Texas may have suffered a heartbreaking defeat during last night’s NCAA men’s championship basketball game, but the state does have something to celebrate today. Local outfit LiveOak Venture Partners, a venture firm focused exclusively on Texas-based startups, has closed a new fund with $105 million in capital commitments.

It’s the second vehicle for the firm, formed in 2013 by longtime investors Venu Shamapant, Krishna Srinivasan and Ben Scott, all of whom met while working together at Austin Ventures in 2000 — and who seem to know what they’re doing as a team.

LiveOak has already seen two of its portfolio companies sell for meaningful amounts (Digital Pharmacists sold last month to K1 Investment Management for more than $100 million; Opcity was snatched up last summer by News Corp. for $210 million). They also have at least two portfolio companies whose valuations have risen considerably since LiveOak funded them, including CS Disco, which raised $83 million in January, and OJO Labs, which raised $45 million just a few weeks ago.

We were in touch with the trio late last week to learn more about what they are seeing on the local startup scene.

TC: You’ve all been based in Austin for a very long time. What are the biggest shifts you’ve seen since meeting each other 19 years ago, during the peak of the dot-com bubble?

KS: There are three primary dimensions where Texas has evolved since 2000. Talent is perhaps the most significant improvement since 2000. There’s been a massive inflow of strong talent — in particular from the coasts — and we also have a maturation of locally cultivated talent. [Both have created a] critical mass of people across functions and industries that have been through a startup cycle.

While, like any other market, Texas had plenty of local capital in 2000, that quickly dried up, leaving Austin Ventures, where we worked at the time, as the only really meaningful source of local capital in Texas. [After the more recent financial crisis], between 2009 and 2012, all local early-stage capital really dried up, in contrast with the continued growth in the talent. But that created the opportunity for us to start LiveOak and today, there’s strong capital availability locally and from outside, setting up a really vibrant entrepreneurial scene in town.

I’d also say that while Texas is certainly more skewed toward the enterprise / B2B market, it has become much more diversified than in 2000. We have completely [moved] away from semiconductors and hardware and heavily accelerated into verticalized software and tech-enabled services. Some of the leaders in our portfolio are players in legal tech, real estate tech, health tech. We’re also seeing some early growth in consumer, but that’s an area where we’ll need to import talent heavily.

TC: How has the founder profile changed, if at all?

KS: While we haven’t reached peak Texas by any means, we have seen a tipping point in terms of cost-of-living factors in coastal states bringing in serial entrepreneurs to start and scale companies that would have otherwise been founded in other parts of the country in past years. In fact, over half of the six investments we’ve already made out of our new fund were founded by entrepreneurs who moved to Texas in the past five years.

TC: And what’s happening in terms of valuations? Any trends you’ve observed over the last year or two?

VS: Valuations in Texas companies are very dependent on the stage of the company. For early-stage companies, while there has been some uptick in valuations, on average, they continue to be at a discount to national valuation trends. For later-stage capital, where these companies target the same national investor base, the valuations tend to converge towards national levels of valuations.

TC: What size checks are you writing, and has that changed with this new fund? 

KS: Our strategy is to be one of the first institutional investors in a company. For post seed-stage companies that are raising their first institutional round of financing, our first check can range from $1.5 million to $4 million. Over the life cycle of a company, we’re comfortable investing from $8 million to $10 million [altogether].

Source: Tech Crunch

Editor’s note: This post is a part of our latest initiative to demystify design and find the best brand designers and agencies in the world who work with early-stage companies — nominate a talented brand designer you’ve worked with.

During a decade as the manager of the in-house design team at open source technology company Red Hat, Chris Grams learned that brand design is best when informed by a company’s culture and community.

He felt a natural push toward an open, collaborative attitude, distinct from how many companies approached design at that time. It was the early 2000s, and most companies saw their interactions with customers as a one-way street. In open source, it was an intersection.

“You almost break down the company and the community of people who surround the brand,” says Grams, currently head of marketing at Tidelift, an open source software management firm, and author of The Ad-Free Brand. “Now it feels like pretty standard operating procedure for the best brands that have the best relationship with their communities.”

This shift has a large influence on the question of when you should hire an in-house designer versus a contractor to do your branding design.

Three reasons to go in-house

After leaving Red Hat in 2009, Grams helped start New Kind, a branding agency that provides contract design services mostly to tech companies. This new vantage point allowed him to see drawbacks and advantages for companies in outsourcing design versus bringing it in-house.

One of the key benefits of in-housing is the designer’s intimacy with the deeply held values and culture of the company, which makes their branding work feel more authentic.

“The internal agency’s power really reveals itself when people are deeply part of the mission of the company,” says Grams. “It comes through in the work. You get an amazing work product.”

The second benefit, especially for tech companies, is the depth of understanding in-house designers can develop about the company’s products and services. And the third is that a dedicated in-house designer can be directed as needed to respond to pressing priorities.

“You can have them stop on a dime,” says Grams. “Say a competitor comes out with a big launch and you need to have something out within 24 hours. You can work on it right away.”

