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Tue, 27 Feb 2018 10:00:31 +0000
Crypto-collectibles and Kitties marketplace Rare Bits raises $6M
Rare Bits wants to be eBay for the blockchain, where you buy, sell and trade non-fungible crypto-goods. After CryptoKitties raised $12 million from Andreessen Horowitz last month for its digital collectibles game, there’s been an explosion of interest in the space. But without a popular marketplace, it’s hard to find the goods you want at the […]

It could be said that the first few years of this current tech boom were fueled by mostly harmless, relatively easy products—websites for sharing your photos, for looking up stuff, for connecting with old friends. And the people who made them were seen as mostly good people.

Yet this feel-good perception has slowly and then suddenly disappeared. Users have begun to regard once trusted sites with suspicion over issues of privacy. The same reporters who previously lavished unthinking praise on every new startup now search with equal enthusiasm for scandals and mistakes. Those once harmless social networks, now at a scale unprecedented in human history, no longer look so innocent. The acronym we have for what were once upstarts or underdogs—Facebook to Amazon to Netflix to Google—hints at the now ominous nature of their place in the world, F.A.N.G.

What happened?

What happened was success. What happened was not that power corrupts, but rather, as the biographer Robert Caro would say, what happened is that power revealed.

Cornelius Vanderbilt began his career in shipping in the early 1800s alongside a man named Thomas Gibbons who fought a monopoly (successfully) all the way to the United States Supreme Court, a case considered a landmark ruling in U.S. commerce. Decades and billions of dollars later, Vanderbilt would famously say, “What do I care about the law? Haint I got the power?”

This is the nature of world-altering success. It’s easy to be good when the stakes (and the valuations) are low. We can count on it as an immutable law of history: in any space where fame and fortune and power are up for grabs, Machiavelli eventually makes his appearance. Even if you started as the little guy or you were certified as a B Corp or put ‘Don’t Be Evil’ in your public filing documents.

In present day, I like to think of this before and after picture of Jeff Bezos as a good example of the arc of a successful businessman or woman, one that is timeless and perennial. At first, you have a skinny nerdy guy who just wanted to sell us books over the computer, and fended off lawsuits by mega-retailers like Barnes & Noble and Wal-Mart for the privilege. Now, twenty or so years later, he’s jacked like a Terminator—the physical manifestation of his trillion-dollar company which has eaten the world—and his influence is now distributed through one of the most prestigious newspapers in the country…which he owns.

We could compare two photos of Andrew Carnegie and see the same thing.

Perhaps what’s set Silicon Valley apart—the difference between Elon Musk and John D. Rockefeller, Elizabeth Holmes and Jay Gould—is that it believes, since the disruption” is orchestrated from behind a computer, it’s not the same. That it was somehow cleaner than coal or oil or steel. This is naive. Disruption is painful. People get hurt. And someone has to do that hurting.

It’s called creative destructionfor a reason.

Good comes from it, but it’s not without its costs—to society or to the people who make it their living.

The ability to willfully seek out this destruction on a massive scale is, in its own way, a skill. Not all of us have it. It’s probably better than most of us do not. But certain people do. There are people who tastelessly start a business designed to put bodegas out of business (as one recent start up attempted) and there are people like Steve Jobs who artfully and heartlessly delivered a mortal blow to Eastman Kodak, a 129 year old company, with one addition to his design for the iPhone. And we cheered him for it. Between these two types, there is a Travis Kalanick who saw taxicab drivers not as solid middle class citizens, like many of us mistakenly did, but as a cabal of overpaid, rent-seeking obstacles to be broken apart and put out of work. Indeed, many of the early Uber investors I would speak to about Travis would remark that his greatest strength was his intense will to power. It was this unquestioning drive that allowed him to blow past technological hurdles, monopoly power, local regulations, unions, and in some cases, mob-controlled taxi companies.

It can’t be said that power changedTravis. That’s the whole point. It didn’tchange him and that was the problem. He was such a natural fighter that he fought everything, and thus, ensured his own downfall.

In my study of the billionaire Peter Thiel over the last year for my book ConspiracyI found that he was one of the few from Silicon Valley who understood this as a precondition to success and was willing to openly discuss all of it. If you read Zero to One, it’s all there: the necessity of secrets, the drive to monopoly, owningthe future. He quotes Emerson, “weak men believe in luck, strong men believe in cause and effect.” Or as the deeply competitive Thiel supposedly said after a chess match, “Show me a good loser and and I’ll show you a loser.”

