Keeping artificial intelligence accountable to humans

As a teenager in Nigeria, I tried to build an artificial intelligence system. I was inspired by the same dream that motivated the pioneers in the field: That we could create an intelligence of pure logic and objectivity that would free humanity from human error and human foibles.

I was working with weak computer systems and intermittent electricity, and needless to say my AI project failed. Eighteen years later — as an engineer researching artificial intelligence, privacy and machine-learning algorithms — I’m seeing that so far, the premise that AI can free us from subjectivity or bias is also disappointing. We are creating intelligence in our own image. And that’s not a compliment.

Researchers have known for awhile that purportedly neutral algorithms can mirror or even accentuate racial, gender and other biases lurking in the data they are fed. Internet searches on names that are more often identified as belonging to black people were found to prompt search engines to generate ads for bail bondsmen. Algorithms used for job-searching were more likely to suggest higher-paying jobs to male searchers than female. Algorithms used in criminal justice also displayed bias.

Five years later, expunging algorithmic bias is turning out to be a tough problem. It takes careful work to comb through millions of sub-decisions to figure out why the algorithm reached the conclusion it did. And even when that is possible, it is not always clear which sub-decisions are the culprits.

Yet applications of these powerful technologies are advancing faster than the flaws can be addressed.

Recent research underscores this machine bias, showing that commercial facial-recognition systems excel at identifying light-skinned males, with an error rate of less than 1 percent. But if you’re a dark-skinned female, the chance you’ll be misidentified rises to almost 35 percent.

AI systems are often only as intelligent — and as fair — as the data used to train them. They use the patterns in the data they have been fed and apply them consistently to make future decisions. Consider an AI tasked with sorting the best nurses for a hospital to hire. If the AI has been fed historical data — profiles of excellent nurses who have mostly been female — it will tend to judge female candidates to be better fits. Algorithms need to be carefully designed to account for historical biases.

Occasionally, AI systems get food poisoning. The most famous case was Watson, the AI that first defeated humans in 2011 on the television game show Jeopardy. Watson’s masters at IBM needed to teach it language, including American slang, so they fed it the contents of the online Urban Dictionary. But after ingesting that colorful linguistic meal, Watson developed a swearing habit. It began to punctuate its responses with four-letter words.

We have to be careful what we feed our algorithms. Belatedly, companies now understand that they can’t train facial-recognition technology by mainly using photos of white men. But better training data alone won’t solve the underlying problem of making algorithms achieve fairness.

Algorithms can already tell you what you might want to read, who you might want to date and where you might find work. When they are able to advise on who gets hired, who receives a loan or the length of a prison sentence, AI will have to be made more transparent — and more accountable and respectful of society’s values and norms.

Accountability begins with human oversight when AI is making sensitive decisions. In an unusual move, Microsoft president Brad Smith recently called for the U.S. government to consider requiring human oversight of facial-recognition technologies.

The next step is to disclose when humans are subject to decisions made by AI. Top-down government regulation may not be a feasible or desirable fix for algorithmic bias. But processes can be created that would allow people to appeal machine-made decisions — by appealing to humans. The EU’s new General Data Protection Regulation establishes the right for individuals to know and challenge automated decisions.

Today people who have been misidentified — whether in an airport or an employment data base — have no recourse. They might have been knowingly photographed for a driver’s license, or covertly filmed by a surveillance camera (which has a higher error rate). They cannot know where their image is stored, whether it has been sold or who can access it. They have no way of knowing whether they have been harmed by erroneous data or unfair decisions.

Minorities are already disadvantaged by such immature technologies, and the burden they bear for the improved security of society at large is both inequitable and uncompensated. Engineers alone will not be able to address this. An AI system is like a very smart child just beginning to understand the complexities of discrimination.

To realize the dream I had as a teenager, of an AI that can free humans from bias instead of reinforcing bias, will require a range of experts and regulators to think more deeply not only about what AI can do, but what it should do — and then teach it how. 


Source: Tech Crunch

Jack Dorsey admits Twitter hasn’t ‘figured out’ approach to fake news

Jack Dorsey is hedging his bets. In an interview with CNN’s Brian Stelter, the beard-rocking CEO said Twitter is reluctant to commit to a timetable for enacting policies aimed at curbing heated political rhetoric on the site.

