ACQUIRE - Retailer Buys AR Startup for $US112M Cash

Home Decor retailer Williams Sonoma has bought AR startup Outward

Cookware and furniture retailer Williams Sonoma will acquire Outward, a 3D imaging and augmented reality startup with a focus on home décor, for $112 million in cash. According to Crunchbase the San Jose, California based Outward previously raised about $12 million in venture funding.

"Outward brings proprietary and transformative technology at the forefront of our industry, and we welcome them to WSI," said Williams Sonoma, Inc. CEO Laura Alber. Despite Williams Sonoma  having full ownership over Outward at the close of the deal, the San Jose based tech company will continue to operate under its current president, Clarence Chui.

The Archeticural Digest story illuminates the reasons why several home decor and home furnishing retailers are pursuing or have acquired Augmented Reality (AR) or Virtual Reality (VR) applications. According to this article IKEA is using the new Apple ARKit to add augmented reality to their online services.

WHY THIS IS IMPORTANT:
Demonstrates the need for acquiring emerging and innovative technology to support brand activities. Also shows a valuation that is more aligned with competitive advantage than the  revenue or free cash flow of the innovator. 

MARKET - Bitcoin Surges Higher

The speculation about factors driving Bitcoin value continues

Whether it is possible to know with confidence, the factors that are driving the value of Bitcoin at this point, seems unlikely. However, as a matter of support for conjecture that Bitcoin is not just a bubble are the announcements that derivatives and other financial products are being placed on the market by some of the largest trading organizations.

This morning Bitcoin value exceeded US$11,000. 

In Canadian dollars a Bitcoin was valued at C$13,770.48 earlier this morning.

CNBC asked panelists to explain this meteoric rise in value

OPINION - Yoplait's Mom On Campaign Takes a Stand

Someone is always judging moms! 

Yoplait brings this into focus for everyone and makes a compelling sales proposition. According to Google, the campaign delivered best-in-class results across all five Brand Lift metrics, including a whopping 1,461% lift in Brand Interest.

Good stuff here!

Emerge - Portea Medical Raises US$26M in Series C Funding

Emerging company in India takes healthcare to the patient

Portea Medical is a 'Late Stage Venture' that operates across four major segments in the healthcare space -primary care, chronic disease management, elder care and post-operative care. The services offered include physiotherapy, doctor consultations, new mother-and-baby care, specialty pharmacy, nutritional wellness, diabetic care, surgery discovery and tele-consultation. Their mantra is 'Heal at Home'.

"In under five years, we have served over 2.5 lakh customers across 16 cities in the country. We look forward to further refining the paradigm for consumer-centric healthcare here," said Meena Ganesh, MD and CEO of Portea Medical. "With this funding round, we will add more depth to our services and consolidate our position," she added.

Portea works with over 50 leading hospital partners, 15 pharma majors and leading insurance companies, according to company information. The model may be replicated in other developing markets to lower the cost of health care delivery and improve the level of patient care.

According to Crunchbase the Series C investment round was lead by Sabre Partners and MEMG CDC and brings the total funding of Portea Medical to US$72,500,000.

WHY THIS IS IMPORTANT: Heal at home services are being facilitated by new technologies. The concept may have the ability to reduce or eliminate the cost and resource commitments of the legacy health campus (hospitals) in chronic or post-treatment scenarios.

MARKET - 60 Seconds of Happenings on the Internet

CHANGE - FCC Plan for Net Neutrality

The FCC is expected to vote on the 'net neutrality' rules on December 14th. 

These rules presently require ISPs (internet providers) to treat all web traffic the same. Among the concerns arising from an FCC vote to repeal the regulation are these:

• Higher consumer costs
• Reduced consumer access to content services
• A playing field no longer level for consumers or content providers
• Elimination of competitive services
• Censorship of some content

The situation is expected to unleash a wave of lobbying. Opponents of the plan are expected to be Consumer Associations, content services like Netflix and social media giants Twitter, Google, Instagram and Facebook (TGIF). Supporters are expected to include large network providers, especially those who also own content services like Comcast and AT&T.

