Failed Palo Alto Startup Pivots From Trying To Be an 'Android Killer' To Self-driving Tech (bizjournals.com)

A Palo Alto startup that stopped trying to be an "Android killer" last year after raising $185 million has apparently pivoted to developing autonomous vehicle technology. From a report: The company now known as Cyngn has changed its name from Cyanogen and recently got a permit to test its self-driving tech on California roads, according to a report Wednesday on Axios. It's being led by Lior Tal, the former chief operating officer who took over as CEO last fall when Kirt McMaster left. The rest of the startup's current team of about 30 people appear to have joined since the strategy shift, Axios reported, citing LinkedIn records. Some of them are former Facebook people, like Tal, and alumni of automakers who include Mercedes-Benz. No new funding has been disclosed for the reinvented company. It lists on its website investors who backed it before it pivoted, including Andreessen Horowitz, Benchmark Capital, Redpoint Ventures, Index Ventures, Qualcomm and Chinese social networking company Tencent. The company was the center of acquisition talk in 2014, when companies like Microsoft, Amazon, Samsung and Yahoo expressed interest in the company.

Comments

Ok, this makes no sense

[ebrandsberg]

If a startup fails to come up with having a compelling profit-making story, but has money left, wouldn't it be the prudent thing to return the money to the investors, then decide, what should be done now. Not completely pivot to a new space that has zero relation to the original investment? If the team is basically one remaining guy, and a completely new team, how does this even fly with the investors?

Re:Ok, this makes no sense

[sexconker]

Rule 1: Investors are dumb.

Re:Ok, this makes no sense

[EndlessNameless]

The CEO decides what to do with the money---it's a corporate asset.

If the board of directors doesn't like what he's doing, they can fire him.

The board is elected by the shareholders, aka the investors.

If they don't like the new direction, they can fix the problem. There's a process for that.

Re:Ok, this makes no sense

[ebrandsberg]

I think this closely corresponds to the evaluation on if you should sell stock options as they vest with a company. The thought experiment with this is: Would you sell your options, then with cash in hand, invest it back into the company or should you invest into ANOTHER company. If you can't say that any money you invest should go into the company you are working for, then you should cash out and invest elsewhere (tax considerations and such aside). Would you as an investor have one team that failed, lost everybody but the COO, now CEO, and then have him rebuild with a completely new team with the money, from scratch, OR would you take that money, and invest into a team that came together and has the pedigree to actually execute in the new space already? Keeping the money in the old company just doesn't make sense vs. re-evaluating where it should go with a fresh perspective. It is a sunk cost fallacy to keep it in the old company.

Re:Ok, this makes no sense

[Kristoph]

In most cases investors do now want the money back, especially traditional VC's. In one startup I did we established - after launch - that there wasn't the growth opportunity in the market that we expected. We were offered a price for the existing business that would have returned a high percentage of the initial investment back to the investor which we thought was a 'good thing to do'.

In response the VC said: 'If this didn't work figure out what will and then spend all but the last dollar trying to get there. The last dollar we'll roll into a join and smoke it' ( we're in WA so this would have been a legal activity ).

Re:Ok, this makes no sense

[Faluzeer]

Rule 1: Investors are dumb.

I believe the Ferengi (from Deep Space 9) rules of acquisition cover this :
Rule 1 : Once you have their money, you never give it back.

Re:Ok, this makes no sense

[ShanghaiBill]

Rule 1 : Once you have their money, you never give it back.

Really. Until the money runs out, they continue to receive their salaries, and they keep the foosball table. What possible motivation would they have to give the money back?

Also, with SD, they don't have to develop full product. They can just get some key patents, positioning themselves for an acquisition by Waymo or Uber.

Re:Ok, this makes no sense

[Darinbob]

"Pivot" means all new staff. Unless they're so amazingly stupid that they think smart phone developers are also AI experts.

Re:Ok, this makes no sense

[Hognoxious]

Is it the same process that keeps executives' pay in line with their performance?

Re:Ok, this makes no sense

[Hognoxious]

The last dollar we'll roll into a join and smoke it

Joins are not webscale.

