Technology

Once America had an unassailable advantage, an economic flywheel that spun off innovation and Fortune 500 companies like a perpetual-motion machine. Bring in the best, brightest, and most driven from around the world; educate them or their children at its universities; then watch them start companies, succeed wildly, give back to their alma maters, and recruit new talent as the virtuous cycle began again.

It hardly mattered whether these immigrants came in as students (think Satya Nadella, Sundar Pichai, and Steve Jobs& father Abdul Fattah Jandali) or with their families (Sergey Brin and Jerry Yang) or as refugees (eg Alexis Ohanianfatherfamily) or as undocumented immigrants (eg Ohanianmother.) Meanwhile, the UK, thanks to its Commonwealth connections and universities like Oxbridge and Imperial College, did much the same on a smaller scale. It was a self-sustaining wealth-generation and nation-strengthening machine of gigantic proportions, and it would take colossal idiocy to want to interfere with it.

Enter Brexit. Enter Donald Trump. Enter their implicit and explicit rejections of immigration, including serious barriers to and discouragement of legal and skilled immigration, such as H-1B visa holders and international students — along with the general sense of &you&re not welcome here& that they&re clearly doing their damnedest to convey.

Meanwhile, across the Atlantic, that other great immigrant nation, France, has been working overtime for the last four years to open both its economy and its borders to tech startups. I was skeptical of these efforts a couple of years ago, but two days ago I sat down with former Cisco CEO John Chambers and Accel partner Joe Schoendorf to talk tech in France, and they&ve convinced me that under President Macron, &everything has changed.&

Itnot just that Macronreforms have made it far easier to hire and fire in France, making labor costs far more understandable and predictable — although this is a huge deal and a major sea-change. Itnot just that France is offering easy-to-access French Tech visas to founders, employees, and investors alike, so that itnever been easier for techies to live and work in France — which, as a former Paris resident myself, I can tell you is pretty great.

Itnot just access to a sizable pool of relatively inexpensive engineers. Itnot just openness across academia as well as the private sector (41% of France75,000 Ph.D students are not French.) Itnot just Paris beginning to surpass London in investor interest generally, not just in technology.

Italso the transformation of the French population as well as the government. 50% of French youth aged 18-24, and 70% of students at the École Polytechnique, Franceflagship technical university, want to go work for startups rather than enterprises — and their ambitions are now European and/or global, not merely French. Therestrength in depth there, too; Chambers compares the raw engineering talent at the Polytechnique to that at Stanford, and France is one Fields Medal away from overtaking the USA in total numbers won.

I can aver that all this is a massive change from when I lived in France a decade ago. Schoendorf says he can think of only one comparable example of a major developed democracy changing so much, in such a short time, as France over the last four years: the UK under Thatcher. Regardless of whether you lionize or demonize Thatcher, that gives you an idea of the scale of the transformation. (And itnationwide: 75% of Francemembers of parliament are new, and there are twice as many women as ever before.)

I don&t want to pretend that Silicon Valley is at risk of being supplanted by the Île-de-France. The Valley is and will remain the sun at the center of techsolar system. But France has now graduated from &asteroid& to &planet,& and is well on its way to &gas giant.& Not least because of its spectacular timing: inviting immigrants just as the US and UK are in the midst of the spectacularly stupid process of dissuading them, and just as the Valley has gotten so expensive, courtesy of NIMBY housing paralysis, that leaders there are looking for any way to diversify to other locales.

All this is beginning to have a measurable effect. There were 274 French companies at the latest CES, up from 13 less than a decade ago. There were more than 700 VC investments in French tech companies last year, which rivals the UK, and more than 50 had American VC involvement. Also, I don&t want to put too much weight on anecdotal data, but two serious, impressive tech people I know have, independently, moved from America to Paris in the last few months.

My chief complaint two years ago was that the French government wanted startups to make their big enterprises better and more competitive, rather than wanting startups to become their big enterprises. That has changed. As Schoendorf says, &Macron sees the worldfive most valuable companies, all tech companies on the West Coast of America, and thinks: we need one of those.& Pascal Cagni, chairman of Business France, has a more accessible intermediary goal: a French &NATU&, meaning Netflix / AirBNB / Tesla / Uber.

