Ideaforge

A recent user survey sent out by Dropbox confirms the company is considering the addition of an electronic signature feature to its Dropbox Professional product, which it refers to simply as “E-Signature from Dropbox.” The point of the survey is to solicit feedback about how likely users are to use such a product, how often, and if they believe it would add value to the Dropbox experience, among other things.

While a survey alone doesn’t confirm the feature is in the works, it does indicate how Dropbox is thinking about its professional product.

According to the company’s description of E-Signature, the feature would offer “a simple, intuitive electronic signature experience for you and your clients” where documents could be sent to others to sign in “just a few clicks.”

The clients also wouldn’t have to be Dropbox users to sign, the survey notes. And the product would offer updates on every step of the signature workflow, including notifications and alerts about the document being opened, whether the client had questions, and when the document was signed. After the signed document is returned, the user would receive the executed copy saved right in their Dropbox account for easy access, the company says.

In addition to soliciting general feedback about the product, Dropbox also asked survey respondents about their usage of other e-signature brands, like Adobe e-Sign, DocuSign, HelloSign, and PandaDoc, as well as their usage other more traditional methods, like in-person signing and documents sent over mail.

Given the numerous choices on the market today, it’s unclear if Dropbox will choose to move forward and launch such a product. However, if it did, the benefit of having its own E-Signature service would be its ability to be more tightly integrated into Dropbox’s overall product experience. It could also push more business users to upgrade from a basic consumer account to the Professional tier.

This kind of direct integration would make sense in the context of Dropbox’s business workflows. If, for instance, a company is working on a contract workflow, being able to move to the signature phase without changing context (or to share with a user who doesn’t use Dropbox) could add tremendous value over and above simply storing the document.

Companies like Dropbox have been looking for ways to move beyond pure storage to give customers the ability to collaborate and share that content, particularly without forcing them to leave the application to complete a job. This ability to do work without task switching is something that Dropbox has been working on with Dropbox Paper.

While it remains to be seen how they would implement such a solution, it might be a case where it would make more sense to partner with existing vendors or buy a smaller player than it would be build such functionality from scratch — although it’s not clear from a simple survey what their ultimate goal would be at this point.

Dropbox has not yet responded to requests for comment.

Source: Tech Crunch

Snapdragon’s been talking up its new wearable chip architecture since Google I/O back in May. The component giant finally took the wraps off the product at an event earlier today in San Francisco.

As one imagines from the I/O partnership, Wear 3100 has Google’s smartwatch operating system firmly in its sites. And not a moment too soon, really. In spite of a handful of updates, Wear OS has felt pretty stagnant for some time. Not even the rebrand from Android Wear could help shake loose the cobwebs.

The new architecture replaces the 2100. Qualcomm’s chips are currently shipping in more than 100 different Wear OS watches by 25 different brands, according to the company. Honestly, I’m mostly surprised to hear that Wear OS devices have hit the triple digits. After all, category leaders like Apple, Fitbit and Samsung have all opted to invest in their own software ecosystem, rather than embracing Google.

Interestingly, the first three partners for the new chip are luxury watch makers, rather than tech companies like LG or Huawei. Fossil Group, Louis Vuitton and Montblanc have all signed up to use the tech, perhaps marking the perceived way forward for the operating system. A Pixel Watch launching at Google’s fall event also seems like a very likely possibility, given the timing of the news.

Extended battery life is the main thing here — that, after all, has long been the bane of smartwatch makers. The new chip also brings new modes, include a “Traditional Watch Mode” to cut down on battery use and a “Rich Interactive Mode” for a more robust experience.

The new chip starts shipping for mass production today.

Source: Tech Crunch

While many lament the death of local news, a small army of tech startups have been developing a new set of tools to figure out how to save it. In one of the latest developments, Hoodline — which has built a platform to ingest and analyse hundreds of terabytes of data to find and then write local news stories — has raised $10 million in a Series A round to help take its effort nationwide.

“We want to cover the news deserts that no one else is covering,” said Hoodline’s founder and CEO Razmig Hovaghimian. “It’s filling a gap. It’s filling a need.”

The San Francisco startup had once been called Ripple News (in reference to the news that “ripples out” from one event) but then took the name of a hyperlocal news blog network that it acquired in 2016 after another Ripple began to make waves.

It is currently generating stories in 20 cities, with ABC, MSN, Yahoo, Hearst and CBS among the publishers that are partnering with it to use its content.

This latest Series A round was led by Neoteny, a seed and early stage investment firm out of Boston whose founder and lead partner, MIT Media Lab director Joichi Ito, is also joining Hoodline’s board.

Sound Ventures, Dentsu Ventures and Eric Schmidt’s Innovation Endeavors also participated, among other investors who asked not to be named.