You can see in Peter’s own development, a hardening that mirrors the evolution of the startup scene. His first company, PayPal, began in an attempt to create a kind of early cryptocurrency and as it got more successful, ended up, in one famous anecdote, having to debate whether to accept payments from pornographers and then after 9/11, whether they were hiding money for terrorists. Facebook, his best investment, went from a fun place for college students to share party photos to connecting the world to being a distributor of fake news. And Palantir, which he founded with PayPal’s anti-fraud technology, began as a big data company…that is now used for drone strikes and SEAL Team Six raids. Success raised their profiles, which raised the stakes.

And Peter’s merciless plot to destroy Gawker (itself a former startup that had become an enormously powerful media company)? Thiel was caught off guard when Gawkerouted him as gay in 2007. There was a time he looked to resolve things amicably with Gawker. One Gawkereditor would tell me about meeting Thiel in 2008 and finding him almost painfully naive about the media business, thinking that he could appeal to personal relationships to get gossip journalists to back up. By 2012, he had hardened, sold a billion dollars in Facebook stock, and become convinced that Gawkerwas an obstacle to his business plans, as well as his vision for the future and needed to be crushed. Part of that cold-eyed calculation was the belief that Gawker’s power as a media outlet could not be met effectively in the marketplace of ideas, but rather had to be met with the power of his bank account. Which is what he did. It took nearly a decade, but at the end Gawkerfell and he remained standing. A $300 million dollar company with 300+ employees ceased to exist.

Morality aside, there is something nakedly bold about that kind of exercise of power. Just as there is in Mark Zuckerberg’s track record of first wooing and then crushingpotential competitors. Ask Twitter. Ask Snapchat. Ask Zynga. Ask Meerkat. Ask Google Plus. Few have gone against Facebook and walked away—and those that have, do with a permanent limp. Which, by the way, is Zuckerberg’s obligation to his shareholders.

I’m not saying this to praise these kinds of moves, but in fact to wash away the vestiges of naivete which allow them to happen unchecked. One of Gawker’s editors would say in a documentary about Peter Thiel’s plot, “It was scarcely believable that something so cinematically vindictive and conspiratorial and underhanded could have actually happened.”

Certainly that disbelief is exactly whyit happened. “We live in a world where people don’t think conspiracies are possible,” Thiel would tell me in an interview. “We tend to denounce ‘conspiracy theories’ because we are skeptical of privileged claims to knowledge and of strong claims of human agency. Many people think they are not possible, that they can’t be pulled off.”

The robber baron type of today and yesterday live in a world where the opposite belief is true, and where power is raw and real and there to be used in furtherance of such conspiracies. Too many others, as Gawker was, are misled by their own cynicism and virtue-signaling. They forget how the world works. Gawkercertainly did, or they would not have acted so recklessly or indiscriminately, not only outing married men with children and tweeting things like this, but deliberately making enemies like Peter Thiel—men who accrued real power—and expecting that there would never be a reckoning.

An immutable law of history: actions have consequences. There is the apocryphal storyabout Vanderbilt after he was cheated by two business partners in Nicaragua and lost his license to operate in the country. He sent them a letter, “Gentlemen: You have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you. Yours truly, Cornelius Vanderbilt.”

Power is sought so it can be wielded. Just as no one builds a multi-billion dollar empire without some sort of savage determination and intense will to power (otherwise they would have stopped at some earlier point, taken their winnings and gone home), no one accumulates power and then declines to use it in the face of existential threats—of which Thiel counted Gawkeras one to his business interests. A Mark Zuckerberg or an Elon Musk doesn’t build an empire and allow others to encroach on their borders. And yet, it says something about our reflective, childlike understanding of the minds of these people that we condemn, the Koch Brothers or George Soros for various schemes, without stopping to think about whythey are doing these things. It’s not simply to save on their taxes, I’ll tell you that. It’s because they have those same “privileged claims to knowledge” and “strong claims of human agency,” that Peter was talking about.

They are trying to own the future, or direct it where they want to go. Sometimes we’ll agree with their attempts—such as when Mark Zuckerberg donated $100 million to New Jersey schools—and other times we’ll be shocked and upset—as people have been with many of Peter Thiel’s when he set up scholarships for dropouts, funded seasteading, and of course, destroyed a media outlet.

