Silicon Valley's Audacious Plan to Create a New Stock Exchange

The author of "The Lean Startup" and his team are in early talks with the Securities and Exchange Commission

Five years ago, when Eric Ries was working on the book that would become his best-selling entrepreneurship manifesto "The Lean Startup," he floated a provocative idea in the epilogue: Someone should build a new, “long-term” stock exchange. Its reforms, he wrote, would amend the frantic quarterly cycle to encourage investors and companies to make better decisions for the years ahead. When he showed a draft around, many readers gave him the same piece of advice: Kill that crazy part about the exchange. "It ruined my credibility for everything that had come before," Ries said he was told.

Now Ries is laying the groundwork to prove his early skeptics wrong. To bring the Long-Term Stock Exchange to life, he's assembled a team of about 20 engineers, finance executives and attorneys and raised a seed round from more than 30 investors, including venture capitalist Marc Andreessen; technology evangelist Tim O’Reilly; and Aneesh Chopra, the former chief technology officer of the United States. Ries has started early discussions with the U.S. Securities and Exchange Commission, but launching the LTSE could take several years. Wannabe exchanges typically go through months of informal talks with the SEC before filing a draft application, which LTSE plans to do this year. Regulators can then take months to decide whether to approve or delay applications.

If all goes according to plan, the LTSE could be the stock exchange that fixes what Ries sees as the plague of today's public markets: short-term thinking that squashes rational economic decisions. It's the same stigma that's driving more of Silicon Valley's multi-billion-dollar unicorn startups to say they're not even thinking of an IPO. "Everyone's being told, 'Don't go public,'" Ries said. "The most common conventional wisdom now is that going public will mean the end of your ability to innovate."

Eric Ries

To Ries, 37, the public markets encourage self-destructive behavior, and he sees their dynamics as one reason why the number of U.S. public companies has fallen by half since its peak in 1996. Once companies go public, employees “are on Yahoo Finance every day, and it’s palpable how much that is affecting the decision-making of ordinary managers,” he says. The problem begins with stock market investors who favor companies that show big increases in sales, profits, users, or other measures every quarter. When a company falls short, investors flee, and the stock plummets. Managers, hoping to avoid such jolts, spend too much time focusing on short-term performance. Ries said he's heard the same story many times: halfway through a quarter, an executive realizes the company isn’t on track and starts slashing innovative projects to meet the targets.

Ries's seminal book preached a fail-fast method of building startups where teams get a "minimum viable product" in front of customers as quickly as possible to avoid wasting time and effort. "The Lean Startup" made Ries, who previously worked as a software engineer at the failed virtual world maker There and as a cofounder of the more successful social network IMVU, a revered name among Silicon Valley entrepreneurs. While readers flocked to his startup lessons, no one picked up his stock market proposal -- it was too polarizing. When he decided to do it himself, he started talking to bankers, venture capitalists and regulators, who told him his idea was ridiculous. "People treated me like a barbarian," he says. Undeterred, he spent three years recruiting a team and weighing different ideas, such as charging higher fees for short-term trades. Eventually, the LTSE settled on three reforms that address how executives are paid, how companies and investors share information and how investors vote.

A company that wants to list its stock on Ries’s exchange will have to choose from a menu of LTSE-approved compensation plans designed to make sure executive pay is not tied to short-term stock performance. Ries complains that it’s common to see CEOs or top management getting quarterly or annual bonuses tied to certain metrics like earnings per share, which pushes them to goose the numbers. Ries wants to encourage companies to adopt stock packages that continue vesting even after executives have left the company, which will push them to make healthy long-term moves.

The LTSE also wants to nudge companies and investors to share more information, such as detail on R&D spending. To get investors to participate, the exchange has to tempt them with a reward, so LTSE plans to use voting rights as a carrot. If investors divulge the real name of the beneficial owner to management (as opposed to hiding behind a "street name") they'll start to gain more voting rights the longer they've held their shares. LTSE hopes to make money mostly by selling software tools to companies and collecting listing fees, which could be a tough business, given most companies list on either NYSE or Nasdaq in the U.S. and often choose based on a trusted reputation. As Ries sees it, an LTSE-listed company will have an extra stamp of approval. “You’re advertising to the markets that you’re willing to be held to a higher standard,” Ries says. “This is the gold standard, the most long-term, the most hardcore version of going public.”