These are real benefits, but they may not outweigh the advantages of contracting out your design to a high-quality agency

The benefits of using an agency

A major benefit of an agency is that you can hire people with a level of expertise and variety of skills that would be out of reach for an in-house team. When Grams was at New Kind, for example, “we had a combined 30 years of experience with open source branding work,” he says

An agency can also provide the bandwidth to take on non-priority tasks such as a rebrand or a special series that in-house teams are often too work-strapped to take on.

Hiring an agency also has advantages in terms of flexibility and cost. The ability to customize the timing and amount of design work to your needs can be less expensive over time, even if each working hour is more expensive.

“You can ramp down and ramp up with an agency,” says Grams. “It’s impossible to do that with people… You’re paying that extra margin to have that flexibility.”

There’s a lot to think about, but Grams advises prioritizing the need for your design to be authentic to your culture… or not.

“I think the biggest thing is the power of your culture, frankly,” says Grams. “If you have a company where culture is not an asset, I would not build an in-house design team… But if you’re building a mission-driven organization or an organization where culture is super important, that’s where I would take an extra-long look at building an internal agency.”

Source: Tech Crunch

Zoom, the only profitable unicorn in line to go public, priced its initial public offering at between $28 and $32 per share Monday morning. The video conferencing business plans to trade on the Nasdaq under the ticker symbol “ZM.”

Zoom, valued at $1 billion in 2017, initially filed to go public in March. According to its amended IPO filing, the company will raise up to $348.1 million by selling 10.9 million Class A shares. The offering will grant Zoom a fully diluted market value of $8.7 billion, a more than 8x increase to its latest private market valuation.

Although the company has garnered praise for its stellar financials — Zoom posted $330 million in revenue in the year ending January 31, 2019, a remarkable 2x increase year-over-year, with a gross profit of $269.5 million — the road to IPO hasn’t been without hiccups.

The company’s founder and chief executive officer Eric Yuan last night published an open letter concerning the conduct of Zoom’s chief financial officer Kelley Steckelberg. According to the letter, Zoom was recently informed by an anonymous source that Steckelberg had an “undisclosed, consensual relationship” during her tenure at a previous employer.

Steckelberg was most recently the CEO of the online dating site Zoosk; before that, she was a senior director in consumer finance at Cisco . The letter does not specify where the relationship took place, when or with whom.

Losing a CFO mere days before an IPO would have been a major loss for Zoom. CFOs often become the face of the IPO, handling the grueling tasks associated with crafting an IPO prospectus, leading the roadshow and more, while also maintaining day-to-day financial operations.

Yuan writes that the Zoom’s board of directors conducted a full investigation into the matter and determined that Steckelberg would stay on as Zoom’s CFO: “Kelly expressed regret for what transpired at her former employer, took ownership for the situation, and made clear to us that she had learned valuable lessons from the experience,” he wrote.

“We appreciated Kelly’s openness and candor during this process,” he continued. “It is clear that this matter related only to circumstances at her former employer. During Kelly’s tenure at Zoom, she has been an incredible contributor, as well as a model steward of our culture, values, and high standards since joining the Company.”

We reached out to Zoosk for comment. Zoom declined to comment further.

Zoom, expected to make the final call on its IPO price next Wednesday, will likely price at the top of range and see a clean pop on its first day on the markets given its clean track record and positive financials. The business was founded in 2011 by Eric Yuan, an early engineer at WebEx, which sold to Cisco for $3.2 billion in 2007. Before launching Zoom, he spent four years at Cisco as its vice president of engineering.

Zoom has raised $145 million to date from investors including Emergence Capital, which owns a 12.2 percent pre-IPO stake, Sequoia Capital (11.1 percent pre-IPO stake); Digital Mobile Venture (8.5 percent), a fund affiliated with former Zoom board member Samuel Chen; and Bucantini Enterprises Limited (5.9 percent), a fund owned by Li Ka-shing, a Chinese billionaire and among the richest people in the world.

Morgan Stanley, JP Morgan and Goldman Sachs are leading its offering.

Source: Tech Crunch

Boston University grad students analyzed more than four million pitches from 11 seasons of Major League Baseball (2008-2018), and the findings aren’t great for human umpires. According to the study, umps made 34,294 incorrect ball and strike calls in 2018. That works out to 14 blown calls per game and 1.6 per inning.

It’s not a huge number, compared to the 162 games each of the league’s 30 teams play in a given regular season, but it’s enough to give pause — and to confirm the suspicions that many irate spectators have had for years.

The study notes that the average age of MLB umps is 46, with with an average of 13 years’ experience. Each season, umps call around 4,200 pitches behind the plate. Interestingly, the findings suggest that younger, less experienced umpires tend to outperform vets.

The frequency of incorrect calls, perhaps unsurprisingly, tends to vary based on the nature of the play. Again, anyone who’s followed the game with any sort of frequency likely already had their suspicion that umps favor either the pitcher or batter, based on who’s leading in a count.