The executive’s lukewarm comments reflect an embattled social network that has been the brunt of criticism from both sides of the political divide. The left has taken Twitter to task for relative inaction over incendiary comments from far right pundits like Alex Jones. The site was slow to act, compared to the likes of services including YouTube, Facebook and even YouPorn (yep).

When it ultimately did ban Jones’ Infowars, it was a seven day “timeout.” That move, expectedly, has drawn scrutiny from the other side of the aisle. Yesterday, Trump tweeted a critique of social media in general, that is generally being regarded as a thinly-veiled allusion to his embattled supporter, Jones.

Social Media is totally discriminating against Republican/Conservative voices. Speaking loudly and clearly for the Trump Administration, we won’t let that happen. They are closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others

Trump also recently called for an end to what the right has deemed the “shadow banning” of conservative voices on social media.

“How do we earn peoples’ trust?” the CEO asked rhetorically during the conversation. “How do we guide people back to healthy conversation?”

Dorsey suggested that his company is “more left-leaning,” a notion that has made him extra cautious of blowback from the right. He also continued his position of refusing to hold the company to be accountable for fact-checking, a policy that runs counter to proclamations of other social media like Facebook.

“We have not figured this out,” Dorsey said, “but I do think it would be dangerous for a company like ours… to be arbiters of truth.”

For now, Dorsey and co. appear to be in a holding pattern, an indecisiveness that has drawn fire from all sides. The exec pines for a less polarized dialogue, citing NBA and K-Pop accounts as examples of Twitter subcultures that have been more measured in their approach.

Of course, anyone who’s spent time reading replies to LeBron or The Warriors can tell you that that’s a pretty low bar for discourse.

The fact of the matter is that this is the state of politics in 2018. Things are vicious and rhetoric can be incendiary. All of that is amplified by social media, as political pundits lean into troubling comments, conspiracy theory and outright lies to drive clicks. 

Dorsey, says he’s pushing for policies “that encourage people to talk and to have healthy conversation.” Whatever Twitter’s “small staff” might have in the works, it certainly feels a long way off.


Source: Tech Crunch

A university is outfitting living spaces with thousands of Echo Dots

Soon, Saint Louis University students won’t be able to avoid Amazon’s near ubiquitous smart speakers. The university announced this week a plan to outfit living spaces with 2,300 Echo Dots. The devices are set to be deployed by the time classes start, later this month.

SLU is quick to note that it’s “the first college or university in the country to bring Amazon Alexa-enabled devices, managed by Alexa for Business, into every student residence hall room and student apartment on campus.” It’s certainly not the first to adopt Amazon’s smart speakers, but it’s among the largest scale for this sort of deployment.

While the product has become a mainstay in plenty of American homes, it does seem like an odd choice dorms and student campus. SLU has worked with Alexa for Business to create 100 custom questions, including, “What time does the library close tonight?” and “Where is the registrar’s office?” 

Then, of course, there are the privacy concerns of having little cloud connected recording devices populating the school’s living spaces. SLU is attempting to get out in front of that here. The company addressed those issues on a privacy page, writing,

Because of our use of the Amazon Alexa for Business (A4B) platform, your Echo Dot is managed by a central system dedicated to SLU. This system is not tied to individual accounts and does not maintain any personal information for any of our users, so all use currently is anonymous. Additionally, neither Alexa nor the Alexa for Business management system maintains recordings of any questions that are asked.

The school notes that students can also mute the microphone. Students can’t technically opt-out, but they can unplug the product and shove it in a drawer, turning it in at the end of the year. Just don’t use it as a hockey puck, because that’ll cost you.


Source: Tech Crunch

Soon you’ll be able to watch high school football on Twitter

Just at the NFL is gearing up to kickoff its regular season, Adidas has announced that it will be partnering with Twitter to livestream high school football games on the platform. The “Friday Night Stripes” series (Get it? Get it?) will include eight games, featuring teams from California, Georgia, Florida, Nevada and Indiana.

The series starts September 7 (a day after the NFL season opener, incidentally), running throughout the standard high school football season, until November 9.

The deal joins a slew of existing streaming sports deals for the platform, including pro games from the NFL, MLB, NBA and NHL, along with collegiate conferences, like Pac-12. NFL games, in particular, have been a big hit for the site. This will, however, mark the first time high school football games have been streaming on the platform.

