Starting with data centers, Carbon Relay is slashing energy costs and emissions using AI

Taiwanese technology giant Foxconn International is backing Carbon Relay, a Boston-based startup emerging from stealth today, that’s harnessing the algorithms used by companies like Facebook and Google for artificial intelligence to curb greenhouse gas emissions in the technology industry’s own backyard — the datacenter. Already, the computing demands of the technology industry are responsible for […]

Taiwanese technology giant Foxconn International is backing Carbon Relay, a Boston-based startup emerging from stealth today, that’s harnessing the algorithms used by companies like Facebook and Google for artificial intelligence to curb greenhouse gas emissions in the technology industry’s own backyard — the datacenter.

Already, the computing demands of the technology industry are responsible for 3% of total energy consumption — and the addition of new technologies like Bitcoin to the mix could add another half a percent to that figure within the next few years, according to Carbon Relay’s chief executive, Matt Provo.

That’s $25 billion in spending on energy per year across the industry, Provo says.

A former Apple employee, Provo went to Harvard Business School because he knew he wanted to be an entrepreneur and start his own business — and he wanted that business to solve a meaningful problem, he said.

Variability and dynamic nature of the data center relating to thermodynamics and the makeup of  a facility or building is interesting for AI because humans can’t keep up..

“We knew what we wanted to focus on,” said Provo of himself and his two co-founders. “All three of us have an environmental sciences background as well… We were fired up about building something that was true AI that has positive value… the risk associated [with climate change] is going to hit in our lifetime we were very inspired to build a company whose technology would have an impact on that.”

Carbon Relay’s mission and founding team including Thibaut Perol and John Platt (two Harvard graduates with doctorates in applied mathematics) was able to attract some big backers.

The company has raised $6 million from industry giants like Foxconn and Boston-based angel investors including Dr. James Cash — a director on the boards of Walmart, Microsoft, GE, and State Street; Black Duck Software founder, Douglas Levin; Karim Lakhani, a director on the Mozilla Corporation board; and Paul Deninger, a director on the board of the building operations management company, Resideo (formerly Honeywell).

Provo and his team didn’t just raise the money to tackle data centers — and Foxconn’s involvement hints at the company’s broader goals. “My vision is that commercial HVAC systems or any machinery that operates in a business would not ship without our intelligence inside of it,” says Provo.

What’s more compelling is that the company’s technology works without exposing the underlying business to significant security risks, Provo says.

“In the end all we’re doing are sending these floats… these values. These values are mathematical directions for the actions that need to be taken,” he says. 

Carbon Relay is already profitable, generating $4 million in revenue last year and on track for another year of steady growth, according to Provo.

Carbon Relay offers two products: Optimize and Predict, that gather information from existing HVAC devices and then control those systems continuously and automatically with continuous decision making.

“Each data center is unique and enormously complex, requiring its own approach to managing energy use over time,” said Cash, who’s serving as the company’s chairman. “The Carbon Relay team is comprised of people who are passionate about creating a solution that will adapt to the needs of every large data center, creating a tangible and rapid impact on the way these organizations do business.”

California moves toward healthcare for more, not yet healthcare for all

It was way easier for candidate Gavin Newsom to endorse single-payer healthcare coverage for everyone than it is now for Gov. Newsom to deliver it.

It was way easier for candidate Gavin Newsom to endorse single-payer healthcare coverage for everyone than it is now for Gov. Newsom to deliver it.

Yet hardcore advocates say they’re pleased with the moves he’s made thus far — even if it may take years to come to fruition.

“This is a governor that is operating from a compass of action,” said Stephanie Roberson, government relations director for the politically powerful California Nurses Association, which hasn’t exactly been known for its patience on the issue.

Newsom has taken two tacks. He’s asking the Trump administration to let the state create its own single-payer system offering coverage to all Californians — a move almost everyone regards as a very longshot. And he’s also pushing specific ideas to expand healthcare coverage to hundreds of thousands of still-uninsured Californians — a move that seems much more do-able.

During his campaign, Newsom promised the nurses he would make it happen. But the state can’t do it alone. That’s why he sent a letter to the federal government right out of the gate, asking the administration and Congress to set up an “innovation waiver” to allow California to create its own single-payer system.

