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Startups net more than capital with NBA players as investors

Posted by on Jun 1, 2019 in Alexa, Andre Iguodala, Basketball, Carmelo Anthony, Column, Dan Porter, david stern, Facebook, Golden State Warriors, Google, Kevin Durant, Messenger, national basketball association, NBA, overtime, player, SMS, Snap, Snapchat, snaptravel, Social Media, Spark Capital, Startups, stephen curry, TC, Telstra Ventures, toronto, twitch | 0 comments

If you’re a big basketball fan like me, you’ll be glued to the TV watching the Golden State Warriors take on the Toronto Raptors in the NBA finals. (You might be surprised who I’m rooting for.)

In honor of the big games, we took a shot at breaking down investment activities of the players off the court. Last fall, we did a story highlighting some of the sport’s more prolific investors. In this piece, we’ll take a deeper dive into just what having an NBA player as a backer can do for a startup beyond the capital involved. But first, here’s a chart of some startups funded by NBA players, both former and current.

 

In February, we covered how digital sports media startup Overtime had raised $23 million in a Series B round of funding led by Spark Capital. Former NBA Commissioner David Stern was an early investor and advisor in the company (putting money in the company’s seed round). Golden State Warriors player Kevin Durant invested as part of the company’s Series A in early 2018 via his busy investment vehicle, Thirty Five Ventures. And then, Carmelo Anthony invested (via his Melo7 Tech II fund) earlier this year. Other NBA-related investors include Baron DavisAndre Iguodala and Victor Oladipo, and other non-NBA backers include Andreessen Horowitz and Greycroft.

I talked to Overtime’s CEO, 27-year-old Zack Weiner, about how the involvement of so many NBA players came about. I also wondered what they brought to the table beyond their cash. But before we get there, let me explain a little more about what Overtime does.

Founded in late 2016 by Dan Porter and Weiner, the Brooklyn company has raised a total of $35.3 million. The pair founded the company after observing “how larger, legacy media companies, such as ESPN, were struggling” with attracting the younger viewer who was tuning into the TV less and less “and consuming sports in a fundamentally different way.”

So they created Overtime, which features about 25 to 30 sports-related shows across several platforms (which include YouTube, Snapchat, Instagram, Facebook, TikTok, Twitter and Twitch) aimed at millennials and the Gen Z generation. Weiner estimates the company’s programs get more than 600 million video views every month.

In terms of attracting NBA investors, Weiner told me each situation was a little different, but with one common theme: “All of them were fans of Overtime before we even met them…They saw what we were doing as the new wave of sports media and wanted to get involved. We didn’t have to have 10 meetings for them to understand what we were doing. This is the world they live and breathe.”

So how is having NBA players as investors helping the company grow? Well, for one, they can open a lot of doors, noted Weiner.

“NBA players are very powerful people and investors,” he said. “They’ve helped us make connections in music, fashion and all things tangential to sports. Some have created content with us.”

In addition, their social clout has helped with exposure. Their posting or commenting on Instagram gives the company credibility, Weiner said.

“Also just, in general, getting their perspectives and opinions,” he added. “A lot of our content is based on working with athletes, so they understand what athletes want and are interested in being a part of.”

It’s not just sports-related startups that are attracting the interest of NBA players. I also talked with Hussein Fazal, the CEO of SnapTravel, which recently closed a $21.2 million Series A that included participation from Telstra Ventures and Golden State Warriors point guard Stephen Curry.

Founded in 2016, Toronto-based SnapTravel offers online hotel booking services over SMS, Facebook Messenger, Alexa, Google Home and Slack. It’s driven more than $100 million in sales, according to Fazal, and is seeing its revenue grow about 35% quarter over quarter.

Like Weiner, Fazal told me that Curry’s being active on social media about SnapTravel helped draw positive attention and “add a lot of legitimacy” to his company.

“If you’re an end-consumer about to spend $1,000 on a hotel booking, you might be a little hesitant about trusting a newer brand like ours,” he said. “But if they go to our home page and see our investors, that holds some weight in the eyes of the public, and helps show we’re not a fly-by-night company.”

Another way Curry’s involvement has helped SnapTravel is in terms of the recruitment and retainment of employees. Curry once spent hours at the office, meeting with employees and doing a Q&A.

“It was really cool,” Fazal said. “And it helps us stand out from other startups when hiring.”

Regardless of who wins the series, it’s clear that startups with NBA investors on their team have a competitive advantage. (Still, Go Raptors!)


Source: The Tech Crunch

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Unicorns aren’t profitable, and Wall Street doesn’t care

Posted by on Mar 26, 2019 in Amazon, Exit, Facebook, Fundings & Exits, Groupon, jeff bezos, Lyft, Pinterest, Snap, snap inc, Startups, TC, Uber, unicorns, Venture Capital, WeWork, Zimride | 0 comments

In Silicon Valley, investors don’t expect their portfolio companies to be profitable. “Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies,” a bible for founders, instead calls for heavy spending on growth to scale in an Amazon -like fashion.

As for Wall Street, it’s shown an affinity for stock in Jeff Bezos’ business, despite the many years it spent navigating a path to profitability, as well as other money-losing endeavors. Why? Because it too is far less concerned with profitability than market opportunity.

Lyft, a ride-hailing company expected to go public this week, is not profitable. It posted losses of $911 million in 2018, a statistic that will make it the biggest loser amongst U.S. startups to have gone public, according to data collected by The Wall Street Journal. On the other hand, Lyft’s $2.2 billion in 2018 revenue places it atop the list of largest annual revenues for a pre-IPO business, trailing behind only Facebook and Google in that category.

Wall Street, in short, is betting on Lyft’s revenue growth, assuming it will narrow its loses and reach profitability… eventually.