Ries’s reforms may not have the intended effects. For example, granting stronger voting rights to long-term shareholders would make takeovers harder, and that could end up protecting complacent managers, says Larry Harris, a professor of finance and business economics at the University of Southern California business school. “The threat of takeover has done far more to get good behavior out of corporations than perhaps anything else,” he says. "I suspect a sophisticated investor may shun” an exchange that creates obstacles to investors who want to shake things up.

Getting SEC approval can also be a painful process, especially when trying to change the status quo. Like Ries, Brad Katsuyama, a hero of Michael Lewis's 2014 book, "Flash Boys," is trying to address what he sees as the shortcomings of existing markets. Katsuyama has spent the better part of a year trying to get SEC approval for the Investors Exchange, which he says neutralizes high-frequency traders' unfair advantage. Incumbents aren't happy. NYSE slammed the proposal as "unfair" and "opaque" in a November letter to regulators. Nasdaq last month warned the SEC that if it approved IEX's application, a lawsuit challenging the decision would likely succeed. "Any time an exchange wants to do something significantly different, it's likely to come under a lot of scrutiny and take a long time," said Tyler Gellasch, executive director of investor trade group Healthy Markets.

And while Silicon Valley has successfully overturned many major industries, it hasn't had any luck with entrenched Wall Street traditions. Google's 2004 attempt during its IPO to distribute its shares more equitably via a "Dutch" auction led to a disappointing first day of trading and never caught on. Marc Andreessen sees Google's unorthodox IPO as "a great case study and a cautionary tale," he said. "A big part of what Eric's trying to do is make sure that obviously doesn't happen."

If Ries gets the go-ahead from the SEC, he will face what may turn out to be his biggest challenge: persuading a company to be first to list on LTSE. Since it could be years before the LTSE gets SEC approval, Ries isn't courting Uber, Airbnb or its peers. Instead he’s connecting with mid-size startup founders, some of whom have invested in the LTSE. In the next few years, Ries hopes a handful of these companies will emerge as strong IPO candidates. If he’s lucky, one will be confident enough to be a pioneer. “There’s a real collective action problem here,” he said. “As an industry, we all want to see these changes happen, but there’s always a little bit of an incentive for any individual actor to say, this isn’t my fight – I’ll wait and let somebody else take it on. I don’t begrudge those people. But if everyone does that, change doesn’t happen.” 

More "mega breaches" to come...

...as rival hackers vie for sales

Three major social networks have quietly fallen victim to data breaches, but despite some high-profile success, patience and trust is now beginning to fade.

Four weeks. Three hacks. Two rival sellers of almost one billion accounts -- with more to come.

How did we get here? For Silicon Valley, the outbreak of recent confirmed data breaches served up a brutal reminder: security really matters. The hacks took over like a fever, fueled by the reasonable expectation -- given the hackers' apparently high level of access -- that more breaches would emerge.

MySpace, LinkedIn, and Tumblr were all crucified for their failure to keep their users' data secure. The companies said their Hail Mary's and ate their humble pie, and promised to do better.

Other companies didn't fare so well.

Dating site Badoo, which last month denied it had been hacked after tens of millions of accounts were being traded on a dark web marketplace, maintained face when a breach notification site LeakedSource uploaded the dataset of 127 million records. Then, social networking site VK.com initially denied in an email that it was hacked, but admitted later in a post that the leaked data was from 2012, confirming our report, and that logins were force-reset after the fact.

But after riding the wave of this year's "mega breaches," things began to unravel.

Dropbox broke the chain as the next major hack that simply wasn't. And Twitter on Thursday was the latest to deny it had been hacked -- though LeakedSource, which analyzed the data, was clear to say it did not think Twitter had been hacked (despite a slew of headlines suggesting otherwise).

Was this the inflection point? Was "peak hack" over? Or have we saturated the market with so many usernames and passwords that reuse and repackaging existing hacks was almost inevitable?