“Under my proposal, the federal government will stop micromanaging the internet,” FCC Chairman, Ajit Pai said in a statement last week. “Instead, the FCC would simply require internet service providers to be transparent about their practices.”

 CBC News covered this story and its implications very well and includes several of the interviews carried on the national radio network.

MARKET - Canada lagging behind in Ecommerce

Recent headlines suggest that Canada is lagging behind other economies in the development of e-commerce transactions.

Earlier this month the Royal Bank published 'Bricks vs Clicks - Why is Canada Lagging Behind in E-Commerce?'

Last spring, The Record published a story entitled 'E-commerce goes north, forcing Canada’s retailers out of hibernation'.

The following table of Stats Can information dated April 2017 shows retail sales up 4.5% over April 2016 and shows that while E-commerce is outperforming bricks and mortar activities, it is still only 2.46% of total retail sales.  

	April 2016r	April 2017p	April 2016 to April 2017p
	thousands of dollars	thousands of dollars	% change
Retail Trade sales (44-453)	46,164,282	48,253,352	4.5
Electronic shopping and mail-order houses sales (45411)	693,493	828,424	19.5
Retail E-commerce 1	851,144	1,205,434	41.6
Retail E-commerce share of total retail trade (%)	1.82	2.46

r - revised

p - preliminary

Source(s):

CANSIM table 080-0033.

The US Department of Commerce, International Trade Administration, supplies information to American exporters. This Report from August 2017, provides a window on their assessment of Canadian E-Commerce. 

Although they acknowledge Canada is one of the heaviest users of the internet,  two quotations from this US report are telling about the state of e-commerce in Canada:

"Although Canadians prefer to support Canadian businesses, a significant proportion of the nation’s e-commerce spending goes to non-Canadian websites. One-third of the total spending is in the United States and the rest in Asia (primarily China) and Europe.  In fact, 67 percent of online purchases Canadians made in 2016 were from other countries."

"As of March 2017, retail e-commerce sales totalled approximately C$1.2 billion. Retailers are investing in digital platforms to reach consumers dispersed over a vast land mass while responding to competition from global e-tailers such as Amazon. In fact, by 2015, 84 percent of Canadians had purchased something online and more than 20 percent of Canadians shopped online about once per month. It is estimated that there will be 20 million digital buyers in Canada who will spend $50 billion annually online by 2019, representing 10 percent of all retail purchases in Canada. Twenty-seven percent of Canadians have shopped online once a month and it is estimated that the e-commerce industry will reach C$50 billion by 2020, representing 10 percent of all retail purchases in Canada."

WHY THIS IS IMPORTANT:
This glimpse of e-commerce suggests there is a great deal of opportunity for e-commerce in Canada. It also suggests that Canadian firms should accelerate their e-commerce strategies and tactics to reduce or eliminate the number of Canadian consumers who cross the border for e-purchases. Perhaps it also shows a degree of risk in this new economy for those who are unwilling or unable to maintain their consumers online with purchases and services. Finally, the numbers show that e-commerce is growing as a category at 4 to 5 times the rate of growth for all retail. Perhaps it would be prudent to curtail new investments in bricks and mortar.

MARKET - 100 Years of Changes in Value

A chart showing the market capitalization of leading organizations in 1917, 1967 and 2017 shows the changes in value and industry leaders are profound.

Determining what will be the next 'blue chip' investment is complicated. This look at what the economy (consumer) is driving and what the investor is valuing is more than interesting:

MARKET - Tesla's Pricing for Semi Truck Lower Than Expected

Tesla releases pricing for its new series of Electric Semi's

With Elon Musk focusing on the cost of operation instead of the purchase price at last week's unveiling, most analysts in the trucking industry were projecting prices in the US$220K+ range. 

However, Tesla has beat projections by revealing the following expected prices:

• Tesla Semi 300  (300 Mile Range) @ US$150K
• Tesla Semi 500  (500 Mile Range) @ US$180K
• Tesla Semi Founders Series @ US$200K
• Most diesel semi trucks today cost around US$120K.