I would argue that this only a taste of what is to come. Silicon Valley was place of a generational—perhaps epoch-level—transfer of power. Nick Denton, the founder of Gawker, himself once observed that New York gossip had transitioned from from Zuckerman (as in Mortimer Zuckerman, the media tycoon and former owner of the New York Daily News) to Zuckerberg. It’s true, and he, and, we, the public, are now experiencing what that will mean.

The press, the public, and politicians need to understand this rising force if they wish to put up guardrails against it or put it to good use solving society’s problems. By understand, I don’t mean clutch at pearls constantly, I mean understandit they way we recognize a riptide or the ferocity of a wild animal. Artists need to understand it too, and create works that teach lessons about it.

I enjoyed Nick Bilton’s book on Ross Ulbricht, the creator of the Silk Road, for this reason. It’s the story of a boy who ached to do something important and massive, who built a libertarian marketplace where anything could be bought and sold, and did not stop for a second to think of the consequences. It was fun at first, like a kid sneaking around his parents’ restrictions. But this is not kid business, and the savagery soon begins to ooze through. Ross is challenged with questions, with the sticky ethical dilemmas inherent in this small but growing illicit operation. What does he do after the first overdose of one of his customers? How does he sleep with that on his conscience? And the first time he’s told of one user robbing another? Now Silk Road users want to use the site for arms dealing? Can they sell cyanide?

Each step, each decision, takes one further from the incorporeal realm and into the brutishness of the Hobbesian world, a world of Social Darwinism. What steps will he take to evade and deceive the police or the agencies that seek to stop him? How will he hide the wealth that has come pouring in? How does it feel to spend money you know came from enabling someone else’s suicide? Ross was one day simply sitting in his room, dreaming his plans on a keyboard, and then another day he had to decide whether to order a contract hit on an employee who threatened to unravel his ambitious attempt to change how society works. He can’t be stopped, he won’t be stopped—what he is doing is too important. The savagery of ordering not just one murder but six would eventually put Ulbricht in a federal prison cell. And indeed he stands now as a cautionary tale, a kind of true story of how one breaks bad. Or rather, fully becomes the bad, as they already were.

I wrote about Thiel’s arc from technology investor to Straussian power broker for that same reason. I think we need a wakeup call about how this all works, what kind of forces have been unleashed by the gold rush of California, just as powerful forces and names like Hearst and Stanford and Huntington were unleashed in the original Gold Rush.

Because we ignore them at our peril.

Ryan Holiday is the bestselling author of Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue

 

 


Mon, 27 Nov 2017 17:27:26 +0000
Author Ryan Holiday on “the nature of world-altering success”
Contributor Contributor More posts by this contributor The dinner that destroyed Gawker Author Ryan Holiday on “the nature of world-altering success” It could be said that the first few years of this current tech boom were fueled by mostly harmless, relatively easy products—websites for sharing your photos, for looking up stuff, for connecting with old […]

HeadSpin, a mobile application testing service, launched today to give developers a one-stop shop for quality assurance and control for mobile application development.

The company’s co-founder and chief executive, Manish Lachwani, knows the mobile appspace better than almost anyone. The former co-founder and chief technology officer of Appurify (which Google bought), Lachwani previously served as the CTO of game developer Zynga and was a principal architect of the Amazon Kindle — developing the first Kindle OS.

At Appurify, Lachwani was one of the first to use hosted software to test automation with real devices, and the company’s subsequent acquisition by Google helped pave the way for in-house testing services that enabled Google developers to move faster and break fewer things, the company said.

““No one was enabling developers with automated real world testing, pre-release. All the attention was on post-launch monitoring and testing. In addition, testing and performance management solutions provided developers no visibility into the complex user experiences around the world,” Lachwani said. “As a result, developers were not getting ahead of performance or user experience issues.”

HeadSpin is already being used by companies like Tinder, DocuSign, Akamai, Telstra, and Dell. The company’s software provides monitoring of application development before and after an application’s release, the company said.

The company monitors code on devices in real networks; it doesn’t use an SDK so there’s no expansion of an application’s code base.

“Unlike other solutions, HeadSpin’s data driven platform is able to proactively uncover ‘hidden insights’ through learning. This helps us fix our app issues before launch and have something reliable and repeatable to test or measure,” said Maria Zhang, CTO at Tinder, in a statement.