With one list of credentials, it's easy to repackage a supposed "hack" as another breach -- simply by trading lists of one genuine batch of records. Sometimes it's to pass off old data as new data to make money, or to show off a hacker's prowess and proficiency.

In reality, it just makes it harder to determine if a new list is genuine or not -- and it's beginning to show.

HISTORICAL HACKS COME BACK TO HAUNT

It was easy to assume Dropbox had been hacked, but proving it would be difficult. It's a hacker's word against a company's -- and in most cases, the latter has more to lose.

A Russian seller who goes by the name "Tessa88" claimed to have 103 million stolen accounts, according to an early March listing on a hacker's forum. The download itself had a smaller set of 73 million records -- a red flag for security reporter Brian Krebs, who first covered the story. It transpired to be rehashed data from Tumblr, but was amped and hyped by monitoring services, which dropped the ball.

Teamviewer, too, was caught up in the hype of the "mega breach" series, which led some to believe the screen-sharing app had been hacked. Though no breach data had appeared online, many claimed their accounts had nonetheless been compromised.

"Are these serious incidents possibly conditioning us to automatically assume the worst? Will it cause us to throw caution to the wind when dealing with the daily claims that some large web presence has become the victim of one of these attacks?" wrote Troy Hunt, a security researcher, who runs breach notification site Have I Been Pwned.

Here's the spoiler alert: A company doesn't necessarily have to have its systems breached to fall victim to a "hack" -- at least in how it appears. It's more likely that years of password reuse are coming back to bite millions on the behind -- because these shared lists of logins can be repackaged and sold on as a "verified" breach of another service.

Given some of the recent trust issues in Silicon Valley (think Edward Snowden), these companies face perception issues that are hard to overcome.

OLD ATTACKS, NEW BREACHES

In the case of verified hacks -- MySpace, LinkedIn, and Tumblr -- it's not known where the data came from, or how the hacks happened. But remarkably, it's now the sellers themselves who are taking center stage -- and they are said to be reaping the rewards as as a result.

After a number conversations over the past three weeks, here's what we think we know.

Tessa88 is thought to have first emerged earlier this year -- it's not clear if she (her gender isn't known but refers to herself in many hacker forums as female) is part of a wider group, but is known to acquire breach data and sell them for bitcoin.

With links to the recent MySpace and VK.com data breaches, she most recently made a name for herself by obtaining over 300 million Twitter logins. That was later revised down to 32 million logins, and an analysis showed that there was no hack behind the leaked data. LeakedSource said the credentials were likely collected from the account holders' computers themselves.

For its part, Twitter denied any breach -- despite numerous headlines suggesting otherwise.

In any case, there's no way to be sure -- and it's the word of one (or two) against a trusted company.

Tessa88, who would strictly only talk to me in Russian, also claims to have accounts for Qip.ru, Rambler.ru, and Mobango -- among others -- which range from 10 (about $5,780) to 15 bitcoin (about $8,670) in price. When we asked for a sample to verify, she asked us for bitcoin -- something we declined to do.

But in the same arena is another seller, who goes by the name "Peace" -- a hacker who made a name for himself by selling different sets of stolen data from Fling, LinkedIn, Badoo, and VK.com.

Now the sellers (independent of one another) are claiming their stake to a much larger set of the same tech scalps.

Both of the sellers claim to have in their possession upwards of 836 million accounts associated with Facebook, which are said to date back to mid-February this year. Peace said an unnamed security firm is interested in buying the data, but didn't say which. He said the data would soon be put up for sale.

Unlike other breaches, neither Tessa88 or Peace would share data associated with the alleged Facebook and Instagram breaches.

Facebook, which also owns Instagram, would not comment on the record on Thursday.

Again, it's "he said" versus "she said." And no matter how spurious or exaggerated the claims may be by the hackers, there's no definitive way to prove either case.

Peace also claimed to have a number of smaller breaches under his belt, which he would sell for a bitcoin or two -- like 23 million accounts with JustMate.com, a dating site that claimed from its own homepage to have tens of thousands of users online at any given time. The site's owner, James King, said in an email that he has only 1,300 active users.

King then threatened legal action if we posted "any negative information about our site."