And heright. Francetransformation into Europeprimary technology power is real and ongoing, among all of government, academia, big business, and startups; but what they really need is a big hit and a cohort of successful entrepreneurs, a French equivalent of what the PayPal Mafia became. (Xavier Niel is having an enormous effect — see Ecole 42 and Station F, &the worldlargest startup facility& in southeast Paris — but he can&t do it alone.) If and when that happens, though, France will lead Europe for the foreseeable future … and help lead the globe, too.

Three e-mobility startups are accelerating into the U.S. motorcycle market.

Italy&sEnergicaand California basedAlta MotorsandZero Motorcycleshave revved up promotion, distribution, and sales.

You may see their machines zip by on American roads before the big two-wheel gas powered companies get EVs to showroom floors.

These startups could reboot U.S. motorcycle sales while shifting the global motorcycle industry toward electric.

The market

Since the recession, Americamotorcycle sector has been in the doldrums. New bike sales have dropped roughly 50 percent since 2008—with sharp declines in ownership by everyone under 40.

Most of the market is now aging baby-boomers, whose&Live to Ride&days are winding down.

Twobrightspots in the space are women and resales. Females are one of the few growing U.S. ownership market segments. And per anInsurance Institute for Highway Safetystudy, total motorcycles on the road actually increased from 2008 to 2017, though nearly 75 percent of registrations are for bikes over 7 years old.

So Americans are buying motorcycles, but for some reason not choosing new ones.

On the e-moto front,two-wheel gas manufacturers have mostly stagnated around EV concepts. None of the big names—Honda, Kawasaki, Suzuki, BMW—offer a production electric street motorcycle in the U.S.

Harley Davidson jolted the industry in February bycommitting to produce an EVfor sale by August 2019.

On U.S. e-motorcycle sales, Global Market Insights (GMI)recently tallied2017 combinedAmerican e-scooterand moto sales at 245K units worth $155M. Following worldwide trends, GMI projects that to grow to 598K and $304M by 2024, with the share of U.S. e-motorcycles to scooters increasing.

The startups and motorcycles

Alta, Energica, and Zero have niche markets for their unique tech and design.

ItalyEnergica is targeting the high performance, higher priced superbike segment. On disrupting existing market leaders such as Ducati or Kawasaki, &Of course we want to do that,& CEO Livia Cevolini told me.

Energica offers three models in the U.S.: the EVA ($26,240),EVA ESSEESSE9($24,940) and top line 145 horsepower, 150mph EGO ($26,460).

All three share innovative features, including a patented cooling system to optimize performance of their motors and high energy lithium polymer batteries.

08-01-2017 Torino, calcio campionato serie a Tim, gara Juventus-Bologna, nella foto: .photo damiano fiorntini

Energicaproprietary Vehicle Control Unit syncs to a digital dash and MYEnergica app. The VCU regulates everything from power output and preset riding modes to ABS andregenerative braking.

As a member of the ChargePoint EV network, Energica integrates the group20 minuteDC Fast Charging tech&because if want to ride Saturday with your sport bike friends nobody is going to wait 2 hours for you to charge,& said U.S. CEO Stefano Benatti.

He explained the company is expanding its American dealer network from San Francisco, to Chicago, Florida, and New York. Energica is also entering racing. Its EGO motorcycle was named the class bike forFIM2019 Moto-e World Cup.

Brisbane, California based Alta Motors focuses primarily on producing electric powered off-road machines. Four of Altafive models—including the three that are street legal—are specialized for dirt riding. The MX and Redshift MXR motorcycles are full on motocross racers.

The startup has raised $45M and counts Tesla co-founders Marc Tarpenning and Martin Eberhard among its investors.

From a design perspective Altatwo-wheelers are distinctly minimalist and produce significant power to weight. &We pioneered a new approach to building 18650 based packs,& Chief Product Officer Marc Fenigstein told TechCrunch—referring to the lithium-ion battery cells used by Tesla.

Alta recently launched its second generation—waterproof, 350 volt, 66 pound—battery. &That pack gives us unique…range per pound­­ for a battery pack and unique economics, not just for the world of electric motorcycles…but pretty much everything smaller than a passenger car,& he said.

