How BlaBlaCar faced growing pains and had to change its focus

BlaBlaCar is often named as one of the most tangible examples that the French tech ecosystem has been doing well. The French startup is the global leader for long-distance ridesharing and is worth around $1.5 billion (€1.4 billion).

And just like other big tech companies, BlaBlaCar recently faced some challenges and had to define a new strategy for the coming years. In a surprisingly candid interview, BlaBlaCar co-founder and CEO Nicolas Brusson looked back at the past few months and shared everything.

The markets

In 2014 and 2015, BlaBlaCar grew massively. All the news coming out of the company were about new international markets and additional funding rounds. In just a couple of years, the startup acquired smaller competitors and launched a dozen new markets. And it raised around $300 million — a comfortable war chest.

But it turns out that not every country needs BlaBlaCar. The startup has avoided the U.S. for years, saying that gas is cheaper there, cities are too far from each other and too big to conveniently pick up and drop off people.

Russia is now BlaBlaCar’s first market when it comes to rides per month — it is bigger than France

As Capital first reported, some other bets have not paid off at all. The company had to shut down three offices — India, Turkey and Mexico. You can still book rides on those local websites, but the services have been on autopilot for a while without any local staff or advertising.

BlaBlaCar’s main markets have also slowed down. For instance, France isn’t growing as much as it used to.

“Western European markets are relatively similar,” Brusson said. “Except in the U.K. where it never really took off. It sort of works but it’s nothing exciting.”

But other countries have shown more positive signs, such as Russia, Eastern Europe and Brazil.

The Russian funding

Russia is now BlaBlaCar’s first market when it comes to rides per month — it is bigger than France. And it’s still growing rapidly. So BlaBlaCar is going to bet it all on Russia and Eastern Europe.

First, the company raised a strategic round of funding from a Russian investor at the same €1.4 billion valuation last year. Brusson confirmed that the company got €21 million from Baring Vostok, a VC firm that invested in Yandex quite early. But Baring Vostok got more than €21 million worth of shares.

“There was a lot of secondary market activity around this funding. They invested €80 million in total to buy back the shares of some of the very early investors before ISAI.”

Second, BlaBlaCar is going to spend time fine-tuning its product offering for the Russian market and Russian regulation. It has to feel like a Russian product for its local community.

Finally, BlaBlaCar is not taking any fee in Russia. In other countries, the startup has adopted the same business model as Airbnb, taking a small cut on each transaction from the driver and the passenger.

In Russia, BlaBlaCar has given up on its cut altogether while the market is still growing rapidly. A few years down the road, the company may flip the switch and start generating money from this market. But for now, it’s just a bet.

“It took us ten years in France to build the equivalent of what we built in 2 years and a half in Russia,” Brusson said.

The product

BlaBlaCar focused on geographic expansion for so long that there hasn’t been major new features for the BlaBlaCar community for a while. The company is going to change that by regularly launching new services.

“What do we do now? How do we diversify our products and our business to foster growth?” Brusson said.

And it starts with a deal between BlaBlaCar, Opel and B2B car leasing company ALD. The most active BlaBlaCar users can now lease a car using BlaBlaCar. Behind the scene, the startup has negotiated some interesting deals. With tens of millions of users, you can get a fair price for those additional services.

“Today, we start with French ambassadors, so around 300,000 people,” Brusson said. “Numbers quickly get huge. There are 8 million active drivers on BlaBlaCar, representing 1.3 million cars sold every year.”

In the future, I can see BlaBlaCar evolving into a club. If you’re an active member, you get access to everything you need to move around your country at a good price. Brusson talked about insurance products, cars, maybe shorter distance rides and even product deliveries. This way, BlaBlaCar could find new revenue streams as well.

BlaBlaCar wants to move from the traditional car ownership model to car-as-a-service.

“Eventually, what’s interesting for the most active drivers is that we could use the money you get from your rides to pay for the lease,” Brusson said. “You could be a student and pay €0 per month for your car if you regularly go back to your family.”

The CEO

Back in October, BlaBlaCar co-founder and CEO Frédéric Mazzella announced that he would become Executive Chairman. Nicolas Brusson used to be COO and is now CEO.

“We formalized the structure that we’ve never really formalized during all these years,” Brusson said. “We now have a formal CEO and Fred [Mazzella] is Executive Chairman and is going to work on the innovation lab.”