Experts say there is little chance the Trump administration will give the state the go-ahead on this.

“He’s making a statement and sometimes making statements is important — even if there’s little chance of making progress in the immediate future,” said Gerald Kominski, senior fellow at the UCLA Center for Health Policy Research. “It’s a way of drawing a line in the sand.”

It’s also a way to stave off criticism from advocates, said Jesus Ramirez-Valles, director of the Health Equity Institute at San Francisco State University. “He can say ‘I tried it’ and there is no risk on him. If he doesn’t do what he promised, then he is risking opposition.”

Federal permission would also require Congress to support a new waiver system — one that would allow the state to redirect funds that usually go to the federal government, such as Medicare income taxes, to a state funding authority that would manage and pay for a single-payer healthcare system, Kominski said. Current waiver systems do not allow for this type of financial management by the state. Other states have used existing waiver programs for permission to set prices or to implement additional requirements, but not to collect federal money.

“You have to ask for the money,” said Roberson of the nurses union. “We are not going to sit on our hands and hope something is going to happen. This strengthens the governor’s commitment to Medicare for all.”

Meantime, Newsom is tackling the block of 3 million uninsured California residents by chipping away at the edges — proposing spending to help struggling middle-income families buy health insurance, and providing state coverage to some undocumented young adults.

He’ll need approval from the Legislature, now a supermajority of Democrats, many of whom have supported similar ideas in recent years.

Two intertwined proposals in his budget would offer hundreds of thousands of middle-income families additional state subsidies to buy health insurance, and require every Californian to obtain health coverage or pay a tax penalty.

This “state mandate” would replace the controversial federal mandate — a central component of the Affordable Care Act, or Obamacare — that the Trump administration recently canceled. A few other blue states were quicker to create a replacement state mandate, but California’s progressive lawmakers were wary of penalizing people who failed to buy health insurance unless the state also cushioned the blow by offering people more subsidies to lower the costs.

Newsom also proposes to use $260 million in state funds to extend Medi-Cal, the government health program for people who can’t afford insurance, to low-income undocumented immigrants ages 18 to 26.

It’s a classic “Resistance State” action for Newsom, as California tries to counteract the Trump administration’s federal moves to undermine Obamacare. Last year a joint UCLA and UC Berkeley study found that the uninsured rate in California would rise to nearly 13 percent by 2023 if nothing is done at the state level to prevent it.

Since the Affordable Care Act, known as Obamacare, was enacted, California’s uninsured rate has dropped from about 17 percent to roughly 7 percent. Roughly half of those 3 million remaining uninsured are undocumented immigrant adults who don’t qualify for assistance.

If Newsom’s plan is approved, California would offer additional subsidies to families that earn between 250 and 400 percent of the federal poverty level and already receive some federal help. The state would also start offering state-sponsored subsidies to households that earn between 400 and 600 percent of the federal poverty level, up to $150,600 for a family of four, who currently do not qualify for any assistance. Families that earn above 400 percent of the federal poverty level make up 23 percent of the state’s uninsured, according to data from the UCLA AskCHISprogram.

The federal poverty level for 2019 is set at earnings of $12,140 for one person and $25,100 for a family of four.

The budget does not include cost estimates for the additional subsidies, but Newsom intends to pay for the expansion by having the state collect penalties from Californians who forego insurance. His budget proposal estimates that the mandate penalty could raise about $500 million a year, similar to what about 600,000 Californians paid to the federal government when it had a mandate and collected its own penalties.

Peter Lee, who directs the state health insurance exchange Covered California, praised Newsom’s proposals during a recent board meeting.

“Not only does his initiative propose an individual penalty show courage,” he said, “it shows some thoughtfulness about the challenges that middle-class Americans face.”

Enrollment for Covered California, which recently ended, was down 15 percent over last year. Lee said the elimination of the federal penalty is partly to blame.

A draft affordability report Covered California is preparing for the Legislature concludes that if Newsom’s two proposals — expanded subsidies and a mandate — are adopted, enrollment could rise by nearly 650,000 people.

Funding the subsidies with penalties is, of course, a bit of a Catch 22: The more successful California is in getting people to obtain healthcare, the smaller the penalty fund to pay for the subsidies that help fund that care.