And, if that wasn't enough, Peace claims to have 1.1 billion accounts associated with Yahoo, which he said "bends over for NSA" -- a reference he didn't clarify, but may have some connection to its naming as part of the clandestine PRISM government surveillance program.

A HACKERS' UNDERGROUND EMERGES

Given that the two sellers meet in the middle on what could be the biggest ever known data breaches, you might think there would be a back story. And if you're wondering what the connection between the two is -- join the club.

It turns out the two sellers just flat-out hate each other.

"They are not friends at all," said one of the members of LeakedSource, who would not be identified. "They both sell data... they get data and resell."

Peace has not told me his name or age, but is thought to live in Europe -- though, a source who claims to know of his work said he lives in central US. He has no formal hacker group affiliations, but occasionally works with Russian hackers, he said some weeks ago. 

Earlier this year, he admitted he installed a backdoor in the Linux Mint distribution, and occasionally sells private exploit services for vulnerabilities on dark web marketplaces.

While Peace will generally work on the dark web marketplaces, which he uses to sell data, Tessa88 has a different style, by tending to stick to Russian-language forum boards -- essentially "clearnet" sites that can be found on the regular internet.

But from the sources we've spoken to, who have knowledge of the two sellers, there are accusations that Peace has on numerous occasions obtained the allegedly hacked data from Tessa88 through a proxy -- which may explain why she is hardly a fan of him.

In an encrypted chat this week, she called Peace a "motherf**ker," "cheater," and "another child who sells my databases." She said, "he has cheated me, and I don't like traitors."

Peace did not respond when we asked about Tessa88.

Tessa88 is thought to be the original source of the data, but she wouldn't say how she got it. Instead, she would sporadically talk about bizarre topics on encrypted chat -- like how she would visit the beach, yet she was "unsafe," and was also (perhaps conveniently) unable to show part of the hacked data at the time because her car had broken down on the Avtomagistral.

Other people we spoke to, who had also been in contact with Tessa88, had similar conversations.

The big, million-dollar question is where the data came from.

"Well," said Peace, "Tumblr, MySpace, LinkedIn, Facebook, Fling and more to come," he said. "They're all hacked by [the] same people. Is it me or someone else? Well, let the FBI 'investigate' and find out," he told me last Friday.

But the longer the data was under wraps, the more valuable it becomes -- for use on the underground market over the course of the past few years, until such a time it's no longer useful. Then, the data is quietly announced on a dark web forum (in Peace's case) or on a hacker's forum (in Tessa88's case), where it can be sold for a price, and vary in price depending on free market economics -- and if the press verifies the data, the price goes up, but if it's scrutinized too much and thought to be an inflated or rehashed breach from an earlier hack, the price can dramatically drop.

Hunt said in a recent interview: "Well it might be that whoever exfiltrated this data to begin with has had some catalyst which has caused them to release this, so maybe they want to get straight and they want to cash it in."

"But clearly there has been some event which has caused this data which has laid dormant for that long to suddenly be out here in the world," he added.

PASSWORDS-AS-A-PATHOGEN

What appeared to be on the face of it a clandestine cooperative to sell and rehash data between two hackers now seems to more likely resemble -- for want of a better term -- a pissing contest between two hackers who are competing to sell third-party data for a quick buck on the dark web.

This recurring theme of historical breaches has little pattern or direction, and has some successes and failures, making it almost impossible to predict. The hype and the sudden drop in faith and trust in a hacker's word now makes it impossible to prove any new alleged breaches when they happen.

And what's having the biggest impact on the hacking saga -- better for the hackers and sellers, but worse for the ordinary public -- is the dire state of password reuse. This sharing of passwords across services is security's fundamental undoing. Two services with the same credentials, and you can pass off a list of passwords with a claim to a hack on each. Once enough accounts have shared usernames and passwords that it creates the illusion that it's been breached, and it's difficult to walk away from because it's almost impossible for a company to prove it hasn't been hacked.

With a dark web market close to reaching a billion logins -- and another billion said to be in the pipeline -- it's not unreasonable to expect the worst. "There's been a hack." "Another company breached." That recirculated data will remain useful to someone -- an account hijacker, phisher, or just a typical run-of-the-mill spammer -- in one way or another, and for years to come.