Mon, 14 Aug 2017 18:00:43 +0000
Mobile application testing service HeadSpin launches from stealth
HeadSpin, a mobile application testing service, launched today to give developers a one-stop shop for quality assurance and control for mobile application development. The company’s co-founder and chief executive, Manish Lachwani, knows the mobile appspace better than almost anyone. The former co-founder and chief technology officer of Appurify (which Google bought), Lachwani previously served as the […]

Two years ago, Google launched universal app campaigns (UAC) to make it easier for developers to easily promote their iOS and Android apps across its various platforms. Instead of having to set up separate campaigns for Search and Google Play, for example, developers can simply use UAC with a few lines of text, images and their bid and the service then handles the rest, based on what the developers want to optimize their campaigns for (installs or in-app conversions, for example).

This has turned out to be such an effective service — thanks in large part to the company’s advances in machine learning — that Google is moving all app install campaigns to UAC over the rest of this year. Starting October 16th, all new app install campaigns created in AdWords will run on UAC, and starting November 15th, all existing Search, Display and YouTube app promo campaigns will stop running.

Google tells us that it has delivered more than 6 billion installs to developers so far. That’s a big increase over the last stats it offered in 2016. At that time, Google said it had delivered 2 billion installs. The company also told us that UAC already delivers more than 50 percent of all app downloads from ads today and that the machine learning algorithms that power the service analyze more than 300 million potential signal combinations in real time. That means the service looks at signals like where people are looking at an ad, for example, and what they are likely trying to do.

What’s most important, though, is that these campaigns perform very well. UACs drive 140 percent more conversions per dollar than the company’s regular app campaigns. Given these numbers, it’s no surprise that Google is doubling down on this campaign type.

One major advantage of UAC is that it allows developers to not just optimize for app installs but also for in-app engagement and lifetime value. For many developers, it’s now less about getting low-value installs but to make sure that the users they get want to make a purchase, book a hotel room or subscribe to their service. Google argues that its algorithms know enough about potential users to allow it to automatically optimize when and where it shows a developer’s ads to bring the right users to the app.

“Having entertained over 1 billion people to-date, at Zynga we’re focused on creating games that are designed to entertain consumer audiences over the long-term while delivering strong operational efficiency,” Zynga’s VP of User Acquisition Kimberly Corbett told me about her company’s use of UACs. “As such, our User Acquisition strategy has evolved to focus on bringing in players who will become part of our forever franchises, including games like Zynga Poker and Words With Friends, which are 10 and 8 years old, respectively.”


Wed, 19 Oct 2016 19:02:03 +0000
Google is going all in on universal app campaigns
Two years ago, Google launched universal app campaigns to make it easier for developers to easily promote their iOS and Android apps across its various platforms. This has turned out to be such an effective service -- thanks in large part to the company's advances in machine learning -- that Google is moving all app install campaigns to UAC over the rest of this year.

Leanplum started out as a mobile A/B testing platform but has since built on this foundation to become a fully-fledged mobile marketing platform. The company has now raised a $29 million Series C round led by Canaan Partners with participation from existing investors Kleiner Perkins Caufield & Byers and Shasta Ventures. This brings Leanplum’s total funding to $46.4 million to date.

Leanplum says it has tripled its revenue over the past two years and expects to triple it again in 2016. Its customers now include the likes of Tinder, Lyft, Zynga and Macy’s. The company tracking close to four billion events per day and expects that this number will reach 12 billion by the end of the year.

Leanplum plans to use the new funding to expand its sales, marketing and engineering teams and drive its global expansion. It expects that at least some of this growth will come from its new email engagement channel, too. While Leanplum already offered marketers the ability to reach users through push notifications and in-app messages, this new email feature, which came out of beta today, will give its users another avenue to reach users.

email-image-2

Like similar personalized email platforms, Leanplum will let its customers segment and target emails based on location, in-app behavior, purchase history and more. Because it already offers its users the ability to use notifications and in-app messages, marketers will also be able to coordinate their messages across these platforms.

“The holy grail of marketing is understanding the needs of each customer in order to deliver unmatched value at the optimal moment,” writes Momchil Kyurkchiev, Leanplum CEO and co-­founder, in today’s announcement. “Mobile unlocks levels of behavioral intelligence and personalization we never thought possible in the web-only days.”


Fri, 05 Aug 2016 00:17:47 +0000
Leanplum raises $29M Series C round for its mobile marketing platform
Leanplum started out as a mobile A/B testing platform but has since built on this foundation to become a fully-fledged mobile marketing platform. The company has now raised a $29 million Series C round led by Canaan Partners with participation from existing investors Kleiner Perkins Caufield & Byers and Shasta Ventures. This brings Leanplum’s total […]

Social game developer Zynga tumbled 9 percent in after-hours trading following the second quarter 2016 earnings announcement after the bell today. The company reported a net loss of $4.4 million, while still beating analysts’ expectations in terms of revenue.