“You’re accomplishing your goal, but you’re taking away revenue,” Kominski said. “This is the kind of problem we should be happy to have.”

The conundrum is reminiscent of the state’s tobacco tax, which was intended to deter people from smoking. Success has meant a drop in the amount of money the tax brings in.

Despite what many see as dismal prospects for single-payer in California so long as the Trump administration can quash the state’s waiver request, the California Nurses Association is undaunted. They’re working on a soon-to-be-introduced single-payer bill, more detailed than the version that died in 2017. That one carried a $400 billion price tag, more than three times the state’s annual budget, but lacked support from then-Gov. Jerry Brown and was scant on details. The new version, nurses union rep Roberson said, will be specific about how single-payer would work and how it would be paid for.

“We’re not eradicating providers, we are not seeking to dismantle hospitals,” she said. “The fundamental structure of healthcare delivery will stay in place; what we are changing is how healthcare is financed.”

And if the Trump administration rejects the waiver request? Roberson sees other paths to a state single-payer system, including petitioning the Centers for Medicare and Medicaid, or trying to set up a system under Affordable Care Act provisions.

If the nurses union and other single-payer advocates end up pursuing those other avenues, the question becomes whether Newsom will as well.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Struggling e-commerce firm LightInTheBox completes $85M deal for Singapore’s Ezbuy

Southeast Asia is a growing digital marketplace and increasingly a focus for startups across the world but there haven’t been many exits. So it’s notable, then, that struggling Chinese discount e-commerce service LightInTheBox has closed its acquisition of Singapore-based Ezbuy, which operates a cross-border selling service in Singapore, Malaysia, Indonesia, Thailand and Pakistan. The all-stock deal was […]

Southeast Asia is a growing digital marketplace and increasingly a focus for startups across the world but there haven’t been many exits.

So it’s notable, then, that struggling Chinese discount e-commerce service LightInTheBox has closed its acquisition of Singapore-based Ezbuy, which operates a cross-border selling service in Singapore, Malaysia, Indonesia, Thailand and Pakistan.

The all-stock deal was first announced in November and it sees LightInTheBox, which operates worldwide, take 100 percent ownership of the company for $85.55 million as it bids to turn its business around.

LightInTheBox could certainly do with a boost. The company went public in 2013 with its shares priced at $9.50, but it has spent most the last few months priced under $1. As of today, the stock is worth $0.64, having been as high as $1.35 a month ago.

The company’s Q2 results showed revenue was down by 29 percent year-on-year, with net loss for the quarter at $9.5 million up from $1.8 million one year previous.

Indeed, that’s where the Ezbuy deal will inject new blood beyond its markets. As announced last month, Ezbuy CEO Jian He has become CEO of LightInTheBox while Meng Lian, a partner with IDG Ventures, has joined as a director. Alan Guo, LightInTheBox’s founder, stepped down from his role as CEO and chairman this past June.

Founded in 2010, Ezbuy raised just under $40 million from IDG Ventures, Sky9 Capital and others. It claims to cater to three million customers using its service which sources product from sellers in countries like China, Taiwan, the U.S, Korea, Malaysia and Singapore.

That fits with LightInTheBox’s focus on enabling cross-border commerce. Southeast Asia’s digital economy tipped to triple in size to reach $240 billion by 2025 with e-commerce alone predicted to cross $100 billion, the company has decided to dive in headfirst.

MWM Immersive is finally combining virtual reality and location-based immersive theater

Using the timeworn and trusty narrative of Charles Dickens’ A Christmas Carol as its platform, MWM Immersive, a division of Madison Wells Media, is finally taking location-based virtual reality to its logical conclusion and merging it with an immersive theater experience. Called Chained: A Victorian Nightmare, the new production combines live actors and an immersive setting with […]

Using the timeworn and trusty narrative of Charles Dickens’ A Christmas Carol as its platform, MWM Immersive, a division of Madison Wells Media, is finally taking location-based virtual reality to its logical conclusion and merging it with an immersive theater experience.

Called Chained: A Victorian Nightmare, the new production combines live actors and an immersive setting with virtual reality to recreate Victorian-era London.