Fenigstein estimated &the premium off-road motorcycle market is bigger than people think, at [roughly] $2BN.& He would not divulge Alta Motors revenue or sales figures.

Shortly after their EV commitment, Harley Davidson took an (undisclosed) equity stake in Alta, along with a board seat, and entered into a co-development partnership.

AltaCEO revealed Harleyrecent EV announcement &isn&t the program we&re working on&, but confirmed the Alta-HD partnership &should result in a motorcycle.&

Of the three startups, Scotts Valley, California basedZero Motorcycleshas the widest market and model breadth. The company has six base models,three with dual sport capabilities, distribution in 30 countries, and had sales of $90M in 2017 (according to GMI—Zero wouldn&t confirm revenue data).

&We&re the number one full sized electric motorcycle manufacturer in the world. We sell more every year than all our competitors combined,& CEOSam Pascheltold TechCrunch—though Zero did not provide exact figures.

Like Alta, Zero manufactures its EVs in the USA. The startup&sZForce batteryconnects to an internal magnet driven motor. Both are governed by a proprietary Main Bike Board (MBB) processor &the brain…that houses all of our algorithms,& said ZeroVP for Product Development Brian Wisman.

&The specific energy thatachieved on Zerolithium ion batteries is far greater than anything achieved by automotive EVs right now,& he said.

Zero motorcycles connect via Bluetooth to an app that allows riders to monitor and adjust performance from devices. The companyEVcan be fast charged from charging stations or by plugging into the same home outlet that powers your toaster.

In addition to citizen motorcyclists, Zero has started specialized fleet sales to the U.S. military and police departments.

The ride

I got a chance to test models from all three companies. The most significant distinctions between their e-motos and gas two-wheelers are power delivery and no shifting.

Zero, Alta, and Energicamachines are fully automatic—no clutch or gears.

Simply flick the on switch and twist the throttle to go. When you do an immediate and uninterrupted stream of voltage powered torque launches you forward. The wind is louder than the motor—though each e-motorcyclehas a distinct sound—and when you stop theresilence.

Energicabig battery acceleration is akin to striking a lightning bolt to the pavement. Altalightweight RedShift MXR is quick, nimble, and flight capable on a motocross track. And ZeroSR feels distinctly balanced across power, performance, and rideability. I didn&t find myself missing gas motorcycles at any point of the tests.

The biz play

Energica, Alta, and Zero face their own steep climbs to profitability—and the e-moto space has already seen two flops in Mission Motorcycles& collapse andBrammo sputtering out.

&We do have a burn rate. Like any sub-scale EV manufacturer such as Tesla, we are pre-profit,& said Zero CEO Sam Paschel. &The way to win is scale.&

And while these electric startups probably can&t revive new U.S. motorcycles sales to seven-figures annually—that would take 12 years of five percent growth—they could play a role in transforming the global motorcycle industry.

As their models close gaps on price, performance, weight, recharge times, and ride distance—Zero, Alta, and Energica could shift the market from gas to electric.

Their tech appeal and simplicity to ride could bring more first-time and younger riders into motorcycling, including women.

This — and HarleyEV production commitment — could pressure the likes of Honda, Yamaha, and Ducati to produce electric motorcycles sooner.

These factors (andregulatory tailwinds) could thrust Alta, Zero, and Energica into an active space for partnerships, mergers, and acquisitions. Their compact, lightweight technology has application for other non-auto, non-motorcycle e-mobility solutions.

Growing competitive pressure and a shift in two-wheel consumer preferences could also make Energica, Zero, and Alta acquisition targets for mainline motorcycle manufacturers.

Thata lot of speculation, but the big gas manufacturers are apparently watching. &Since HarleyEV announcement, three of the big motorcycle companies bought one of our bikes,& an exec from one of the startups told me on background.

&We&d like to think they&re just curious to ride our e-motos, but more than likely itto break them down and study the tech,& the exec said.

For the last few years now, BMW has wrestled with the question of what it&llmean to be a luxury car manufacturer in the age of electric cars, autonomous driving and rapidly changing — and increasing — customer expectations. What, after all, makes something the &ultimate driving machine& when the driver eventually stops driving

For BMW, the answer is a renewed focus on technology and the in-car experience it enables, without forgetting its heritage in performance cars. To discuss the state of the companytransformation, not just in terms of its cars but also its business model, I sat down with BMWoutspoken VP of Digital Products and Services Dieter May shortly after the company unveiled the latest version of its in-car operating system.

