Toyota’s surprise executive shakeup may disappoint investors

Toyota’s president, Akio Toyoda, surprised the automotive world this week by announcing he would resign his position and hand the reins over to Koji Sato, who currently helms the company’s Lexus and Gazoo Racing divisions.

But Toyoda isn’t going far. The 66-year-old isn’t retiring outright, but instead retiring to the boardroom, where he’ll take over the role of chair.

Insiders aren’t expecting Toyoda to be hands-off, either. One executive said that Toyoda was about to embark on a period of “cloister rule,” a period in Japan’s history where the emperor retired to a monastery without actually ceding power.

If that’s the case, then the shakeup in Toyota City might not be much of a shakeup at all.

Toyota’s surprise executive shakeup may disappoint investors by Tim De Chant originally published on TechCrunch

Fifth Wall, focused on real estate tech and managing $3.2B, looks to eat up even more of its market

Brendan Wallace’s ambition is beginning to seem almost limitless. The L.A.-based venture firm that Wallace and cofounder Brad Greiwe launched less than seven years ago already has $3.2 billion in assets under management. But that firm, Fifth Wall, which argues there are massive financial returns at the intersection of real estate and tech, isn’t worried about digesting that capital. It’s heavy-hitting investors — CBRE, Starwood, and Arbor Realty Trust among them — don’t seem concerned, either.

Never mind that just last month, Fifth Wall closed the largest-ever venture fund focused on real-estate tech startups with $866 million in capital, or that it closed a $500 million fund earlier in 2022 that aims to decarbonize the property industry. Never mind that on top of these two efforts, Fifth Wall also expanded into Europe last February with a London office and a €140 million fund. (It also a large New York office, an office in Singapore, and a presence in Madrid.) As for the fact that office buildings in particular have been shocked by a combination of layoffs, work-from-home policies and higher interest rates, Wallace says he considers it an opportunity.

More, Wallace already sees many more opportunities he wants to pursue, including in Asia, as well as around infrastructure, including the buying and building of “utility-scale solar and micro grids and wind farms” that Fifth Wall plans to both invest in and to which it will provide financing.

It’s a lot to take on, particularly for a now 80-person outfit whose biggest exits today include the home-flipping outfit OpenDoor, the property insurance company Hippo Insurance, and SmartRent, which sells smart home technology to apartment building owners and developers. None have been spared by public market shareholders; still, talking to Wallace and the picture he paints of the world, it’s easy to see why investors keep throwing money at his team.

We spoke with him earlier today in a chat that has been edited for length.

TC: How is it that your many real estate investing partners are investing so much capital with you when it’s such a challenging time for real estate, particularly office buildings?

BW: It’s the same thesis we were we were founded on, which is you have the two largest industries in the U.S., which is real estate, which is 13% of US GDP, and tech, and they’re colliding and it represents a huge explosion of economic value [as] we’ve seen in this kind of super cycle of proptech companies that has grown up. Now, this additional layer has been unearthed around climate tech. The biggest opportunity in climate tech is actually the built environment. Real estate accounts for 40% of CO2 emissions, and yet the venture climate tech venture capital ecosystem only has historically put about 6% of climate VC dollars toward tech for the real estate industry.

How do you designate which vehicle — your flagship proptech fund or your climate fund — funds a particular startup?

How we define proptech is tech that is usable by the real estate construction or hospitality industry, so it needs to be tech that’s immediately usable by them — which can be a lot of different things. It can be leasing, asset management software, fintech, mortgages, operating systems, keyless entry — but it doesn’t necessarily have the effect of decarbonizing the real estate industry. It can be a derivative benefit, but it’s not the core focus. The core focus is simply that you have this industry that has been so slow and late to adopt technology that’s now starting to do so, and as it does, it’s creating all this value. We’ve already had six portfolio companies go public and we’re a six-year-old firm.

[As just one example], do you know how many multifamily units today have a smart device inside them? One percent of all multifamily units in the United States have a single smart device — any smart device: a light switch, shade, access control. There is a massive transition going on right now, where every single thing inside a building is going to become smart. And we’re at the dawn of that right now.