The new production is premiering at experiential studio GreatCo on Friday and will run through January 6, 2019. It include a full Victorian-era set in which one audience member at a time is fitted with a virtual reality headset by a professional actor. The individual audience experience is designed for the viewer to interact the entire time with live actors and objects.

Co-produced by MWM and the virtual reality studio Here Be Dragons, the Chained experience was created and directed by Justin Denton, who was also responsible for the immersive Legion experience that debuted at San Diego Comic Con in 2017. The executive producer for the project was MWM Immersive’s Ethan Stearns, who was the shepherd behind Carne y Arena the Academy Award-winning virtual reality project from the famed Mexican director Alejandro González Iñárritu.

[gallery ids="1752184,1752185,1752186,1752188"]

“By combining the best of VR and immersive theater, Chained surpasses the limitations of each medium and lets the audience see, converse with, and even touch the impossible,” said Justin Denton, in a statement. “I grew up with Charles Dickens’ A Christmas Carol but in my mind’s eye I always imagined the spirits of Christmas Past, Present, and Future as much darker and more intense than most adaptations. Audiences will walk away from Chained as though they have just awoken from a dark and beautiful fever dream full of self discovery, fascination, fear, and wonder.”

Tickets, which cost $40, are available for purchase at Eventbrite.com and the company is planning to bring the experience to more cities after its initial run through January.

Combining immersive theater with virtual reality has long felt (at least to me) like the best use case for the technology. Unlike a cinematic experience, immersive theater benefits from movement in an established environment and interaction with a cast in real time. A production like “Sleep No More” would obviously lend itself to an enhanced experience in virtual reality and if this is successful, the MWM Interactive experiment could become a road map for increasing and encouraging the technology’s adoption among a broader base of users.

It’s a great gateway to the best use cases for virtual reality and something that more companies will likely pursue.

Tesla picks telco executive Robyn Denholm to replace Elon Musk as chairman

Elon Musk’s replacement as the chair of Tesla has been named and it is Robyn Denholm, an Australian executive who has been a director with the electric vehicle firm since 2014. Denholm is currently CFO of Australia-based telco Telstra and she’ll step into the breach once a six-month notice period is served, Tesla said in […]

Elon Musk’s replacement as the chair of Tesla has been named and it is Robyn Denholm, an Australian executive who has been a director with the electric vehicle firm since 2014.

Denholm is currently CFO of Australia-based telco Telstra and she’ll step into the breach once a six-month notice period is served, Tesla said in an announcement released late Wednesday evening U.S. time.

There’s been plenty of speculation as to who will replace Musk — the figurehead of Tesla’s business — after he announced in September that he would step down as the firm’s chairman. Musk’s resignation was part of a settlement with the SEC, which found Tesla guilty of failing to require disclosure controls and procedures relating to a tweet from Musk about taking the company private. Tesla later confirmed it would remain a public entity despite Musk’s tweets.

The SEC deal included a $20 million fine for Musk who retained his position as CEO and the confidence of the board.

Denholm was extensive experience in the automotive industry beyond her time with Tesla. Her career includes a seven-year stint with Toyota Australia, and she has also worked for tech giants Juniper Networks and Sun Microsystems. She is a graduate of the University of Sydney, where she studied economics, and holds a Master’s degree in Commerce from the University of New South Wales.

Robyn Denholm has been a Tesla director since 2014

“I believe in this company, I believe in its mission and I look forward to helping Elon and the Tesla team achieve sustainable profitability and drive long-term shareholder value,” Denholm said in a statement.

“Robyn has extensive experience in both the tech and auto industries, and she has made significant contributions as a Tesla Board member over the past four years in helping us become a profitable company. I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy,” Musk added.

Vishal Makhijani steps down as chief executive of Udacity

Vishal Makhijani, the long time chief executive of online education company Udacity, is stepping down as its chief executive officer, TechCrunch has learned. Makhijani first joined the company in 2013 as chief operating officer under Sebastian Thrun, the company’s founder and chief executive at the time. In 2016, Thrun, the original architect of Alphabet’s self-driving […]

Vishal Makhijani, the long time chief executive of online education company Udacity, is stepping down as its chief executive officer, TechCrunch has learned.

