Motif

Overview

Motif is a FinTech startup creating a new type of investing platform.  You can think of them as a merger between social networks and traditional online brokerages such as eTrade.  Unlike a traditional brokerage account where you buy individual stocks or ETFs, customers invest in portfolios built around themes or concepts called motifs.  These "motif" portfolios are auto-weighted baskets of up to 30 stocks or ETFs.  Examples include aging population, robotics, pets, mobile devices, infrastructure rebuild, online gambling, national defense, and more that can be seen here.  Customers can invest in hundreds of existing motifs or construct their own.  When others invest in their motif customers receive a commission.  The company also offers limited early access of IPOs to retail investors.  Customers can either pay per trade or enroll in a monthly subscription plan for unlimited trades.

The company was started in June 2010 and is based in San Mateo, California.

Why I like Them

I like the creativity and innovation in their product offerings as they make investing fun for people with otherwise no interest in finance.  By all account the ability to invest thematically and around concepts is much more understandable and even seen as fun by average consumers.  There is also a strong social aspect to using motif's product with an active community formed around each motif.  I especially like the commission feature earned by motif creators when others invest in their concept.

There is no hiding the fact however that they are in a fiercely competitive industry with a host of large players.  It remains an open question on how easily copied the ideas and communities behind motifs are if the company truly starts to break out.  

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Limex (TBM Co.)

Overview

TBM Co. (DBA Limex)  is a Tokyo materials and cleantech startup that caught my eye with an innovative product called Limex. Limex is a new material made from limestone (yes the rock) that can be used to make paper and plastic.  Currently 1 ton of normal paper requires 100 tons of water and 20 trees to produce whereas Limex paper requires no water or wood pulp.  It is also recyclable.  The original version of this technology is derived from a product known as Stone Paper developed in Taiwan in the late 1990s.  Version 2.0 of this technology, Limex, is much lighter, thinner, cheaper, with a paper-like texture.  In stereotypical fashion, the Japanese have taken a product from elsewhere and solved its primary challenges while making made it better and cheaper.

Limex paper is much harder to bend, tear, is age-resistant, and waterproof compared to regular paper (it can even be written on under water).  The company's primary product today is Limex paper business cards.  They also manufacture menus, posters, stickers, and other paper products.  The company is beginning to investigate Limex as a foundation material for other applications including cloth, and as a building material.

As a plastic Limex is also unique in that most plastics are composite materials whereas Limex plastic can be made into films and sheets.  Similar petroleum derived plastics are much pricier.

The firm was founded at the end of 2011 and is currently less than 100 employees.  The founder is Nobuyoshi Yamasaki, a true entrepreneur in the jack of all trades sense - he has been a carpenter, used car dealer owner, and serial entrepreneur of a number of different businesses.

Why I like Them

Frankly, the technology here is just very cool and novel.  Turning stone into plastic and paper in an environmentally friendly fashion is true product innovation.  Even better they have patents in 43 countries.

From a business perspective TBM Co. has a very long and steep mountain ahead.  Although the product is one of the most innovative I've seen recently, it will be a very hard sell, for them to scale beyond niche applications - regular wood derived paper is cheap, plentiful, and has a number of large established incumbents.  

Limex is a more advanced version of a Taiwanese developed product called Stone Paper that in the decades it has been out has only found limited, niches applications.  The main issues with the original Stone Paper product that Limex solves were it was heavy, expensive, with high manufacturing defect rates.  However, consumers who used the initial version of the product reported high customer satisfaction.  Limex appears be better marketed and distributed while solving the issues of the parent product.  At the same time Limex's ability to also be a plastic substitute may open interesting new applications.

LiMex paper and Limex plastic

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Msg.ai

Overview

Msg.ai is an early stage startup that offers a SaaS machine learning product for companies to interact with their customers across all channels including SMS, social media, email, etc.  Basically they offer AI in a box targeting real time online customer service across social media and messaging channels.  When the conversation gets to complex for the AI, the system automatically hands it off to a human agent.  Their product works across a wide range of industries including CPG, eCommerce, online retail, etc.

Founded in October 2014, the company is based in San Francisco.  The founder, Puneet Mehta, is a former Wall Street IT leader and IBM engineer.