Thanks to a decade of poor security and bad passwords, these sellers can just keep repackaging our fears and failures for months and years -- and for the most part, we're none the wiser.

Technology Made Travel Agents Obsolete. Now It's Saving Them (BW)

Booking travel feels old-school, no matter how you spin it: Such sites as Expedia and Orbitz have barely updated their layouts since 1999, and dialing a travel agent hardly feels appropriate in the age of Uber. That’s about to change, thanks to a series of disruptive travel services that are blending human intelligence with mobile technology. The goal: striking a middle ground in an industry where the personal touch still means something, but the bottom-line savings of D.I.Y. tech is hard to beat.

Whom it’s for: The time-crunched and independent-minded

What it costs: $400 for an annual membership, billed only when you make your first booking

“People have been writing our epitaphs forever,” said Jack Ezon, president of leading agency Ovation Travel and co-founder of Skylark, a members-only website and app that caters to the luxury leisure market. “Until recently,” he said, “our agency’s high-end customers weren’t going online—the internet was really a mass market space.” That has changed in the last few years, as every five-star company from Four Seasons to Aman began moving their business to the web. 

  

Enter Skylark, which is catering to a new psychographic that Ezon described as the “do-it-yourself until you don’t want to” economy: sophisticated types who know what they want, know how to find it, but simply can’t add to their to-do lists. For a $400 annual fee, they can browse a vetted list of seven to eight hotel-and-airfare packages, all offered at discounted agency rates, and then book within a matter of minutes. Members get the perks of booking with an agent—24/7 customer service, automatic rebookings in the event of flight cancelations, free upgrades, and so on—minus the back and forth. (Skylark is invite-only while in beta mode, and will open to the public by yearend.)

“We merge online and offline,” said Ezon of Skylark’s model. “Every digital transaction is paired with a live travel specialist who you can contact by phone, IM, e-mail … however you want.” The service will help you coordinate a scavenger hunt for the kids in Rio or get VIP access tickets to the British Museum in London, for instance.  

In a recent test, we found discounts that ranged from insignificant ($33 off a four-night stay at the Hotel Vernet in Paris) to impressive (29 percent off flights to London and a stay at the Corinthia). The best results come from package deals, which protect both hotel and airline from revealing specific discounts and damaging their price integrity.

What We’ll Do When Ad Tech Dies

When you analyze the effects of fraud, viewability and ad blocking on the digital display advertising business, then add the ever-increasing abilities of the traffic launderers to game the system, you reach an inevitable conclusion: ad tech has evolved into a toxic ecosystem that is killing itself, and it is taking digital advertising with it.

How We Got Here

In the golden age of digital, Google SEO ruled the web. Back then, you wanted the best possible placement for your organic search results. This meant following Google’s rules for almost every aspect of your online architecture. That was then.

Today, clickbait and recommendation platforms rule the web. The consequences of this transition are unfortunate. Publishers are economically motivated to use any means to maximize page views. This has spawned a plague of traffic brokers who specialize in traffic laundering at an almost unbelievable scale. It has also caused publishers to devolve user interfaces into the emotionally unsatisfying experiences they are today, motivating users to deploy content blockers, motivating publishers to create countermeasures, elevating the arms race to the next level, resulting in a vortex that is sucking the entire industry into oblivion.

At its core, ad tech’s sorry state is a function of scale and misguided media procurement strategies. Publishers need more traffic than they can realistically generate because their “real” traffic is undervalued or, some would say, indistinguishable from fraudulent traffic. If you need to take an order for 20 million impressions and you only have 2 million to sell, you will use a traffic broker to procure the additional 18 million impressions – everyone is doing it, even if they think they aren’t. Fraud is out of control.

A regulatory revolt is on the horizon. Things are going to change, whether they change because of a government agency or civil lawsuits or simply an economic crackdown. Too much money is being wasted in too blatant a way for this fraudulent behavior to continue unchecked.