For the second quarter ended June 30, the San Francisco-based maker of FarmVille and Words with Friends posted revenue of $181.7 million and non-GAAP net earnings came in at $0.00.

Wall Street expected EPS of $0.00 on revenue of $169.4 million, according to Thomson Reuters. The stock hit 9 percent down in late afternoon, after having closed less than 1 percent up at $2.97.

[graphiq id=”iEUS6IcfBGt” title=”Zynga Inc. (ZNGA) Stock Price” width=”600″ height=”617″ url=”https://w.graphiq.com/w/iEUS6IcfBGt” link=”http://listings.findthecompany.com/l/2372807/Zynga-Inc-in-San-Francisco-CA” link_text=”Zynga Inc. (ZNGA) Stock Price | FindTheCompany” ]

“We are tightening our operating model and improving our cost management as we do more with less, particularly in marketing,” said Frank Gibeau, CEO of Zynga, in a statement.

In a conference call with analysts, Gibeau commented on the viral success of Pok


Wed, 04 May 2016 12:57:54 +0000
Zynga plummets 9% in after-hours trading
Social game developer Zynga tumbled 9 percent in after-hours trading following the second quarter 2016 earnings announcement after the bell today. The company reported a net loss of $4.4 million, while still beating analysts’ expectations in terms of revenue. For the second quarter ended June 30, the San Francisco-based maker of FarmVille and Words with Friends posted revenue […]

Choosing this year’s Disrupt NY Startup Battlefield winners will be a tough job. There is an exceptionally strong and unique group of young companies competing in Startup Battlefield next week with 20 companies showcasing their innovative solutions to solving important and critical issues.

Thankfully, we have an experienced team of entrepreneurs and investors to help judge the Startup Battlefield competition. We carefully curated a group of Final Round judges that will bring their experience and expertise to choosing the next winner of the Disrupt Cup (and a huge $50,000 check)!

Please meet your esteemed final round judges for the Disrupt NY Startup Battlefield competition.


JohnBorthwick

John Borthwick is the CEO and co-founder of betaworks. Betaworks is an internet studio that builds and invests in companies across the social, data-driven media internet.

Companies that betaworks has built include Giphy, Dots, bitly and Chartbeat, betaworks acquired and re-launched Digg and Instapaper. Betaworks investments include: kickstarter, tumblr (acquired by Yahoo), Summize (acquired by Twitter as their search engine), IFTTT, OMG Pop (acquired by Zynga), Tweetdeck (acquired by Twitter), along with 100+ others.

Prior to betaworks John was Senior Vice President of Alliances and Technology Strategy for Time Warner Inc. John’s company, WP-Studio, founded in 1994, was one of the first content studios in New York’s Silicon Alley, it was acquired by AOLTW. John holds an MBA from Wharton (1994) and an undergraduate degree BA in Economics from Wesleyan University (1987). He sits on the board of WNYC, Data and Society, and Rhizome at the New Museum.


Charles Hudson

Charles Hudson is the Managing Partner with Precursor Ventures, an early-stage venture capital firm focused on investments on investing in strong teams in the business to business and business to consumer software markets. Prior to founding Precursor, Charles was a Partner with SoftTech VC, one of the most active seed stage investors in Internet and mobile startups. Hudson holds a BA in Economics and Spanish from Stanford University and an MBA from the Stanford Graduate School of Business.


alfred-lin-danielle-levitas4

Alfred Lin is a partner at Sequoia Capital and works with inspiring founders focused on disrupting the mobile, marketplace, commerce, consumer services, and online-to-offline sectors. He currently represents Sequoia on the boards of Airbnb, DoorDash, Houzz, Humble Bundle, Kiwi, Stella & Dot and Zipline, and was previously on the Board of Achievers (HAWK). Prior to joining Sequoia in 2010, Alfred was fortunate enough to be associated with a variety of successful upstarts and served as COO/CFO of Zappos.com, VP of Finance and Business Development of Tellme Networks, and VP of Finance of LinkExchange. Alfred also co-founded Venture Frogs, LLC and invested in companies such as Ask Jeeves, MongoMusic, MyAble, OpenTable, Tellme and Zappos.com. Alfred has a B.A. in Applied Mathematics from Harvard and an M.S. in Statistics from Stanford.


susan-lyne

Susan Lyne is the founder and President of BBG Ventures, an early-stage investment fund for women-led tech start-ups. The AOL-seeded fund is focused on next-gen consumer internet products, backing smart entrepreneurs who reflect and understand the consumers driving the fastest-growing areas of the internet.