Why I like Them

Vertically focused specific use cases like this are where I think the interesting applications are of AI over the next 3-6 years.  Startups that find a way to use AI to automate specific human (aka expensive) processes such as digital customer service are interesting.  It's a relatively easy sell when you can show in a few months the savings dropping straight to a company's bottom line and management can reduce headcount in costs centers.

Even more interesting with Msg.ai is the access to their clients' unique proprietary datasets.  Years of one of a kind records of customer service exchanges in the past are datasets no one else in the industry has access to.  As I bring up time and time again on this blog,  with machine learning its less about the algorithms themselves and more about the proprietary data access they can train the models on that no one else can.

Msg.ai has had strong out of the gate success having already signed Sony and Heinz.  Sony reported in the first 3 months it was able to replace 70 human customer service staff due to Msg.ai technology while making their customer support responses faster.

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Drone Racing League

Overview

Drone Racing League (DRL) is a sports and media company that creates and markets drone racing competitions.  The company seeks to leverage fans of traditional high speed sports such as Nascar and eSport viewers.  It designs its own drones that the racers then use to race along elaborate 3D courses.  They successfully utilized social media to grow their fanbase quickly and have secured spots on sports entertainment networks including ESPN.  In its first season DRL claims to have reached 30 million viewers.

DRL is a New York startup founded in early 2015 by a Tough Mudder executive named Nick Horbaczew­ski.  The company's first formal event took place at the end of 2015.

Why I like Them

Along with eSports this is the most innovative new type of entertainment to be created in the last two decade.  It is very fast and visually spectacular with the ability to carry the audience into the action through cameras on the drones or even virtual reality.    

It is hard to launch a new type of sport with an extremely high failure rate but DRL seems to have taken an informal hobby of drone racing and created a sports like franchise around it in a year.  Although fledgling I certainly expect it to become more popular and mainstream globally, especially as viewers of traditional sports such as baseball continue to decline

Disclosure:  All information is from publicly available sources, I have not had any contact with a member of the company or its investors.

Emerging Trends: Automated Food

In the last couple of years a number of startups have appeared in the restaurant industry that seek to automate completely the process of preparing and serving everything from casual meals to beverages.  Several of these startups include:

• Eatsa - A new restaurant concept that is mostly automated and defined by customers having zero interaction with the employees.  Food is ordered online or via in store ipads and when completed appears in electronic cubbies that show the customer's name on them when ready.
• Cafe X - A startup that has built and opened in San Francisco a fully robotic coffee shop.  The actual coffee itself has been reported to be higher quality and half the cost of nearby coffee shops.
• Momentum Machines - A team of roboticists building robotics for restaurants including a high end fully autonomous hamburger machine that can replace 3 workers per machine.  Their mission is explicitly not to build machines to help restaurant workers but to completely replace them.  The startup has plans to launch a burger chain in the next several years.  

As cool as these technologies are, it is critical to keep in mind that they will dramatically replace low skilled human labor.  The US government estimates there are currently half a million people employed at fast food and fast casual eateries.  It is looking like over the next 5-10 years almost all of these jobs will be automated away.  Critics say that consumers prefer human interaction but in my experience a number of people actually prefer not having to interact with another human to purchase a product, especially if an automated system is faster.  In fact, to a number of people (myself included) having no human social interaction when getting food is a feature, not a bug, and something some might even pay an additional amount for.  Larger chains that have kiosks in stores report younger customers will actually wait in line to order from the automated kiosk rather than order from the completely available human cashier next to it.

It is obviously impossible to know without seeing their financials but my guess would be the unit economics for a Cafe X like store are great per order served with faster service, more accurate orders, and less management once the store is setup. Automated produced food has already proven to be faster at dealing with lunch rush hours, sanitation, and food quality consistency.  Simultaneously, some of the labor savings costs can be reinvested into the food itself with higher quality ingredient meals available at lower prices.

Large chains such as Chipotle, McDonalds, etc are certainly watching these startups with keen interest to see consumer reactions and salivating at the chance to cut their rising labor costs.  My prediction is within the next 4-8 years lower end eateries will be 80%+ automated for more efficiency at lower cost.  Human service and interaction will be one of the selling points of mid and high end more formal restaurant dining and even that part of the industry will likely become heavily automated.