“Research results demonstrate that umpires in certain circumstances overwhelmingly favored the pitcher over the batter,” according to the study. “For a batter with a two-strike count, umpires were twice as likely to call a true ball a strike (29 percent of the time) than when the count was lower (15 percent).”

Notably, the news comes a month after the MLB announced that it would be exploring the use of robotic umps Atlantic League minors, with an eye on potentially implementing the technology in the majors at some point. The subject has gained prominence in recent years as baseball broadcasts now include a visualization of the strike zone.

Source: Tech Crunch

Twitter just took another big step to help boot spammers off its platform: it’s cutting the number of accounts Twitter users can follow, from 1,000 per day to just 400. The idea with the new limits is that it helps prevent spammers from rapidly growing their networks by following then unfollowing Twitter accounts in a “bulk, aggressive or indiscriminate manner” – something that’s a violation of the Twitter Rules.

A number of services were recently banned from Twitter’s API for doing this same thing.

Several companies had been offering tools that allowed their customers to automatically follow a large number of users with little effort. This works as a growth tactic because some people will follow back out of courtesy, without realizing they’ve followed a bot.

The companies also offered tools to mass unfollow the Twitter accounts of those who didn’t return the favor by following the bot back. Other automated tools were often provided, as well –  like ones for creating those annoying auto-DMs, for example.

Twitter at the beginning of the year suspended a good handful of apps for violating its rules around “following and follow churn.” But booting the companies only addressed those that aimed profit by providing spammy automations as a service that others could use.

To really take on the spammers, the limits around how many people Twitter users can follow also had to be changed at the API level.

However, some people believe Twitter hasn’t gone far enough with today’s move.

In response to Twitter’s tweet about the new limits, several have responded to ask why the number “400” was chosen, as that still far more than a regular Twitter user would need to follow in a single day. Some users said it took years to get to the point of following hundreds of people. Meanwhile, the business use case for following 400 people is somewhat debatable, since DMs can be left open and companies can tweet a special URL to send customers to their inbox to continue a conversation – no following or unfollowing needed on either side.

While smaller businesses may still employ mass following techniques to attract customers, this at least puts more of a cap on those efforts.

Twitter explained to TechCrunch why it chose the number.

“We looked at follow behavior at various thresholds, and selected 400 as a reasonable limit that stopped most spam while not affecting legitimate users,” a spokesperson said.

These new limits and the spam dealer crackdown aren’t the only changes Twitter has taken in recent months to tackle the spam problem on its platform.

The company also updated its reporting tools to allow users to report spam, like fake accounts; and it introduced new security measures around account verification and sign-up, alongside other changes focused on more proactively identifying spammers. Last summer, Twitter also purged accounts it had previously locked for being spammy from people’s follower metrics.

Combined, the series of actions is designed to make spamming Twitter less attractive and considerably more difficult to scale. This impacts not only those who use spam for capital gain but also the new wave of fake news peddlers looking to topple democracies and disrupt elections – something that now has the U.S. government considering increased regulations for social media.

The short-term impact of these changes could be a drop in Twitter’s monthly user growth (a number Twitter recently stopped sharing), but it’s a bet on the long-term health of the platform instead.

Source: Tech Crunch

When Sinemia first came across our radar, the company was happily riding the wave of anti-MoviePass publicity. With its chief competition in the midst of what looked to be a historic collapse, Sinemia happily grabbed headlines as a what looked to be more stable alternative for movie ticket subscriptions.

Last July, at the height of MoviePass’ meltdown, we asked Sinemia co-founder and CEO Rifat Oguz how he planned to avoid a similar fate. “By not providing unlimited tickets, but providing two tickets for $9.99 with more flexible options and features, we might not have grown as fast as MoviePass, but we’ve grown more sustainably,” he answered, happy to contrast the two companies.

Another key difference between the two competitors is that Sinemia isn’t public, so any struggles it’s had over the past year have largely been out of the public eye. Not entirely, however. Not in the age of social media. As I noted in a piece last week, every Sinemia story that’s run on this site, no matter how minor, has been bombarded with a deluge of Twitter criticism.

It’s a wide-ranging laundry list of complaints at first glance. Sinemia’s Twitter support team appears to be working overtime to address them, but the sheer number of critical responses is unlike anything I’ve seen doing this job.

The primary complaints generally fall into three separate, but sometimes overlapping, categories.

1. Hidden fees
2. Cancellations without refunds
3. Widespread app problems

Earlier this week, we spoke to Oguz about the service’s ongoing issues. It was a short call, squeezed between meetings the executive was running to at CinemaCon in Las Vegas this week.

“As CEO, I can say, we’re still learning,” he said in a humble tone. “I think we’re learning in a way.

As we spoke, Sinemia issued sent us a press release noting the launch of “two new customer service websites.” It’s not the kind of announcement companies tend to brag about in PR emails, but it seems clear the sheer volume of negative feedback has caused Sinemia to be more proactive in highlighting the steps it’s taking to address its very vocal, angry subscribers.