Before launching BBG Ventures, Susan was CEO of AOL’s Brand Group, where she oversaw AOL’s unique content brands including AOL.com, TechCrunch, Engadget, Makers, StyleList, Moviefone and MapQuest. From 2008 to 2012, Susan was CEO and then Chairman of Gilt Groupe, the innovative e-commerce company that pioneered flash sales in the United States. Prior to that she spent three decades in the media industry.

From 2004 to 2008 she served as President and CEO of Martha Stewart Living Omnimedia (MSO). From 1996 to 2004, she held various positions at the Walt Disney Company and ABC, including EVP of Movies and Miniseries and later President of ABC Entertainment.


matthew-panzarino5

Matthew Panzarino has been a retail jockey, professional photographer, independent blogger, Managing Editor at The Next Web and now Editor-In-Chief at TechCrunch. He has made a name for himself in the tech media world as a writer relentlessly covering Apple and Twitter, in addition to a broad range of startups.


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Alan Patricof is the Founder and Managing Director of Greycroft Partners. A longtime innovator and advocate for venture capital, Alan entered the industry in its formative days with the creation of Patricof & Co. Ventures Inc., a predecessor to Apax Partners – today, one of the world’s leading private equity firms with $41 billion under management. He stepped back from the daily administration and operational aspects of Apax Partners, LP in 2004 to concentrate on a group of small venture deals on its behalf. In 2006, he founded Greycroft Partners, a venture capital firm, which funds leading early and expansion-stage Internet and mobile companies. With offices in New York and Los Angeles, Greycroft is currently investing from its fourth core Fund and its first Growth Fund. Greycroft, LLC has a total of $800MM under management.

With a 40-plus year career in venture capital, Alan has been instrumental in growing the venture capital field from a base of high net-worth individuals to its position today with broad institutional backing, as well as playing a key role in the essential legislative initiatives that have guided its evolution. He has helped build and foster the growth of numerous major global companies, including, among others, America Online, Office Depot, Cadence Systems, Cellular Communications, Inc., Apple Computer, FORE Systems, NTL, IntraLinks, and Audible. He was also a founder and chairman of the board of New York magazine, which later acquired the Village Voice and New West magazine.

Alan is active in the New York and Washington communities. He is a board member of the Finance Committee of Northside Children for Child Development in Harlem and the Board of Overseers of Columbia School of Business. In addition, he is an advisor to Disney’s Startup Accelerator Program as well as the Entrepreneurship Advisory Board at Columbia University. He is also a member of the Tribeca Film Festival Disruptor Foundation and the Council on Foreign Relations. In October 2013, he was appointed to the board of the President’s Global Development Council by President Barack Obama. From 2007 to 2012, he served two terms on the board of Millennium Challenge Corporation, having been appointed by Presidents Bush and Obama respectively. And in 1992, he was appointed by President Clinton as Chairman of the White House Commission on Small Business. In addition, Alan is a former board member of TechnoServe, Trickle Up Program, Global Advisory Board of Endeavor, Applied Sciences NYC Advisory Board, and the Initiative for Global Development (IGD) Leadership Council.


Get your tickets here while you still can!

As always, if you are interested in becoming a sponsor, opportunities can be found here. Students can also come and be a part of Disrupt SF, for $300 here.


Tue, 03 Nov 2015 21:31:37 +0000
Meet your Disrupt NY Startup Battlefield final round judges: John Borthwick, Charles Hudson, Alfred Lin, Susan Lyne, Matthew Panzarino and Alan Patricof
Choosing this year’s Disrupt NY Startup Battlefield winners will be a tough job. There is an exceptionally strong and unique group of young companies competing in Startup Battlefield next week with 20 companies showcasing their innovative solutions to solving important and critical issues. Thankfully, we have an experienced team of entrepreneurs and investors to help […]

Zynga today beat analyst expectations for its third-quarter earnings, bringing in about $176 million in bookings with flat earnings, and revenue of $196 million. Analysts were expecting a loss of 1 cent per share for the company’s earnings.