Wall Street’s hungry for unicorns

Lyft, losses notwithstanding, is growing rapidly and Wall Street is paying attention. On the second day of its road show, reports emerged that its IPO was already oversubscribed. As a result, Lyft is said to have upped the cost of its stock, with new plans to raise more than $2 billion at a valuation upwards of $25 billion. That represents a revenue multiple of more than 11x, a step up multiple of more than 1.6x from its most recent private valuation of $15.1 billion and, of course, Wall Street’s insatiable desire for unicorns, profitable or not.

New data from PitchBook exploring the performance of billion-dollar-plus VC exits confirms Wall Street’s leniency toward unprofitable tech companies. Sixty-four percent of the 100+ companies valued at more than $1 billion to complete a VC-backed IPO since 2010 were unprofitable, and in 2018, money-losing startups actually fared better on the stock exchange than money-earning businesses. Moreover, U.S. tech companies that had raised more than $20 million traded up nearly 25 percent of 2018, while the S&P 500 technology sector posted flat returns.

Wall Street is still adapting to the rapid growth of the tech industry; public markets investors, therefore, are willing to deal with negative to minimal cash flows for, well, a very long time.

A tolerance for outsized exits

There’s no doubt Lyft and its much larger competitor, Uber, will go public at monstrous valuations. The two IPOs, set to create a whole bunch of millionaires and return a number of venture capital funds, will provide Silicon Valley a lesson in Wall Street’s tolerance for outsized exits.

Much like a seed-stage investor must bet on a founder’s vision, Wall Street, given a choice of several unprofitable businesses, has to bet on potential market value. Fortunately, this strategy can work quite well. Take Floodgate, for example. The seed fund invested a small amount of capital in Lyft when it was still a quirky idea for ridesharing called Zimride. Now, it boasts shares worth more than $100 million. I’m sure early shareholders in Amazon — which went public as a money-losing company in 1997 — are pretty happy, too.

Ultimately, Wall Street’s appetite for unicorns like Lyft is a result of the shortage of VC-backed IPOs. In 2006, it was the norm for a company to make its stock market debut at 7.9 years old, per PitchBook. In 2018, companies waited until the ripe age of 10.9 years, causing a significant slowdown in big liquidity events and stock sales.

Fund sizes, however, have grown larger and the proliferation of unicorns continues at unforeseen rates. That may mean, eventually, an influx of publicly shared unicorn stock. If that’s the case, might Wall Street start asking more of these startups? At the very least, public market investors, please don’t be swayed by WeWork‘s eventual stock offering and its “community adjusted EBITDA.” Silicon Valley’s pixie dust can’t be that potent.


Source: The Tech Crunch

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Snap’s exec team continues to shrink as more reports of internal drama surface

Posted by on Jan 18, 2019 in Personnel, Snap, TC | 0 comments

Days after Snap announced the departure of its CFO, reports have emerged that the company’s HR chief was asked to leave following an internal investigation late last year that had led to the firing of its global security head.

The Wall Street Journal is reporting that Snap fired global security head Francis Racioppi late last year after an investigation uncovered that he had engaged in an inappropriate relationship with an outside contractor he had hired. After the relationship ended, Racioppi terminated the woman’s contract, the report says.

Racioppi denied any wrongdoing in a comment to the Journal. A report from Cheddar also adds that a security manager of Racioppi’s was fired for aiding in an attempt to cover up the scandal.

The investigation’s findings reportedly contributed to CEO Evan Spiegel asking the company’s HR head Jason Halbert to step down. Halbert announced his plans to leave the company this week.

While today’s news pins two high-profile executive departures to a single incident, Snap’s executive team has seemed to be losing talent from its ranks at a quickening pace.

Snap did not comment on the reports.


Source: The Tech Crunch

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TikTok is giving China a video chat alternative to WeChat

Posted by on Jan 15, 2019 in alibaba, Apps, Asia, bytedance, China, douyin, E-Commerce, messaging apps, musical.ly, Snap, Social, Social Media, social media platforms, Tencent, tiktok, WeChat, Weibo | 0 comments

ByteDance, the world’s most-valued startup, just launched a new social media product under its Douyin brand in what many people see as a serious attempt to challenge WeChat.

Tencent has long dominated China’s social networking space with WeChat and QQ. WeChat claims to have one billion monthly active users worldwide, most of whom are in China. Its older sibling QQ managed to survive the country’s transition from PC to mobile and still have a good chunk of 800 million MAUs at last count.

Over the years Tencent has drawn contenders from all fronts. Ecommerce behemoth Alibaba was one, whose app “Laiwang” to take on WeChat later pivoted to a Slack-like product for enterprise communication.

Now ByteDance is in the spotlight with its new brainchild, Duoshan. The app comes as a mix of TikTok, which is called Douyin in China, and Snap, to bet on a 5G-powered future in which new generations prefer using ephemeral videos to communicate.

Unlike TikTok, which incentivizes users to follow celebrities and strangers, Duoshan is built for private messaging. It offers a dazzling selection of special effects and filters as most other short-video apps do these days. The twist is that videos disappear after 72 hours to provide stress-free, off-the-cuff sharing, a need that WeChat also noticed and prompted the giant to come up with its own Snap-like Stories feature recently.

duoshan bytedance tiktok

Screenshots of Duoshan. Image: ByteDance

“We are seeing more and more Douyin users share their videos through other social media platforms and channels,” Douyin’s president Zhang Nan said in a statement. “With the launch of Duoshan, we are creating our first video-based social messaging app to allow users to share their creativity and interact directly with their family and friends.”

You may not know ByteDance, but its suite of media apps are turning heads all over the world thanks to millions of dollars spent on advertising. TikTok, which swallowed up Musical.ly last year, claims to have more than 250 million daily active users with MAUs reaching 500 million. That solid user base will surely help Duoshan during its initial user acquisition as the app allows easy login for existing Douyin users.