I do believe, though, that the opportunity in climate tech is a multiple of that simply because the cost required to decarbonize the real estate industry is so vast. The cost to decarbonize the U.S. commercial real estate industry is estimated to be $18 trillion. That is just the U.S. commercial real estate industry. To put that in perspective, the U.S. GDP is like $22 trillion to $23 trillion, and we have to decarbonize the real estate industry over the next 20 years, so one way to think about that is that we have to roughly spend one year of U.S. GDP over the next 20 just on decarbonizing our physical assets.

Where are the major spending areas on which you’re focused?

I’ll give you one very concrete example, which is literally concrete. If concrete were a country, it would be the third largest CO2 emitter on planet Earth after the U.S. and China. Fully 7.5% of global CO2 emissions come from making concrete. It’s the most used material on planet Earth after water. So you have this raw material that’s an input for all of our infrastructure — all of our cities, all the homes we inhabit, all the buildings where we do business — and that is generating 7.5% of global co2 emissions. And so the race is on right now to identify an opportunity to make carbon neutral or carbon negative cement. We actually invested in a company called Brimstone alongside Bill Gates and Jeff Bezos because they also see this opportunity that this is one of the major spend categories where that $18 trillion that’s required to decarbonize real estate is going to go. Then you can go further down [list], from glass, steel, cross laminated timber — just all of the materials that are used in making buildings.

More immediately, and this is more a question about repurposing space, but what do you think becomes of underused office space in this country over the next 18 to 24 months? It’s particularly extreme in San Francisco, I realize, given its population of tech workers who haven’t returned to the office.

I wouldn’t draw too much of a conclusion from San Francisco alone. I think San Francisco has probably been the hardest hit city. I don’t think San Francisco is the canary in the coal mine for the rest of the U.S. office industry. But with that said, I think we’re now in a moment where the pendulum has swung obviously very far in the direction of hybrid work and companies downsizing their physical footprints, but you’re already starting to see that these things are circular and cyclical and that some employees actually want to go back to the office, while CEOs are saying, ‘It’s hard to mentor and build culture and drive the kind of operational efficiencies we once had in an office in an entirely remote environment.’ So my sense is that we’re probably two to three years out from another pendulum swing back toward companies retrenching themselves in a physical office. I think we’re in an artificially low ebb in sentiment and demand for office.

Fifth Wall, focused on real estate tech and managing $3.2B, looks to eat up even more of its market by Connie Loizos originally published on TechCrunch

Warner Bros. swiped our Harry Potter wand IP, says Kano

Kano, the venture-backed U.K. startup known for its build-your-own computer kits and software for teaching coding and associated STEM skills, has accused Warner Bros. of copying one of its products and infringing on its intellectual property (IP).

The product in question is the Harry Potter: Magic Caster Wand that Warner Bros. announced back in October, and which began shipping to consumers in the U.S. and U.K. for $150 just before Christmas. London-based Kano issued a “cease and desist” to Warner Bros. this week, which TechCrunch has seen, requesting that the media and entertainment giant halt its go-to-market and promotional activities.

While Kano is probably better known for its Raspberry Pi and Windows-based modular PCs, the company launched a device similar to Warner Bros.’ new wand way back in 2018. Kano’s Harry Potter Coding kit came replete with a physical gesture-controlled Bluetooth wand designed to engage children through coding spells, making on-screen cauldrons change color, or feathers fly, via elaborate swishing motions with the wand.

Powering the wand are various sensors, including an accelerometer, gyroscope and magnetometer, which help the wand convey its direction and motion to the tablet or PC to which it’s connected.

In the intervening years, Kano says it has sold some 180,000 units of its Harry Potter coding wand, a figure that rises to 460,000 when you factor in similar gesture-controlled products Kano subsequently launched in partnership with Disney spanning the Star Wars and Frozen franchises.

While Kano is no longer actively marketing its Harry Potter wand, some of its retail partners — which have previously included Apple and Target — do still sell it.