Makhijani first joined the company in 2013 as chief operating officer under Sebastian Thrun, the company’s founder and chief executive at the time.

In 2016, Thrun, the original architect of Alphabet’s self-driving car initiatives and a storied entrepreneur and engineer in Silicon Valley, handed the reins of his online education startup over to Makhijani, who assumed the mantle of CEO while Thrun became chairman and president of the company.

In an interview, Makhijani declined to disclose his next steps, but Thrun praised the executive for taking Udacity to new heights and hailed him as a key contributor to the company’s continuing growth.

As Thrun wrote in a blog post praising Makhijani for his tireless efforts.

Over the last five years, Vish worked with hundreds of tech companies to build curriculum focused on opening up new career opportunities for our students. Under Vish’s leadership, we launched more than thirty Nanodegree programs in areas such as Artificial Intelligence, Data Science, Self-Driving Cars, and Digital Marketing. We expanded our operations into China, India, Brazil, the Middle East, and Europe, and we started a fast-growing new enterprise division.

Udacity now employs a team of 500 across the globe and its enterprise division, offering continuing education to workers through partners like PriceWaterhouseCoopers and other Fortune 1000 customers has become a new engine of revenue and growth for the company.

It also has more than 10 million students across its paid and free classes, with over 50,000 enrolled in its nanodegree programs.

The financials are also looking better for Udacity. The company saw revenue rise 100% in 2017 to $70 million and is on track for continued revenue growth this year.

A spokesperson for the company said that there were no complaints brought against Makhijani that would have pushed him to step down.

With the executive’s departure, the Udacity board is instituting a new search for chief executive led by director and Andreessen Horowitz general partner, Peter Levine .

“In the interim, as Udacity’s founder and now executive chairman, I will work closely with Udacity’s leadership team to run the business and collaborate on a search for our new CEO,” Thrun wrote in a blog post.

Mozilla is matching all donations to the Tor Project

Firefox parent Mozilla is returning to back the Tor Project, its long-time ally, after it committed to matching all donations made to fund Tor, the open source initiative to improve online privacy which has just started its annual end of year funding drive. Tor announced Mozilla’s support today, extending the pair’s partnership which last year helped […]

Firefox parent Mozilla is returning to back the Tor Project, its long-time ally, after it committed to matching all donations made to fund Tor, the open source initiative to improve online privacy which has just started its annual end of year funding drive.

Tor announced Mozilla’s support today, extending the pair’s partnership which last year helped Tor raise over $400,000 from a similar campaign last year. That is a small seed round for a tech startup, but it represents an important source of income for Tor, which began soliciting ‘crowdfunded’ donations in 2015 in a bid to offset its reliance on government grants.

The company’s latest publicly available accounts cover 2015 when Tor received a record $3.3 million in donations. That’s up from $2.5 million in 2014 and it represented Tor’s highest year of income to date, but state-related grants accounted for 86 percent of the figure. That was an improvement on previous years, but Tor Research Director and President Roger Dingledine admitted that the organization has “more work to do” to change that ratio.

Tor hasn’t made its latest (2016) financials available as of yet, but the past year has seen the organization make big leaps in its product offerings, which are still best known for being used by NSA whistleblower Edward Snowden . Tor launched its first official mobile browser for Android in September and the same month it released Tor Browser 8.0, its most usable browser yet which is based on Firefox’s 2017 Quantum structure. It is also worked closely with Mozilla to bring Tor into Firefox itself as it has already done with Brave, a browser firm led by former Mozilla CEO Brendan Eich.

Beyond the browser and the Tor network itself, which is designed to minimize the potential for network surveillance, the organization also develops a range of other projects. Around two million people are estimated to use Tor, according to data from the organization.

“The Tor Project has a bold mission: to take a stand against invasive and restrictive online practices and bring privacy and freedom to internet users around the world. But we can’t do it alone,” Sarah Stevenson, who is fundraising director at the Tor Foundation, wrote in a blog post.

“Countries like Egypt and Venezuela have tightened restrictions on free expression and accessing the open web; companies like Google and Amazon are mishandling people’s data and growing the surveillance economy; and some nations are even shutting off the internet completely to quell possible dissidence,” she added.