It’s an interesting time for Zynga’s earnings report. Activision Blizzard just yesterday said it would acquire King Digital, the company behind Candy Crush Saga, for $5.9 billion. Zynga’s been in a tough position as it transitions to mobile, moving from a time when it was incredibly strong on desktop to finding itself under pressure from mobile games like Candy Crush Saga. Zynga’s strategy is to go deep on several categories — such as casino and Words With Friends, among others, CEO Mark Pincus said in an interview.

“It’s along this trendline I talked about in the beginning that companies over time differentiating themselves by having a large diverse player network, being multi-category on their game development, and owning and developing leading mobile franchises,” Pincus said. “I also think there’s some other categories in mobile that we have deeper investments in and we’ve built strong positions in, like social casino — we’re number two in slots — and action strategy with Empires & Allies, which we’re just getting back into. And we’ve made a huge commitment with acquiring Natural Motion. We intend to be a major longterm player and provider in action-strategy.”

[graphiq id=”fYbR8ah7do9″ title=”Zynga Inc. (ZNGA)” width=”700″ height=”530″ url=”https://w.graphiq.com/w/fYbR8ah7do9″ link=”http://listings.findthecompany.com/l/2372807/Zynga-Inc-in-San-Francisco-CA” link_text=”Zynga Inc. (ZNGA) | FindTheCompany”]

Shares of Zynga were about flat after rising as much as 3 percent in extended trading on the earnings report, after rising 2.5 percent in regular trading. On the year, Zynga shares are down by about 7 percent. Zynga’s revenue was up 11 percent from the third quarter last year, when it reported $176.6 million in revenue. It reported a net income of $3 million, which is well up from the net loss it reported in the third quarter last year of $57.1 million.

The culprit of the share’s movement is likely a combination of a few things: a big share repurchase program, posting a net profit and beating earnings expectations, but still seeing its user numbers continue to fall.

The company authorized a $200 million share repurchase program, something that will surely please investors given the cash that the company has on its balance sheet. It had around $1.1 billion in cash, cash equivalents and marketable securities. As part of the earnings announcement, the company also said its chief financial officer David Lee would also step down.

“We feel like we’re very well capitalized and financed, and we just look at our position in the market today and where we think our prospects are over the next three to five years, with the board we thought that it was a good point in time to change our cap table a little bit with the stock buyback,” Pincus said.

In particular, the company pointed to the strength of its slots and Poker games, as well as Words With Friends. Mobile bookings now account for 69 percent of the company’s total bookings, up from 66 percent in the second quarter this year. Pincus said that, while the company had initially missed out on the slots category, it has quickly brought itself back with high quality Slots games to be second in the category. Despite an audience decline, bookings for Words With Friends great 34 percent year-over-year, the company said.

“Social casino really is our original legacy, and the original legacy of social gaming,” CEO Mark Pincus said in an interview. “Our poker game was the first major social game, and we really missed the opportunity when it expanded to slots, and slots was really terrific for social gaming because it matched up so well with an adult female audience that social gaming is really appealing to for the first time. Slots is really a great category for us, we missed it not from lack of effort — we had a few slots efforts and they failed, so we were trying — and we learned the hard way that you really need to go deep on quality for that category and that audience.”

The company’s Monthly Active Users continued to fall, to 75 million in the third quarter this year — which is down from 103 million in the third quarter last year — though the average booking per user rose in that same period. Zynga made around 10 cents per monthly active user, up from 7.9 cents per active user in the third quarter last year and around 9 cents in the second quarter this year.

As part of the earnings report, the company also said it was delaying two of its titles — CSR Racing 2 and Dawn of Titans. The reasoning behind that, Pincus said, was that while the games had soft-launched they weren’t quite ready for mass-market. The games have been delayed till 2016, the company said.

The elephant in the room, of course, is now Activision Blizzard. But King has found itself having difficulty expanding beyond the massive hit of Candy Crush Saga. Even while it continues to produce new games, the company has seen its revenue and earnings performance somewhat lag, with shares largely flat before the acquisition was announced. It’s a position Zynga is familiar with, and hopes to avoid in the future.

“You will over time see those companies that have made those commitments, and you’ll see companies that didn’t,” Pincus said. “The companies that didn’t, that have an amazing franchise in one category, it’s not obvious they’ll have the same launch and growth prospects.”


Thu, 06 Aug 2015 20:22:52 +0000
Zynga Beats Expectations On Earnings, Posts A $3M Profit
Zynga today beat analyst expectations for its third-quarter earnings, bringing in about $176 million in bookings with flat earnings, and revenue of $196 million. Analysts were expecting a loss of one cent per share for the company's earnings.