ESPN play-by-play announcer Courtney Lyle will call the games, along with analysis from former Packers linebacker A.J. Hawk and sideline coverage by YouTube comedian Cameron “Scooter” Magruder. Twitter will also offer the standard sports timeline features to supplement the on-field action.

You can find the full schedule here.


Source: Tech Crunch

HUD complaint accuses Facebook ads of violating Fair Housing Act

A new complaint filed Friday by the U.S. Department of Housing and Urban Development (HUD) accuses Facebook of helping landlords and home sellers violate the Fair Housing Act. According to the grievance filed by the department, Facebook’s ad settings let sellers disregard laws by targeting specific demographics.

HUD says that the ability to tailor Facebook advertisements to bar individuals of a certain race, religion, sex, national origin and various other categories is a clear violation of the rule, which was enacted as part of the 1968 Civil Rights Act.

“The Fair Housing Act prohibits housing discrimination including those who might limit or deny housing options with a click of a mouse,” Assistant Secretary for Fair Housing and Equal Opportunity, Anna María Farías said in a statement issued by the department. “When Facebook uses the vast amount of personal data it collects to help advertisers to discriminate, it’s the same as slamming the door in someone’s face.”

Facebook was quick to respond to the complaint. While it acknowledges that the technology leaves open the potential for misuse, it insists that it’s been working to undercut abuse.

“There is no place for discrimination on Facebook; it’s strictly prohibited in our policies,” Facebook said in a statement offered to The Washington Post. “Over the past year we’ve strengthened our systems to further protect against misuse. We’re aware of the statement of interest filed and will respond in court; we’ll continue working directly with HUD to address their concerns.”

The complaint has been a long time coming, with the National Fair Housing Alliance and other housing groups having already taken Facebook to court over the issue earlier this year. 


Source: Tech Crunch

Original Content podcast: ‘To All The Boys I’ve Loved Before’ is a charming high school romance

While Hollywood’s interest in romantic comedies seems to be fading, Netflix has been picking up some of the slack. Just a few months ago, it released the tremendously fun Set It Up. And now we’ve got To All The Boys I’ve Loved Before, a high school romance based on the young adult novel by Jenny Han.

To All The Boys tells the story of Lara Jean Covey (played by Lana Condor), a teenager who’s written love letters to all of her crushes, but never sent them — until the beginning of the movie, when they mysteriously end up in the hands of the titular boys.

Naturally, this leads to intense mortification and embarrassment, particularly when Lara Jean is so desperate to hide her feelings on her sister’s ex Josh (Israel Broussard) that she agrees to pretend to date her former (?) crush Peter (Noah Centineo).

On the latest episode of the Original Content podcast, we’re joined by our colleague Taylor Nakagawa to review the film. Taylor wasn’t entirely won over — after all, you can probably guess most of what happens next based on the bare bones plot description above. But your regular hosts Anthony and Jordan enjoyed it anyway, particularly the movie’s tremendously charming leads.

We also discuss Crazy Rich Asians, one of the rare Hollywood rom coms to make it onto the big screen, and how the filmmakers turned down an offer from Netflix. And we cover the week’s streaming news, including Netflix’s exclusive deal with Black-ish creator Kenya Barris and the reports that Amazon is in talks to buy a theater chain.

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You also can send us feedback directly. (Or suggest shows and movies for us to review!)


Source: Tech Crunch

Distributed teams are rewriting the rules of office(less) politics

When we think about designing our dream home, we don’t think of having a thousand roommates in the same room with no doors or walls. Yet in today’s workplace where we spend most of our day, the purveyors of corporate office design insist that tearing down walls and bringing more people closer together in the same physical space will help foster better collaboration while dissolving the friction of traditional hierarchy and office politics.

But what happens when there is no office at all?

This is the reality for Jason Fried, Founder and CEO of Basecamp, and Matt Mullenweg, Founder and CEO of Automattic (makers of WordPress), who both run teams that are 100% distributed across six continents and many time zones. Fried and Mullenweg are the founding fathers of a movement that has inspired at least a dozen other companies to follow suit, including Zapier, Github, and Buffer. Both have either written a book, or have had a book written about them on the topic.