It echoes a move made by the company last week, when it sent its announcement of a new $15-a-month Always Unlimited plan accompanied by a lengthy “Account Termination Media Alert” that outlined its aggressive moves in March to cancel accounts over “fraudulent activity and/or misuse of the service.”

Like MoviePass before it, Sinemia began a process of terminating accounts en masse for violations of terms and generally gaming the system. In a statement last week, the service gave the following reasons as cause for potential account termination.

• Unauthorized use of the Sinemia card/cardless outside of its intended purposes, resulting in fraudulent financial activity. For example, this could be purchasing concessions at the theater instead of a movie ticket.
• Using multiple Sinemia accounts on the same device.
• Not checking in at the theater before or after your movie.
• Seeing the same movie more than three times.
• Creating multiple Sinemia accounts for the same person.
• Sharing one’s Sinemia membership to buy tickets for other people. This includes not only people buying tickets and selling to others but also people sharing their own tickets with friends and family members.
• Manipulation of location data resulting in deceptive ticket purchases. For example, faking GPS data on a phone.
• Reasonable suspicion of fraud and/or abuse.

But while cancellation complaints do appear to have accelerated last month, the truth is that negative feedback against the service dates back further. In late February, Pennsylvania law firm Chimicles Schwartz Kriner & Donaldson-Smith filed a class action suit in Delaware (not to be confused with the on-going patent dispute with MoviePass), the state in which the now largely Los Angeles and Turkey-based company was incorporated.

The 50-page filing doesn’t mince words, with statements like, “Sinemia fleeces consumers with an undisclosed, unexpected, and not-bargained-for processing fee each time a plan subscriber goes to the movies using Sinemia’s service.”

Benjamin F. Johns, a partner and plaintiff in the case against Sinemia, told TechCrunch that the firm has received more than 2,000 complaints from current or former Sinemia subscribers.

“I’ll be very transparent about our litigation strategy: we want to certify a class consisting of all of the Sinemia consumers who were harmed in the same way by the same defective conduct, and then get the case in front of a jury as quickly as possible,” the lawyer said in a statement to TechCrunch. “We think our clients and the thousands of others like them have compelling stories to tell, and we look forward to having an opportunity to present it in court.”

Asked whether the 2,000 number sounded high, Oguz simply responded, “No. It’s a small number if you compare it with our user base.” Because it’s not a publicly traded company, Sinemia is not required to disclose such numbers, and the executive didn’t offer much in the way of specifics, only saying that it has “grown almost 50 percent month over month for the last 15 months.”

Orguz did address growing customer complaints around Sinemia’s app. Like many of the other ongoing issues with the service, complaints run the gamut. The most commonly cited, however, involve things like double charges, error messages and frequent pop-ups explaining that the app is “down for maintenance.”

According to users, these kinds of issues have the tendency to pop up when trying to purchase tickets to popular features like Captain Marvel and Us. Orguz discussed the maintenance issues in a recent interview with IndieWire that the publication describes as, “at times[…]contentious,” adding that he “express[ed] surprise” upon hearing some of these complaints read back to him.

The tone of our own conversation was ultimately a bit less combative than that interview, with Orguz admitting that Sinemia’s app has been experiencing issues. “Yeah,” he answered, agreeing to the premise that the app’s problems appear to be “pretty widespread.”

It’s for that reason, he explained, that Sinemia is launching two independent service websites to address the problems with the app and accoount terminations. “We are taking it seriously,” he insisted. “We are looking at every comment. We didn’t found the company a year ago. It started about five years ago. We are taking every negative comment very seriously.”

At the very least, a pending lawsuit and months of wall-to-wall customer complaints on Twitter and Reddit do appear to have moved the needle somewhat. Just how much and how Sinemia will approach disgruntled users going forward remains to be seen. But like MoviePass before it, it’s hard to shake the notion that so much negative publicity has left an irreparable mark on the company just as it started to make a name for itself — not to mention a sea of irate consumers in its wake.

Fittingly, Orguz’s comments echo those of Ted Farnsworth. In our recent interview, the CEO of MoviePass parent Helios and Matheson suggested that the service was a victim of its own success, growing the service faster than its staff could ultimately manage.

Similarly, Orguz told us, “Our subscriber numbers have grown more than expected. Even after last August, we weren’t expecting to go that much, that fast. When we’re growing, we’re also improving ourselves, and we’re trying to find a way to maintain and to sustain.”

But as difficult as managing that success may have been for the company, its greatest challenge is still ahead of it: convincing thousands of disgruntled fans — and possibly a courtroom — that its worst days are behind it.

Source: Tech Crunch

Evan Spiegel has finally found a way to fight back against Mark Zuckerberg’s army of clones. For 2.5 years, Snapchat foolishly tried to take the high road versus Facebook, with Spiegel claiming “Our values are hard to copy”. That inaction allowed Zuckerberg to accrue over 1 billion daily Stories users across Instagram, WhatsApp, and Facebook compared to Snapchat’s 186 million total daily users. Meanwhile, the whole tech industry scrambled to build knock-offs of Snap’s vision of an ephemeral, visual future.