The board isn’t changing and the three co-founders with CTO Francis Nappez still have board seats. I’m not sure what it means for Mazzella’s day-to-day involvement, but Brusson now seems like the person in charge of the new strategic direction.

The organizational shift

With the new focus on product features and Russia, BlaBlaCar’s priorities have changed quite a lot. And the team changes affected the entire company, not just the three co-founders.

“It’s the first time it wasn’t just incremental news. Every time we were announcing something internally, we were saying ‘we’re also going to do another thing, and another one, and another one.’ And this time we said ‘we’re going to do all of this, but we’re also going to stop doing that,’” Brusson said.

Corporate reorganizations are tough. Some teams became more important while others became irrelevant — the “New Country Team” isn’t useful anymore for instance. A few sources also told me that there was a sudden increase in job candidates coming from BlaBlaCar in the tech ecosystem in Paris.

After the reorganization, some employees chose to leave the company. But it’s just part of the story. There were some layoffs as well. Brusson didn’t give an actual number, but “dozens” of people left the company in total.

“There were some departures and some new hires,” he said. “We kept growing when it comes to total headcount.”

As for the company’s bank account, BlaBlaCar isn’t going to raise money any time soon after the previous big funding rounds.

“We don’t need to raise money at all. That’s the reason why the 2016 funding round was mostly on secondary market,” Brusson said. “If we had financing problems, we wouldn’t have swapped our investors. We’re more concerned about our dilution than our cash balance, so it means that we have enough cash.”

BlaBlaCar is taking an interesting turn, evolving beyond its simple product-market fit with new features. There’s still no clear competitor on the carpooling startup space. So BlaBlaCar can take its foot off the pedal when it comes to international expansion.

It’s the very beginning of this new strategy — it’s too early to say if it’s going to pay off. But it seems like BlaBlaCar is willing to face its own shortcomings, even if it can be painful. That’s how you grow up as a company.

Text, image and video moderation service Arbitrum picks up $500K from Ask.fm founders

Arbitrum, a text, image and video moderation service founded by German Gedgauds, who previously headed up Ask.fm’s moderation team and product, has raised $500,000 in funding. Backing the Riga, Latvia-based startup is Balaclava Lab, the investment vehicle of Ask.fm founders Ilja Terebin, Mark Terebin and Oskar Liepins.

That Arbitrum has ties to Ask.fm’s chequered history will raise a few eyebrows given the social Q&A site notoriously ran into user-generated content problems, leading to accusations from parents and the media that the service was a haven for bullies. After IAC acquired Ask.fm, Gedgauds says he was tasked with building moderation functionality that could scale.

“Moderation was indeed a disaster after Ask.fm went viral and traffic was growing extremely fast. At that point all the effort was focused on scaling technically to be able to support the growth, and moderation process was somewhat neglected – which lead to issues you are well aware of,” he says.

“In 2014, the Q&A network was acquired by IAC, [who were] determined to solve these problems. As promised, the company put a lot of effort into creating an internal solution, as no satisfactory solution was available on the market. Shortly after the new solution was implemented and proved to be a success – since then no bad cases have been reported. I was a Project Manager of the Ask.fm moderation team at the time and I know the problems and solutions inside-out”.

That, evidently, was the catalyst for Gedgauds and a number of Ask.fm developers to leave the company and start a new venture. He said it took almost a year to develop the software that powers Arbitrum and that the Beta version was launched this February.

The target market is dating apps, marketplaces, and social networks. “All these products have tons of constantly added user generated content, which should be moderated, in order to provide an excellent user experience to its customers,” he says.

To that end, Arbitrum provides text, image and video moderation, and combines human resources, automation and machine learning so that it can scale. In addition, the startup offers an API for easy integration and real-time reporting with key metrics, allowing customers to follow the moderation process day by day.

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Spotify’s VP of design on being data aware, debating your ideas and being heard

Rochelle King is the VP of Design and Insights at Spotify. In this episode, we discuss the close relationship between design and data, define metrics in design, and talk the importance of debating your ideas within your organization.

The idea that data constrains design is a fallacy. King breaks down how data should be looked at as a tool to not only aid the design process, but empower it. After all, each number on a keynote and every data point gathered is the result of actions performed by a real human being.