I don’t want to speculate as to the method of ad tech’s demise. If I had to guess, I would posit a reinvention of ad tech with regulatory oversight, rather than its total destruction. But instead of worrying about where traditional ad tech may end up, I’d like to explore a possible future for the evolution of consumer messaging via the Internet.

Business Outcomes Are Better than Impressions

How can small and midsized publishers compete with super-scaled mega-sites without resorting to traffic laundering? By turning the business model right-side up again.

No business wants to purchase a CPM or a GRP or an impression. Given a choice, most businesses would prefer to purchase a business outcome. You could argue that the system already does this. It does not. We have developed sophisticated proxies that are optimized to correlate to business outcomes, but we (the industry) sell impressions. What if we actually sold business outcomes?

I’m not talking about direct response advertising. It already exists, and it doesn’t work for brand advertising or nonimmediate calls to action such as upcoming sales events. I am suggesting that through the use of data scientific research and machine-learning tools, we are on the cusp of understanding how to generate leads that will result in acquired customers and directly drive business outcomes. The goal is not new, but awesome new tools are just becoming commercialized.

Relentless Retargeting

If you watch a video entitled “Unboxing the Samsung Galaxy S7” four times, there’s a pretty good chance that you are in the market for a new smartphone. This is well understood. Current ad tech tools relentlessly retarget you to the point where you cannot visit another website for days without seeing display ads for an S7 or a competing brand that is willing to pay more money than Samsung to get in front of a person who is “in market” for a new device. There is a better way.

There are new tools emerging that enable publishers to combine common measurements for content adjacency, context, and behavioral targeting with pattern-matching algorithms to rank users into “in market” clusters (as opposed to targeting specific people). There are several programmatic creative tools capable of putting the right message in front of the clusters. The machine learning algorithms can continuously refine the clusters and, in many cases, can identify attributable paths to purchase. The result is the ability to guarantee a business outcome at a price. If publishers believe that advertising works, they can prove it by assuming some (or all) of the risk for a greater reward.

This may look like an iterative step up from bounties, and it may be. But the capabilities of the toolsets are increasing at an exponential rate.

Adtopia

Adtopia might look like this: platforms continue to sell targeted impressions (but would eventually offer business outcomes). Mega-sites get regulated into unprofitability. Quality publishers, realizing that they can never compete with platforms or mega-sites, evolve super-sophisticated data-driven business outcome capabilities and enjoy a renaissance where erudition (the filter set of choice) leads to guaranteed business outcomes for the highest-paying clients.

It won’t happen this way. There is no Adtopia, and ad tech will be with us in its current form until someone goes to jail. That said, things have got to change, and data science can lead the way.

Note: I have written a few articles that help illustrate the issue including: Non-Human Traffic, Ad Fraud and Viewability, The Root of Ad Evil, and Ad Blocking – This Time It’s Serious.

Where $9 Billion of Ride-Sharing Funding Has Gone So Far in 2016

The world's biggest oil nation alongside giant car companies are funding startups that may change forever the way we get around. 

Uber Turns to Middle East for $3.5B Investment

Ride-sharing apps have been attracting big money since the start of the year, with Saudia Arabia’s $3.5 billion investment Thursday into Uber Technologies Inc. only the most recent example of the industry's $9 billion's haul.

Some are passive investments in the future of transportation. Others have a strategic rationale, ranging from a desire to sell more cars to cab drivers to upending the traditional rental-car market. In several cases, automakers are joining startups in ventures that could end car ownership as we know it today. In that future, we get to Point A from Point B summoning fleets of self-driving cars by smartphone.  

Put into context: The amount flowing to ride-sharing apps so far in 2016 is almost twice the amount invested in another hot startup segment -- food-related technology startups including delivery services -- in all of 2015.

Here's a list of the most notable ride-sharing investments in the past six months, ranked by deal size, and what they are all about. 

Uber – June 2. Saudia Arabia’s sovereign wealth fund makes a $3.5 billion investment in the best-known ride sharing service. The investment is seen as a chance for Saudi Arabia to further diversify its portfolio into overseas companies and the fast-growing tech industry.

Didi – June 1. Jean Liu, the president of Uber’s biggest global competitor, Chinese ride-hailing company Didi, says her company is working on closing a funding round of more than $3.5 billion.