For all of the discussions about how to hire, fire, coordinate, motivate, and retain remote teams though, what is strangely missing is a discussion about how office politics changes when there is no office at all. To that end, I wanted to seek out the experience of these companies and ask: does remote work propagate, mitigate, or change the experience of office politics? What tactics are startups using to combat office politics, and are any of them effective?

“Can we take a step back here?”

Office politics is best described by a simple example. There is a project, with its goals, metrics, and timeline, and then there’s who gets to decide how it’s run, who gets to work on it, and who gets credit for it. The process for deciding this is a messy human one. While we all want to believe that these decisions are merit-based, data-driven, and objective, we all know the reality is very different. As a flood of research shows, they come with the baggage of human bias in perceptions, heuristics, and privilege.

Office politics is the internal maneuvering and positioning to shape these biases and perceptions to achieve a goal or influence a decision. When incentives are aligned, these goals point in same direction as the company. When they don’t, dysfunction ensues.

Perhaps this sounds too Darwinian, but it is a natural and inevitable outcome of being part of any organization where humans make the decisions. There is your work, and then there’s the management of your coworker’s and boss’s perception of your work.

There is no section in your employee handbook that will tell you how to navigate office politics. These are the tacit, unofficial rules that aren’t documented. This could include reworking your wardrobe to match your boss’s style (if you don’t believe me, ask how many people at Facebook own a pair of Nike Frees). Or making time to go to weekly happy hour not because you want to, but because it’s what you were told you needed to do to get ahead.

One of my favorite memes about workplace culture is Sarah Cooper’s “10 Tricks to Appear Smart in Meetings,” which includes…

  • Encouraging everyone to “take a step back” and ask “what problem are we really trying to solve”
  • Nodding continuously while appearing to take notes
  • Stepping out to take an “important phone call”
  • Jumping out of your seat to draw a Venn diagram on the whiteboard

Sarah Cooper, The Cooper Review

These cues and signals used in physical workplaces to shape and influence perceptions do not map onto the remote workplace, which gives us a unique opportunity to study how office politics can be different through the lens of the officeless.

Friends without benefits

For employees, the analogy that coworkers are like family is true in one sense — they are the roommates that we never got to choose. Learning to work together is difficult enough, but the physical office layers on the additional challenge of learning to live together. Contrast this with remote workplaces, which Mullenweg of Automattic believes helps alleviate the “cohabitation annoyances” that come with sharing the same space, allowing employees to focus on how to best work with each other, versus how their neighbor “talks too loud on the phone, listens to bad music, or eats smelly food.”

Additionally, remote workplaces free us of the tyranny of the tacit expectations and norms that might not have anything to do with work itself. At an investment bank, everyone knows that analysts come in before the managing director does, and leave after they do. This signals that you’re working hard.

Basecamp’s Fried calls this the “presence prison,” the need to be constantly aware of where your coworkers are and what they are doing at all times, both physically and virtually. And he’s waging a crusade against it, even to the point of removing the green dot on Basecamp’s product. “As a general rule, nobody at Basecamp really knows where anyone else is at any given moment. Are they working? Dunno. Are they taking a break? Dunno. Are they at lunch? Dunno. Are they picking up their kid from school? Dunno. Don’t care.”

There is credible basis for this practice. A study of factory workers by Harvard Business School showed that workers were 10% to 15% more productive when managers weren’t watching. This increase was attributed to giving workers the space and freedom to experiment with different approaches before explaining to managers, versus the control group which tended to follow prescribed instructions under the leery watch of their managers.

Remote workplaces experience a similar phenomenon, but by coincidence. “Working hard” can’t be observed physically so it has to be explained, documented, measured, and shared across the company. Cultural norms are not left to chance, or steered by fear or pressure, which should give individuals the autonomy to focus on the work itself, versus how their work is perceived.

Lastly, while physical workplaces can be the source of meaningful friendships and community, recent research by the Wharton School of Business is just beginning to unravel the complexities behind workplace friendships, which can be fraught with tensions from obligations, reciprocity and allegiances. When conflicts arise, you need to choose between what’s best for the company, and what’s best for your relationship with that person or group. You’re not going to help Bob because your best friend Sally used to date him and he was a dick. Or you’re willing to do anything for Jim because he coaches your kid’s soccer team, and vouched for you to get that promotion.