While TikTok is not a direct threat to WeChat — for it’s built for media consumption and WeChat is more of a tool for communication and a platform to run daily errands — Tencent did respond with a dozen of video apps over the past year to play catch-up. Now, Duoshan appears to be going after WeChat’s core — instant messaging.

“We hope WeChat doesn’t see [Duoshan] as a competitor. What they do in essence is to build an ‘infrastructure’. We, on the other hand, is only going after people who are closest to you,” Chen Lin, the newly appointed chief operating officer of ByteDance’s news app Jinri Toutiao said at a press event today.

Two other high-profile entrepreneurs are joining ByteDance to roll out their own social apps today. Smartisan, who backed a WeChat rival that turned out to be a blip, is announcing the product tonight in China. The other challenger is Wang Xin, a pioneer in China’s online video-streaming space who was sentenced to jail in 2016 after being charged with providing easy access to pornography. His take on social media — Matong — is already live and is greeted with such warm reception that its server went down.

Duoshan has got many people excited. Some of the top trending words on Weibo, China’s closest answer to Twitter, today are linked to ByteDance’s move, such as “social”, “waging a war” and “Zhang Yiming,” who founded ByteDance in 2012.


Source: The Tech Crunch

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Still a year away from launch, Meg Whitman and Jeffrey Katzenberg’s Quibi keeps adding talent

Posted by on Dec 5, 2018 in 21st century fox, alibaba, Amazon, Apple, Artificial Intelligence, AT&T, broadband, Business, chairman, dan brown, Disney, Goldman Sachs, Guillermo del Toro, HBO, Hulu, instagram, Jeffrey Katzenberg, major, meg whitman, mobile media, model, nbcuniversal, Netflix, Quibi, sam raimi, Snap, Sony Pictures Entertainment, Startups, stephen curry, TC, telecommunications, Television In The United States, the walt disney company, verizon, WndrCo | 0 comments

Video won’t start rolling on Meg Whitman and Jeffrey Katzenberg’s new bite-sized streaming service with the billion-dollar backing until the end of 2019, but talent keeps signing up to come along for their ride into the future of serialization.

The latest marquee director to sign on the dotted line with Quibi is Catherine Hardwicke, who will be helming a story around the creation of an artificial intelligence with the working title “How They Made Her,” according to an announcement from Katzenberg onstage at the Variety Innovate summit.

Hardwicke, who directed “Thirteen,” “Lords of Dogtown” and, most famously, “Twilight,” is joining Antoine Fuqua, Guillermo del Toro, Sam Raimi and Lena Waithe in an attempt to answer the question of whether Whitman and Katzenberg’s gamble on premium (up to $6 million per episode) short-form storytelling is a quixotic quest or a quintessential viewing experience for a new generation of media consumers.

Katzenberg also revealed in a LinkedIn post that Quibi would be working on a basketball-related series with Steph Curry’s production company. He wrote:

I announced a new docu-series by Whistle called “Benedict Men” coming exclusively to Quibi. “Benedict Men” will be executive produced by Stephen Curry’s Unanimous Media and will give viewers an inside look at one of the most unique high school basketball teams in America at St. Benedict’s Prep in Newark, New Jersey.

St. Benedict’s Prep is an all-boys secondary school founded on the core belief ‘What Hurts My Brother Hurts Me,’ and aims to foster a legacy of strong character, community, leadership, and faith. As one of the top athletic high schools with a storied basketball program and the highest graduation rate in New Jersey, the series will follow the brotherhood of young men who seek to balance life in complicated surroundings.

In some ways, the big adventure backed by Katzenberg, the former chairman of Walt Disney Studios and founder of WndrCo, and every major Hollywood studio — including Disney, 21st Century Fox, Entertainment One, NBCUniversal, Sony Pictures Entertainment and Alibaba Goldman Sachs — is the latest in an everything old is new again refrain.

If blogs reinvented printed media, and podcasts and music streaming reinvented radio, why can’t Quibi reinvent serialized storytelling.

Again and again, Whitman and Katzenberg returned to an analogy from the early days of the cable revolution. “We’re not short form, we’re Quibi,” said Whitman, echoing the tagline that HBO made famous in its early advertising blitzes. That Whitman and Katzenberg’s project to take what HBO did for premium television and apply that to mobile media is ambitious. Now industry-watchers will have to wait until 2019 at the earliest to see if it’s also successful.

In the interview onstage at a Variety event on artificial intelligence in media, Katzenberg cited Dan Brown’s “The Da Vinci Code” as something of an inspiration — noting that the book had more than 100 chapters for its 500 pages of text. But Katzenberg could have gone back even further to the days of Dickens and his serialized entertainments.

And right now for the entertainment business it really is the best of times and the worst of times. Traditional Hollywood studios are seeing new players like Netflix, Amazon, Apple and others all trying to drink their milkshake. And, for the most part, these studios and their new telecom owners are woefully ill-equipped to fight these big technology platforms at their own game. 

Taking the long view of entertainment history, Katzenberg is hoping to win networks with not just a new skin for the old ceremony of watching entertainment but with a throwback to old style deal-making. The term serialization here takes on greater meaning. 

Quibi is offering its production partners a sweetheart deal. After seven years the production company behind the Quibi shows will own their intellectual property, and after two years those producers will be able to repackage the Quibi content back into long-form series and pitch them for distribution to other platforms. Not only that, but Quibi is fronting the money for over 100 percent of the production.

Katzenberg said that it “will create the most powerful syndicated marketplace” Hollywood has seen in decades. It’s a sort of anti-Netflix model where Katzenberg and Whitman view Quibi as a platform where creators and talent will want to come. “We are betting on the success of the platform — and by the way, it worked brilliantly in the ’60s and ’70s and ’80s.” Katzenberg said. “Hundreds of TV shows were tremendous successes and [like the networks then] we don’t want to compete with our suppliers.”