Hoodline had been a part of Disney’s accelerator in 2017, so it too has backed the company, as has Rakuten, the Japanese e-commerce behemoth that acquired Hovaghimian’s previous startup, the crowdsourced online video subtitling startup Viki.

Hoodline is not disclosing its valuation, but from what we understand, it’s around $75 million and a bump up from its previous valuation.

Hoodline’s platform today has two parts: a local data wire producing local news stories; and a recommendation module that is somewhat similar to the likes of Outbrain and Taboola. Rather than recirculating stories from a wider network of clickable sites, however, it suggests stories from Hoodline’s inventory of stories, alongside a publication’s own inventory to keep people engaged on a site for longer.

The first of these inks partnerships with media platforms to supply content but currently is provided free to them; the second runs ads alongside the recommended articles.

One of the big issues with local news and its decline is that, as more traditional publishers have moved to the internet to cut the costs of producing printed newspapers, they’ve found that the revenues and margins that they generated from the older activities have not translated to the newer medium and the issues that even exist for large, world-famous publications are only compounded for smaller ones: they have a hard time getting the economies of scale needed to make the ad-based model work, and then when they club together they have to contend with the fact that their readership has moved on to other forms of infotainment.

But as it turns out, there is still an appetite for local information.

“There are so many good stories that go uncovered,” Hovaghimian said. “Plus, forty percent of all searches have local intent.” Facebook’s new interest in local news and Google’s own experiments with local journalism aren’t simple good-will attempts at fostering more community; they reflect interests that these companies have observed among their user bases.

So now, while tech has arguably “killed” the local news business in that way, it’s also been trying to save it be — namely in the form of providing more intelligent ways to run its business, from the advertising technology and/or paywalls to fund it, through to disrupting and improving the means of producing it.

Hoodline is part of the guard of companies that have been looking at how the rise of new kinds of computing technology, such as AI and big data analytics, can be used to help with the latter of these.

“Hoodline is bringing pioneering technology to the world of hyper-local news and content, while layering in editorial expertise and perspective.  This uniquely allows them to craft dynamic stories across a wide range of verticals and outlets,” said Ito in a statement. “We’re incredibly excited to be partnering with Hoodline and Razmig as they continue to deliver consumers content that they want, but was previously not available to them.”

Hoodline is not the only one exploring how to tap into big data to build stories; there are many. Among them, in the UK, the Press Association is working with a startup called Urbs to develop AI systems that can help surface interesting stories for (human) journalists to write. In the US, Automated Insights has been developing “robot” reporters to cover local sports and quarterly earnings beats. Other efforts like LiveStories is also tackling a trove of publicly available information — in its case civic data — to visualise and shape narratives from it, products that potentially also make their way into the news.

Hovaghimian said that Hoodline’s system ingests around 250 terabytes of data from a pretty diverse range of sources, spanning from hyperlocal listings services like Yelp and Foursquare through to things like feeds of local high school football sports results, and organises it and passes it through its algorithms to surface interesting items that can be used in stories. Editors, meanwhile, write templates that can be used for different types of stories, such as local food events, job trends in a particular city, or sports results from a local team. One person at the company described the templates as “advanced Madlibs.”

And for now, it’s as basic as this, too. Hoodline has bylined content written by journalists, but the content that is bylined to Hoodline is created by the company’s big data platform, and those articles, it has to be said, are more anodyne than earth-shattering. But Hovaghimian says this is almost intentional, it’s to clear the way for more serious work.

“We are filling a gap and covering news that is not being covered, even if it’s just to test what audiences want to read,” he said. “This frees up resources for more journalistic pursuits.”

Whether or not publications dedicate resources to more journalistic pursuits to complement the Hoodline work, of course, is another matter.

Meanwhile, Hoodline also has journalists to work on original content and to build these templates. The company currently has a ratio of around two engineers to one editor, Hovaghimian said, but believes that as it scales it will be bringing in fewer editors and more engineers: “At this point it’s about growth now that we have figured out what our bottlenecks are,” he said.

As for what comes next, Hovaghimian said that the ambition is to bring this to more than just the US eventually, and to work with different kinds of partners beyond news organizations. Facebook and Google’s own interests in this area haven’t gone unnoticed and the company has thought about how it could partner with them, too.

Source: Tech Crunch

You can’t really blame Epic for captilizing on Fortnite’s massive and largely unexpected success. And really, you’ve got to strike while the iron’s still hot on this one. The gaming company announced a partnership with toy giant Hasbro this week that while give the world a Fortnite-branded Monopoly game and Nerf Blasters.

Monopoly: Fortnite Edition launches October 1 — just in time to be a little too early for the holiday season. That one is arriving in both the U.S. and U.K. this fall, with more markets coming in 2019. It promises to “bring a a battle building twist to the iconic Fast Dealing Property Trading game,” because nothing says real estate mogul like a survival game.

