There seems to be a lot of task givers and please-do-my-homework-for-me type people on Appens boards. However, because Appen whom I am heavily invested in is gaining interest, I find it in my best interest to educate fellow investors who are curious as to what Appen does and how Appen remains a viable business for the ultra long term.
1. Competition - there are several companies who are in the same space, however they are not as clear cut as being competitors the way Coles and Woolworths are. You could label them as competition or you could label them as another organization operating in the Data Annotation landscape, but not quite doing what Appen does. Some of them go more niche into only really localized markets. Some provide the underlying software to companies like Appen and Figure 8.
Some others take the data Appen and Figure 8 provides, further enhances it, re-sells it back to Appen, because Appen has the relationships with Google, Facebook, Amazon, et cetera whereas the other company doesn't or cannot afford to (do you know how difficult it is to get a company like Google, Facebook or Amazon to meet up with you or listen to your sales pitch? I know because I have worked with them before)
One competitor who I have found is Lionbridge. As far as I know, they are Appen's only competitor as Appen has acquired Leapforce who used to be a competitor, and now Figure 8.
You can easily go online and check reviews on Appen versus Lionbridge.
I'm not sure if you are familiar with the term "Side Hustle". It is what many millenials and the workforce of this generation have to do to be able to buy a house these days. Your primary job isn't enough to build up a deposit, even with a dual income household. You need to have a second or third job and either drive for Uber, deliver with Deliveroo, lease out rooms via AirBnB, do tasks for others via AirTasker and Upwork or Translate and Annotate data for Appen (or Lionbridge). It is a really common thing to do now.
2. Market share - nobody is able to provide you with a proper answer. Why?
Because to accurately define market share, we have to first know what is the TAM (Total Addressable Market). The problem is that TAM for AI is constantly changing. We may think that we know all the applications AI can do for humans, but day by day, people are discovering more and more use cases for AI.
First, it was getting machines to do labour intensive mechanical jobs. Then it was getting machines to process simple routine tasks. After that it is getting machines to automate responses out to common questions or queries. Then it is getting machines to answer queries by other machines. Today, we are thinking why not only allow self-driving cars on the roads? This way, there is no human element behind the steering wheel and therefore no human issues like drunkenness, slowing reflexes due to old age, drowsiness, roads will be a lot safer and less accidents and congestion. What's next?
What I'm trying to explain is we don't know how big the AI pie is, so I cannot tell you how big of the pie Appen has.
How big is AI?
ChinaDaily - Technology says $151B by 2030 4-Traders says $40B by 2027 Wall Street Daily says $2T by 2027 Futurism says $3.1T by 2025 GlobalNewswire says $20B by 2026 BWDisrupt says $37B by 2025
The figures are all over the place because nobody knows for sure how big the pie we are talking about is. It is constantly evolving and it is dynamic. This is exactly why the tech sector is so exciting.
If you're talking baby formula industry for A2M, yes it is possible to identify the TAM. Just project the number of newborns. If you're talking the wine industry for TWE, yes it is possible to identify the TAM. Just project the number of wine sippers. If you're talking TAM for an evolving thing like AI, I don't think you can forecast with a good degree of certainty how big this industry will be.
At the risk of oversimplifying things, I'll just say that as of September 2018, Appen counts 9 out of the top 10 global technology companies as customers.
The top 10 are most likely from this list Apple, Alphabet (Google), Microsoft, Intel, IBM, Facebook, Oracle, Netflix, Amazon, Cisco, Tesla. This would be grossly oversimplifying things though. 9 out of 10 does not mean they have 90% marketshare as Lionbridge will most likely also share the same customer base.
Interesting view from Tech Crunch
Appen just announced that it’s acquiring Figure Eight in an all-cash deal that sees Appen paying $175 million upfront, with an additional payment of up to $125 million based on Figure Eight’s performance this year.
Both companies focus on using crowdsourced labor pools to annotate data, which in turn is used to train artificial intelligence and machine learning — for example, Figure Eight (formerly known as CrowdFlower and Dolores Labs) says its technology has been for everything from mapping to stock photography to scanning receipts for expense reports.Appen, meanwhile, is a publicly-traded company headquartered in Sydney.
CEO Mark Brayan described its technology — and its “crowd” of more than 1 million remote workers — as “highly complementary” to Figure Eight, which he praised for its data annotation and self-serve capabilities.
“We know that to compete and to be able to deliver even higher volumes, we need a richer set of technologies,” Brayan said. “That’s where Figure Eight comes in. They are, in our view, the leader in the market of the platform providers.”
As for what this means for the Figure Eight team, he said, “Everybody stays in place,” and that Appen plans to continue investing in the product.Brayan also noted that Appen previously acquired another data annotation company called Leapforce in 2017, a move that he said provided the company with greater scale.
“The Figure Eight acquisition is the next step of our evolution,” he said. “Step one was to get bigger, step two is to become much more tech forward, which is what we get with Figure Eight.”
San Francisco-based Figure Eight has raised a total of $58 million in funding, according to Crunchbase, from investors including Trinity Ventures, Industry Ventures, Canvas Ventures and Salesforce Ventures.
As CrowdFlower, it launched on-stage at the TechCrunch50 conference nearly a decade ago.“I’m extremely proud of the team,” said Figure Eight co-founder Lukas Biewald in a statement.
“This is a genuine validation of everything we’ve achieved and a great platform for our teams to combine and continue to do amazing things in AI.”
Biewald (a college friend of mine), along with his co-founder Chris Van Pelt, has moved on to a new startup called Weights and Biases, but he remains involved in Figure Eight as chairman.
APX Price at posting:
$23.58 Sentiment: Buy Disclosure: Held
(20min delay)