Do you have a HIPPO problem in your organization? If so, King goes on to explain how you can break down the issue of the Highest Paid Person’s Opinion using data and debates.

Jared Erondu and Bobby Ghoshal are the hosts of High Resolution. This post and episode notes were put together by freelance writer, Gannon Burgett. Watch for High Resolution episodes to drop every Monday on TechCrunch at 8 a.m. PT. You can also listen on iTunes and Overcast.

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Italian eyewear startup Quattrocento offers ‘paper try-on’ service

Lots of online eyewear retailers offer to send you a selection of frames to try on at home before you buy, a model made popular by Warby Parker in the U.S. and GlassesDirect in Europe. However, although sending you the exact same frame as you intend to purchase has largely solved the conversion problem selling eyewear online creates, it can be pretty costly.

Not only is there the cost of delivery, including returning the frames, but it also requires a lot of extra stock to be held. That was the problem faced by Italian eyewear startup Quattrocento, so its founders came up with a potentially ingenious alternative: the paper try-on.

Specifically, Quattrocento is offering customers the ability to have up to 5 pairs of replica frames made of cardboard sent to your home or office, designed to let you experience how the frames will fit (and, to a limited extent, look) before purchasing the actual product.

I had the opportunity to try a prototype of the idea about a year ago and I can say it works really well. And from a business point of view, the advantages of paper try-ons include the low cost of manufacture and delivery, and they don’t need to be posted back. In this way it might be considered a very clever marketing tool, since a customer can hold on to them indefinitely and share with friends.

The potential downside is, of course, that they might not convert as well as the real thing. I’m told that in Quattrocento’s early testing the conversion rate sits at 12 per cent, compared to some industry figures of around 37 per cent or more for real frames. That might seem like quite a big difference but, as explained above, it’s like comparing apples with oranges.

“We have spoken with industry experts that know our competitors and they are impressed by these KPIs,” says Quattrocento co-founder Eugenio Pugliese. “We invented this new kind of trial, which is more engaging and smart. Since we ship paper glasses, we do not need to have huge inventory, the cost of shipping is as we ship a letter, and we do not need the cost of logistics and [additional] customer care”.

Pugliese says he came up with the idea after he received a call from a customer asking about the measurements of a particular pair of Quattrocento glasses. “At a certain point he told me he printed a picture of the frame from our website. So I said to myself, ‘why not make a paper model?’”.

Of course, it would need to be made of quality paper, “with a certain grammature, thick, plastified,” and then be able to be sent to the customer so that the paper model can act as a proxy of how well the frame will fit their face. And, thus, the paper try-on was born.

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Tenzo offers restaurants real-time and actionable data on how they are performing

Tenzo, a London startup and graduate of Techstars, has built what looks like an interesting and timely platform to help restaurants (and potentially any brick ‘n’ mortar retailer) get real-time data insights on how they and their staff are performing.

So, for example, Tenzo can help a restaurant manager or owner to forecast demand, such as how many people to staff and when or how much food to order. The platform can also be used to understand which staff are performing best, in terms of up-selling or driving positive social media mentions, or simply to know which location is performing best or what menu item should be de-listed.

The idea is that this data is delivered in a timely and actionable manner, helped in part by Tenzo being mobile-first, but also in the way the platform plugs into and makes sense of other data sources and software a restaurant runs its business on top of, such as POS systems, scheduling software or social media.

“The amount of data that restaurants generate is exploding and technology is fragmented. This makes it hard for restauranteurs to make informed decisions,” co-founder Christian Mouysset tells me. “Tenzo connects to a restaurant’s sources of data, analyses the data and delivers simple actionable insights to the in-store team members at the right time on mobile or web”.

That, says Mouysset, is in stark contrast to the old way of doing things, which sees restauranteurs attempt to use Excel to analyse the data that comes out of their POS, staff scheduling, inventory or social platforms. “We automate this thereby reducing the error rate and the time spent preparing these and make them available in an easier format to digest,” he says.

But, perhaps more noteworthy, given that there are lots of data plays for restaurants or other kinds of retailers, are the Tenzo founders’ backgrounds.

Mouysset co-founded Hummus Bros, a chain of quick service restaurants that now does $5 million in revenue, apparently. He says he’s seen the problem of getting actionable data insights first hand.