The Nerf partnership is a bit more of a natural from a licensed content perspective. No specifics to speak of at the moment, but given that there are, you know, guns in Fornite, you can really just use your imagination. Hasbro says they’ll “emulate the amazing onscreen battles Fortnite is known for,” which could imply a laser tag element here.

Those are due out some time next year.

Source: Tech Crunch

Snapchat is hedging its bets as its social network shrinks. Today Snap Inc revealed the first class of its startup accelerator called Yellow that offers $150,000 in funding and creativity-centric business education in exchange for what a source says is a seven to ten percent equity stake — in line with other accelerators like Y Combinator. The nine companies will take up a three-month residency in one of Snap’s buildings in Venice, Los Angeles.

The accelerator class ranges from augmented reality and journalism studios to lifystyle brands around weddings and fashion to aesthetic-focused marketplaces like ConBody that pairs you with a muscular ex-convict for workouts.

Yellow calls itself “A launchpad for creative minds and entrepreneurs who are looking to build the next generation of great media companies.” Yellow could become a content provider and potential acquisition feeder for the company. ANRK and Space Oddity Films could boost Snapchat’s AR gaming effort, Hashtag Our Stories could fill Snap Map with citizen news broadcasts, Toonstar could bring animation to Discover, and SelfieCircus could power marketing pop-ups like the Snapbots that sold the company’s Spectacles.

But at the same time, it’s hard not to see Yellow as a potential escape route for Snap’s business if Instagram’s competition does end up stealing all its users. Snapchat lost three million last quarter, contributed to a massive share price downslide. Following today’s departure of COO Imran Khan, it’s trading at $9.66, just a few cents above its all-time low.

If a few of Yellow’s investments blow up and Snap makes capital available for follow-on rounds, the returns could supplement its ad revenue. But none of this first batch of startups looks poised to be gamechangers the way Snap’s acquisitions of Bitmoji and Looksery’s early AR filters were.

Yellow’s Inaugural Class

Here’s a look at the first nine companies in Snapchat Yellow, courtesy of write-ups provided by Snap.

ANRK (London, UK) – a new realities studio, exploring immersive storytelling through AR, VR, games and beyond.

• We are passionate about human-centered narratives, and use playful interaction and new technologies to create powerful experiences that connect the digital and physical.

ConBody (New York, NY) – a prison-style fitness bootcamp that hires formerly incarcerated individuals to teach fitness classes.

• ConBody is facilitating an opportunity-filled lifestyle by empowering our community to realize success lies within. We hire formerly incarcerated individuals to build personal discipline through a unique blend of cardiovascular training and bodyweight exercises that take advantage of the resistance properties of everyday objects. We apply military techniques to space constraints intimately familiar to city-dwellers and individuals who reside in small, constrained spaces. In addition, we’re changing the views of formerly incarcerated individuals to be changed by allowing professionals to interact with formerly incarcerated individuals, which allows to give professionals a different perspective on them.

Hashtag Our Stories (Durban, South Africa) – an international mobile journalism (MOJO) network, publishing vertical video stories on social media. Created by citizens, curated by journalists.

• Since September 2017, we’ve empowered 200 citizen storytellers in over 40 countries to produce videos with their phones. We focus on constructive, solutions-based stories and provide more diverse news coverage. Because more cameras and more perspectives means more truth.

IDK (Los Angeles, CA) – the ID for Korean music. We are a digital media company expanding in-depth on the music of Korea and K-Pop as a globally recognized genre; showcasing the Identity of the artists that shape the culture. We provide insightful and rich coverage and content for the global Korean Pop audience.

• We are creating a Global Brand and Destination for an English-Speaking Korean Pop Audience. Our mission is to create rich and stylized content about the Korean Music Genre; less gossip, more news & features. We want to provide a legitimate outlet for Korean Pop Culture; to create emotive, aspirational stories that are visually chic to a young, hyper-aware, and digitally engaged audience.

• As the company begins we will focus on publishing the best in engaging social video content. We will translate this content across platforms, ultimately building brands, shows, and stories that feed the insatiable audience appetite for Korean Pop. From there we will build towards live events, merchandise, and much more.

Love Stories TV (New York, NY) – a video platform for wedding planning and inspiration, bringing engaged couples and event professionals together in a uniquely visual community. Think of us like ‘Houzz’ for weddings: We connect brides and grooms with the ideas, inspiration, products, and services they need for their weddings in a uniquely visual community.