THE COMPLETE TESLA SPEC SHEET AND PRICING FOR THE SEMI

Confirmed orders for the Tesla Semi.

Musk says the truck is expected to be delivered in 2019, has achieved a drag coefficient of 0.36 which beats some modern passenger cars and with its four independent electric motors is capable of acceleration from 0-60 mph with a full load (80,000 lbs) in 20 seconds.

Naysayers are numerous. However, it may not be prudent bet against Musk, the man who is reusing rockets by landing them in a vertical position (when everyone said it couldn't be done). Musk is also the man who yesterday won a $50m bet by installing the world's largest lithium battery in Australia in under a 100 days.

OPINION - Josh Marshall on the Digital Media Crash

Joshua Marshall is an American Polk Award-winning journalist and blogger who founded Talking Points Memo. 

The New York Times Magazine calls his blog "one of the most popular and most respected sites" in the blogosphere.

Perhaps you've been wondering how the digital media/advertising/news complex works. Or, perhaps you're wondering why advertising seems more expensive and less effective than you expected in this new paradigm. 

What ever you imagined, this opinion piece is a good explanation of what may be occurring. What Marshall has to say about the digital news media crash deserves further attention by investors, advertisers and marketers. 

Here is the link to his article published on November 17th. 

MARKET - E-Commerce Booms While Retail Remains Flat

On Monday, November 20th, 2017, Business Insider ran the headline: "NOTHING CAN STOP THE SHIFT TO ONLINE SHOPPING"

The article referenced the recent US Department of Commerce report of Q3 sales. The estimate of U.S. retail e-commerce sales for the third quarter of 2017 totaled $107.0 billion, an increase of 1.9 percent (±0.7%) from the second quarter of 2017. The third quarter 2017 e-commerce estimate increased 15.5 percent (±1.1 %) from the third quarter of 2016 while total retail sales increased 4.0 percent (±0.4%) in the same period. 

E-commerce sales in the third quarter of 2017 accounted for 8.4 percent of total retail sales.

As Business Insider declared, "There is one sector in retail that is seriously booming". Meanwhile, overall retail sales are flat, barely ahead of inflation. Comparing these numbers to statistics for retail and service brands involved in e-commerce transactions shows a problem is rapidly developing. Most brands do not have a strategy or effective tactics to compete with the sector domination of a few large online brands.

WHAT YOU NEED TO DO
If you do not have an effective plan to support online transactions (e-commerce), get help to determine if that will effect the sustainability of your business. If it turns out e-commerce will disrupt the sustainability of your business, find help to assess if your business can be aligned with one of the dominant online players that will sell and/or fulfill your offerings online (Like Amazon). If that strategy is unavailable, get help to find a strategic partner or an acquirer in your sector. One of the disruptors of your business may find your products, services and clients desirable. Above all else, get good advice and make your moves before you are left on the sidelines. Being on the margins of disruption isn't where you want to be.

ACQUIRE - Bell buys Alarm Force for C$166M Cash

Two weeks ago, BCE Inc. offered C$16.00 per share to acquire AlarmForce Industries Inc., a leading home security and automation firm in Canada. 

Alarm Force is said to have 102,000 subscribers paying an average monthly fee of C$35.00. The transaction is expected to close in January 2018. 

Bell's offer represented a 71% premium to AlarmForce's closing share price of $9.34 on November 6, 2017 and a 70% premium to the 20‐day volume weighted average price for the period ending November 6, 2017.

George Cope, President and CEO of BCE Inc. and Bell Canada said the acquisition would "Leverage Bell's network and service leadership and our place in millions of Canadian homes. We look forward to growing our nascent position in security and automation services to ensure Bell residential customers are at the leading edge of connected home innovation."

While most analysts believe the transaction isn’t material to Bell’s bottom line we see the transaction as part of a strategic move.