Patented

Last April, Kano co-founder and CEO Alex Klein was granted a patent for the wand’s gesture recognition system, covering the basic mechanics of how it works: The user holds down a button to begin the gesture recognition, and the screen displays a cursor trail as the user moves the wand to show how a spell is being cast in real time.

It’s worth noting that Kano launched its wand as part of a brand-licensing partnership with Harry Potter rightsholder Warner Bros., which is why Klein says he was perturbed to learn of its new competing wand hitting the market a few months back.

In a conversation with TechCrunch, Klein explained that off the back of the initial success it saw with the Harry Potter wand in 2018, Warner Bros.’ corporate arm reached out to Kano to get it to explain a bit more about how the product works, including its componentry and how it’s able to recognize spells, and other potential use cases for the underlying technology.

And this is where things get interesting regarding its spat with Warner Bros.

Unlike Kano’s original Harry Potter wand, which was focused squarely on teaching kids how to code, Warner Bros.’ Harry Potter: Magic Caster Wand is all about the smart home. It’s designed to connect to devices such as TVs, lights and speakers, so users can control their contraptions using “spells” and choreographed wand gestures.

According to Klein, Kano had already envisaged such use cases with its own wand, and had made some early developments in the smart home realm.

“In the process of making it easy for a person to hold down the button on the wand and cast a spell, we realized that this is a new language for human computer interaction,” Klein said. “You could be casting spells not only to make Bertie Bott’s Every Flavour Beans explode on a screen, but you could [also] be doing gestures to control your lights, unlock your door and control the volume of music. We realized that this gestural form of interaction could be quite powerful and extended into other domains in the smart home. So we came in, they [Warner Bros.] got really excited about this idea of controlling the smart home.”

Klein showed TechCrunch a video of an early prototype of Kano’s wand controlling various connected devices, which he says was recorded in November 2018 as part of a demonstration in Warner Bros.’ offices.

Fast-forward to 2022, and with Warner Bros. bringing a similar Harry Potter wand to market, Klein says that he reached out to various people at the company to get an explanation, adding that he was told that an internal investigation would follow. But he said the line of communication went cold, leading to the cease and desist letter that Kano issued to Warner Bros. this week.

“A side-by-side comparison of the operation of both the Coding Wand [Kano’s] and the Spellcaster Wand [Warner Bros.’] makes clear — and has now made clear to multiple third-party observers, including patent and intellectual property experts — that an issue has arisen,” the letter states. “The new product uses intellectual property — multiple patent-protected assets, trade secrets, inventions, etc. — of Kano’s, some of which were shared in strict confidence with WB during the many detailed engagements between the companies.”

The story so far

Founded in 2013, Kano has raised some $45 million in funding from notable backers, including European VC Index Ventures, Barclays, Salesforce co-founder Marc Benioff and Microsoft, which worked with Kano to develop a Windows-based PC back in 2019.

Mark Zuckerberg is also apparently a fan of Kano’s products, according to this post from 2021.

Mark Zuckerberg apparently digs Kano. Image Credits: Mark Zuckerberg

However, Kano had been relatively quiet these past few years, announcing a round of layoffs in late 2019 and then not really releasing much in the way of new products. However, in 2021 the company did partner with Kanye West to launch Stem Player, a device that lets users isolate and remix individual song elements. It ultimately pulled back from the partnership due to antisemitic comments made by West.

Today, Kano continues to sell the Stem Player without West’s involvement, and a few weeks back the company unveiled the Stem Projector, while hinting at all manner of new products that may include food and clothes. The company also signaled its transition away from its legacy DIY PC business when it revealed it was spinning out its creative software suite Kano World as a standalone business.

However, the company does plan to stay at least a little bit true to its roots, as it’s developing a modular two-in-one device that can run Windows or ChromeOS, which Klein said it expects to push to market some time this year.