In remote workplaces, you don’t share the same neighborhood, your kids don’t go to the same school, and you don’t have to worry about which coworkers to invite to dinner parties. Your physical/personal and work communities don’t overlap, which means you (and your company) unintentionally avoid many of the hazards of toxic workplace relationships.

On the other hand, these same relationships can be important to overall employee engagement and well-being. This is evidenced by one of the findings in Buffer’s 2018 State of Remote Work Report, which surveyed over 1900 remote workers around the world. It found that next to collaborating and communicating, loneliness was the biggest struggle for remote workers.

Graph by Buffer (State of Remote Work 2018)

So while you may be able to feel like your own boss and avoid playing office politics in your home office, ultimately being alone may be more challenging than putting on a pair of pants and going to work.

Feature, not a bug?

Physical offices can have workers butting heads with each other. Image by UpperCut Images via Getty Images.

For organizations, the single biggest difference between remote and physical teams is the greater dependence on writing to establish the permanence and portability of organizational culture, norms and habits. Writing is different than speaking because it forces concision, deliberation, and structure, and this impacts how politics plays out in remote teams.

Writing changes the politics of meetings. Every Friday, Zapier employees send out a bulletin with: (1) things I said I’d do this week and their results, (2) other issues that came up, (3) things I’m doing next week. Everyone spends the first 10 minutes of the meeting in silence reading everyone’s updates.

Remote teams practice this context setting out of necessity, but it also provides positive auxiliary benefits of “hearing” from everyone around the table, and not letting meetings default to the loudest or most senior in the room. This practice can be adopted by companies with physical workplaces as well (in fact, Zapier CEO Wade Foster borrowed this from Amazon), but it takes discipline and leadership to change behavior, particularly when it is much easier for everyone to just show up like they’re used to.

Writing changes the politics of information sharing and transparency. At Basecamp, there are no all-hands or town hall meetings. All updates, decisions, and subsequent discussions are posted publicly to the entire company. For companies, this is pretty bold. It’s like having a Facebook wall with all your friends chiming in on your questionable decisions of the distant past that you can’t erase. But the beauty is that there is now a body of written decisions and discussions that serves as a rich and permanent artifact of institutional knowledge, accessible to anyone in the company. Documenting major decisions in writing depoliticizes access to information.

Remote workplaces are not without their challenges. Even though communication can be asynchronous through writing, leadership is not. Maintaining an apolitical culture (or any culture) requires a real-time feedback loop of not only what is said, but what is done, and how it’s done. Leaders lead by example in how they speak, act, and make decisions. This is much harder in a remote setting.

A designer from WordPress notes the interpersonal challenges of leading a remote team. “I can’t always see my teammates’ faces when I deliver instructions, feedback, or design criticism. I can’t always tell how they feel. It’s difficult to know if someone is having a bad day or a bad week.”

Zapier’s Foster is also well aware of these challenges in interpersonal dynamics. In fact, he has written a 200-page manifesto on how to run remote teams, where he has an entire section devoted to coaching teammates on how to meet each other for the first time. “Because we’re wired to look for threats in any new situation… try to limit phone or video calls to 15 minutes.” Or “listen without interrupting or sharing your own stories.” And to “ask short, open ended questions.” For anyone looking for a grade school refresher on how to make new friends, Wade Foster is the Dale Carnegie of the remote workforce.

To office, or not to office

What we learn from companies like Basecamp, Automattic, and Zapier is that closer proximity is not the antidote for office politics, and certainly not the quick fix for a healthy, productive culture.

Maintaining a healthy culture takes work, with deliberate processes and planning. Remote teams have to work harder to design and maintain these processes because they don’t have the luxury of assuming shared context through a physical workspace.

The result is a wealth of new ideas for a healthier, less political culture — being thoughtful about when to bring people together, and when to give people their time apart (ending the presence prison), or when to speak, and when to read and write (to democratize meetings). It seems that remote teams have largely succeeded in turning a bug into a feature. For any company still considering tearing down those office walls and doors, it’s time to pay attention to the lessons of the officeless.


Source: Tech Crunch

Global unicorn exits hit multi-year high in 2018

Unicorn exits are taking flight.

With the IPO window wide open, an apparent record number of venture-backed companies privately valued over $1 billion have launched public offerings this year. Crunchbase data shows 23 unicorn IPOs globally so far in 2018, well outpacing full-year totals for 2016 and 2017.