But Snapchat’s new strategy is a rallying call for the rest of the social web that’s scared of being squashed beneath Facebook’s boot. It rearranges the adage of “if you can’t beat them, join them” into “to beat them, join us”. As a unified front, Snap’s partners get the infrastructure they need to focus on what differentiates them, while Snapchat gains the reach and entrenchment necessary to weather the war.

Tinder lets you use Snapchat Stories as profile photos

Snapchat’s plan is to let other apps embed the best parts of it rather than building their own half-rate copies.

Why reinvent the wheel of Stories, Bitmoji, and ads when you can reuse the original? A high-ranking Snap executive told me on background that this is indeed the strategy. If it’s going to invent these products, and others want something similar, it’s smarter to enable and partly control the Snapchatification than to try to ignore it. Otherwise, Facebook might be the one to platform-tize what Snap inspired everyone to want.

The “Camera company” corrected course and took back control of its destiny this week at its first ever Snap Partner Summit in its hometown of Los Angeles. Now it’s a camera platform thanks to Snap Kit. Its new Story Kit will implant Snapchat Stories into other apps later this year. They can display a more traditional carousel of your friends’ Stories, or lace them into their app in a custom format. Houseparty’s Stories carousel shares what your buddies are up to outside of the group video chat app. Tinder will let you show off your Snapchat Story alongside your photos to seduce potential matches. But the camera stays inside Snapchat, with new options to share out to these App Stories.

Snap CEO Evan Spiegel presents at the Snap Partner Summit

This is how Snapchat colonizes the native app ecosystem similarly to how Facebook invaded the web with the Like button. Snap’s strong privacy record makes these partners willing to host it where now they might fear that Facebook and its history with Cambridge Analytica could tarnish their brand.

Instead of watching these other apps spin up mini competitors that further fragment the Stories world, Snap saves developers the slow and costly hassle while instantly giving them best-in-class tools to boost their own engagement. Each outpost makes your Snapchat account a little more indispensable, grants its camera new utility, and reminds you to visit again. It’s another reason to stick with Snap rather than straying to other versions of Stories.

If Spiegel knows what’s up, he’ll douse the Story Kit partnerships team with resources so they can sign up as many apps as possible before Facebook can copy this idea too. For now, Snap isn’t injecting ads into App Stories, but it could easily do so and split the cash with its host. This would attract partners, generate revenue, and give Snap’s advertisers more reach.

Houseparty embeds Snapchat Stories

Either way, Snap will score those benefits with its new Ad Kit. Later this year the Snapchat Audience Network will launch allowing partners to host Snap’s full-screen vertical video ads and earn an as-yet-undisclosed revenue share. They won’t have to build up an ad sales force or build an auction and delivery system, but just drop in an SDK to start displaying ads to both Snapchat users and non-users. The company’s message again is that it’s becoming easier to cooperate with Snapchat than copy it.

Snap’s new ad network

Giving its advertisers more reach and reusability for Snap’s somewhat proprietary ad unit format helps Snap address its core challenge: scale. Snap’s 186 million total users can look small in comparison to Instagram, Facebook, or YouTube, especially since that count sank in Q2 and Q3 before stabilzing in Q4 of last year. That makes it tougher for advertisers to justify the chore of spending on Snapchat. Ad Kit and potentially Story Kit give Snap more reach even without user growth.

Added size could tip the cards in Snap’s favor given it’s already popular with an extremely important demographic. Snapchat now reaches 75 percent of 13 to 34-year olds in the US, and 90 percent of 13 to 24-year olds there. It claims to now reach more of that younger age group than Facebook in the most lucrative countries: the US, Canada, UK, France, and Australia.

Facebook has massively neglected this segment. Case in point: Facebook Messenger’s Stickers feature that’s popular with kids has hardly improved since its launch in 2013, which I hear was a fight to get approved internally. Meanwhile, Snapchat keeps growing its lead on virtual identity with Bitmoji. Now Snap will let you put your personalized Bitmoji avatar on your FitBit smart watch face, use them to joke about Venmo purchases, and even represent yourself with one in Snap’s new multiplayer games platform.

Again, Snap wants partners to integrate the real thing rather than try to build some half-assed facsimile of Bitmoji. Surprisingly, Facebook’s Avatars have been mired in development for over a year and Apple’s Memoji can’t escape iMessage and FaceTime yet. That’s why Snapchat would be wise to double-down on trying to make Bitmoji the ubiquitous way to represent yourself without a photograph. Facebook’s lack of design cool and Bitmoji’s massive headstart with this differentiated product is a powerful way for Snap to wedge itself into partnerships.

Snap needs all the help it can get if the underdog is going to carve out a substantial and sustainable piece of social networking. Teaming up was the theme of the rest of the Snap Partner Summit. It’s built ways for Netflix, GoFundMe, VSCO, and Anchor to share stickers and for publishers like the Washington Post to share articles back to Snapchat. It’s got Zynga and ZeptoLab building real-time multiplayer Snap Games that live inside chat and are a clever way of slipping ads into messaging.

