A Conversation with Amino Partner Dr. Sue Xu: CES 2020 & Insights on Current Tech Trends
By Jacob Jiao, NYU ’22
Reach me at jacob.jiao@stern.nyu.edu!
The Consumer Electronics Show (CES) took place in Las Vegas, Nevada from Jan 7 to Jan 10. Arguably the world’s most prominent gathering place for everything consumer technologies related, the CES saw thousands of young innovators and giant incumbent players attend this year.
While much attention tends to focus on the latest buzzwords–artificial intelligence, big data…–companies presenting at CES 2020 promised technologies and products that would fundamentally disrupt, even more, entire industries like finance and healthcare.
I recently had the chance to sit down for a chat with Sue, who is one of AMINO’s managing partners. Prior to her work at Amino, Sue was a postdoc fellow at Stanford University where she began her venture into early stage entrepreneurship by becoming the founding scientist of biotech startups. Today, she holds three patents and has co-authored over 20 journal publications.
Given her expertise on and exposure to the world of venture and emerging technologies I was curious to hear Sue’s thoughts regarding this year’s CES.
To start, what technology trends did you find most interesting in the couple days that you were in Las Vegas?
So what we first noticed at this year’s CES was a lot more Korean speaking attendees present than in previous years. After talking to some Korean government officials at the show, I found out that there were around 250 Korean companies presenting this year, the country’s largest turnout yet. This puts it right behind the US and China, which boasted around 1000+ companies at the show each.
Going around the venue, what we noticed most was, of course, the three common trends that people talk a lot about these days: artificial intelligence, self-driving car, and 5G. Additionally, there are many companies targeted two industries which have yet to be heavily disrupted in mobile and social era: finance and healthcare, where AI has a chance and AMINO Capital has the most investment return in. This is largely because both industries are highly regulated.
I know AMINO has paid close attention to health tech and digital health startups in the past as it appears to be an innovative space. Whether it’s detecting sleep apnea or more effectively measuring blood sugar, more and more innovative technologies and wearable products have been appearing in recent years. Did any such products catch your eye at CES? What is your opinion on this space; is it as promising as it seems?
At this CES, there were a lot of IoT devices on display, many of which had a healthcare focus. To give an obscure example, Charmin, the toilet paper company showcased a mobile robot, which carried a roll of toilet paper on top and could be called by an app to deliver users toilet paper. Not surprisingly, a lot of these health and consumer-product companies enjoy being in the headline, and will position themselves as having incorporated “AI” into their products. So while I highly doubt, for example, this Charmin robot will be released to the general public any time soon, adopting AI does generate buzz for Charmin in the media. Indeed, we’ve seen our portfolio companies working with Fortune 500 in the past ten years to set up shows at CES, such as the world’s first smart cushion Darma (with Steelcase in 2015), and Drone powered aerial intelligence Skycatch (with Komatsu in 2015). Sesame Smart Lock (with CNET in 2018), Cassia Network for Bluetooth (awarded by Engadget in 2016), and Woobo family tech (covered by Wired) took advantage of CES platform and were covered extensively.
Another company I found interesting analyzed user DNA through a cheek swab test and then developed health recommendations based on collected information. What I find fascinating is that such consumer products would simply be impossible without advancements in fields like big data–in this case, allowing for deep sequencing technology to be so cheap.
To touch on just one last company, Withings is a consumer electronics company which just launched a new electrocardiogram (ECG) watch called the ScanWatch. What it does is continuously measure a person’s heart rate, whether they’re awake or asleep, and catch irregularities to alert users of abnormal symptoms. A lot of heart attacks or heart arrests, for example, happen during sleep, so there are legitimate use cases for this product. These sorts of wearables are becoming more and more of a hit as seen by the massive demand for Apple Watches last year. To my understanding Withing’s product has not yet been approved by the FDA but I’m quite sure many other companies out there are aggressively researching in this field to continuously improve upon this baseline. At AMINO Capital, we recently have invested in a Stanford University material science laboratory spin off, Wearlinq, the first stretchable multi-lead ECG wearable with a higher diagnostic yield and 10x reduced size over the current product in the US.
If you really think about why digital health or health technology has a chance, I think the way to look at it is through comparing a human body to an airplane. Airplanes have thousands of monitors precisely gauging every little parameter. On the other hand, as a much more complicated human we usually only have one annual checkup. After every plane trip, maintenance personnel thoroughly run through the entirety of the aircraft, shifting through downloaded data to detect issues and such. But what about humans? Comparatively speaking, our inspection appears much less rigorous. And so this is exactly why AI, big data, and improvements in health technology together have so much space to grow. This is why we enjoyed investment returns in big data, and startups that leverage big data in the healthcare field specifically.
Another area that AMINO has been involved in is financial technology (fintech). In the last decade, fintech ventures such as global cashless payments, digital currencies, and banking as a service (Baas), have earned over $100 billion in investments. Chime, an AMINO portfolio company, for example, has seen its valuation grow to $5.8 billion dollars as of late 2019 and helped increase adoption of “neo-banking” tremendously. Were fintech companies/products prevalent at CES? What are your perspectives on fintech going forward?