Collectively, this year’s newly public unicorns are doing pretty well too. Most priced shares around or above expectations. We’re also seeing a lot of impressive aftermarket gains. At least six are currently valued at more than $10 billion.

Meanwhile, unicorn M&A volumes are chugging along as well, with at least 11 deals so far this year. Big transactions like Walmart’s $16 billion acquisition of Flipkart and Microsoft’s $7.5 billion purchase of GitHub have helped boost the totals.

It all adds up to some enormous numbers. We’ll delve into those in more detail below, focusing on year-over-year comparisons, geographic breakdown, biggest exits and more.

How 2018 compares to prior years

First off, a bit of context. A lot of startup-related metrics are on track to hit multi-year or record highs in 2018. These are lofty times for supergiant funding rounds, venture capital fundraising and unicorn investment, to name a few. Given that pattern, it’s not surprising to see a pickup in unicorn exits too, including some really big names like Xiaomi, Spotify and Dropbox.

That said, if one focuses on anticipated exits, as opposed to the ones that already occurred, even this year’s phenomenal IPO streak may seem comparatively humdrum. There’s mounting excitement around the potential for even bigger offerings next year from UberAirbnb, Didi Chuxing and others.

If markets don’t implode in the next few months, and at least some of these household names make it to market, it’s likely 2019 will be an even bigger year for unicorn IPOs than 2018. Unfortunately, however, we don’t have hard data on the future, so we’re left comparing this year to the prior two in the chart below:

As you can see, we’re already well ahead of last year’s totals. On the IPO front, not only are the 2018 unicorn offerings more numerous, they’re also bigger. In 2017, out of 16 unicorn IPOs, there were two at initial valuations above $10 billion (Snap and online insurer ZhongAn). So far this year, there have been five.

Geography of unicorn exits

The exiting unicorns are also a geographically diverse bunch, with the U.S. and China accounting for the lion’s share and Europe trailing a distant third.

In the chart below, we look at the geographic breakdown in more detail:

While the U.S. produced the largest number of unicorn exits, they weren’t the biggest. Notably, this year’s most valuable IPOs and M&A deal involved companies based in Europe and Asia.

Of the six 2018 debuts currently valued at $10 billion or more, detailed below, only one, Dropbox, is a U.S. company. In the chart below, we look at who topped the rankings:

Adding it up

The grand tally of 2018 exits provides a clear counterpoint to skeptics (your author included), who questioned whether fast-growing unicorn populations and valuations would hold up with acquirers and public market investors.

It appears prices are keeping up nicely. The vast majority of U.S. unicorn exits this year, for instance, were close to or above private market valuations. Among U.S. IPOs the only big fizzle was Domo. While Dropbox looked like a “down round IPO” at first, strong aftermarket performance has the company above its highest reported private valuation.

The year’s largest unicorn IPO — China’s Xiaomi — also managed to slightly top its last reported private valuation, even after pricing shares for its June IPO far below initial projections.

All these giant exits add up. The unicorns that went public this year currently have a collective market capitalization north of $200 billion. Add in roughly $45 billion from M&A deals, and we’re talking close to a quarter of a trillion (!) dollars in post-exit value.

These big exits come as investors continue to funnel record sums into high-valuation private companies. So far this year, investors have poured more than $200 billion into venture and growth-stage startups, with more than $70 billion going into companies already valued at $1 billion or more.

In sum, we’re seeing big numbers all around — going in as investments and coming out as exits. Eventually, all parties wind down. But for now, this one rages on.


Source: Tech Crunch

Gaming in Asia may be crypto’s killer dApp

As money and talent flows into the crypto and blockchain worlds, a persistent question keeps coming up: what is going to be the “killer app” that drives adoption for these nascent technologies? The answer may well be quite simple: gaming in Asia.

That’s the theory for Cryptokitties, the notable purveyor of cute cats. The company has started expanding into China, Japan, and Korea as it attempts to capture a large market of gamer and crypto enthusiasts there, and it is building on the playbook pioneered by Uber when it launched in China in 2014.

Back in March, Andreessen and Union Square Ventures led a $12 million Series A round into Cryptokitties. A portion of that money went into Cryptokitties’ ambitions to expand into Asia. In fact, Cryptokitties’ largest user markets have been, and still are, the U.S. and China, followed by Russia.