Kano’s upcoming DIY modular PC. Image Credits: Kano

Financially, things hadn’t been looking so great for Kano. At its most recently reported financial year ending of March 2021, Kano disclosed a pre-tax loss of £10.1 million ($12 million), though this was an improvement on the £16.8 million ($20.8 million) loss it reported the previous year. The company told TechCrunch a few weeks back that its provisional accounts for fiscal year 2022 show a pre-tax profit of around £1.2 million ($1.5 million).

What’s next

While Klein is naturally keen to paint an outwardly rosy picture of how things are going at Kano, the fact that it’s actively releasing and developing new products is an encouraging sign. However, a litigious IP scuffle with a billion-dollar mass-media conglomerate is probably the last thing it needs right now.

In a modern-day David versus Goliath scenario, defending IP rights in court as a relatively small startup is not a cheap pursuit — something that Klein is acutely aware of as he considers his next moves.

“It can cost up to $3 million to defend and protect a patent / technology IP,” Klein said. “This stacks the deck in favor of the big corporates. They can afford to throw aggressive lawyers at smaller companies and tie them up in process.”

There is nothing to say, at the moment at least, that this is definitely how things will unfold. But if it does, Klein indicated that he’s willing to do whatever it takes to defend Kano’s work, noting that he has been told by lawyers who have worked on the case so far, on a pro bono basis, that it’s a “pretty open and shut” case.

“If necessary, I’ll work late nights and weekends and represent us myself, pro se,” he said. “We will make sure our team’s hard work and creativity is not abused and ripped off. I may not have gone to law school, but all the proceedings are public, and can be understood with a little elbow grease.”

A Warner Bros. spokesperson finally provided TechCrunch with a comment, saying: “The claims made by Kano are without merit.”*

*This story was updated shortly after publishing to include a response from a Warner Bros. spokesperson.

Warner Bros. swiped our Harry Potter wand IP, says Kano by Paul Sawers originally published on TechCrunch

Energy transition investments hit $1.1 trillion — with a T — last year

Here comes the hockey stick.

After years of bumbling along, investment in the energy transition appears to be taking off. Businesses, financial institutions, governments and end users around the world sunk $1.11 trillion into low-carbon technologies, according to a new report from BloombergNEF. It was just over 30% more than 2021 and the second year in a row in which the growth rate exceeded that figure.

Perhaps more notable is the fact that for the first time ever, money put into the energy transition matched funds spent on fossil fuel investments. If you count the $274 billion spent on improving the electrical grid, then energy transition investments shot well past the fossil fuel fossils, hitting $1.38 trillion.

Over the last two decades, most low-carbon investments were targeted at renewables, including wind, solar and biofuels. They hit another record last year with $495 billion invested, up 17% from 2021. But in recent years, money has also been flowing into more diversified sectors, including energy storage, space heating, sustainable materials and electrified transport.

Last year was no exception. Investments into electrified transport — think EVs and charging networks — grew a whopping 54% in 2022 to $466 billion. Hydrogen, which is often uttered in the same breath as battery-electric vehicles, contributed $1.1 billion toward the trillion-dollar total. While that figure may seem small, it’s triple the amount the sector received in 2021. Overall, investment was balanced between supply (energy production and storage) and demand (energy users like transportation, heat and sustainable materials).

Most of the money has come from China. The country accounted for about half the total, $546 billion. The U.S. was second with $141 billion, and Germany was third with $55 billion. If the entire EU is lumped together, the bloc would have taken second place with $180 billion.

In particular, China dominates in areas like manufacturing capacity and supply chain development. Last year it spent heavily on electrified transportation and renewables like solar and wind. Given that combination, it’s possible that we’ll see Chinese solar panels flood the market once more, though this time they’ll be accompanied by cheap batteries. Inexpensive solar paired with cheap batteries is what’ll be needed to kick significant amounts of fossil energy from the grid.

If there was a dim spot, it was global equity and private investment in climate tech. Those numbers were down 29% to $119 billion. That should come as no surprise; 2021 was a crazy year for venture capital and private equity.

Energy transition investments hit $1.1 trillion — with a T — last year by Tim De Chant originally published on TechCrunch