Month: May 2019

U.S prosecutors have brought charges against a Chinese national for his alleged involvement of the 2015 data breach at health insurance giant Anthem, which resulted in the theft of 78 million medical records.

Fujie Wang, 32, and other unnamed members of a China-based hacking group, are charged with four counts of conspiracy to commit fraud, identity theft and computer hacking.

The hackers are also accused of breaking into three other businesses, all of which were not named.

Prosecutors said the hackers used “sophisticated techniques to hack into the computer networks of the victim businesses without authorization” — including spearphishing attacks — and transferred archive files from Anthem’s data warehouse back to China.

The hackers said to have “patiently waited months” after they broke into the health insurance giant’s systems before they stole data. The hackers are said to have stolen the 78 million records over a month between October and November 2014.

“The allegations in the indictment unsealed today outline the activities of a brazen China-based computer hacking group that committed one of the worst data breaches in history,” said U.S. assistant attorney general Brian Benczkowski in remarks. “These defendants allegedly attacked U.S. businesses operating in four distinct industry sectors, and violated the privacy of over 78 million people by stealing their personal identifiable information.”

Developing… more soon.

Source: Tech Crunch

It has to be a bit depressing to be in the cloud infrastructure business if your name isn’t Amazon. Sure, there’s a huge, growing market, and the companies behind Amazon are growing even faster. Yet it seems no matter how fast they grow, Amazon remains a dot on the horizon.

It seems inconceivable that AWS can continue to hold sway over such a large market for so long, but as we’ve pointed out before, it has been able to maintain its position through true first-mover advantage. The other players didn’t even show up until several years after Amazon launched its first service in 2006, and they are paying the price for their failure to see the way computing would change the way Amazon did.

They certainly see it now, whether it’s IBM, Microsoft or Google, or Tencent and Alibaba, both of which are growing fast in the China/Asia markets. All of these companies are trying to find the formula to help differentiate themselves from AWS and give them some additional market traction.

Cloud market growth

Interestingly, even though companies have begun to move with increasing urgency to the cloud, the pace of growth slowed a bit in the first quarter to a 42 percent rate, according to data from Synergy Research, but that doesn’t mean the end of this growth cycle is anywhere close.

Source: Tech Crunch

In Riga, Latvia, an 80-person startup called Printify is reimagining the on-demand printing business.

Gone are the days where small merchants have to sell their customized products on platforms like Zazzle, Society6, CafePress, or Teespring . Using Printify, e-commerce business owners can create clothes, accessories and more fixed with their designs, logos, art or photos, then sell them directly on their very own online stores.

The “first wave” of on-demand printing companies, Printify founder and chief executive officer James Berdigans explained to TechCrunch, typically require that merchants sell their items on the provider’s platforms.

“The problem is that these merchants don’t have the capability to build their own brand,” Berdigans said. “At the end of the day, you end up building the Teespring brand, not your own brand.”

Printify, a graduate of the 500 Startups accelerator, has attracted a $3 million investment from Bling Capital, a venture capital fund launched five months ago by Ben Ling, a former general partner at Khosla Ventures.

“Printify is perfectly positioned to enable the new trend of micro and boutique brands,” Ling said in a statement. “Consumers and SMBs alike can benefit from Printify’s high-quality, low-cost, and fast printing platform — and create their own micro-brands.”

Founded in 2015 by Berdigans, Artis Kehris and Gatis Dukurs, Printify had previously raised a $1 million round following a big pivot. Initially, the business “pretended to be the manufacturer,” opting to be less transparent as a means to entice customers.

“That was a terrible idea,” Berdigans said. “Even though you aren’t lying, you end up not being a very honest company and that’s not the business model we wanted.”

Now, Printify operates as a B2B marketplace that connects manufacturers with ecommerce stores. Plus, the startup handles the mundane tasks of fulfilling orders, including billing, manufacturing requests and shipping so store owners can focus on brand building. The switch allowed the startup to begin growing 30 percent year-over-year, as well as add hundreds of unique products to its catalog.