Tenzo’s other co-founder is Adam Taylor, who, after completing an MBA at Harvard, was an Associate Partner leading McKinsey’s big-data and growth-tech work in Silicon Valley. The pair met 17 years ago while studying computer science at Cambridge University.

Meanwhile, I’ve learned that the startup has closed £600,000 in funding. Backers include Techstars, Acequia Capital, Force Over Mass, and a number of angels and restaurant clients.

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Europe funds another data accelerator to get startups tackling societal problems

A new European Commission-funded startup accelerator, Data Pitch, is being launched today with the aim of connecting established businesses and organizations with lots of data with startups that might be able to help them unlock the value of the info they hold and thereby tackle industrial and societal challenges.

The EC says it’s committing €7.1 million into “data driven innovation” over the next three years, with €4.8 million going directly to fund startups and SMEs via this “startup-corporate collaboration” Data Pitch program.

Data Pitch will provide up to 50 European startups and SMEs with up to €100,000 in equity-free funding, it said today, as well as mentoring, investment opportunities and access to data from established businesses and the public sector — with each program running for six months.

A spokeswoman told us that Data Pitch will operate across Europe, with the aim being to accelerate between two to three cohorts per year. Startups will be able to apply for a place from July 1, 2017, with successful teams selected in October and November, and the first cohort joining the program in December.

“The ambition is to create an innovation ecosystem for Europe, where larger organizations work closely with agile startups to innovate and learn from each other, using data as an enabler to solve problems,” the EC said in a statement.

The funding for the initiative is coming from the EU’s Horizon 2020 program. And the three-year data-focused accelerator project will be delivered by The University of Southampton, the Open Data Institute, Portuguese accelerator organization Beta-i and French data marketplace platform Dawex.

If you’re getting a sense of déjà vu that’s because the EC funded a similar project in 2014, called the Open Data Incubator Europe (Odine) — also providing the same level of funding to startups to do creative and innovative things with data. That three-year project led to 57 successful projects generating €16 million in sales and investment and creating 268 jobs, according to the EC.

In terms of particular areas of interest for the new data accelerator, the spokeswoman said the program has an “open brief” and will be led by “the datasets available from data providers,” although it does also intend to structure this into a set of sector-specific tracks and challenges — identified in discussions with industry leaders and experts over coming weeks.

Among the areas and challenges it’s going to consider are:

  • Smart cities
  • Food and agriculture
  • Health and well being
  • Retail
  • Data privacy
  • e-tourism
  • Finance and telecoms

Data-driven hackathons (aka “datathons”) will be used to define challenges, with the accelerator planning to partner with established hackathons across Europe — such as Pixels Camp, AngelHack, Hack HPI and The Port Hackathon in Cern — as well as taking crowdsourced suggestions to feed into these idea-sourcing events, the first of which will kick off this spring.

To give you an idea of the kinds of projects Data Pitch might fund, the spokeswoman said it’s drawing on the Open Data Challenge Series as its model — giving an example from that program where applicants for a Crime and Justice track were asked to submit products and services using open data that would increase community involvement with the criminal justice system; create further evidence for what are effective interventions for rehabilitation; and address the rise in personal crime.

The winner in that instance, Check That Bike!, is a free online service that lets people check whether a second-hand bike they want to buy has been stolen — with the service tapping into (open) databases of stolen bike details (such as police data, national and local registers, manufacturers, insurers); and also the Bing search engine to identify crime hot spots. The team apparently also makes use of Freedom of Information requests to try to get more police forces to open data on bike unique frame numbers that have been registered as stolen.

Commenting on Data Pitch in a statement, Elena Simperl, professor at the University of Southampton and project director for the accelerator program, said the aim is to create “a European ecosystem for data-driven innovation.”

“In the digital age, every organization, public or private, big or small, generates and owns substantial data assets. Not all them have the opportunity to use this data effectively. With Data Pitch we take an established open innovation model and apply it at European scale — we pair some of the most creative entrepreneurial minds in 28 countries and help them to solve data challenges that matter — for the economy, for the environment, for science, and for society as a whole.”