If you feel suitably compelled, you can donate to the Tor Project’s campaign right here.

Next 10 Ventures is launching an incubator for YouTube personalities

The EduCreator Incubator will seed 25 to 40 “emerging video creators” with $25,000 to $75,000 in seed funding.

Los Angeles-based Next 10 Ventures, a $50 million fund focused on the creator economy, is launching an incubator program to support YouTubers.

The EduCreator Incubator will seed 25 to 40 “emerging video creators” with $25,000 to $75,000 in seed funding, depending on their location, and will enroll them in a 12-month mentorship program. The only requirement is that they focus on educational video content targeting children and young adults.

“The amazing thing about being able to provide more educational content to YouTube is that children, who may be first generation from an emerging or developing country, they now have a mobile phone and they have the ability to watch content,” said Cynthia So Schroeder, Next 10’s recently hired vice president of marketing, who’s leading the incubation efforts. “Through this content, they may discover a field or a topic they haven’t had access to. Maybe they’ll discover oceanography or physics and that glimpse will … inspire them to be a future astronaut or engineer.”

So Schroeder, eBay’s former head of global community development and engagement, joins the firm’s founders: Benjamin Grubbs, YouTube’s former global director of top creator partnerships, and Paul Condolora, the former co-head of the Harry Potter franchise at Warner Bros.

All participants in the program will jointly participate in a revenue share on revenue generated from their content. Next 10 says they intend to reinvest that into a growth fund for next year’s EduCreator participants and that any equity arrangements or follow-on investments will be discussed at the end of the program.

EduCreator will provide participants with a network of other like-minded creators, programming focused on content development and format and mentorship from digital storyteller Jay Shetty, WeCreateEdu founder Jacklyn Duff and others. The goal is to help the YouTubers build sustainable and scalable online businesses.

What’s in it for Next 10? The firm’s hypothesis is that digitally savvy, mobile-first content creators are big money makers, or will be 10 years down the line — hence the fund’s name. Nearly 60 percent of GenZers, after all, cite YouTube as their preferred learning method, and the quantity of streaming video has more than doubled in the past year.

“At YouTube, I saw over 5x growth in watch time, commercialization and really, globalization of the platform,” Grubbs told TechCrunch. “I have three kids ages 9, 7 and 4 and I’ve seen it there too in how they are consuming media. Looking ahead over the next 10 years, this is going to be the way consumers are [being entertained], accessing insights and knowledge, and connecting.”

Applications to the incubator opened today and close November 17, 2018.

Jeffrey Katzenberg and Meg Whitman announce the name of their stealthy mobile video startup

Called Quibi, short for quick bites, the company is creating content with notable filmmakers Sam Raimi, Guillermo del Toro and Antoine Fuqua.

On stage at Vanity Fair’s New Establishment Summit in Los Angeles, Jeffrey Katzenberg and Meg Whitman unveiled the name of their highly-anticipated mobile video company known until now as NewTV.

The name is Quibi, short for “quick bites,” per a note on its new website: “Something cool is coming from Hollywood and Silicon Valley — quick bites of captivating entertainment, created for mobile by the best talent, designed to fit perfectly into any moment of your day.”

The short-form video service, launching next year, will operate on a two-tiered subscription model similar to Hulu, per Deadline. Quibi is cooking up original content with Oscar-winning filmmaker Guillermo del Toro, Southpaw director Antoine Fuqua and Spiderman director Sami Raimi, as well as Get Out producer Jason Blum and Van Toffler, the CEO of digital media production company Gunpowder & Sky.

The Hollywood Reporter says the del Toro project “is a modern zombie story,” the Fuqua project is “a modern version of Dog Day Afternoon” and the Blum project, titled Wolves and Villagers, could be compared to Fatal Attraction.

Katzenberg, the former chairman of Walt Disney Studios and founder of WndrCo, a consumer tech investment and holding company, has raised $1 billion for Quibi from Disney, 21st Century Fox, Entertainment One, NBCUniversal, Sony Pictures Entertainment, Alibaba Goldman Sachs, JPMorgan Chase, Madrone Capital and several others. He hired Meg Whitman as Quibi’s CEO in January.