Snapchat’s new Scan augmented reality utility platform has signed up Giphy and Photomath as well as former partners Shazam and Amazon to let you squeeze extra interactivity out of your surroundings. And since the physical world is too vast for any one developer to fill with AR experiences, Snap beefed up its Lens Studio platform with new templates and creator profiles so developers add to its warchest of 400,000 special effects. Facebook may be able to clone Snap’s features, but not its developer army.

“If we can show the right Lens in the right moment, we can inspire a whole new world of creativity” says Snap co-founder Bobby Murphy . From partnerships to utilities to toys, all the new announcements drive attention back to Snapchat’s camera. That makes it ripe to become the augmented reality brower of the world.

It all feels like a coming of age moment for Snapchat, punctuated by the glitzy press event where media bigwigs gnoshed on Chinese steak buns and played with AR art installations in West Hollywood.

Spiegel has discovered a method of capitalizing on his penchant for inspiring mobile product design. With this strategy in place and Snap’s reengineered Android app and new languages rolling out now, I believe Snapchat will grow again, at least in terms of deeper engagement if not also total user count. Perhaps it will need a little bit more funding to get it over the hurdle, but I expect it will reach profitability before the end of 2020. 

During a pre-event press briefing with a dozen Snap executives including Spiegel and Murphy (that was on ‘background’ so we can’t quote or specify who said what), one Snap higher-up joked that Facebook has been copying it for seven years so it’s started to feel normal. Zuckerberg recently declared he wanted to reorient Facebook around privacy, ephemerality, and messaging — the core tenets of Snapchat. But a Snap leader used some colorful language to describe how they don’t care what Facebook says its philosophy is until it fixes the 2 billion-user product that keeps doing harm.

Subtly throwing shade from the stage, Spiegel concluded that “Our camera lets the natural light from our world penetrate the darkness of the Internet . . . as we use the Internet more and more in our daily lives, we need a way to make it a bit more human.” That apparently means making other apps a bit more Snapchat.

Source: Tech Crunch

Welcome back to this week’s transcribed edition of Equity, TechCrunch’s venture capital-focused podcast that unpacks the numbers behind the headlines. Here we put the words of our wildly popular venture capital podcast, Equity, into Extra Crunch members’ eyes instead of their ears. This week, TechCrunch’s Kate Clark and Crunchbase News’s Alex Wilhelm get rapid-fire on funding news from around the way. And because they both talk so fast, they got a lot in.

In case you hadn’t heard, Andreessen Horowitz relinquished its status as a venture capital firm and registered all 150 of its employees as financial advisors. Kate and Alex dug in a bit more about that story. And who is sick of hearing about Lyft’s IPO? Nobody? Great. Because they talked about that and the implications of Uber’s imminent journey into the land of the public.

And finally, the Midas List. Does it matter? Why are we talking about it? Why do lists exist? Who’s on top? Who’s not? Who’s sad? Who cares? And more questions left unanswered.

For access to the full transcription, become a member of Extra Crunch. Learn more and try it for free. 

Kate Clark: Hello, welcome back to Equity. I’m TechCrunch’s Kate Clark and I’m joined again this week with Crunch Base News’ Alex Wilhelm.

Alex Wilhelm: Hello Kate. Good to be back in the studio.

Kate Clark: Welcome back. It’s just Alex and I this week and we have a lot of news to get through. So we’re just gonna start off by doing a rapid-fire overview of some of the stuff we’re not going to go as deep on. Alex, start us off with Affirm.

Source: Tech Crunch

When I first came out to California, one of my favorite places to go for sushi was in downtown Mountain View. They had these little boats that would float around the bar, each carrying some sushi on a small plate. You just sat down and started picking out the ones you liked, and began eating — very efficient and also a little bit of fun.

I feel like my news consumption these days is like those sushi boats. I sit down and the news just streams by and I pick out the articles I like and read them. Very efficient and also a little bit of fun. But I’ve been stuck at the sushi boat bar of news for far too long, watching the same imitation crab rolls go by. I need a better way to consume better information.

As you probably guessed, that “sushi boat bar of news” is Facebook, Twitter and the like. The algorithmic nature of news feeds tends to target the lowest common denominator, and it can often pander to people’s baser instincts. That being said, it does have its place, and provides a glimpse into what is capturing the general public’s attention — but it can’t be the whole meal, and that is what it has become. It’s like people who eat McDonald’s for breakfast, lunch and dinner. It’s tasty, addictive, but very unhealthy in the long term.

So what can you do about it, how can you make a change?

Email newsletters have been making a resurgence in popularity, but they are hard to manage and sort through. Christopher Mims of The Wall Street Journal tweeted about this problem:

if everyone has an email newsletter and someone gets the brilliant idea to consolidate them in one place where they can easily be followed or unfollowed wouldn’t that realize the dream of an open standards-based, surveillance-free alternative to Facebook?

And then Steven Sinofsky had a witty response:

And let us name it is RSS.