So fintech, propelled by AI and blockchain, is a very interesting domain that has been disrupting the landscape of the finance industry. One of the most interesting companies to me is Chime. When we first invested in them, a lot of people in the US thought, oh, this online debit card thing could only take off in developing countries where credit card usage isn’t proliferated. However, after a shakedown from the financial crisis and then a shift in attitude of millennials who have less of a desire to borrow on credit like their parents, things have changed. Maybe millennials simply want to separate from their parents’ bank accounts. Or rather than going to a nearby Bank of America, Chase Bank, or Wells Fargo, they prefer going online. Whatever the reason may be, the younger generation today seeks to find banks that are seamlessly easy to use, and simple to open an account for–like through an mobile app. So some of fintech is fueled by the difference in lifestyles between the younger and older generations.
Looking again at Chime, during its first couple years of operation, its user base consistently stayed less than 1 million. In these past 1–2 years, however, their user growth shot up and today, over 6.5 million customers are on the platform.
In looking at fintech startups, we look first at the team, and then their vision. We want to see the founder define his or her product as one for the future generation. For those hoping to become involved in fintech, I would say that it is important to keep an eye on the development of 5g because there is some crossover between the two fields with many investing and researching in both.
As more and more players enter this emerging field, the traditional finance industry faces massive disruption. As an investor in fintech, how do you view the dynamic between these young companies and large incumbents? Has the “old guard” been hostile to, scrambling to replicate and innovate alongside, or seeking to acquire these newcomers?
Taking Chime as an example again, when they first started in 2014, the big banks noticed, but were adamant or reluctant to consider many acquisitions. Instead they wanted these younger companies to grow a little bit, then see which ones had the best traction. With consumer products, it’s very difficult to predict their trajectories. So in the beginning, the venture industry played a large role in self-selecting the next big, most valuable projects. Banks were largely supportive. We, for example, worked with many early stage ventures, such as the Wells Fargo startup accelerator. Similarly, when we started our blockchain university back in 2014, a lot of the big banks became sponsors, and so in the early days, they were very open minded. While we believe such banks could have moved faster to innovate or adopt projects in the fintech space, at least from our perspective, there was not any notable hostility. Of course, as many of these once harmless fintech companies grew in size and scale, they became direct competitors. Chime, now boasting a $5.8 billion valuation, puts it elbow to elbow with many banks. Such competition, an inevitable product of innovation, in our belief, is not a bad thing.
To wrap up, what do you think people should look out for next year at CES 2021? What would you hope to see more of next year and which areas would you be most excited to see more innovation in?
Having gone to CES for many years, our top priority is always to meet our partners. With around 150 portfolio companies, we spend most of our time attending private meetings, and also with larger Fortune 500 companies as they constantly look for startups to partner with. Because 60% of our portfolio companies are enterprise solutions these meetings are very important to us. We produce recommendations and strive to be an influencer for Fortune 500 companies.
In my opinion, I don’t think CES is a place where companies go to simply launch the next big product. Apple to note, for example, never does. And so for everyday consumers, I don’t believe it is as interesting. In fact, CES is really more like a giant party hosted by an assortment of enterprise solution companies. Of course, large technology giants are present as well. The most important people and corporations, you can call them, come to CES almost just for the fun of it all. Samsung, for example, always steals the show with their most important executives presenting and whole floors of conference rooms rented out with beautiful showrooms everywhere.
In the upcoming years, I’m sure CES will continue growing larger in physical space and attention. They have new buildings being built and when we left, we noticed a brand new Chinese themed casino being constructed. More and more US companies will most likely continue showing up, being a hotbed for innovation and a center for world class talent. At the same time, you must not forget about the rest of the world too. China already has a large presence at the convention, and as mentioned before Korea is catching up. Next up you may have, Europe, India, Brazil, and other countries in Southeast Asia, showing up more. As money pours into these emerging markets and infrastructure and incentives are built up, it forms a positive feedback loop, driving technological output. We don’t see much yet from those regions but I am excited to see a boom in the next couple of years.
AMINO Capital is a venture firm based in Palo Alto, focusing on seed to growth stage investments in big data and data driven technologies, including over 150 high growth startups, with over 21 successful exits, 7 Unicorns, and over 17 startups with over $100 million valuation, including Assemblage (acquired by Cisco), Orbeus (acquired by Amazon), Ozlo (acquired by Facebook), GrokStyle(acquired by Facebook), Woomoo (acquired by Priceline), Contastic (acquired by Sugar CRM), Mobike (acquired by Meituan/Tencent), Evertoon (Acquired by Niantic | PokemonGo), Yiqixie (Acquired by Kuaishou/Tencent), Chime Bank, Voyage, AIFI.io, Vicarious, Paperspace, Skycatch, Webflow and Grail.
To learn more visit: http://www.aminocapital.com/