• On lovestoriestv.com filmmakers and newlyweds from all over the world share their professionally produced videos along with the data and details about the wedding. Brides and grooms watch the videos to find ideas, inspiration, products, and services for their wedding. We also have an active community of pre-engaged-brides under the age of 24 who watch the videos on our site, social, and Amazon Prime channel for entertainment. We partner with brands and wedding pros to help them reach brides and grooms on our site and channels via the real wedding films that feature them and original content.

Premme (Los Angeles, CA) – a fashion-first, body-positive lifestyle brand for the plus-size It-Girl.

• Today, 67% of women in America wear plus-sizes – yet plus-size fashion only accounts for 17% of the women’s apparel market. When it comes to media representation, plus-sizes are similarly lacking in positive, aspirational visibility. Premme empowers women who have been historically marginalized through fashion-forward, statement making clothing and visionary, contemporary editorial content and imagery. By creating a relatable, yet aspirational, brand that centers plus-size women, we aim to flip the script on what it means to look and be stylish, while leading the conversation and movement towards truly diverse and inclusive fashion.

SelfieCircus (Los Angeles, CA) – a new kind of circus.

• SelfieCircus creates popup experiences designed to be documented and shared on social media. The company is building a platform to connect artists, brands, and consumers. The first SelfieCircus will open in Los Angeles in late 2018.

Space Oddity Films (Los Angeles, CA) – a content studio exploring tech and culture that creates innovative content for every platformmobile, digital, AR/VR, video games, feature film and television.

• We tell stories about the convergence of humanity and technology. Our original viral tech horror thriller shorts are the foundation of our brand. Our goal is to make the future now.

Toonstar (Los Angeles, CA) – a digital animation network that creates and distributes daily pop culture cartoons for an “always on” world. Powered by proprietary animation tech, we produce daily, snackable, interactive animated content at unprecedented speed and cost.

• We have a large and highly engaged audience of teens and young adults generating millions of views per week because our content is sticky, shareable, relatable and engineered specifically for social.  We’re a team of studio alumni and media tech innovators who have produced hit digital animated series, built groundbreaking interactive media technologies and launched mega entertainment franchises. Now we’re on a mission to build a nextgen animation network that delivers greater reach + engagement at a fraction of the operating cost.

Source: Tech Crunch

I spent TechCrunch’s latest Disrupt extravaganza asking questions of various notables onstage, and what struck me most was how fantastically optimistic they were. To pick two examples: Kai-Fu Lee talked about preparing for a world of mass plenitude and abundance 30-50 years from now; Dario Gil waxed enthusiastic about quantum computers simulating life-changing new materials and pharmaceuticals, transforming everyone’s lives for the better.

And then I turned around and returned to the world of hair-trigger outrage, condemnation, consternation, pessimism, gloom and impending apocalypse; which is to say, America and social media, where it sometimes seems an encouraging word is rarely heard without being promptly drowned out by a dozen angry doomsayers prophesying rains of fire and blood. Surely the truth is somewhere in between; surely any rational assessment of the future must include a mixture of both optimism and pessimism. So why do those seem like two entirely separate modes of thought, of late?

Certainly there’s much to be pessimistic about. Our slowly boiling planet; the resurgence of racist nationalism around the global; the worldwide rise of authoritarian demagogues who don’t represent their people. Certainly tech industry folk, and especially investors, are deeply incentivized to be optimistic. If they’re right, they win big, and if they’re wrong, well, there’s no real downside except maybe having their embarrassing pro-Theranos / pro-Juicero tweets paraded out a few years later. Panglossianism is not the path of wisdom.

But neither is apocalypticism. Whisper it, but there is much to be optimistic about. For all of capitalism’s flaws, and there are many, it has reduced the number of people living in extreme poverty by more than a billion since 1990, even while the world’s population has grown by two billion. Fast, far-reaching progressive social change has been proved possible; witness e.g. the attitude change towards gay marriage in America from 2005 to 2015. We’ve connected the planet, put supercomputers in the pockets of a third of the world, made solar/wind power and electric cars both increasingly widespread and increasingly cost-effective, and we’re working hard at replacing most rote human drudgery with robot labor.

Sure, we live with fat-tail risks of various catastrophes of mindnumbing scale; but why do we never speak of the fat-tail chances of benevolent breakthroughs? Why does optimism about the future — not even net optimism, but any optimism — seem so rare these days?

Partly this is  social media’s fault. Facebook and Twitter “optimize,” so to speak, for engagement, which is to say they implicitly amplify that which causes outrage, fury, terror, and insecurity, rather than that which prompts a quiet hope for / confidence in things slowly getting better. From this we get the sense that everyone else is appalled by everything that’s going on, and so we naturally grow more appalled ourselves.