RBC Capital Markets analyst Drew McReynolds advised clients, that “Strategically, we believe the acquisition highlights the growing battle among telecom operators to own the home as well as the desire to tactically and actively participate in over-the-top services (such as home security and home automation),” 

Barclays analyst Phillip Huang was quoted as saying the deal, (less than 0.2 per cent of BCE’s market cap) is “a small acquisition that serves big purposes." In his message to clients Huang noted that AlarmForce is another product that can be bundled with internet, TV and telephone. Bundled customers are less likely to change providers due to the hassle. For network providers, a reduction in customer churn is desirable.

More details are available from the press release.

WHY THIS IS IMPORTANT
Network providers, online retailers and equipment manufacturers are all chasing the 'connected home'. Amazon's Echo and Echo Dot as well as the Google Home devices are prime examples of the race to 'own the home'. Adding innovative applications that allow these devices and the network connections owned by large players like Bell, Rogers, Telus and Shaw to be more effective and productive is the next battlefield. So who will win? Those who currently own the cable, wired and wireless connections to the home or those with the largest pool of content, the most available products and services or the most applications that consumers use. Stay tuned.

EMERGE - Healthmatch App Wins TechCrunch Battlefield Australia Competition

HealthMatch makes clinical trials more accessible to patients who need them. Recruiting for clinical trials can prove costly for CROs and tedious and time-consuming for patients. 

HealthMatch uses machine learning and proprietary algorithms to efficiently match patients with the trials for which they’re eligible. The service is completely free for patients and charges CROs on a per-client basis or on an annual license.

ACQUIRE - Procter and Gamble buys Native Deodorant for US$100M Cash

Native sells natural deodorant and a million online customers for US$100M Cash

According to a TechCrunch report last week, consumer products giant Procter and Gamble is acquiring Native a natural deodorant brand, for $100 million in cash. San Francisco-based Native initiated business in 2015 and previously raised seed funding from Azure Capital Partners.

According to industry sources,  Procter and  Gamble recently announced they would be transparent about what’s truly in their fragrances by the end of 2019. This is a huge move considering “fragrance” is an umbrella term that can include a myriad of chemicals (which are not legally required to be disclosed).

Industry Analysts estimate the annual sales of Native to be between US$25-30 million per annum.

WHY THIS IS IMPORTANT
Native moved deodorant into a subscription based business. Procter and Gamble's acquisition price does not seem related to free cash flow or revenue. It seems to be more about acquiring an innovative approach to deodorant. In that respect this purchase is not unlike Unilever's earlier purchases of Dollar Shave Club and The Honest Company. Given the high cost and time required to develop a product and a subscriber ecosystem, acquisitions like this one may well become common place. 

OPINION - Peter Hinssen on Ignorance and Innovation

A serial entrepreneur, advisor, keynote speaker and author, Peter Hinssen is one of the most sought-after thought leaders on radical innovation, leadership and the impact of all things digital on society and business.

Hinssen brings forward the idea that organizations need to have a percentage of people who Don't Know What They Are Doing to be innovative and bring forward the best result for the future. 

Hinssen points to emerging companies where the percentage of these people is much higher than in mature organizations. He shows that innovators in these legacy organizations spend a disproportionate amount of their time wrestling with those who Know What They Are Doing but will never generate a different result. 

INNOVATE - An IoT Solution Improves Wine Making for Henry of Pelham

Last week Bell announced it has partnered with BeWhere Technologies and Huawei to implement an automated Internet of Things (IoT) solution for the Henry of Pelham vineyard to help improve planning and sustainability programs.

By using wireless environmental sensors connected to Bell's LTE-M wireless network, the winery will be able to remotely monitor temperature and water levels, prevent vine disease, and ultimately improve the health of its plants, lowering operating costs and providing for years of maintenance-free data gathering.

"Unexpected adverse weather conditions can impact quality, yield and mortality of our crops," said Matthew Speck, Owner/Viticulturist of Henry of Pelham Family Estate Winery. "Bell's solution will increase the density of our environmental monitoring. We'll be able to automatically act on temperature inversions by turning on fans when temperatures change, ensuring the health of our grapes and an optimal product for our customers. The solution is not only economical and scalable, it gives growers a good view of the vines' temperature needs to improve quality and drive sustainability."