In addition to the business model innovations (or throwbacks, depending on how one looks at it), Quibi is being built from the ground up with a technology stack that will leverage new technologies like 5G broadband, and big data and analytics, according to Whitman.

Indeed, launching the first platform built without an existing stable of content means that Quibi is preparing 5,000 unique pieces of content to go up when it pulls the curtains back on its service in late 2019 or early 2020, Whitman said.

And the company is looking to big telecommunications companies like Verizon (my corporate overlord’s corporate overlord) and AT&T as partners to help it get to market. Since those networks need something to do with all the 5G capacity they’re building out, high-quality streaming content that’s replete with meta-tags to monitor and manage how an audience is spending their time is a compelling proposition.

“We want to work to have video that looks good on mobile [and] ramp up content in terms of quantity and quality,” Whitman said. That quality extends to things like the user interface, search features and analytics.

“We have to have a different search and find metaphor,” Whitman said. “It takes eight minutes to find what you’re looking for on Netflix… We will be able to instrument this with data on what people are watching and using that in our recommendation engine.”

Questions remain about the service’s viability. Like what role will the telcos actually play in distribution and development? Can Quibi avoid the Hulu problem where the various investors are able to overcome their own entrenched interests to work for the viability of the platform? And do consumers even want a premium experience on mobile given the new kinds of stars that are made through the immediacy and accessibility that technology platforms like YouTube, Instagram and Snap offer?

“Where the fish are today is a phenomenal environment,” Katzenberg said of the current short-form content market. “But it is an ocean. We need to find a place where there are these premium services.”


Source: The Tech Crunch

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Openbook is the latest dream of a digital life beyond Facebook

Posted by on Aug 11, 2018 in Advertising Tech, Apps, Artificial Intelligence, Augmented Reality, Europe, Facebook, instagram, Kickstarter, machine learning, online privacy, openbook, Privacy, Snap, Social, Social Media, social networking, social networks, Startups, Tim-berners lee | 3 comments

As tech’s social giants wrestle with antisocial demons that appear to be both an emergent property of their platform power, and a consequence of specific leadership and values failures (evident as they publicly fail to enforce even the standards they claim to have), there are still people dreaming of a better way. Of social networking beyond outrage-fuelled adtech giants like Facebook and Twitter.

There have been many such attempts to build a ‘better’ social network of course. Most have ended in the deadpool. A few are still around with varying degrees of success/usage (Snapchat, Ello and Mastodon are three that spring to mine). None has usurped Zuckerberg’s throne of course.

This is principally because Facebook acquired Instagram and WhatsApp. It has also bought and closed down smaller potential future rivals (tbh). So by hogging network power, and the resources that flow from that, Facebook the company continues to dominate the social space. But that doesn’t stop people imagining something better — a platform that could win friends and influence the mainstream by being better ethically and in terms of functionality.

And so meet the latest dreamer with a double-sided social mission: Openbook.

The idea (currently it’s just that; a small self-funded team; a manifesto; a prototype; a nearly spent Kickstarter campaign; and, well, a lot of hopeful ambition) is to build an open source platform that rethinks social networking to make it friendly and customizable, rather than sticky and creepy.

Their vision to protect privacy as a for-profit platform involves a business model that’s based on honest fees — and an on-platform digital currency — rather than ever watchful ads and trackers.

There’s nothing exactly new in any of their core ideas. But in the face of massive and flagrant data misuse by platform giants these are ideas that seem to sound increasingly like sense. So the element of timing is perhaps the most notable thing here — with Facebook facing greater scrutiny than ever before, and even taking some hits to user growth and to its perceived valuation as a result of ongoing failures of leadership and a management philosophy that’s been attacked by at least one of its outgoing senior execs as manipulative and ethically out of touch.

The Openbook vision of a better way belongs to Joel Hernández who has been dreaming for a couple of years, brainstorming ideas on the side of other projects, and gathering similarly minded people around him to collectively come up with an alternative social network manifesto — whose primary pledge is a commitment to be honest.

“And then the data scandals started happening and every time they would, they would give me hope. Hope that existing social networks were not a given and immutable thing, that they could be changed, improved, replaced,” he tells TechCrunch.

Rather ironically Hernández says it was overhearing the lunchtime conversation of a group of people sitting near him — complaining about a laundry list of social networking ills; “creepy ads, being spammed with messages and notifications all the time, constantly seeing the same kind of content in their newsfeed” — that gave him the final push to pick up the paper manifesto and have a go at actually building (or, well, trying to fund building… ) an alternative platform. 

At the time of writing Openbook’s Kickstarter crowdfunding campaign has a handful of days to go and is only around a third of the way to reaching its (modest) target of $115k, with just over 1,000 backers chipping in. So the funding challenge is looking tough.

The team behind Openbook includes crypto(graphy) royalty, Phil Zimmermann — aka the father of PGP — who is on board as an advisor initially but billed as its “chief cryptographer”, as that’s what he’d be building for the platform if/when the time came. 

Hernández worked with Zimmermann at the Dutch telecom KPN building security and privacy tools for internal usage — so called him up and invited him for a coffee to get his thoughts on the idea.

“As soon as I opened the website with the name Openbook, his face lit up like I had never seen before,” says Hernández. “You see, he wanted to use Facebook. He lives far away from his family and facebook was the way to stay in the loop with his family. But using it would also mean giving away his privacy and therefore accepting defeat on his life-long fight for it, so he never did. He was thrilled at the possibility of an actual alternative.”

On the Kickstarter page there’s a video of Zimmermann explaining the ills of the current landscape of for-profit social platforms, as he views it. “If you go back a century, Coca Cola had cocaine in it and we were giving it to children,” he says here. “It’s crazy what we were doing a century ago. I think there will come a time, some years in the future, when we’re going to look back on social networks today, and what we were doing to ourselves, the harm we were doing to ourselves with social networks.”