Re:Ok, this makes no sense

[Hognoxious]

The fucking word's so overused it barely means anything any more.

Like Kato Kaelin "pivoted" from an actor to a gardener.

Re:Ok, this makes no sense

[rogoshen1]

what a quaint idea! nothing like a bit of humor to brighten up a dreary wednesday afternoon -- thanks bub!

Re:Ok, this makes no sense

[angel'o'sphere]

The company is usually an incorporated.
The investors have a contract with the company to pay money in chunks (every x month).
The investors usually hold shares of the company.

So no: wouldn't it be the prudent thing to return the money to the investors
It s not even legally easy possible. E.g. in Germany a company can not hold its own shares easily (I simplified)

Re:Ok, this makes no sense

[Qzukk]

Joins are not webscale.

MongoDB can do joins now. Joins have always been webscale. We have always been at war with Eastasia.

Re:Ok, this makes no sense

[EndlessNameless]

Oh, I agree that this is just going to burn the rest of their money.

But I was responding to question "do they have recourse?"---yes, they do.

If they want the CEO to reinvent the company, it's their money. I imagine that most of them are rich enough that they won't starve after losing a few million dollars.

Re:Ok, this makes no sense

[EndlessNameless]

Is it the same process that keeps executives' pay in line with their performance?

Absolutely.

The board inflates the CEO's salary, and the CEO inflates the stock price. They both get want they want. The process is working well for both sides.

It's the poor suckers who end up jobless that get shafted. And maybe the banks and the suppliers if you count collateral damage.

Re:Ok, this makes no sense

[SCVonSteroids]

I'd like to sign up with this VC of yours. Seems like a fucking cool cat.

Re:Ok, this makes no sense

[geoskd]

how does this even fly with the investors?

These investors were stupid enough to invest 185million in a startup that was trying to compete with a free operating system for other peoples phones. These investors are obviously too stupid to have even done rudimentary research on the idea/team they were investing in, so I can't see any particular reason that they should be on th ball enough to even know what a self driving car is, much less whether it is a good investment or not.

Re:Ok, this makes no sense

[geoskd]

I'd like to sign up with this VC of yours. Seems like a fucking cool cat.

You can't, He ran out of money a long time ago...

Re: Ok, this makes no sense

[Jesus H Rolle]

Gardening is a growing field.

Re: Ok, this makes no sense

[Lanthanide]

That's farming.

Re:Ok, this makes no sense

[Hognoxious]

Of course you can return the money to the investors. You pay off outstanding debts and liquidate the corporation and divide up what's left.

P.S. Palo Alto isn't in Germany.

Re:Ok, this makes no sense

[angel'o'sphere]

Of course you can.
As you pointed out: by liquidating the company.
Obviously the share holders, oops investors, did not want that.

They already got failing part down

[sinij]

They already got failing part down to science, so they are ahead of many other startups.

Re:They already got failing part down

[Lunix Nutcase]

How about just Fuckups?

"Cyngn"? How the fuck do you pronounce that?

[Anonymous Coward]

How the fuck is "Cyngn" pronounced?

"Sine-gan"?

"Sine-gone"?

"Sin-gin"?

"Sin-gone"?

"Kin-gan"?

"Kin-gone"?

"King-enn"?

"See-why-an-gone"?

When I first saw it I thought it said "obgyn", which is short for the term "obstetrics and gynecology".

Re:"Cyngn"? How the fuck do you pronounce that?

[Nidi62]

How the fuck is "Cyngn" pronounced?

My vote is for "Sin-jin". Which happens to sound suspiciously like another company which has famously failed 3 times now, killing a lot of people and causing millions of dollars of damage in the process.

Re:"Cyngn"? How the fuck do you pronounce that?

[eepok]

I'll go with "singin' " as in "I'm singin' all the way to the bank with all this stupid investment capital.

Re:"Cyngn"? How the fuck do you pronounce that?

[RMingin]

Right? Gimme my fuckin points, Andover. I need to put some on this asshole over here!

Better idea

[110010001000]

They should reinvent themselves as an "AI" and "autonomous driving" company. The VC money will come rolling in!