Partly it’s that the fruits of the advances which provoke this optimism remain so unequally distributed. It’s nice to talk about a world full of plenitude, but if 80% of the benefits go to 20% of the population, while the 40% at the bottom see their lives actually get worse as a side effect of the disruptive changes, are our collective lives really getting better? And even if your life is objectively improving a little every year, if you seem to be falling further behind the median, you’ll still feel it’s actually getting worse.

But there’s more to it than that. Optimism is dangerously provocative. It implicitly calls on us to do something, to contribute, to join the spreading wave, whereas pessimism is easier. It only calls on us to endure.

It’s true that the tech industry often seems to handwave that because in the long run, our new technologies will make everything better, we don’t need to bother worrying about its short- and medium-term effects. This is wrong and dangerous and (ironically) spectacularly shortsighted; we need to do better. But at the same time, the pessimists need to do better too, by realizing that there is plenty of room for hope and optimism in any reasonable imagination of the future.

Source: Tech Crunch

Priscilla Chan is so much more than Mark Zuckerberg’s wife. A teacher, doctor, and now one of the world’s top philanthropists, she’s a dexterous empath determined to help. We’ve all heard Facebook’s dorm-room origin story, but Chan’s epiphany of impact came on a playground.

In this touching interview this week at TechCrunch Disrupt SF, Chan reveals how a child too embarrassed to go to class because of their broken front teeth inspired her to tackle healthcare. “How could I have prevented it? Who hurt her? And has she gotten healthcare, has she gotten the right dental care to prevent infection and treat pain? That moment compelled me, like, ‘I need more skills to fight these problems.’”

That’s led to a $3 billion pledge towards curing all disease from the Chan Zuckerberg Initiative’s $45 billion-plus charitable foundation. Constantly expressing gratitude for being lifted out of the struggle of her refugee parents, she says “I knew there were so many more deserving children and I got lucky”.

Here, Chan shares her vision for cause-based philanthropy designed to bring equity of opportunity to the underserved, especially in Facebook’s backyard in The Bay. She defends CZI’s apolitical approach, making allies across the aisle despite the looming spectre of the Oval Office. And she reveals how she handles digital well-being and distinguishes between good and bad screen time for her young daughters Max and August. Rather than fielding questions about Mark, this was Priscilla’s time to open up about her own motivations.

Most importantly, Chan calls on us all to contribute in whatever way feels authentic. Not everyone can sign the Giving Pledge or dedicate their full-time work to worthy causes. But it’s time for tech’s rank-and-file rich to dig a little deeper. Sometimes that means applying their engineering and product skills to develop sustainable answers to big problems. Sometimes that means challenging the power structures that led to the concentration of wealth in their own hands. She concludes, “You can only try to break the rules so many times before you realize the whole system’s broken.”

Source: Tech Crunch

Token structuring and tokeneconomics are among of the most important considerations when designing a blockchain. When thinking about how best to distribute these tokens, founders often think about how the tokens will impact external stakeholders such as their investors, the community, and stakers (people that can mine or validate block transactions according to how many coins he or she holds). But token economies are also bringing disruption to organizations internally, especially when it comes to HR and compensation.

If the tokens are structured properly for a blockchain, external stakeholders will be directly aligned with the goal of the project. Those incentives can encourage participation on the blockchain platform and/or drive token demand with community-building and marketing. Similarly, if internal stakeholder incentives are structured correctly, the project could accrue long-term value by motivating employees to work towards the same goal, while reducing adversarial behavior and also bad actors.

For any blockchain company to succeed long-term and scale, it’s inevitable that they need to structure their tokens to retain and reward the best employees sustainably. This is as important it not more important than incentivizing external token holders.

How does an employee look at tokens vs equity? 

Currently, equity in the form of stock options is widely distributed as part of compensation packages amongst startups. When employees join a company, they are usually offered a combination of cash and stock options. The options become a way for the employees to meaningfully participate in a company’s upside should they succeed. Often, employees can negotiate between taking a higher cash comp or higher options amount, depending on their risk appetite.

There are many ways tokens and equity are similar. For one, both assets motivate individuals to align their goals with that of a company’s. If the company becomes more successful, the value of its tokens and equity should theoretically go up. Nonetheless, one of the downsides of stock options is that they usually require a liquidity event for an employee to convert them to paper money. Historically, that was when a company went public and the employee could convert their options into stocks and then sell them in the public markets.

However, in the last decade, with the increasing amount of private capital and subsequent larger private fundraising rounds, companies are taking way longer to IPO. Companies such as Dropbox took eleven years from founding to IPO, while Airbnb has been around ten years and still hasn’t gone public. As a result, private companies started doing option buybacks to provide liquidity for their employees. Simultaneously, this phenomenon has caused the secondary market to thrive in Silicon Valley.

Token liquidity changes the game

One of the largest differences between tokens and equity is that tokens are immediately liquid, assuming that they have already been listed on an exchange. To put simply, equity options only prove their value at the end, whereas tokens have certainty values from the beginning.