“We need an alternative to the social network work revenue model that we have today,” he adds. “The problem with having these deep machine learning neural nets that are monitoring our behaviour and pulling us into deeper and deeper engagement is they already seem to know that nothing drives engagement as much as outrage.

“And this outrage deepens the political divides in our culture, it creates attack vectors against democratic institutions, it undermines our elections, it makes people angry at each other and provides opportunities to divide us. And that’s in addition to the destruction of our privacy by revenue models that are all about exploiting our personal information. So we need some alternative to this.”

Hernández actually pinged TechCrunch’s tips line back in April — soon after the Cambridge Analytica Facebook scandal went global — saying “we’re building the first ever privacy and security first, open-source, social network”.

We’ve heard plenty of similar pitches before, of course. Yet Facebook has continued to harvest global eyeballs by the billions. And even now, after a string of massive data and ethics scandals, it’s all but impossible to imagine users leaving the site en masse. Such is the powerful lock-in of The Social Network effect.

Regulation could present a greater threat to Facebook, though others argue more rules will simply cement its current dominance.

Openbook’s challenger idea is to apply product innovation to try to unstick Zuckerberg. Aka “building functionality that could stand for itself”, as Hernández puts it.

“We openly recognise that privacy will never be enough to get any significant user share from existing social networks,” he says. “That’s why we want to create a more customisable, fun and overall social experience. We won’t follow the footsteps of existing social networks.”

Data portability is an important ingredient to even being able to dream this dream — getting people to switch from a dominant network is hard enough without having to ask them to leave all their stuff behind as well as their friends. Which means that “making the transition process as smooth as possible” is another project focus.

Hernández says they’re building data importers that can parse the archive users are able to request from their existing social networks — to “tell you what’s in there and allow you to select what you want to import into Openbook”.

These sorts of efforts are aided by updated regulations in Europe — which bolster portability requirements on controllers of personal data. “I wouldn’t say it made the project possible but… it provided us a with a unique opportunity no other initiative had before,” says Hernández of the EU’s GDPR.

“Whether it will play a significant role in the mass adoption of the network, we can’t tell for sure but it’s simply an opportunity too good to ignore.”

On the product front, he says they have lots of ideas — reeling off a list that includes the likes of “a topic-roulette for chats, embracing Internet challenges as another kind of content, widgets, profile avatars, AR chatrooms…” for starters.

“Some of these might sound silly but the idea is to break the status quo when it comes to the definition of what a social network can do,” he adds.

Asked why he believes other efforts to build ‘ethical’ alternatives to Facebook have failed he argues it’s usually because they’ve focused on technology rather than product.

“This is still the most predominant [reason for failure],” he suggests. “A project comes up offering a radical new way to do social networking behind the scenes. They focus all their efforts in building the brand new tech needed to do the very basic things a social network can already do. Next thing you know, years have passed. They’re still thousands of miles away from anything similar to the functionality of existing social networks and their core supporters have moved into yet another initiative making the same promises. And the cycle goes on.”

He also reckons disruptive efforts have fizzled out because they were too tightly focused on being just a solution to an existing platform problem and nothing more.

So, in other words, people were trying to build an ‘anti-Facebook’, rather than a distinctly interesting service in its own right. (The latter innovation, you could argue, is how Snap managed to carve out a space for itself in spite of Facebook sitting alongside it — even as Facebook has since sought to crush Snap’s creative market opportunity by cloning its products.)

“This one applies not only to social network initiatives but privacy-friendly products too,” argues Hernández. “The problem with that approach is that the problems they solve or claim to solve are most of the time not mainstream. Such as the lack of privacy.

“While these products might do okay with the people that understand the problems, at the end of the day that’s a very tiny percentage of the market. The solution these products often present to this issue is educating the population about the problems. This process takes too long. And in topics like privacy and security, it’s not easy to educate people. They are topics that require a knowledge level beyond the one required to use the technology and are hard to explain with examples without entering into the conspiracy theorist spectrum.”

So the Openbook team’s philosophy is to shake things up by getting people excited for alternative social networking features and opportunities, with merely the added benefit of not being hostile to privacy nor algorithmically chain-linked to stoking fires of human outrage.

The reliance on digital currency for the business model does present another challenge, though, as getting people to buy into this could be tricky. After all payments equal friction.

To begin with, Hernández says the digital currency component of the platform would be used to let users list secondhand items for sale. Down the line, the vision extends to being able to support a community of creators getting a sustainable income — thanks to the same baked in coin mechanism enabling other users to pay to access content or just appreciate it (via a tip).

So, the idea is, that creators on Openbook would be able to benefit from the social network effect via direct financial payments derived from the platform (instead of merely ad-based payments, such as are available to YouTube creators) — albeit, that’s assuming reaching the necessary critical usage mass. Which of course is the really, really tough bit.

“Lower cuts than any existing solution, great content creation tools, great administration and overview panels, fine-grained control over the view-ability of their content and more possibilities for making a stable and predictable income such as creating extra rewards for people that accept to donate for a fixed period of time such as five months instead of a month to month basis,” says Hernández, listing some of the ideas they have to stand out from existing creator platforms.

“Once we have such a platform and people start using tips for this purpose (which is not such a strange use of a digital token), we will start expanding on its capabilities,” he adds. (He’s also written the requisite Medium article discussing some other potential use cases for the digital currency portion of the plan.)

At this nascent prototype and still-not-actually-funded stage they haven’t made any firm technical decisions on this front either. And also don’t want to end up accidentally getting into bed with an unethical tech.