The founders say Printify most often caters to political campaign employees, designers & artists, and influencers & “hustlers,” or people who are self-taught experts on managing digital sales. With a fixed pricing scheme, merchants know exactly what they are paying Printify but have the flexibility of pricing their own product. Other print-on-demand marketplaces, like the aforementioned “first wave” businesses, don’t give merchants the ability to determine their own margins.

“If you use Zazzle, for example, you only get a small portion of revenue share but on Printify, you pay us a small fee,” Berdigans said. “If you were selling t-shirts for $25 and the average production cost is $10, our sellers will see a 50 to 60 percent margin.”

Dozens of angel investors, including YouTube co-founder Steve Chen, Twitch co-founder Kevin Lin, ClassPass co-founder Fritz Lanman, DoorDash co-founder Evan Moore, Google AdSense pioneer Gokul Rajaram and Facebook’s vice president of product Kevin Weil, also participated in the company’s latest round.

“What Airbnb did for the hospitality industry, that’s basically what we can do for the print-on-demand industry,” said Kehris, Printify’s chief operating officer.

Source: Tech Crunch

HBO has been releasing little glimpses of its adaptation of the classic graphic novel “Watchmen,” but now we’ve got a full teaser trailer.

“Watchmen” has already been turned into a big-budget film by director Zack Snyder. While the movie was neither a disaster nor a big success, the results were still disappointing, since the original graphic novel (written by Alan Moore and drawn by Dave Gibbons) routinely appears on lists of the greatest comics of all time.

One of the main problems with the movie, at least in my view, is that Moore and Gibbons’ story is so perfectly suited to the comics format that any is going to feel like a step down. Perhaps “Watchmen” TV creator Damon Lindelof felt something similar, since he said last year that the comics  “will not be retread nor recreated nor reproduced nor rebooted” on the show.

Instead, he suggested that the series would treat the comics as “our Old Testament” and tell new stories about what comes after.

While the teaser mostly sticks to cryptic, ominous imagery, that does seem to be approach here — depicting a world where costumed vigilantes have been shaping American history for decades, and where the catastrophic events that ended “Watchmen” are receding into the past.

By the way, Lindelof’s involvement is what makes me excited for the show. While he’s best-known for co-creating “Lost,” his most recent project was “The Leftovers,” which I’d argue is itself a contender for greatest television show of all time. So even though I’m not convinced the world really needed another version of “Watchmen,” I’m very interested to see what Lindelof does with the characters.

Source: Tech Crunch

One hundred and fifty years before John Nash received his Nobel prize, a train left Versailles for Paris. On board were two brothers returning home from visiting friends. Always a pleasant journey through the French countryside, this one was, unfortunately, in peril. The train crashed and one of the two brothers, Joseph, was severely injured with a broken bone and other fractures. Joseph Bertrand on that day was 20 years old and was already a professor of mathematics with a doctorate he received at the age of 17 for a thesis in thermodynamics.

Joseph later would challenge another French mathematician Antoine Augustin Cournot, reworking an economic situation in which two companies dominate a market, formally known as the Bertrand duopoly. He proposed that in a state of duopoly, whereby players offer a non-differentiated product and are not in cooperation, their customers buy from whichever one sells it for cheaper. The Bertrand duopoly is a harsh situation where prices eventually converge to costs making it economically impossible for its players to exist in the long run. It was a time when only profitable companies existed.

Bertrand’s work was one of the foundations upon which John Nash would later build. Where Bertrand defined a cutthroat competition, Nash recognized that competitors don’t always know what the other’s cost structure is or what they would do in response to one’s actions, therefore keep making tactical decisions in their businesses resulting in certain payoffs. He stated that there exists a profile of strategies such that each competitor’s strategy is an optimal response to the other’s, there is a point of balance in which neither competitor has anything to gain by changing strategies. That point is called the “Nash Equilibrium.”

John Nash shared the Nobel prize in 1994 with another brilliant mind: John Harsanyi. Harsanyi examined the uncertainty around each party’s knowledge and understanding of the other’s decisions and how beliefs can be embedded into a framework of game theory. These games are called games of incomplete information. Harsanyi said that the payoff structures are not always known and come with a certain probability distribution so one should take probability into account when making a tactical economic move and calculating the results.