Now in cryptocurrency and blockchain companies, employees could get paid in tokens in lieu of equity or cash, primarily outside of the U.S. Many tokens have a liquidity advantage over equity. For example, it can be immediately sold upon reception, assuming that the token has been listed on an exchange and there is enough trading volume.

This is also one of the reasons why exchanges are so important for the cryptocurrency space because 1) it’s one of the easier ways to gauge the value of a company given that the industry has yet to figure out a proper valuation methodology, and 2) it provides immediate liquidity for employees who have been burned by the hopes a billion dollar company not coming to fruition and all the options going to zero.

For an employee looking for a job in a technology-based company, consider two companies that are exactly the same, with the same team quality and same targeted industry, but one company has a token incentive structure instead of an equity incentive structure, and the token is already traded on an exchange. Why would the employee ever want equity? With tokens, you’d still share the upside in the company’s success, but also have immediate liquidity.

Additionally, outside the U.S., often employees can also get paid in tokens or stable coins in lieu of cash to take advantage of tax benefits given the lack of regulatory sophistication. That may change very soon, however. Token structure, therefore, is a disruption to a company’s internal structure and we will share some examples below of how that’s already affecting a number of Chinese crypto companies.

Token incentives will disrupt traditional ways of compensating employees

These changes to employee compensation have already become popular in places like China, where a number of Chinese blockchain companies have started on the foundation of distributing tokens as compensation. Companies like Ontology, NEO, Huobi, and Binance pay their employees in their own tokens. Many of these teams operate worldwide but they are able to manage hundreds of people, often with just a handful of HR staff, through a shared incentive structure.

In the case of Neo, the original founding team, in fact, didn’t have anyone with a computer science background. When they were looking for developers, they would pay tokens to people to do development work for them. For Ontology, it was even more extreme. The founding team initially set up the Ontology Foundation. They didn’t want to hire people, so instead, they listed out a list of things that needed to be developed and paid tokens to all the developers who contributed.

Binance, similarly, paid their employees in tokens. They would then use their quarterly profits to burn tokens, which subsequently boosted the value of the remaining tokens. It is possible that partially due to these effective token incentives, Ontology has been the best performing token this year while Binance continues to hold the lead in the exchange space.

China has taken a lead here compared to the U.S. partially because of regulatory uncertainties, but there are examples in America as well of these changing compensation norms. In the early days of cryptocurrency when it was (even more) wild west, Consensys got started by compensating their employees in tokens until their first legal hire came along. That story is similar to Coinbase, where initially a number of first employees were given the choice of being paid in coins and/or cash.

Token compensation also seems to be particularly powerful incentives for Chinese blockchain companies, more so than their U.S. counterparts. Maomao Hu, Partner at Eigen Capital and CTO of Calculus Network, talks about the psyche of the young generation of Chinese developers: “Being Chinese, Chinese engineers, especially the young ones, have a hunger that you only see in some parts of Silicon Valley, and that’s like everyone. They are just doing 80 hours 100 hour weeks because they hate being poor and they hate not having an opportunity and they don’t have other ways to get an opportunity, and that’s like everyone.”

It may also be that because there have been fewer technology cycles in China, and the rise of the largest technology companies happened only in the last decade, equity compensation remains a relatively new concept to local citizens. With token compensation introduced, this is the first time for many Chinese people to be able to participate in a company’s upside so directly.

Despite their growing popularity, these incentive schemes are still early and experimental, and there are unforeseen risks associated with token issuance as compensation. In particular, the appeal of short-term, quick gains from tokens is ever more attractive. If wrongly incentivized, people could end up spending time hyping up their tokens instead of building product, allowing employees to cash out quickly without producing.

As a result, serious founders of new token-based companies should be aware of such short-sightedness when designing employee token incentives. They can potentially introduce long-term token vesting schedules, and also hire people who care about driving long-term value. For CEOs, this is going to be an increasingly important role they will have to take in the token economy. I’m certain though that the next set of large unicorns will be coming from tech companies with great token incentives structures, in or outside of the U.S.

Source: Tech Crunch

For all of the excitement centered around fintech over the past half-decade, most venture-backed fintech companies struggle to acclimate to public markets. LendingClub and OnDeck have plummeted since their late 2014 IPOs after several years of darling status in the private markets. GreenSky, which went public in May of this year, has been unable to return to its IPO price. Square is the exception to the rule.

Sometimes we overlook the companies that hail from the era that precedes the current wave of fintech fascination, a vertical which has accumulated over $100 billion in global investment capital since 2010.