“Digital currency wise, we’re really concerned about the environmental impact and scalability of the blockchain,” he says — which could risk Openbook contradicting stated green aims in its manifesto and looking hypocritical, given its plan is to plough 30% of its revenues into ‘give-back’ projects, such as environmental and sustainability efforts and also education.

“We want a decentralised currency but we don’t want to rush into decisions without some in-depth research. Currently, we’re going through IOTA’s whitepapers,” he adds.

They do also believe in decentralizing the platform — or at least parts of it — though that would not be their first focus on account of the strategic decision to prioritize product. So they’re not going to win fans from the (other) crypto community. Though that’s hardly a big deal given their target user-base is far more mainstream.

“Initially it will be built on a centralised manner. This will allow us to focus in innovating in regards to the user experience and functionality product rather than coming up with a brand new behind the scenes technology,” he says. “In the future, we’re looking into decentralisation from very specific angles and for different things. Application wise, resiliency and data ownership.”

“A project we’re keeping an eye on and that shares some of our vision on this is Tim Berners Lee’s MIT Solid project. It’s all about decoupling applications from the data they use,” he adds.

So that’s the dream. And the dream sounds good and right. The problem is finding enough funding and wider support — call it ‘belief equity’ — in a market so denuded of competitive possibility as a result of monopolistic platform power that few can even dream an alternative digital reality is possible.

In early April, Hernández posted a link to a basic website with details of Openbook to a few online privacy and tech communities asking for feedback. The response was predictably discouraging. “Some 90% of the replies were a mix between critiques and plain discouraging responses such as “keep dreaming”, “it will never happen”, “don’t you have anything better to do”,” he says.

(Asked this April by US lawmakers whether he thinks he has a monopoly, Zuckerberg paused and then quipped: “It certainly doesn’t feel like that to me!”)

Still, Hernández stuck with it, working on a prototype and launching the Kickstarter. He’s got that far — and wants to build so much more — but getting enough people to believe that a better, fairer social network is even possible might be the biggest challenge of all. 

For now, though, Hernández doesn’t want to stop dreaming.

“We are committed to make Openbook happen,” he says. “Our back-up plan involves grants and impact investment capital. Nothing will be as good as getting our first version through Kickstarter though. Kickstarter funding translates to absolute freedom for innovation, no strings attached.”

You can check out the Openbook crowdfunding pitch here.


Source: The Tech Crunch

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Snapchat monitors Infowars as Alex Jones promotes ‘censorship’ gag AR filter

Posted by on Aug 8, 2018 in Alex Jones, content moderation, Drama, infowars, Media, Snap, snap inc, Snapchat, TC | 0 comments

Snapchat has largely escaped scrutiny about fake news and election interference because its content quickly disappears and its publisher hub, Discover, is a closed platform. But now the Infowars mess that’s plagued Facebook and YouTube has landed at Snap’s feet, as conspiracy theorist Alex Jones has begun tweeting to promote an augmented reality Snapchat Lens built by someone in his community that puts a piece of masking tape with the word “censorship” written over it across the mouth of the user with a “Free Infowars” logo in the screen’s corner. He’s also encouraging his followers to follow Infowars’ official Snapchat page.

The situation highlights the whack-a-mole game of trying to police the fragmented social media space. There always seems to be another platform for those kicked off others for inciting violence, harassing people or otherwise breaking the rules. A cross-industry committee that helps coordinate enforcement might be necessary to ensure that as someone is booted from one platform, their presence elsewhere is swiftly reviewed and monitored for similar offenses.

“If they can shut me down, they can shut you down,” Jones says at the start of his 42-second video. He cites Facebook, Twitter and Google among those that are getting mobilized by “the Democrats” in aid of defeating opposing candidates in future elections.

(In actual fact, Twitter and related sites like Periscope have, to the consternation of many, not removed Jones’ or Infowars’ accounts from its platform, and for that matter neither has LinkedInGoogle+, or Instagram. Others like Pinterest and Facebook itself have now gotten behind a wider move to start to take action against accounts like these to reduce the amount of sensationalized information being spread around in the name of “free speech.” You can see the full list of Infowars’ and Alex Jones’ active and now inactive social accounts here.)

Jones himself doesn’t seem to have a Snapchat account, but Infowars’ website cites the “Infowarslive” handle as its official Snapchat profile, and it’s what Jones is now pointing fans toward. However, from what we understand from sources, the account has been inactive since early this year. Snap, according to these sources, is currently monitoring it to see what it does and whether that content violates community guidelines, which prohibit hate speech and harassment.

In the meantime, say the sources, Snap is also looking into the Lens that Jones is promoting to determine whether it violates Snap’s community guidelines. These guidelines include prohibiting content that may incite or glorify violence or the use of weapons; may be considered offensive by a particular group of individuals or that could foster negative stereotypes, such as slurs or other derogatory language; promotes dangerous, harmful, or illegal activity, or that encourages Snapping while driving; contains hashtags or usernames; or threatens to harm a person, group of people or property. 

The interesting thing with a Lens, however, is that while the Lens itself may be innocuous, how it gets appropriated might be less so, and that’s not something that might get caught as quickly by Snap. Users can unlock the Lens for 24 hours with a link or screenshot of its QR Snapcode. From there they can do whatever they want with it, including reactivating it each day for further use. Lenses are one of the least ephemeral parts of Snapchat, making them a potent vector for persistently spreading a controversial viewpoint, and indeed viewpoints that might well violate those community standards, even if the Lens itself does not.

The insight that’s emerging from the whole Infowars debacle is that problems exist not only with how public figures use social platforms, but with how their audiences interpret or mutate their messages as they get shared, again and again.

Snap itself — as its earnings showed us yesterday — is still a smaller platform compared to some social networks. That’s another reason it may have avoided becoming a tool for information operations by malicious actors like the Russian agents that attacked the 2016 presidential election via Facebook.