From Bertrand to Nash to Harsanyi, many companies have struggled with competition, conditions of duopoly, price pressures and survival. Some survived, some did not. Others reached a profitable state of Nash equilibrium and still exist to this day.

Fast-forward to today… here comes Uber and Lyft.

Consider a hypothetical situation where Lyft runs a promo in a specific market. Doing so will impact Lyft’s market share, total revenue, and overall profits. It will also impact Uber’s market share and total revenue in that market, but not profit per ride because they have not yet responded to the move by adjusting their price. The same situation applies to Lyft if Uber runs a promo. They will choose to respond or not respond based on their beliefs of the payoff they will receive. They will keep playing this game until they conclude there’s nothing to gain by offering more promos at which point, they will have reached Nash equilibrium.

Harsanyi’s work is quite relevant here because the two companies have a reasonably good idea about the outcome of each action and each other’s costs but do not precisely know what they were, and they compete with a certain level of belief about each other’s preferences and payoffs. Based on their beliefs, each company will have to assign a certain level of probability to the outcomes of their actions and the responses of their competitor.

We must also note that in the very beginning, competitors know less about each other, but the longer they play the game, the more they will learn and make adjustments to their moves. Going public brings more transparency about each company so with that they will learn even more. The more each competitor will know about each other the more informed their decisions and responses will be so the rideshare game should ultimately reach Nash equilibrium.

So, which one will prevail? At this point, there are a number of questions one must ask as an investor. Are Uber and Lyft in Nash equilibrium today? If they are in Nash equilibrium, and we know that this state means they’re losing money every day, they will ultimately deplete all reserves. If not, what would that final state of equilibrium be? Would it be a profitable state for these companies and their investors? In a state of Nash equilibrium, what price would each company charge their customers in a given market?

Secondly, do Uber and Lyft exist in a Bertrand duopoly? Their products are identical. One driver can drive for both companies in the same car and they often do. Bertrand would be baffled at how fierce this competition is. In his mind, price wars would end when price equals cost leaving no profit for either party or no economic interest to continue their businesses. In this case, these companies convinced investors to raise massive levels of outside capital so that they can afford to charge prices below their cost, operating at deficits hoping they would beat the competition and at some point, reach profitability.

There are two things companies can do to escape Bertrand duopoly: either come up with a lower cost structure or differentiate the product. If one can come up with a lower cost structure, such asdriverless cars, and the other does not, that one wins. If one introduces a new product, such as bikes or scooters and breaks into a brand-new market, they escape Bertrand and gain an edge. But as long as the companies maintain a status of non-differentiated products, according to Bertrand, customers would go with the cheaper of the two, prices would go lower, drivers earn less, and economic benefits erode.

Bertrand assumed a very commoditized world and did not take into consideration the softer elements of competition. In the absence of cost-cutting solutions such as driverless cars, attributes such as “company culture” come into play. If two companies charge the same price, would consumers split 50-50 like Bertrand said, or would they pick the company they think is “nicer?” Or, what is the premium or discount attributable to “niceness” of companies?

In the war between Uber and Lyft, or in any other duopoly, the ability of companies to make calculated decisions at times of competition remains a vital piece of the puzzle. The strategy comes in two steps. First, all decisions must be made at optimal levels reaching a state of Nash equilibrium. At this point, there are no further decisions to make that’ll provide an additional economic benefit to either party. Once that’s done, then differentiation efforts begin so that the parties may escape Bertrand. And those happen on two fronts: cost and product differentiation. It’s certainly a complex task and both companies have smart teams in place to make the calculations. It will be exciting to watch the battles in the years to come.

(If you’re an investor, would it make sense to invest in both companies in a Bertrand duopoly? Perhaps that’s like betting on both black and red in a game of roulette. Remember, if the ball lands on zero, both bets lose!)

Disclaimer: Venture Science is a Lyft investor.

Source: Tech Crunch

Two years ago, Apple changed the way its app store ratings worked by allowing developers to decide whether or not their ratings would be reset with their latest app update — a feature that Apple suggests should be used sparingly. Today, Google announced it’s making a change to how its Play Store app ratings work, too. But instead of giving developers the choice of when ratings will reset, it will begin to weight app ratings to favor those from more recent releases.