For those unfamiliar with Cryptokitties, it’s often been alluded to as a digital version of Beanie Babies. Cryptokitties are virtual collectibles in the form of cute cats that can be bought, sold, collected and traded with cryptocurrency, with all the transactions listed on the blockchain. Owners who purchase these kitties can then breed them with other kitties to produce new baby kitties.

The company is part of Axiom Zen, the Vancouver and San Francisco-based design studio that originally built the game. Since its launch in 2017, Cryptokitties has also built a third-party app platform for crypto developers called the Kittyverse, open-sourced their digital asset licensing platform, and started a crypto gaming investment fund. The company currently has about 70 employees and is headquartered in Vancouver.

One of the main purposes why Cryptokitties raised venture capital was for geographical expansion. Having ample capital to not worry about cash flow as the company steps on the gas is certainly quite helpful. But as a business, Cryptokitties was already doing fine. Back in June when I was having a discussion with the company, Cryptokitties was already profitable starting in week three.

The company has successfully differentiated itself from many other crypto decentralized apps (dApps for short) companies out there by proving that they could make money first and have a sustainable user base. Jimmy Song from Blockchain Capital once said, you can make money three ways in crypto, and those are “selling mining machines, starting up Crypto exchanges, and organizing Crypto conferences.” Nonetheless, Cryptokitties was an outlier. With its newly raised money, the team was looking to deploy the capital for hiring, building out it’s Kittyverse, and expanding in Asia.

Asia and China has a Large and Untapped Crypto Gaming Market

Benny Giang, one of the co-founders of Cryptokitties, has been tasked with Cryptokitties Asia expansion since late 2017. Since then, the team has launched Cryptokitties in China, Hong Kong, and Taiwan. During the launch, in order to avoid another one of Ethereum’s network clogs like what happened in late 2017, the iOS app launch was initially limited to 5,000 new players, based on selected WeChat accounts.

Benny believes blockchain games in Asia are a huge untapped market but with increasing competition. Whereas the intersection of gaming and blockchain users is still pretty limited in the Americas, in Asia, that audience is significantly larger. This is primarily due to three reasons: 1) the awareness of cryptocurrency and blockchain is more prevalent in Asia, 2) the regulatory markets are more developed and sophisticated (for better or worse) in China, Korea, and Japan, and 3) there is a proportionally higher number of gamers in Asia than the U.S.

China is the biggest market in this intersection, but there have been challenges. As Cryptokitties launched and grew in the last year, the company saw competition and copycats (pun intended) from China moving quickly into the market. In the beginning of 2018, just as Cryptokitties was launching in China, Xiaomi, the mobile phone maker that recently IPO-ed on the Hong Kong Stock Exchange, launched their own crypto collectible called Cryptobunny. Baidu, the large search engine of China, also recently launched Cryptopuppy.

Go to Market Learnings from Uber in China – Identifying the Right Local Partners and Hires

As Benny and team began doing research on the Asia market, they realized that working in a market that’s twelve hours away is not easy. Taking some of its lessons from Uber’s experience in China, they decided that they needed to localize their go-to-market approach.

One of the reasons Uber ended up exiting the Chinese market was that it did not successfully build a product catered to Chinese citizens. Despite the large sum of money it was pouring into the Chinese market, Uber was still losing market share to Didi. Another suggested reason for the failure was that Uber should have gone to market with a local partner like Didi instead of going head to head with them. The Cryptokitties team knew that they wanted to expand correctly, and subsequently identified a local partner in China to target the market there.

In January 2018, Axiom Zen partnered with Animoca Brands to publish the Cryptokitties game on mobile in China, Hong Kong, and Taiwan. Animoca is a Hong Kong-based, privately-held developer and publisher of games, with a number of games using popular IP such as Garfield, Ultraman, and Doraemon. By working with Animoca, Cryptokitties was able to build out a localized website for its Chinese-speaking audience, provide native-speaker support services, and host numerous giveaway events.

In my discussion with him, Benny provided some insightful advice on go to market strategy in Asia. First, he mentioned that for a blockchain gaming company like themselves, it is best to find two local partners – one in blockchain and one in gaming – to help navigate the landscape. This kind of well-thought-out, go-to-market strategy requires hard work and local community understanding that very few cryptocurrency teams have achieved.