But Snapchat is in a vulnerable place right now. Yesterday’s Q2 earnings report revealed that its daily active user count actually shrank from 191 million to 188 million. It took a hard stance against fake or controversial accounts, either blocking on driving away users, that could further weigh on its growth. Snap is meanwhile starting to see momentum in its ad business, beating expectations with $262.3 million in revenue last quarter. That’s a trend it doesn’t want to mess with.

Now that Jones can’t spread his false news on Facebook and YouTube, he may look increasingly to platforms like Snapchat or his mobile app that Apple hasn’t removed. And if these platforms allow him to stay, that may light a beacon attracting more questionable content creators.


Source: The Tech Crunch

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Snapchat gets $250M investment from Saudi prince for 2.3%

Posted by on Aug 7, 2018 in Apps, Earnings, Snap, snap inc, Snapchat, Snapchat earnings, Social, TC | 0 comments

Snap Inc got a fresh infusion of cash from the Saudi royal family to help it survive despite losing $353 million this quarter. Prince Al-Waleed Talal tweeted a video of him and Snap CEO Evan Spiegel, noting that he’s invested $250 million in exchange for a 2.3 percent stake in Snap Inc. The investment raises questions about what say the Saudis will have in Snapchat’s direction.

Snap declined to comment on the news. But after an initial 11 percent pop after earnings was announced, Snap shares sank to just below the closing price as the user shrinkage and Saudi investment sank in.

Al-Waleed Talal has previously buddied up to the U.S. tech sector, investing in Lyft and Twitter. Elsewhere, he’s recently made investments in European streaming music service Deezer, as well as Chinese ecommerce giant JD.com. He previously owned shared of Newscorp and Citigroup.

The prince had sat down with Snapchat CEO Evan Spiegel and COO Imran Khan back in 2015 to discuss a possible investment, but nothing came of it until now. The Arabic press release explains that the deal was done on May 25th. “Our investment in Snapchat is an extension of our strategy for personal investment in new technology through leading companies such as Lyft, JD.com, and social networking sites, Twitter” the release explains. “Snapchat is one of the most innovative social networking platforms in the world and we believe it is just beginning to surpass its true potential.”

Snap could be looking for more allies abroad as it’s seen weak international growth after years of neglecting the developing world and its Android app’s performance. While the Rest Of World region is typically a source of growth for social networks, Snap actually shrank by 1 million daily active users there. The one truly bright point of its earnings report was a 65 percent quarter-over-quarter boost in average revenue per user in the Rest Of World, reaching $0.96. The Saudi royal family’s involvement could potentially pave the way for partnerships or growth opportunities in the Middle East at a time when Snap needs whatever help it can get.

The extra cash will extend Snapchat’s runway and give it more time to stabilize its business. With its daily user count now shrinking, it will have to find creative ways to squeeze more cash out of those that remain to keep revenue growing. That may take time, and Saudi Arabia just gave it more.


Source: The Tech Crunch

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Snapchat shrinks by 3M users to 188M despite strong Q2

Posted by on Aug 7, 2018 in Apps, Mobile, Snap, snap inc, Snapchat, Snapchat earnings, Social, TC | 3 comments

The Stories War has officially killed Snapchat’s growth, leading to its first user count decline ever. In Q2 2018 earnings today, Snapchat’s daily active users number shrank 1.5 percent to 188 million this quarter, down from 191 million and positive 2.9 percent user growth last quarter.

Snapchat did beat earnings expectations with $262.3 million in revenue and a loss of $0.14 while Wall Street estimated an EPS loss of $0.17 with $249.8 million in revenue. Snap’s net loss decreased by 20 percent year-over-year, so it only destroyed $353 million this quarter compared to $385 million last quarter. Snap will have some extra cash to extend its runway despite its still-massive losses thanks to a $250 million investment from Saudi Prince Al-Waleed Talal in exchange for a 2.3 percent stake in the company.

Despite its user count shrinking for the first time since its launch in 2011, the improvement to revenue (up 44 percent year-over-year) and reduced losses led Wall Street to give Snap’s shares an immediate 11 percent pop in after-hours trading. But after dodging multiple questions about how it would improve revenues and when its optimized Android app would arrive, shares fell back to just below the day’s closing price of $13.12.

Snapchat is coming off a disastrous Q1 earnings with its slowest-ever user growth rate that led to a 24 percent plunge in its share price in May. But the company has been highly volatile, seeing a 37 percent boost in its share price after surprisingly positive Q4 2017 earnings. Now it’s proving that Facebook isn’t the only social network with growth troubles.

In hopes of distracting from the shrinking DAUs, Snapchat shared a monthly active user count for the first time: 100 million monthly active users in the U.S. and Canada. Snap says this is the highest it’s ever been, yet the reveal highlights that teens are as addicted to daily Snapchat use as they once were. DAUs are a much more accurate way of measuring engagement and ad revenue potential, as opening a single notification and never returning can still register someone as an MAU.

CEO Evan Spiegel blamed the DAU shrinkage on “a slightly lower frequency of use among our user base due to the disruption caused by our redesign.” But since, he believes “we have now addressed the biggest frustrations we’ve heard” so he’s optimistic about future growth. On the other hand, he credits the redesign as producing an 8 percent increase in retention among users older than 35, demonstrating the new design is more obvious and well labeled.

During the earnings call, Snap’s new CFO Tim Stone mentioned that it’s interested in monetizing every part of the app, including “communication.” That could foreshadow more ads in the messaging inbox beyond the sponsored lenses users can play with to send augmented reality Snaps to friends. Snap is also hoping that after a decline in ad prices as it moved to self-serve auctions, ad prices and revenue will climb.

One big bright point for Snap was that its average revenue per user in the Rest Of World region grew 65 percent just this quarter to reach $0.96. Figuring out how to monetize these developing countries where buying power is lower will be key to the company’s outlook. Snap says it’s still working to re-engineer its Android app to boost performance and reduce churn, since that’s where most of its new users are coming in.