One of these companies is LendingTree, which got its start height of the Internet bubble, going public in mid-February of 2000, less than a month before the Dot-com bubble peaked.  LendingTree began in 1996 in a founding story that epitomizes the early Internet era. Doug Lebda, an accountant searching for homes in Pittsburgh, had to manually compare mortgage offers from each bank. So he created a marketplace for loans in the same way OpenTable helps you find your restaurant of choice or Zillow simplifies the home buying process. In the words of Rich Barton, iconic founder of Expedia, Zillow, and Glassdoor, this business is a classic “power to the people play.”

The marketplace business model has been the darling that has driven returns for many of the leading VCs like Benchmark, a16z, and Greylock. Network effects are a non-negotiable part of the explanation as to why. Classic success stories that have transitioned nicely into public markets include Zillow, OpenTable (acq.), Etsy, Booking.com, and Grubhub. LendingTree is often left off of this list, yet, the business sits in a compelling space as consumers and lenders continue to manage their financial lives online. 

Insight in a Sea of Ambiguity

The lending process has been defined by significant information asymmetry between borrowers and lenders. Lenders have a disproportionate amount of leverage in the relationship. And that’s not to say it should be different – it’s perfectly logical to require a borrower to prove their creditworthiness. However, aggregation, synthesis, and recommendations modernize a dated dynamic. 

Ironically, in an age where consumers are inundated with information, less than 50% of interested borrower’s shop for loans. Most consumers take the first offer they receive. The benefit of a marketplace, however, is price competition and transparency. The ability to shop the market and access the same information that lenders have is a luxury that didn’t exist twenty years ago. The borrowers who do shop through LendingTree reap significant benefits; on average, roughly $14,000 on mortgages and 570 basis points on personal loans. There’s certainly something to be said for comfortability and hand-holding, but at some point the metrics speak for themselves. 

LendingTree isn’t a marketplace in the purest sense because of the process that takes place after a borrower clicks “apply.” While a diner can reserve a table at any listed restaurant with OpenTable for dinner tomorrow tonight, she can’t simply take the loan she wants. LendingTree lacks the direct feedback loop between consumers and lenders that characterizes most marketplaces. Instead, the platform aggregates information from a network of over 500 lenders to provide options according consumer’s needs. LendingTree is effectively the onramp for interested borrowers, which necessitates the entry of lenders to fill the borrower’s needs.

As this “onramp” continues to serve a larger audience as more consumers conduct their finances online, banks and lenders intend to seize the opportunity. Digital ad spend in the financial services industry is going to continue to grow rapidly at an estimated 20% CAGR between 2014 and 2020, effectively tripling the size of LendingTree’s core market. 

Diversifying away from Mortgages

For all intents and purposes, LendingTree has been in the mortgage business since its inception. The company experimented with a myriad of business models, including a foray into loan origination through their LendingTree Loans product line, which they ultimately sold off to Discover in 2011. Even in 2013, only 11% of their revenue originated from non-mortgage products.

LendingTree has expanded their platform in a few short years to build their non-mortgage products including credit cards, HELOCs, personal, auto, and small business loans. They have also pursued credit repair services and deposit accounts, with insurance in the pipeline. Whereas mortgage revenue made up roughly 60% of total sales in Q2 2016, it dropped to 36% as of this quarter. They wanted to diversify their product mix, but they realized they were also leaving money on the table. 

Through strategic M&A activity, LendingTree has acquired a number of leading media and comparison properties to expand into new products. Acquiring CompareCards, a leading online source for credit card comparisons, has allowed them to catch up to Credit Karma and Bankrate, who own a large part of the existing market. Additional acquisitions in tertiary products like student loans, deposit accounts, and credit services have enabled the company to expand their market share in markets that are both ripe for growth and sparse of competition. The inorganic growth strategy emulates that of two of LendingTree’s major shareholders: Barry Diller, who’s company IAC previously owned LendingTree before spinning them off in 2008, and John Malone, who owned 27% of shares as of November, 2017.

Enhancing Customer Engagement

The potential scale and success of LendingTree’s business model is predicated on discovering prospective borrowers. If they’re repeat customers, that’s a big win because their promotional costs drop significantly once a customer is familiar with the platform.

My LendingTree, the company’s personal financial management (PFM) app launched in 2014, has 8.8 million customers and generates roughly 20% of the company’s leads. It offers free credit scores, credit monitoring, and goals-based guidance through a proprietary credit and debt analyzer. At the surface, it’s not especially different from any of the other leading consumer PFM apps. That’s been the issue with these apps: the service is valuable, but it’s very difficult to differentiate beyond UI/UX, which is far from a defensible moat.

However, the ability for LendingTree to lock in customers and accumulate customer data to personalize product recommendations is a breakthrough for both consumers and lenders. Consumers outsource the loan diligence process to their phone, which explores the universe of lending options in order to find the most suitable options. 