“You told us you wanted a rating based on what your app is today, not what it was years ago, and we agree,” said Milena Nikolic, an Engineering Director leading Google Play Console, who detailed the changes at the Google I/O Developer conference today.

She explained that, soon, the average rating calculation for apps will be updated for all Android apps on Google Play. Instead of a lifetime cumulative value, the app’s average rating will be recalculated to “give more weight” to the most recent users ratings.

With this update, users will be able to better see, at a glance, the current state of the app — meaning, any fixes and changes that made it a better experience over the years will now be taken into account when determining the rating.

“It will better reflect all your hard work and improvements,” touted Nikolic, of the updated ratings.

On the flip side, however, this change also means that once high-quality apps which have since failed to release new updates and bug fixes will now have a rating that reflects their current state of decline.

It’s unclear how much the change will more broadly impact Google Play Store SEO, where today app search results are returned based on a combination of factors, including app names, descriptions, keywords, downloads, reviews and ratings, among other factors.

The updated app ratings was one of numerous Google Play changes announced today, along with the public launch of dynamic delivery features, new APIs, refreshed Google Play Console data, custom listings, and even “suggested replies” — like those found in Gmail, but for responding to Play Store user reviews.

End users of the Google Play Store won’t see the new, recalculated rating until August, but developers can preview their new rating today in their Play Store Console.

Source: Tech Crunch

Virtual reality is the ultimate money pit. Tech giants are selling low-margin hardware on which users play software that was funded by those same companies. This strategy seems to continue year after year without a hockey stick chart in sight.

While VR may still be waiting for its breakout hardware hit, there has already been a clear software standout. Beat Games released Beat Saber one year ago. The popular game is part Guitar Hero, part Fruit Ninja, and it utilizes the benefits of VR to let players slice their way through an EDM soundtrack, which the company’s music-mixing CEO produced.

While a few VR studios have surpassed lifetime revenue in the low millions, Beat Games sold more than 1 million copies of the $20 game after just nine months on the market. The title’s addicting gameplay has left it endlessly showcased across the web by game streamers, enabling a mainstream success that the VR market really hasn’t seen yet.

Beat Games CEO Jaroslav Beck says the title’s success is “dope,” but he’s more concerned with ensuring he doesn’t leave anything on the table, whether that’s expansion into esports or arcades or the fitness market. I chatted with Beck about what it means to actually finish a game in the era of freemium, why he doesn’t want to become a manager and how Beat Games has never raised VC funding.

‘Unlocked my head’

Beck didn’t come up with the idea for Beat Saber. Like a lot of people who have bought the game, his first experience with it was watching an early demo on the web built by a couple of tinkering Czech programmers.

Ján Ilavský and Vladimír Hrinčár had been building games together since high school. The pair had published a few games; their biggest success was Chameleon Run, a mobile game that won an Apple Design Award in 2016. Following that success, the duo set its sights on building something for virtual reality.

Beat Games co-founders (left to right) Hrinčár, Beck and Ilavský

They were already a year into development when Beck saw a demo on Facebook. At the time, Beck had been living in L.A. building out customers for his own studio, Epic Music Productions, where he had already done some work for clients like EA, Blizzard and Disney. Despite thinking the VR market might be a passing fad, the Beat Saber demo piqued his interest and led him to more online investigating.

“I was so skeptical, but then I saw the teaser that these two had put out and it was like something had unlocked my head,” Beck told TechCrunch.

After discovering the pair shared his Czech background, he contacted them and flew out to Prague to convince them to let him build the soundtrack for their new game. He also planted the idea of starting a new company around the title if it achieved the success that he thought it would.

Convincing the “strict programmers” to build a venture around their demo was more challenging than expected, he admits, but Beck eventually got them on board to finish the game. The team of perfectionists had a tougher time hitting their deadlines than expected, and even after releasing an “early access version” of the title a year ago, Beck still talks about finishing the game as though it’s a far-flung dream. This, despite the fact that Beat Saber is one of the most-downloaded games in VR’s early history.