Quibi, given Katzenberg and Whitman’s entertainment and business acumen, is expected to compete with the biggest players in the space, including Instagram, Netflix and Snap, which today announced Snap Originals. The new effort will have the ephemeral messaging service rolling out 12 new scripted shows on its app from Keeping Up With The Kardashians creator Bunim/Murray, Friday Night Lights writer Carter Harris and more.

Quibi is hiring aggressively, recently bringing on former Viacom executive Doug Herzog, former Instagram product manager Blake Barnes and former Hulu chief technology officer Rob Post, also per THR.

Quibi did not immediately respond to a request for comment.

The next big restaurant chain may not own any kitchens

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own. These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses. The Battle Is For The Customer Interface Investors […]

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own.

These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses.

Investors are pouring millions into the creation of a network of shared kitchens, storage facilities, and pickup counters that established chains and new food entrepreneurs can access to cut down on overhead and quickly spin up new concepts in fast food and casual dining.

Powering all of this is a food delivery market that could grow from $35 billion to a $365 billion industry by 2030, according to a report from UBS’s research group, the “Evidence Lab”.

“We’ve had conversations with the biggest and fastest growing restaurant brands in the country and even some of the casual brands,” said Jim Collins, a serial entrepreneur, restauranteur, and the chief executive of the food-service startup, Kitchen United. “In every board room for every major restaurant brand in the country… the number one conversation surrounds the topic of how are we going to address [off-premise diners].”

Collins’ company just raised $10 million in a funding round led by GV, the investment arm of Google parent company, Alphabet. But Alphabet’s investment team is far from the only group investing in the restaurant infrastructure as a service business.

Perhaps the best capitalized company focusing on distributed kitchens is CloudKitchens, one of two subsidiaries owned by the holding company City Storage Solutions.

Cloud Kitchens and its sister company Cloud Retail are the two arms of the new venture from Uber co-founder and former chief executive, Travis Kalanick, which was formed with a $150 million investment.

As we reported at the time, Travis announced that he would be starting a new fund with the riches he made from Uber shares sold in its most recent major secondary round. Kalanick said his 10100, or “ten one hundred”, fund would be geared toward “large-scale job creation,” with investments in real estate, e-commerce, and “emerging innovation in India and China.”

If anyone is aware of the massive market potential for leveraging on-demand services, it’s Kalanick. Especially since he was one of the architects of the infrastructure that has made it possible.

Other deep pocketed companies have also stepped into the fray. Late last year Acre Venture Partners, the investment arm formed by The Campbell Soup Co., participated in a $13 million investment for Pilotworks, another distributed kitchen operator based in Brooklyn.

Meanwhile, Kitchen United has been busy putting together a deep bench of executive talent culled from some of the largest and most successful American fast food restaurant chains.

Former Taco Bell Chief Development Officer, Meredith Sandland, joined the company earlier this year as its chief operating officer, while former McDonald’s executive Atul Sood, who oversaw the burger giant’s relationship with online delivery services, has come aboard as Kitchen United’s Chief Business Officer.

The millions of dollars spicing up this new business model investors are serving up could be considered the second iteration of a food startup wave.

An earlier generation of prepared food startups crashed and burned while trying to spin up just this type of vision with investments in their own infrastructure. New York celebrity chef David Chang, the owner and creator of the city’s famous Momofuku restaurants (and Milk Bar, and Ma Peche), was an investor in Maple, a new delivery-only food startup that raised $25 million before it was shut down and its technology was absorbed into the European, delivery service, Deliveroo.

Ando, which Chang founded, was another attempt at creating a business with a single storefront for takeout and a massive reliance on delivery services to do the heavy lifting of entering new neighborhoods and markets. That company wound up getting acquired by UberEats after raising $7 million in venture funding.

Those losses are slight compared to the woes of investors in companies like Munchery, ($125.4 million) Sprig, ($56.7 million) and SpoonRocket ($13 million). Sprig and Spoonrocket are now defunct, and Munchery had to pull back from markets in Los Angeles, New York, and Seattle as it fights for survival. The company also reportedly was looking at recapitalizing earlier in the year at a greatly reduced valuation.