In June, Bell announced it will launch an LTE-M (Long Term Evolution, category M1) wireless network in 2018 to support the rapidly increasing use of IoT devices on low-power, wide-area networks (LPWANs) in Canada.

LTE-M improves the operating efficiency of IoT devices by enabling very low power consumption and better coverage in underground and other hard-to-reach locations. In partnership with Huawei, Bell has successfully demonstrated these benefits in its Mississauga wireless innovation lab and in network field trials.

"Bell's LTE-M network combined with BeWhere's environmental sensors and cloud-based applications will provide Henry of Pelham with a perfect solution to help them do what they do best – produce fine wines," said Owen Moore, CEO of BeWhere. "We are thrilled to have the opportunity to work with Bell, Huawei and Henry of Pelham on this project."

WHAT YOU NEED TO KNOW:  LTE-M is intended to support a broad range of large-scale IoT solutions, including smart city services, smart metering, home automation, weather and environmental monitoring, asset tracking, supply chain management, security monitoring, transportation and logistics, as well as personal wearables for healthcare and accessibility applications.

INNOVATE - Loblaws, Walmart and J B Hunt have Purchased the Heavy-duty Telsa Trucks

A Need to Reduce Carbon Emissions is driving Tesla sales

Loblaws has pre-ordered 25 of Tesla's new heavy-duty electric trucks called the Tesla Semi to join Walmart in adopting the new technology.

“It’s part of our commitment to electrify our fleet,” spokeswoman Catherine Thomas said. The company has committed to have a fully electric fleet by 2030. To accomplish this goal Loblaws would need to add 350 zero-emission tractors and more than 2,000 zero emission trailers to its fleet.

The Ontario-based grocer says removing diesel from its transport trucks and refrigerated trailers could reduce more than 94,000 tonnes of carbon dioxide emissions annually, the equivalent of removing more than 20,000 cars from the road.

Reuters is reporting that Walmart and J B Hunt Transport Inc a major US hauler have also placed firm orders for the Tesla Semi. 

Wal-Mart said it plans to order a total of 15 Tesla trucks, five for the United States and ten for Canada. The company operates a fleet of about 6,000 trucks in the United States.

JB Hunt Transport Inc is the first major U.S. trucking company to announce an order for Tesla’s new “Semi” electric trucks, saying it has reserved multiple vehicles for use on the U.S. West Coast.

According to Reuters, about 260,000 Class-8 trucks are produced in North America annually, with a value of about $28.6 billion. The first deliveries of the Tesla Semi trucks are expected in 2019. Tesla has not identified any other buyers for the truck but claims it will be faster, easier and safer to operate than comparable diesel trucks.

Tesla claims that a fully loaded Semi consumes less than two kilowatt-hours of energy per mile and has a range of about 800 kilometres. That could save owners at least US$200,000 in fuel costs over 1.6 million km.

Some analysts believe China will also be an early adopter of this technology.

ACQUIRE - Facebook Acquires TBH Application

According to industry sources, Facebook paid just under US$100 million for the 'tbh' app but they have not released the details. 

Several weeks ago Facebook acquired social media application 'tbh'. The months old application has already attracted 5 million users (downloads) who have sent more than a billion messages. The application reportedly has 2.5 million active daily users.

The application allows users to anonymously answer questions about their friends, fellow employees and other parties in their network. The 'tbh' application works by giving users a description, such as "always the best dressed," then allowing them to anonymously choose which person meets that description from a small set of names in their network. By keeping the activity structured, 'tbh' expects to maintain positive conversations, instead of regressing into bullying as other anonymous apps have done.

It is unusual for Facebook to acquire an application that is focused on anonymous activity. However, the social media giant is seeking new ways to reach young users who are fickle but savvy and often responsible. While this cohort may not be as loyal as others they can be engaged to communicate in different ways that attract their interest. 