Currently, most Western crypto companies do not apply a traditional tech-oriented go-to-market strategy when trying to expand into other regions. Instead, most of them choose to leverage their “global communities.” They would incentivize these regional token holders to do local marketing and encourage them to find more token supporters and buyers in their region. Nonetheless, that type of marketing approach effectively identifies people who want to make a quick buck, rather than users who can sustain a platform.

Secondly, tasteful and culturally-appealing design is also very important when it comes to dApps. Cryptokitties originally differentiated themselves from other dApps by creating beautiful cats on the blockchain that immediately caught people’s attention. They have also decided to apply a similar local strategy in China.

Momo Wang is the creator of the highly popular Tuzki character, a black and white line drawing of a bunny that’s used widely across various instant messaging platforms, particularly WeChat .

The popular character Tuzki (Photo courtesy WeChat)

Cryptokitties hired Momo as a brand ambassador and contributor to the Artist Series to design kitties for them. By doing so, they are able to appeal to an audience who may have a different local taste.

Benny adds that it is essential for dApp companies to create beautiful websites and great user experiences that appeal to local communities. However, there are also cons when building beautiful websites for a blockchain company that is decentralized by nature. Smooth user interfaces in the form of a traditional website or an app fall under the jurisdiction of a traditional tech business. Internet companies in China, for example, require approval and licensing from the government to be able to operate and serve its citizens.

China has become the wild west of crypto and blockchain, and there will continue to be unforeseen obstacles. It certainly isn’t easy for Cryptokitties to be the first western dApp company to venture into China, but in the next five years, we’ll see a significant number of Western companies heading east – and these early learnings will be invaluable.


Source: Tech Crunch

Only 48 hours left: Apply to Startup Battlefield at Disrupt Berlin

The action you take within the next 48 hours could change your life. That’s how much time you have left to apply to TechCrunch Startup Battlefield, our world-renowned pitch competition, which takes place at Disrupt Berlin 2018 on November 29-30. The application deadline expires on August 20th at 9 p.m. PST. Don’t waste another minute — apply right here, right now.

TechCrunch Startup Battlefield is the stuff of Silicon Valley legend. Some of today’s biggest names in tech launched their early-stage startup in our premier pitch competition. Companies like Vurb, Dropbox, Mint, Yammer, TripIt and more. Since 2007, more than 750 companies have competed (and now form our alumni community), collectively raised $8 billion in funding and generated 102 exits. Not. Too. Shabby.

This is your opportunity to join that august alumni group — can you just imagine the networking possibilities? But hold on, we’re getting ahead of ourselves. Here’s what you need to know about applying and competing.

TechCrunch editors, who clearly have a sharp eye for choosing successful startups, scrutinize every application. They’ll pick the founders of roughly 15 early-stage startups to go head-to-head in the Startup Battlefield competition. This is a highly competitive vetting process, and our acceptance rate typically hovers around three percent.

The founders of each team receive free pitch coaching (from our expert editors), and they’ll be rehearsed and ready to step onto the TechCrunch Main Stage in front of a live crowd numbering in the thousands. Not to make you sweat, but that audience is filled with investors, the very people who can make your dreams come true.

Teams have just six minutes to present a live demo to a distinguished panel of investors and entrepreneurs. Following each pitch, the judges get six minutes to put each team through their paces by asking a series of tough questions.

Next comes round two, and only five teams will make the cut to pitch again — to a fresh set of judges — and endure another round of probing questions.

Remember that live audience? It’s also filled with media outlets looking to write up the next big thing. Plus, we live-stream the entire Startup Battlefield competition to a global audience on TechCrunch.com, YouTube, Facebook and Twitter (and make it available later, on-demand). It’s awesome exposure — for all participating teams — that travels across Europe and around the world. Of course, the winners do get a bit more reward — namely the bragging rights, the Disrupt Cup and the $50,000 grand prize. That’s equity-free cash money, friends.

This is a classic nothing-to-lose and everything-to-gain scenario. Don’t sit this one out. Come and launch your startup to the major influencers in the European and global tech scene.

Startup Battlefield takes place at Disrupt Berlin 2018 on November 29-30, and the application window closes August 20 at 9 p.m. PST. You have just 48 hours left to submit your application — right here.


Source: Tech Crunch