What gives companies like Kitchen United, Pilotworks and Cloud Kitchens hope is that they’re not required to actually create the next big successful concept in fast food or casual dining. They just have to enable it.

Kitchen United just opened a 12,000 square foot facility in Pasadena for just that purpose — and has plans to open more locations in West Los Angeles; Jersey City, N.J.; Atlanta; Columbus, Ohio; Phoenix; Seattle and Denver. Its competitor, Pilotworks, already has operations in Brooklyn, Chicago, Dallas, and Providence, R.I.

While the two companies have similar visions, they’re currently pursuing different initial customers. Pilotworks has pitched itself as a recipe for success for new food entrepreneurs. Kitchen United, by comparison is giving successful local, regional, and national brands a way to expand their footprint without investing in real estate.

“One of the directions that the company was thinking of going was toward the restaurant industry and the second was in the food service entrepreneurial sector,” said Collins. “Would it be a company that served restaurants with their expansions? Now, we’re in deep discussions with all kinds of restaurants.”

Smaller national fast food chains like Chick-Fil-A or Shake Shack, or fast casual chains like Dennys and Shoney’s could be customers, said Collins. So could local companies that are trying to expand their regional footprint. Los Angeles’ famous Canter’s Deli is a Kitchen United customer (and an early adopter of a number of new restaurant innovations) and so is The Lost Cuban Kitchen, an Iowa-based Cuban restaurant that’s expanding to Los Angeles.

Kitchen United is looking to create kitchen centers that can house between 10-20 restaurants in converted warehouses, big box retail and light industrial locations.

Using demographic data and “demand mapping” for specific cuisines, Kitchen United said that it can provide optimal locations and site the right restaurant to meet consumer demand. The company is also pitching labor management, menu management and delivery tools to help streamline the process of getting a new location up and running.

“In all of the facilities, all of the restaurants have their own four-walled space,” says Collins. “There’s shared infrastructure outside of that.”

Some of that infrastructure is taking food deliveries and an ability to serve as a central hub for local supplier, according to Collins. “One of the things that we’re going to be launching relatively soon here in Pasadena, is actually in-service days where local supplier and purveyors can come in and meet with seven restaurants at once.”

It’s also possible that restaurants in the Kitchen United spaces could take advantage of restaurant technologies being developed by one of the startup’s sister companies through Cali Group, a holding company for a number of different e-sports, retail, and food technology startups.

The Pasadena-based kitchen company was founded by Harry Tsao, an investor in food technology (and a part owner of the Golden State Warriors and the Los Angeles Football Club) through his fund Avista Investments; and John Miller, a serial entrepreneur who founded the Cali Group.

In fact, Kitchen United operates as a Cali Group portfolio company alongside Miso Robotics, the developer of the burger flipping robot, Flippy; Caliburger, an In-n-Out clone first developed by Miller in Shanghai and brought back to the U.S.; and FunWall, a display technology for online gaming in retail settings.

“Kitchen United’s data-driven approach to flexible kitchen spaces unlocks critical value for national, regional, and local restaurant chains looking to expand into new markets,” said Adam Ghobarah, general partner at GV, and a new director on the Kitchen United board. “The founding team’s experience in scaling — in addition to diverse exposure to national chains, regional brands, regional franchises, and small upstart eateries — puts Kitchen United in a strong position to accelerate food innovation.”

GV’s Ghobarah actually sees the investment of a piece with other bets that Alphabet’s venture capital arm has made around the food industry.

The firm is a backer of the fully automated hamburger preparation company, Creator, which has raised roughly $28 million to develop its hamburger making robot (if Securities and Exchange Commission filings can be believed). And it has backed the containerized farming startup, Bowery Farming, with a $20 million investment.

Ghobarah sees an entirely new food distribution ecosystem built up around facilities where Bowery’s farms are colocated with Kitchen United’s restaurants to reduce logistical hurdles and create new hubs.

“As urban farming like Bowery scales up… that becomes more and more realistic,” Ghobarah said. “The other thing that really stands out when you have flexible locations … all of the thousands of people who want to own a restaurant now have access. It’s not really all regional chains and national chains… With a satellite location like this… [a restaurant]… can break even at one third of the order volume.”