The leader in this space is Credit Karma, and by a wide margin. They’re estimated to have around 80 million customers. Those numbers appear starkly different at first glance, but it’s important to keep in mind LendingTree is relatively new, launching in 2014. Credit Karma developed a more captive relationship with customers from their inception in 2007, beginning as a free credit score platform. They’re effectively in an arms race, trying to emulate each other’s primary value propositions in order to win over a larger share of customer attention. 

By all accounts, the My LendingTree product is still in its infancy. Personal loans make up nearly two-thirds of revenue generated through My LendingTree. Credit cards were integrated through CompareCards earlier this year; deposits will be integrated in the fourth quarter through DepositAccounts. As the platform more formally integrates mortgage refinancing and HELOCs, there are more channels to drive user engagement.

For the consumer, this app reinforces the aggregation and connection between interested borrowers and willing lenders. Arguably more significant, however, is the personalization of individual customer experience that will drive further engagement and improve the recommendation engine. With the continued migration to online and mobile for financial services, this product benefits from natural demographic tailwinds.

If LendingTree can successfully reengage with customers on a more recurring basis via My LendingTree, the app should be accretive to overall variable marketing margin because they’ll have to spend far less on promotional activities due to organic customer. The combination of a market-leading aggregator with a comprehensive PFM tool creates a flywheel effect where success begets success, particularly with a major head start in the lending aggregation business. 

Removing the Informational Asymmetry 

In LendingTree’s business model, customer demand drives the flow of ad dollars and ultimately origination volume. Lenders follow customer demand. LendingTree helps expedite that process. Lenders can expand their conversions by boosting the number of high-quality leads and reducing obstacles to the loan application process. LendingTree improves both catalysts. 

On the lender side, My LendingTree fundamentally changes LendingTree’s value proposition. They used to be responsible for connecting lenders with warm leads to drive conversions. With an existing customer base, the lead generation suddenly gets easier. It also significantly reduces the customer acquisition cost for lenders, notoriously a major component of their expense profile.

Nearly 50% of all consumer interactions with banks and financial services companies occur online. It’s not controversial to say that figure is likely heading in only one direction. Currently, credit cards and personal loans are the most automated online application processes because the decisioning occurs relatively quickly. Of the expansive network of mortgage lenders on LendingTree’s platform, only 40 currently enable borrowers to continue their application online. As mortgages and small business loans become more automated through partnerships with third-parties like Blend and Roostify, LendingTree will benefit from more seamless integrations and likely, higher conversions. 

The real value proposition for the lender, however, is in the headcount consolidation. Just as the number of stock brokers and equity traders has diminished significant, the role of the loan officer will follow a similar trajectory. LendingTree initially supplemented loan officers in their borrower sourcing from a marketing perspective, which drove loan officer commissions down significantly.

Doug Lebda’s next conquest is to supplant the entire sales function. In response to a question about LendingTree’s impact on lender headcount, Lebda responded: “what will happen is [lenders will] be able to reduce commission. So the real competitor, if you will, to LendingTree…is the fully commissioned loan officer…In the future, you’re going to have LendingTree convincing the borrower through technology and then you’re going to have an individual lender just basically processing and getting it through.” 

The relationship between a loan officer and a prospective borrower is marred by informational asymmetry. Incentives aren’t aligned.  Soon enough, the pre-approval process launched through their new digital mortgage experience, “Rulo” will help to solve a problem that has plagued LendingTree since its inception: an exhaustive pursuit from loan officers.

With Rulo, LendingTree sorts and filters the list of offers and provides a recommendation based on the best option. Then, the app allows you to contact the lender directly, offering the consumer the freedom they historically haven’t had. Commenting on the early success of the new experience, Lebda said “[the conversion rate is] literally about triple what it is on the LendingTree experience.” LendingTree is streamlining a low value, yet operationally costly element of the lending business that has remained more or less stagnant for half a century. 

Seeing the Forrest through the Trees

The fawning over fintech companies has driven exorbitant amounts of global investment from venture capitalists and private equity firms who are ultimately looking for exit opportunities. Two things are happening: first, most of the major fintech companies aren’t going public, although that is beginning to change. Second, and perhaps more importantly, the ones that do go public don’t fare particularly well. 

The tried and true strategy of most emerging financial technology startups is to focus on user growth and monetize later. LendingTree did the opposite; they created a cash-flow generating platform that served a critical purpose, simplifying a historically complex landscape for consumers, while simultaneously driving directly attributable revenue for lenders. They have proved their original value proposition, connecting borrowers with lenders, and now they’re playing catch up to provide supplementary tools to add more value for customers. It’s a rare pathway, but a productive one that more fintech startups should consider.

Source: Tech Crunch