Indeed, another “old” technology like email that people have been gravitating toward as an alternative to get their daily news. Wired has proclaimed that “It’s time for an RSS revival” and it has resonated with well-respected thought leaders like Brad Feld. But RSS has had a tumultuous past, mainly used by professionals who need to keep up with their respective industries, not by the average consumer.

If email newsletters or RSS were to become the replacement, it would need a new approach or framework, not just a rehashing of past products. But that is only half the problem. In this day and age, we have become accustomed to having our friends and other people around when we read the news. Even if you don’t make any comments yourself, news exists in a public conversation and people’s reactions, whether they be from your friends or celebrities, are often part of the news itself.

Now these public conversations can be very toxic and are the very reason people are fleeing and looking for alternatives, but I don’t think people want to turn the dial to zero and go back to the days of reading the newspaper by yourself over breakfast. I think people still want others around — they just want it to be safe and free from trolls.

When the web first started taking off, information propagated via the web and hyperlinks, and that world was dominated by Google web search. As Facebook and Twitter grew into prominence, information started to propagate via social networks. And now people are starting to get more and more of their information via messaging, which is looking to be the next step in the progression. You can already see this transition happening in places like India with WhatsApp, where it is becoming a major source of misinformation. And there are interesting experiments out there like Naveen Selvadurai’s README on Telegram, where he posts articles into a Telegram group.

But for the most part there hasn’t been much evolution or progress on the messaging side of the equation to adapt it to become more of an information propagation medium. It’s still mainly about casual conversation and has little overlap with the “news feed” use case. But given how things are changing, now may be a good time to push the boundaries of what messaging could become. I think people are seeking relief from the barrage of social media, not knowing who to trust any more and wanting a better channel to the truth.

I’m pretty confident that closing the circle to a closer, trusted group would be welcome by most people. It doesn’t necessarily mean just friends, but it could include trusted experts or voices in the community that can help shepherd people through the noise and distractions.

Mike Isaac recently started a newsletter called “Brain Dump” wherein he wrote about his thoughts on the privacy post by Mark Zuckerberg, but what caught my attention was a paragraph near the end:

this is at least in part why i started this newsletter. the form is a kind of weird semi-private hybrid — a public newsletter, sent directly to inboxes, which occasionally elicits one-to-one conversations with some of you (that i greatly enjoy). it makes me feel much better than scrolling through twitter and watching performative nastiness.

A public forum with a positive audience interaction model. Even Fred Wilson noted that his readers often email him directly with comments that lead to one-to-one conversations. I wonder if Fred enjoys it as much as Mike does.

I’m sure this doesn’t scale very well, but it provides an interesting starting point that aligns with where we are heading. The modern equivalent of one-to-one email conversations is private messaging, which is squarely where Facebook has declared that it is headed, and it is also where people spend most of their time communicating these days, especially with the advent of mobile. The email newsletter also needs a modern equivalent, and maybe it can learn something from podcasts, which is seeing a major rebirth these days.

As it so happens, podcasts have adopted RSS as a de facto standard for providing feeds to podcast aggregators. It has its shortcomings, but it’s doing the job well enough that it continues to be used and has become a requirement for any new podcast that wants distribution. Even though it may seem like an esoteric protocol from the internet days of old, RSS is woven more deeply into the fabric of the web than you might think.

So if we think about who could shepherd us through the noise and distractions, could people like Mike Isaac or Fred Wilson be the right voices that help guide us toward understanding the truth of what is happening in the world? They are two very different types of people with two very different motives, and sometimes they are at odds with each other.

Mike Isaac is a journalist for The New York Times, a publication that recently did a campaign with the slogan, “The truth is more important now than ever.” We live in a time where world-class journalism is dying and yet it is desperately needed. The free press has always been a watchdog for democracy and, as The Washington Post says, “Democracy dies in darkness.” Journalists are probably the most obvious group of people that can guide us, since it is at the core of who they are and it is their job to expose the truth.

Fred Wilson is a venture capitalist for Union Square Ventures. He has a financial interest behind much of what he writes about, but that doesn’t necessarily disqualify him from being an important voice in the community. There are many people who are often the subject of the articles written in The New York Times that should have a voice of their own. “The Players’ Tribune” is a media company built entirely around that concept, giving athletes a platform to connect with the world on their own terms. The critics are skeptical that this just sugar-coats their stories, but you can’t ignore testimonials like the father trying to get his son to enjoy reading and how Steph Curry’s story connected with his son like no other sports publication could.

So I believe it will have to be a diverse group of voices that will guide us, just like reading only one publication these days may not always give you the whole story. It will likely start with one-to-one conversations between those voices and their readers, but that will only be the beginning.

Just like teenagers will resort to using Google Docs as their chat application of choice at school, the olds are using whatever tools they can get their hands on to find a safe way to understand the truth of what is going on in the world today. There is a product waiting to be built that is optimized for this purpose, and I’m sure companies large and small are trying to figure it out. For some like Facebook, it is an existential question. For publications like The New York Times and The Washington Post, it’s an opportunity to re-establish themselves after the wake of the internet revolution. And for the entrepreneurs, it could be the chance to use the thin edge of the wedge to work their way to a larger success.