Didi –  May 13. China’s answer to Uber scores a $1 billion investment from Apple. Didi Chuxing already handles more than 11 million rides per day for some 300 million users across China. Apple’s investment is seen as both as a savvy financial investment at a time that profits from its core smartphone business are slowing, as well as perhaps an effort to gain R&D for its own automotive ambitions. Some suspect what Apple really wants is data from all those millions of daily rides to help train a self-driving car that the company has under wraps.

Lyft – Jan. 4. General Motors invests $500 million in San Francisco ride sharing app Lyft as part of a $1 billion fund raising round for the startup. The two companies say they will develop a network of autonomous vehicles as well as a series of hubs where customers can rent cars on a short-term basis.

Gett – May 24. Volkswagen invests $300 million into a strategic partnership with Israeli-based taxi hailing service Gett, which has differentiated itself by allowing users to order up on-demand rides from London’s traditional black cabs -- right after bidding to buy one of the biggest of those traditional businesses, Radio Taxis.

Via – May 5. Via, a ride-sharing app with headquarters in New York and its research and development wing in Israel, raised $100 million from a group of venture capital funds, including Pitango Growth and Russian billionaire Roman Abramovich.

Scoop – May 25. BMW’s venture capital arm, BMW I, makes an undisclosed investment as part of a $5.1 million fundraising round for the California-based carpooling app that matches employees of companies such as Cisco Systems and Microsoft Corp. for commuting in the San Francisco Bay area. BMW has previously helped start another Seattle carpooling service called ReachNow that lets users book chauffeur services.

Uber – May 24. Toyota enters into an agreement with the ride-sharing giant that includes a strategic investment of undisclosed amount. Toyota also will begin offering Uber drivers a new car leasing program.

Tesla has 780 million miles of driving data

and adds another million every 10 hours

Tesla’s customers are also test drivers amassing an unprecedented dataset that the company hopes to use to design its self-driving cars. And it hopes to do this before other car companies test their own self-driving technology with paying customers. So far, the strategy seems to be working.

Sterling Anderson, director of Tesla’s Autopilot program, told MIT Technology Review’s EmTech Digital conference this week that the company had recorded data from Tesla drivers who covered 780 million miles in the last 18 months. The company’s Autopilot program, launched in 2014, is not fully autonomous, but it uses a suite of ultrasonic sensors, radar and cameras to steer, change lanes and avoid collisions, and has been described as the predecessor to the full automation Tesla says it will release in 2018.

Tesla added sensors, radar cameras to its cars in 2014 to power its Autopilot feature.

Tesla’s rate of data collection is climbing fast. The company is adding another million miles worth of data every 10 hours, according to Anderson, almost double the figure Tesla CEO Elon Musk cited last October.

Tesla’s Autopilot feature still ranks on the low-end of autonomy (one of Volvo’s engineers called Autopilot an “unsupervised wannabe“). But Musk has been taking an incremental approach. His priority seems to be getting as many Tesla cars on the road as possible, streaming back data. “When one car learns something, the whole fleet learns. This fleet learning is quite a powerful network effect,” Musk said in a press call last year. “Any car company who doesn’t do this will not be able to have a good autonomous driving system.”

Volvo is planning to roll out its own self-driving test in 2017. BMW, Mercedes, GM and others are readying programs as well. But most players appear years away from reaching scale. Even Google, which launched its self-driving program in 2009, has only amassed just over 1.5 million miles on the road through its self-driving program, although admittedly it has taken the more challenging approach of building fully autonomous vehicles. Google augments its testing program by running new features against the entire simulated driving history of its 55-car fleet, and logs more than 3 million simulated miles per day without leaving the lab.

Tesla claims its strategy has taken it from the back of the pack to the forefront of self-driving technology. Given that almost every car company is now in this race, and you can even obtain kits to outfit existing vehicles, Tesla needs to be there. “The ability to pull high-resolution data from these vehicles and to update the vehicles over the air is a significant part of what’s allowed us in 18 months to go from very behind the curve, to what is today one of the more advanced autonomous or semi-autonomous driving features,” Anderson said.

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