In other words

[JohnFen]

They completed the task of destroying Cyanogenmod and are looking for what to destroy next.

Re:In other words

[lexman098]

This will be accomplished by:
1. developing the self-driving tech for the easiest, most open source vehicle they can find
2. Releasing it to the public without thorough verification
3. Encouraging inexperienced developers to port it to more complex vehicles
4. People who love to flash and re-flash their cars will start dying in horrible accidents with firey explosions
5. ??
6. They will never turn a profit

Re:In other words

[Dynamoo]

Amen to that. After screwing up Cyanogenmod they should perhaps name themselves FCKWTS.

Re:Self-Driving Vehicles are just like VR...

[EndlessNameless]

(Hell, commercial applications could afford RADAR/LIDAR and all sorts of sensors that would be impractical on a consumer vehicle and it would still be difficult.)

Huh? What year are you living in?

Tesla shipped the Model S with only camera+radar, but everyone else is doing camera/radar/lidar now---on systems designed for consumer vehicles.

Tesla actually got some press when they said they were not adding lidar to newer models. Maybe they think they can derive the information they need from camera+radar, but time will tell.

The best application of self-driving right now is automatic parking and automatic turning for tractor-trailers.

The easiest is not necessarily the best. Very little property damage and no lives are saved in this case. I'm all for convenience, but I think we can aim higher.

fraud

[kwoff]

How is this not fraud?

Re:fraud

[tomhath]

What's the problem? It seems pretty clear that the owners (aka investors) have been kept informed of the change in strategy.

Re:fraud

[JohnFen]

How is it fraud?

"Fraud" is when someone intentionally deceives another in order to gain something (usually, but not necessarily, money).

In this case, I don't think that they intentionally deceived anybody, and they aren't just taking the money and running.

Failed Palo Alto Startup

[epine]

Way to narrow it down from millions to ten of thousands. What an appallingly shitty lead.

Yeah, whatever

[SCVonSteroids]

As long as those investors give us their money, amirite???

Fuck.

Re:Why is this 'news'

[Lunix Nutcase]

Why would anyone bother to astroturf on an irrelevant website like Slashdot?

Bumper Sticker

[Neuronwelder]

Will we be seeing 'Careful Student Robot Driver' on the trucks then?

The story of startups

[Reverend Green]

1. Fedgov prints a bunch of free money out of thin air, calling it "Quantitative Easing"

2. Fedgov gives that free money to their friends / "campaign contributors" in the big banks

2. The big banks bid up every asset they can find, but still have piles and piles of free money sitting around.

3. Big banks can't figure or anything else to do with all that free public money - so they start giving a bunch of it to the bankers' inbred, half-wit cousins who run VC firms in Palo Alto

4. The VCs discover they've been given more money than they can possibly waste on hookers & blow. So they hire a few of their butt-buddies from the Stanford dorms to found some "startups".

5. The butt-buddies look at what other loss-making companies are doing, then do the same thing only with an even stupider company name.

6. No business acumen, nor any actual talent, are required to get a leadership role at a startup. You just have to be from the "right schools". Consequently the startups have no business model and not much ability to execute. But hey - at least this time they didn't pay "outrageous" salaries to a bunch of filthy working class nerds!

6. The startups make a handsome loss, undercut and bankrupt a few legitimate businesses, and keep on getting bigger and bigger valuations each time they return to the VC teat to suck more free public money.

7. Somewhere way up the food chain, someone in DC or New Jack City gets a little nervous about propping up so many worthless loss-making "startup" companies.

8. The steady stream of free public money starts to dry up

9. The Crash!

10. Somewhere in Palo Alto, a Stanford boy can no longer afford his Personal Ass Sanitation Assistant, and is forced to resume wiping his own butt.

Actually they are aiming at both goals!

[LordHighExecutioner]

Once they build their self-driving car, they will train the onboard computer to track and run over all Google's Android engineers that can be found walking along Palo Alto...

Pivot

[sdinfoserv]

another made up, bullsheit, useless euphemism spit from the orifices of nonsensical failed Silicon Valley brogrammers looking to con more coin from gullible vulture capitalists to fund pointless consumptive lifestyles without any real value to society