average internet user who craves a simple and trustworthy product to protect them and their families. Finally, constant data collection and surveillance and the resulting massive data breaches revealed that privacy violations have become the norm. In response, we began building browser tools to help our customers alleviate these issues, but soon realized we were just creating more browser Band-Aids. Then the inspiration came when one of us posed the question: “Why not build a better browser instead?” We know that sounds crazy, but we’ve always been driven by big ideas, so that was the spark that got us going. VC, Angel or Bootstrap: For the first two years, we were self-funded. This past month we announced our strategic partner and investor, , for our first significant seed round. We decided to start raising money once we gained real user traction and growth. We especially wanted to work with ConsenSys, which is focused on blockchain businesses. The decentralized future is coming, so if you’re building the browser of the future, you must partner with the best in the industry. We share the same values and vision. Tenta is the secure gateway to the new internet that will help drive adoption of many blockchain services, so we’re looking forward to deep collaborations with them. Our ‘secret sauce’ is: Our team is awesome. Most of us have been working together for many years on complex, large-scale software, so that gives us an advantage. Having a great team also leads to smarter product decisions. For example, we offer built-in VPN and encrypt all your browsing data by default. That includes your bookmarks, downloaded files, open tab data, domain name system (DNS), online traffic, etc. No other browser in the world does this. Our team figured out early on that this was going to be a real differentiator and the team knew how to execute that strategy. The smartest move we’ve made so far: Deciding to build a strong cryptographic foundation to power the browser. There are many private browsers in the market today, but most are glorified incognito browsers with an ad blocker attached. These do nothing to keep you invisible or protect your data. We decided early to go all-in on building a private browser and that meant redesigning many components that our competitors ignored. It also meant that it took us longer to get off the ground, so there were times we thought “maybe we’re going too hardcore with this privacy thing and no one cares.” Now that early decision is the reason why we’re gaining momentum with amazing customer reviews, which in turn helped secure our funding. The biggest mistake we’ve made so far: Drastically changing the browser user interface (UI) when we first launched. You might be lucky to create an app design that is totally new and that people love right away, but that’s extremely rare. With software, it’s often better to iterate and improve on existing experiences. We got too excited with the idea of building a new type of browser and went overboard. We re-learned that lesson the hard way, wasting precious time simplifying the UI. Tenta co-founders Chris O’Connell, Jesse Adams, and Jen McEwen. (Tenta Browser Photo) Which entrepreneur or executive would you want working in your corner? Elon Musk. He’s actually trying to do something grand for humanity. He’s awe-inspiring. If he can land rockets and take us to Mars, then helping us build the browser of the future should be a piece of cake :) Our favorite team-building activity is: Eating together and sharing a toast. Our team is distributed around the world, so we really enjoy getting together and sharing a meal. Most of us love to cook. I think it’s one of the best ways to build bonds and spark conversation and creativity. The biggest thing we look for when hiring is: We look for people who are passionate about what they do for a living and love learning. We often prefer to just look at a candidate’s personal GitHub repository instead of a resume. If you have no personal projects to share, then I’d argue you’re only coding for the money, not because you enjoy it. That difference matters in a startup. What’s the one piece of advice you’d give to other entrepreneurs just starting out: My advice is to take this quote from Calvin Coolidge to heart: “Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.”