Startups wanting to apply for the Data Pitch program must —

  • be registered with the European Commission
  • have fewer than 250 employees
  • have less than €50 million turnover
  • be single companies only, consortia are not allowed
  • eligible countries are EU member states, associated countries eligible to receive Horizon 2020 funding

In the case of the U.K., which last month initiated the two-year negotiation process of leaving the European Union, the spokeswoman confirmed U.K. startups can still apply to the program even though Data Pitch is envisioned to run until the end of 2019 (so after the exit process should have concluded).

“The U.K. government has re-assured organizations that have been awarded EU funds before March 2019 — which will be the case with all startups in Data Pitch — that they will be supported financially through national funds,” she noted.

Featured Image: Anton Balazh/Shutterstock (IMAGE HAS BEEN MODIFIED)

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Uber is now banned in Italy for unfair competition

While Uber is fighting Waymo at home, the American company is also having issues abroad. As Reuters reported, an Italian court has ordered Uber to stop all activities in all of Italy. The court says Uber represents unfair competition for taxi drivers.

In particular, the court in Rome says that Uber is a transportation company but doesn’t respect transportation laws — rates aren’t set by the transportation authority. That was the main contention point for traditional taxi associations as they can’t compete with Uber on price.

Uber has ten days to shut down all its activities and can’t run any advertising campaign. After that, the company will have to pay €10,000 per day if the company still operates (€3.65 million per year). As of today, you can still order an Uber ride in Italy.

Uber told La Repubblica that it will appeal the decision. The company said that the transportation law is outdated and doesn’t benefit Italian users.

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Gig economy stalwart TaskRabbit is contemplating a sale

One of the earliest and most prominent startups of the so-called “sharing economy” or “gig economy” is evaluating the possibility of selling itself. As reported by Recode, freelance work marketplace TaskRabbit acknowledged that it is contemplating a sale after receiving inbound interest from a possible strategic buyer.

TaskRabbit launched in early 2008 as a way to match up with various types of odd jobs in their local area part-time workers who had spare time. In its earliest days, the business operated in a very loose marketplace model — users could list jobs they needed accomplished and the price they were willing to pay for those services, and so-called “TaskRabbits” could choose to accept those jobs or not.

It was a pretty novel concept at the time, but it wasn’t long before a number of other startups cropped up offering similar capabilities. Over time, those gig economy companies started to position themselves around specific types of work, with many attempting to be the place to go for cleaning services or home improvement.

A few more years passed, and, after some initial excitement around the gig economy, follow-on venture capital dried up and many of TaskRabbit’s competitors either shut down or were acquired for pennies on the dollar.

And so here we are. After raising $38 million dollars from investors like Shasta Ventures, Founders Fund, First Round, Floodgate, CollabFund and others, there’s little appetite for other investors to keep putting money in companies like TaskRabbit.

So what now? All indications are that handyman services, light home renovation and furniture assembly are going to end up being a billion-dollar business. So it makes sense that TaskRabbit would explore the possibility of a sale if there’s a buyer — or multiple buyers — interested.

The only question is who those buyers might be, and how much they might be willing to pay for the business.

Featured Image: Bryce Durbin

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Spotify Premium Director Robert Lamvik leaves company for meditation app Headspace

Meditation app Headspace recently brought on Robert Lamvik, Spotify’s now-former director of its Premium service, and Dr. Megan Jones Bell, former chief science officer at mental health startup Lantern. Their respective roles at Headspace are head of growth and chief science officer — two new roles at the company.

“We’ve always had team of scientists, but as we go into this next stage of growth, we thought it was important to build out the seniority of the team and bring real leadership to it,” Headspace co-founder Rich Pierson told me. “It’s a really important part of what we do. With the growth side, we’ve got to that stage now where turning our free users into subscribers is a really important part of the mission as well.”

Lamvik spent almost four years at Spotify working on the music streaming company’s growth and revenue initiatives, i.e. subscription service Spotify Premium. With Lamvik on board Headspace as head of growth, the goal is to essentially turn Headspace into a subscription leader like Spotify.

“[Spotify has] basically perfected the freemium model,” Lamvik told me. “This was an opportunity to join a mission-driven startup like Headspace and an opportunity to bring people together and bridge together health and happiness.”

He went on to say that his goal at Headspace will be to educate and inspire people to learn more about the freemium product. Lamvik’s departure from Spotify is notable, given that Spotify has been rumored to be considering going public but might not take the traditional approach of filing an initial public offering, TechCrunch’s Katie Roof reported this past week.