Influencers and influence

Via Beat Saber’s Facebook page

How the team reached this achievement requires dissecting the qualities of a viral game, which is no small task. Beck thinks the game was successful simply because Ján and Vladimír built the type of game they wanted to play without ever worrying about building a commercial hit.

But for a medium that’s been so difficult to showcase without putting on a headset, the Beat Saber team set out early on to ensure the game was highly visible. Because many of the songs were Beck’s, it was much simpler to ensure that YouTubers could freely post footage of the gameplay without concerns for takedowns or reduced monetization. It worked; it wasn’t long after the game’s release that top streamers like PewDiePie and Jacksepticeye were playing the game for their massive subscriber bases.

Beck says that videos showcasing the game on YouTube have now received more than 2 billion views. That popularity has gradually expanded offline, with plenty of gamers that I’ve chatted with saying the viral Beat Saber videos led them to get VR systems in the first place.

But Beat Saber isn’t just helping sell VR headsets, it’s changing how the systems are built.

Oculus has been using Beat Saber as a way to benchmark the quality of its new inside-out tracking system, ensuring that the new headsets can handle the game’s most advanced modes.

“Our tracking team continued to improve their technology until we could play Expert+ songs and achieve the sorts of scores we see on Rift,” Oculus director of ecosystem Chris Pruett told TechCrunch. “Beat Saber proved to be a very valuable bar against which we have been able to measure our overall tracking quality.”

Beck similarly says that one of Valve’s recent code updates for its SteamVR tracking system was made specifically to account for the tracking needs of Beat Saber’s fastest players.

‘Capturing the full potential’

After smashing through VR sales records, one of Beat Games’ biggest challenges might be ensuring that the platform’s limited reach doesn’t end up stifling its own growth.

The company is already working on some of its own hardware after partnering with South Korea’s SKonec to build custom VR arcade machines so that players in Asia can try out the title without having to fully buy-in to virtual reality.

Some in the VR industry see Beat Saber’s success as a sign that the VR industry’s days of lackluster growth are behind it.

“…The most interesting data point for me is that Beat Saber sold over one million copies in a year and is making over $20 million in revenue,” Tipatat Chennavasin, a co-founder of The VR Fund and an advisor to Beat Games, told TechCrunch in an email interview. “That makes it not just the biggest VR games success story but also the biggest indie games success story on any platform of the past year. Angry Bird’s success on iOS helped legitimize smartphones as a gaming platform when it made $6 million in one year.”

Finding the widest audience has led the Beat Games team to ensure that their code is lean and that the game “could run on a washing machine” if it needed to, Beck says. Even optimizing the game has been intensive work for the small team. Despite having such a hot title, Beck and his co-founders aren’t racing to turn their endeavor into an empire. In the past year, they’ve grown to just eight full-time employees.

“It’s complicated because we don’t really want to scale that much because then we’ll just become managers of a huge team,” he says. “We created the game and we want to be the ones to finish it.”

In an industry seemingly filled with investments that didn’t live up to the industry’s hype, Beat Games has never received outside funding.

“I’m really proud that we were able to build the company with this mindset of making decisions based on what is good for the game and not what is the most profitable thing,” he says. “I think the worst thing for a developer is that you get this awesome idea that you’re super excited about and then investors tell you, ‘Yeah that’s cool, but we’ll be broke.’ Then it’s like, what’s the point? You didn’t start making these games just to become crazy rich, right?”

“I’m not saying we will never raise funding, though,” he quickly adds.

Beck says that the team has some ideas for follow-on titles for Beat Games, but that completing their first effort is the studio’s central priority. Finishing Beat Saber seems like it should be well within the team’s reach, but Beck seems to see “finishing” the game as a nebulous task better defined by what’s left on the table rather than what they actually ship.

“Finishing the game isn’t about just bringing in all of these new features, but it’s about capturing the full potential of the game, whether that’s in esports, fitness or in just exploring music,” Beck says. “That’s a lot of work… the question is if we will survive until then (laughs), but I sure hope that we do.”

Source: Tech Crunch