In her statement Vanessa Chan, a Facebook spokesperson, said, “TBH and Facebook share a common goal -- of building community and enabling people to share in ways that bring us closer together. We’re impressed by the way TBH is doing this by using polling and messaging, and with Facebook’s resources TBH can continue to expand and build positive experiences.”

The staff of 'tbh' will move into Facebook infrastructure and use FB resources but maintain their autonomy from other FB activities. 

WHAT YOU NEED TO KNOW:  Facebook’s advertising business model requires people to use their real identities, make clear what they like or don’t like and have their social behaviours attached to their identity. This acquisition seems to show the rising value of acquiring an ecosystem with lots of activity and widespread appeal even if it doesn't fit the old paradigm. Perhaps a new recipe is required to grow a giant but mature social media play.

EMERGE - Tesla Truck Launch (Surprise ending)

Lots of fun at the Tesla Launch last night! 

Tomorrow doesn't seem that far away. 

This really could be a 'hard core smack down' for diesel and gas burning vehicles!!

Change Management - IBM on Accidental Agitators

IBM recently published an Executive Report and InfoGraphic for the transportation sector that was entitled 'Accidental Agitators'.

Please click on the image below to see the entire IBM InfoGraphic. Even though you may not be in the transportation sector, there is much to learn here.



We believe you will be struck by an emerging picture of what is driving digital reinvention and also where the drivers are coming from. The picture coming into focus is that the disruptors of your business may not be those who you have always looked upon as your competitors. In fact, those who can disrupt your business may not even be in your sector.

Furthermore, as the borders of the world and industry you know become blurred, porous or even non-existent you will need to become agile or risk losing the relevance required to sustain your business.

As you think about reinventing your business, we believe this IBM information  can provide you with the keys to creating a new model and new values with consumer centricity through openness, innovation and collaboration. 

It's time to grab the handles of your wheelbarrow!

If you want to be around for 140 years you must be willing to change!

Last year, GE CEO Jeff Immelt and Satya Nadella, CEO of Microsoft discussed why General Electric one of the world's largest industrial companies was becoming a digital company!

"When you realize the jet engines you produce have sensors that produce more than a terabyte of information on each flight, you begin to realize you already are a digital company with the need for an industrial strength cloud based system to process and deliver the information you have collected."

Robots Check the Shelves at Walmart, Intel Invests US$17,500,000

Bossa Nova Robotics Inc. is sending its shelf-scanning robots out to 50 Walmart stores in a real-world use of technology to help one of the planet’s largest retailers keep its aisles stocked and ready for customers.

Perhaps that's why Intel and others are supplying new capital to this innovator in robotics.

Late last month, Walmart confirmed the relationship with Bossa Nova and stated it would provide their employees with near real-time data about what is on the shelf, what is not and what has pricing errors. Walmart does not expect it will reduce the head count of its retail stores, but does expect it will eliminate the number of times a client can't find a product or find it at the advertised price. 

There may be other advantages for logistics and inventory management as well as for Walmart's new Ecommerce services.

Crosbie Report - Q3 2017 Merger and Acquisitions in Canada

Is it time for Information Technology to attract investment attention?

Crosbie Company Inc., released their Q3 2017 Report on M and A activity in Canada last week. While information technology was not the primary story, one little paragraph in the report caught our attention:

"Information Technology and Utilities also experienced

increases in activity during the quarter, increasing 12% and

80% (from 10 to 18) over the same quarter last year,

respectively."

Innovators developing Information Technology in Alberta cannot be criticized for wondering when capital would be available for the applications and technology they wish to bring forward.

The Alberta Government program to provide Investment Tax Credits (AITC) awaits eligible investors, reducing their risk with a 30% Tax Credit to attract new capital. Recently Urban Animal Corporation received approval to raise C$2.65 million under this program. Perhaps the timing will be right for things to now move forward.

A big Thank You to Richard Betsalel, Managing Director of Crosbie for sharing the merger and acquisition information with us.

Waymo Formerly Google Self Driving Cars

Watch as three Waymo self driving cars take their occupants to work!