The reason this is happening now is that people are starting to wake up to the reality of the digital world we live in and realize they are not safe. If you use Eugene Wei’s framework, social capital has grown to be enormous, but that by itself is not the concern — it is because social capital has become a fungible asset that can be bought, sold and used in whatever manner you choose.

It was all fine when it was just YouTube and Instagram influencers peddling products and making money, but when you can use that same social capital to influence elections, it started to make people feel very creepy and unsafe. The game is changing from one of status that Eugene Wei so articulately describes in his post to one of trust. We’ve fallen down a couple of levels in Maslow’s hierarchy of needs and safety has to be taken care of first before we can get back to esteem.

But we want to get back to trust and safety in a sustainable way, and for that we have to have the right business model. The tricky part is that trust tends to be inversely related to money. The more money you have, the less people trust you. I don’t think the general public trusts the billionaires to look out for their best interests, and the growing income disparity has only made it worse, spawning protests like “Occupy Wall Street” and political slogans like “We are the 99%.”

Ironically in the case of trust, a bank is a good analogy. People need to trust the bank to keep their money safe. If people trust a bank, more people will put more money into it. If they don’t trust the bank, then it will create panic and there will be a run on the bank.

In the context of social media, the currency is people’s attention and the bank is what is keeping people’s attention. People are losing trust in the current “attention banks,” so they are moving it out and trying to find a new more trustworthy place to store it. Again, to use Eugene Wei’s framework, the difficulty in migrating off of a social media platform will depend on how much social capital they have accumulated in the “attention bank” and if they can’t transfer that social capital easily, it will be much harder to leave. But for the average consumer, I don’t think they have much social capital, so it will be easy for them to leave. And when enough of the average consumers leave, there will be a mass deflation of the social capital value on the platform, so it will be easier for those “rich” people to leave also.

Now coming back to the business model. Just like banks make a profit by keeping other people’s money and lending it out to others, social media makes money by keeping other people’s attention and lending it out to others. The medium by which people’s attention is captured has moved from the printed page to an online web page, then an online web page to a social media post. And if the progression toward messaging is fully realized, then attention will migrate into a conversation, which would require a transformation of how people’s attention is lent out to others.

This transformation is an opportunity to reinvent the business model. It still may fundamentally be about lending out people’s attention, but it may become much more tangible. If you go back to print media, when you purchased an ad in a magazine, you had to use the size of the readership as a proxy to gauge how much attention that was lent to you. If what you get instead is a conversation with a potential customer, it is much more valuable. A good indicator that this could be a good business model are companies like Intercom, which are creating tools to immediately engage in conversations with customers instead of just taking them to a landing page.

Now if you bring this back to people needing a better way to understand the truth of what is happening in the world, can we have frank and honest discussions about a product that may put the company that makes it in bad light, yet still have that company willing to advertise on the platform?

The answer to this question lies in private messaging. On a platform like Facebook and Twitter, where it is a public conversation, a “town square” as Zuckerberg calls it, then it is more likely to be a problem. But if the conversation is private or in a small closed group, then it is less likely to be a problem. If done correctly, it could be an opportunity to change people’s minds or clarify misunderstandings.

As we said before, it will require a diverse group of voices to guide us to the truth, and companies should have a voice in the conversation where people are talking about their products or services. It’s not too dissimilar to Yelp giving businesses a way to respond to reviews and defend themselves. I think it’s the fair thing to do, and what’s important is not who is right or wrong, but the conversation itself. Keeping a dialog going between all parties, whether you like them or not, will only help us get closer to the truth. Shutting them down will not. They just need to be safe and with people we trust.

If you walk down Harrison Street in San Francisco’s Mission District, you’ll come across a store front with blacked-out windows, right across from the award-winning restaurant Flour + Water, (where Steve Jobs famously got denied a table). The only writing you’ll find is on the front door, which says “By Reservation Only sasakisf.com.”

You would never know by looking at it, but it is also an award-winning restaurant owned by Masaki Sasaki, who earned a Michelin star when he was the chef at Maruya and also consulted for many other omakase restaurants in San Francisco. The restaurant seats 12 people and they offer only one prix-fixe menu nightly. When I want the best sushi both in quality and overall dining experience, this is where I go. Each bite sends you to another world and you can’t help but close your eyes to fully enjoy the experience. It is fitting that omakase is all the rage these days; an intimate experience with only the highest-quality fish, hand-crafted by a master chef.

I think this is where we are heading with our daily news consumption — private groups, only the highest quality, curated by experts that we trust. You can see this change already happening in people’s behavior, partly in reaction to recent events, but also because people are starting to educate themselves on how all of this technology works and what it means to them personally.

With that understanding will come action and people will begin to make different choices depending on how they feel about what they have learned. And that action will lead to opportunity for new and existing companies to provide a service that people want given what they now know.

Source: Tech Crunch