Headspace makes money through selling subscriptions to its guided meditations. Anyone can try out the service for free through Headspace’s “Take 10” program, which offers 10 guided meditations that you can replay as many times as you want. But if you want a variety of meditations, that’s where the money comes in. Headspace has a few membership plans. One costs $12.95 per month on a month-to-month basis and another costs $7.99 per month if you sign up for a full year.

Headspace wouldn’t get into specifics about growth projections, but was willing to say that more than 14 million people have downloaded the app, and that the goal is to more than double revenue this year versus last year. Super helpful, I know.

Bell, on the other hand, told TechCrunch she was attracted to Headspace for the “broader canvas to paint on” in regards to changing the culture around mental health wellness.

“For me, joining Headspace is bringing me back to the root of my personal and professional mission — to make that broader impact,” Bell said.

As chief science officer, Bell plans to expand upon the research and evidence of the work Headspace is doing.

“We’re very keen to show measurable impact and particularly to validate that,” Bell said.

Headspace has raised $38.3 million in funding, with its most recent round coming in at $30 million in September 2015 from The Chernin Group, Advancit Capital, Allen & Company, Breyer Capital, The Honest Company co-founder Jessica Alba, actor Jared Leto, TV personality Ryan Seacrest, LinkedIn CEO Jeff Weiner and others.

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Adidas’ latest 3D-printed shoe puts mass production within sight

Adidas unveiled their latest 3D-printed shoe last night, the Futurecraft 4D. The shoe is a huge improvement on their last 3D-printed runners, which were more of a concept than an actual product.

The new version is better suited for mass production – Adidas plans on selling 5,000 pairs this upcoming fall, which will scale up to more than 100,000 pairs by the end of 2018. While the company hasn’t announced the price, expect the first run to still be priced as a limited edition shoe. The first 3D runners retailed for $333, but sold secondhand for many times that.

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To create the shoes Adidas has teamed up with Carbon, a Silicon Valley-based 3D-printing company we’ve covered before. The startup, which has raised over $200M from Sequoia Capital, GV, Yuri Milner and others, is focused on making 3D printing a viable manufacturing method for large-scale production across industries.

The key to turning 3D-printing into more than a novelty used only for prototyping is speed – which is what Carbon prides itself on.

Using a method called Digital Light Synthesis the startup is able to print objects up to 10 times faster than other 3D printers. The difference is that instead of printing an object layer by layer from the top down like traditional additive 3D printers do, Carbon’s process is continuous and starts from the bottom.

The liquid resin material also allows for a much more flexible final product compared to the material used by traditional 3D printers.

Carbon’s machines use digital light below the printing surface to turn the liquid resin into a solid object. The object, in this case the shoe’s midsoles, are pulled up and literally formed from the top down.

The image below should help you visualize the process.

The object being printed doesn’t stick to the printing surface because it’s never actually touching – the surface is permeable to both the digital light and oxygen, which is pumped through the surface to always maintain a ultra-thin layer of air between the printing surface and object being printed.

After the midsole is printed it’s attached to the top of the shoe, which is made from fabric using traditional manufacturing methods.

Sound complicated? It is. But the end result means that companies can use Carbon’s technology to 3D print objects at scale. Which is exactly what Adidas is planning to do.

For them, the benefits also extend beyond speed. 3D printing allows the shoe company to unlock performance-enhancing design modifications that would have been impossible with other materials like foam.

So how does this help you, the end user?

Adidas knows that to perform at their best, athletes need different points of density throughout their midsole. A runner may need a firm toe spot and softer heel, etc. To achieve this with regular shoes, manufacturers need to glue together different pieces of foam with varying densities.

But with Carbon’s 3D printing process they can simply change the geometry of the lattice to make different areas firmer or softer.

Essentially, different patterns result in different density and feel. For example, check out how the density of the midsole below changes throughout.

The finished product is a shoe that feels really good. The shoes are springy but firm at the same time – which is exactly what Adidas is trying to accomplish. And since they’re 3D printed all it would take is a slight tweak of a design file to make a pair more springy or stable.

Because while the first step is just to get to mass-production, Adidas eventually sees a future where everyone will be able to have their own 3D-printed shoe, with the midsole totally customized to their individual needs.

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