&We build digital products and services that are meant to help us differentiate our core product, the car and generate revenue,& May said. &But these digital services also provide us with channels and touch points that allow us to now have a direct relationship with the customer on the sales side and talk to the customer directly.&

In the car industry, however, the sales channel has traditionally been the dealership. Thatwhere you buy the car and thatwhere you get it serviced. Itthe dealer who knows (ideally) who you are and what you want. The manufacturerrole in this model is to build the car, maybe build a bit of a central online presence with a configurator so customers can get some idea of the carprice — and get out of the way.

Thatnot the future that May envisions, though. And neither is it one where the big tech companies like Apple and Google own the driver and the user experience.

&As we&re building the digital products in the car, we are also building out the car as a channel and touchpoint at the same time,& May noted. &We&ll have our app, a personal assistant etc. and with that, we can create a user profile and provide that to our sales teams. Today, virtually every car manufacturer can&t talk directly to the customers because the customer belongs to the dealer, and because the different business units, like after sales, financial services, etc., aren&t unified and all try to talk to the customer separately.&

So for BMW, digital experiences in the car are one thing — and you can expect to hear a bit more about this in the coming weeks and months — but the company is looking beyond this and how it can use this transformation to also create new business opportunities that go beyond maybe selling an in-car Spotify subscription for a few dollars. But what gets May most excited about this is the prospect of being able to talk to the customer throughout the ownership lifecycle. &Thatthe cool part, because it allows me tokeep the product ‘car& fresh throughout the lifecycle and manage it like a device,& he said.

The move that May is hinting at here means that BMW wants to not just focus on selling cars but to create a model where it can extract some revenue from users throughout the carlife. As an example, May noted that BMW may sell you a Mini with a charging package and, in addition, it&ll sell you a flat-rate subscription to charge it. &There are so many opportunities here, but you have to play it smart, both before somebody buys the car and after the sale.

If BMW wants to own the customer, though, that means dealerships have to change. &The dealers will have to grow into a different role over time,& May acknowledged. &We expect and hope that just as we will share data with the dealer, the dealers will share their data with us. A small piece of a larger cake is still better than nothing.&

Customers will still come to the dealer for their service needs, so BMW isn&t cutting them out completely, but the company definitely wants to own a larger part of the relationship with the customer. And at the end of the day, itthe dealer who represents the manufacturer, whether thattaking somebody on a test drive or helping the customer take delivery of a car.

&Whatmost important for us — and everybody is talking about autonomous driving and electric vehicles and so on — but if we don&t become a customer-centric company, then we are destined to fail. The number of digital elements in our customers& lives and in the car continues to increase, and if we don&t understand that, we&ve got a problem.&

As for its current in-car systems, May told me that BMW now has more than three million registered users for its ConnectedDrive system, but whatmaybe more important is that the number of user interactions is increasing significantly faster than that. Whatinteresting to hear is that the way BMW thinks about these users is pretty much in line with any consumer internet company. The team tracks monthly, weekly and daily active users, for example, and is working to increase those engagement numbers with every update.

One problem car manufacturers have long suffered from is that cars stick around far longer than smartphones, and that the in-car technology can quickly seem out of date. Because it is betting on a connected car that is always connected to the cloud, BMW (and, to be fair, many of its competitors) is now able to update the in-car software. Thattrue for new head units, but not necessarily for older ones, and fragmentation remains an issue — though with a standardized model for both BMW and its Mini brand, that&ll likely be less of a problem for newer cars than for those that launched two or three years ago.

&In the car industry, a lot of people think that everything has to be backward-compatible reaching back 20 years, but my take is that we have to be more like smartphone vendors,& said May.

Taking a page from the software industry, the BMW team often launches new features that are akin to minimal viable products. Thatnot necessarily something the luxury car buyer is used to, of course, but it does allow the company to test new features and expand on them as they gain traction.

The next concrete step for BMW in this journey is to feature an interactive personal assistant in the car that knows about the customer. May believes this will drive a lot of usage. Although the exact details remain to be seen, the BMW team hinted that we&ll learn more in the fall.