The quarter saw Snapchat escape much of the scrutiny facing other social networks regarding fake news and election interference. But it clearly still has issues with security, as Snapchat accidentally leaked its own source code, which was archived by someone who then posted it to GitHub today, though it was eventually taken down.

Snapchat started running un-skippable ads in its Shows that could be a big money maker if extended to Stories. It began experimenting with e-commerce in earnest, allowing brands to sell things people can buy without leaving the app. It also opened self-serve buying of its augmented reality lens ads that people not only post, but play with for extended periods of time. And it launched its privacy-safe Snap Kit developer platform in hopes that alliances and referral traffic would help revive its user growth.

But problematically, its competitors like Instagram Stories continued to surge, with it now having 400 million daily Stories users and WhatsApp Status now having 450 million. Combined, Facebook has over 1.1 billion daily (duplicated) Stories users across its family of apps. That reach could make it tough for Snap to compete for ad dollars. And with its user count actually decreasing, that could make for a grim future for the teen sensation.


Source: The Tech Crunch

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Snapchat code reveals team-up with Amazon for ‘Camera Search’

Posted by on Jul 9, 2018 in Amazon, Apps, eCommerce, Mobile, Snap, snap inc, Snap Store, Snapchat, Snapchat Search, Social, TC | 0 comments

Snapchat is building a visual product search feature, codenamed “Eagle,” that delivers users to Amazon’s listings. Buried inside the code of Snapchat’s Android app is an unreleased “Visual Search” feature where you “Press and hold to identify an object, song, barcode, and more! This works by sending data to Amazon, Shazam, and other partners.” Once an object or barcode has been scanned you can “See all results at Amazon.”

Visual product search could make Snapchat’s camera a more general purpose tool for seeing and navigating the world, rather than just a social media maker. It could differentiate Snapchat from Instagram, whose clone of Snapchat Stories now has more than twice the users and a six times faster gro

wth rate than the original. And if Snapchat has worked out an affiliate referrals deal with Amazon, it could open a new revenue stream. That’s something Snap Inc. direly needs after posting a $385 million loss last quarter and missing revenue estimates by $14 million.

TechCrunch was tipped off to the hidden Snapchat code by app researcher Ishan Agarwal. His tips have previously led to TechCrunch scoops about Instagram’s video calling, soundtracks, Focus portrait mode and QR Nametags features that were all later officially launched. Amazon didn’t respond to a press inquiry before publishing time, and it’s unclear if its actively involved in the development of Snapchat visual search or just a destination for its results. Snap already sells its Spetacles v2 camera glasses on Amazon — the only place beyond its own site. Snap Inc. gave TechCrunch a “no comment,” about visual search but the company’s code tells the story.

Snapchat first dabbled in understanding the world around you with its Shazam integration back in 2016 that lets you tap and hold to identify a song playing nearby, check it out on Shazam, send it to a friend or follow the artist on Snapchat. Project Eagle builds on this audio search feature to offer visual search through a similar interface and set of partnerships. The ability to identify purchaseable objects or scan barcodes could turn Snapchat, which some view as a teen toy, into more of a utility.

What’s inside Snapchat’s Eagle eye

Snapchat’s code doesn’t explain exactly how the Project Eagle feature will work, but in the newest version of Snapchat it was renamed as “Camera Search.” If you remember, Snap used another animal name, “Cheetah”, as the secret word for its big redesign. The app’s code lists the ability to surface “sellers” and “reviews,” “Copy URL” of a product and “Share” or “Send Product” to friends — likely via Snap messages or Snapchat Stories. In characteristic cool kid teenspeak, an error message for “product not found” reads “Bummer, we didn’t catch that!”

Eagle’s visual search may be connected to Snapchat’s “context cards,” which debuted late last year and pull up business contact info, restaurant reservations, movie tickets, Ubers or Lyfts and more. Surfacing within Snapchat a context card of details about ownable objects might be the first step to getting users to buy them… and advertisers to pay Snap to promote them. It’s easy to imagine context cards being accessible for products tagged in Snap Ads as well as scanned through visual search. And Snap already has in-app shopping.

Snapchat’s Camera Search could become a direct competitor for Pinterest’s Lens, which identifies objects and brings up related content. Pinterest has evolved the product, embedding it inside the apps of retailers like Target. Beyond shopping, Camera Search could let Snapchat users find Stories that contain the same object they’re snapping.

Being able to recognize what you’re seeing makes Snapchat more fun, but it’s also a new way of navigating reality. In mid-2017 Snapchat launched World Lenses that map the surfaces of your surroundings so you can place 3D animated objects like its Dancing Hotdog mascot alongside real people in real places. Snapchat also released a machine vision-powered search feature last year that compiles Stories of user-submitted Snaps featuring your chosen keyword, like videos with “puppies” or “fireworks,” even if the captions don’t mention them.

Pinterest’s Lens visual search feature

Snapchat was so interested in visual search that this year, it reportedly held early-stage acquisition talks with machine vision startup Blippar. The talks fell through with the U.K. augmented reality company that has raised at least $99 million for its own visual search feature, but which recently began to implode due to low usage and financing trouble. Snap Inc. might have been hoping to jumpstart its Camera Search efforts.

Snap calls itself a camera company, after all. But with the weak sales of its mediocre v1 Spectacles, the well-reviewed v2 failing to break into the cultural zeitgeist and no other hardware products on the market, Snap may need to redefine what exactly that tag line means. Visual search could frame Snapchat as more of a sensor than just a camera. With its popular use for rapid-fire selfie messaging, it’s already the lens through which some teens see the world. Soon, Snap could be ready to train its eagle eye on purchases, not just faces.

In related Snapchat news:


Source: The Tech Crunch

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