Zynga today beat analyst expectations for revenue and earnings, but its user numbers continued to decline, sending the stock down about 1 percent in extended trading.

Zynga’s daily active user numbers declined 23 percent year over year to 21 million, which were also down 15 percent quarter-over-quarter. Its monthly active users also fell 32 percent to 83 million, down 18 percent sequentially. In the first quarter, the company had 100 million monthly active users, and 25 million daily active users.

This is still to be sort of expected. Zynga is still in the midst of a turnaround, with co-founder Mark Pincus taking the reins once more earlier this year. Zynga’s slots franchises were a strong point in the quarter, where bookings rose more than 247 percent year-over-year and rose 32 percent quarter-over-quarter. The company also signed a deal with Warner Bros to license Willy Wonka and the Chocolate Factory, which means we can probably expect a slots version of that in the near future.

Zynga reported $199.9 million in revenue, up 30 percent year-over-year, and a loss of 1 cent per share. Analysts were expecting a loss of 2 cents per share on revenue of $153.2 million in the second quarter this year. The company said it’s projecting to be in the range of $175 million to $190 million in the third quarter this year, with analysts expecting $174.8 million in revenue for the same quarter.

zynga stock q2

And of course, running a gaming company is difficult — especially in 2015, when viral hits are usually the games that drive huge businesses, such as Candy Crush Saga propelling King to being one of the biggest game companies in the world. Even King, however, is not immune to the ebb and flow of the gaming industry, with its revenue in the first quarter shrinking slightly year-over-year. King reported revenue of $569.8 in the first quarter this year, compared to $607.6 in the first quarter last year.

Zynga, like King, rode the success of huge hits like FarmVille and CityVille to becoming one of the largest gaming companies in the world. But other momentary viral hits — like 2048 and Kim Kardashian: Hollywood (which have also faded from popularity) — can steal the thunder of even those massive games. Still, Zynga’s core franchises — like FarmVille — saw a 4 percent increase in bookings quarter-over-quarter and a 9 percent increase year-over-year.

And then there are the layoffs. The last time the company reported earnings it said it would lay off around 18 percent of its staff, or 300 people. But they are hardly the only company facing layoffs, with Gree laying off 120 earlier this year and Kixeye laying off a chunk of its staff earlier this year.

Frank Gibeau, a longtime EA executive, is also joining Zynga’s board of directors. Gibeau left EA earlier this year where he served as head of mobile as most gaming companies faced the steep task of finding a way to capture an audience on mobile devices.

The company’s advertising business, interestingly, rose 70 percent from the same quarter last year to $38 million, up 7 percent quarter-over-quarter. Zynga’s stock has dropped more than 12 percent since the company’s last earnings report, ending the day down 2 percent. It fell as much as 9 percent in extended trading after the report came out.


Wed, 06 May 2015 22:01:11 +0000
Zynga Beats Expectations In Q2 With $200M In Revenue, Fails To Stem User Exodus
Zynga today beat analyst expectations for revenue and earnings, but its user numbers continued to decline, sending the stock down about 1 percent in extended trading.Zynga's daily active user numbers declined 23 percent year over year to 21 million, which were also down 15 percent quarter-over-quarter. Its monthly active users also fell 32 percent to 83 million, down 18 percent sequentially. In the first quarter, the company had 100 million monthly active users, and 25 million daily active users.

About two years ago, Mark Pincus brought on former Xbox executive Don Mattrick to run the company, and he took a step back. This was actually a tremendous surprise to the industry.

Pincus has a reputation of being a bit of a micro manager and is not often able to delegate responsibility or empower his lieutenants. It was seen as a change in direction for Zynga, which became one of the most successful gaming companies in the world on the strength of its Facebook games. It seemed the company would go from an analytically driven social gaming company driven by virality to, essentially, a more traditional gaming company in the vein of Electronic Arts and Activision-Blizzard.

Then, in a very unsurprising move, Mark Pincus came back and took over the company about two years later; Mattrick left last month. Pincus’ attempt at divorcing himself from the company was unsuccessful — though he certainly had checked out for a short period of time and started an incubator of sorts. When Zynga announced that Pincus would return as CEO, the company’s stock promptly fell about 18 percent.

Zynga also cut 18 percent of its staff, the company disclosed in its earnings report today. In an interview given to Re/code as part of the release of the company’s earnings, Pincus said the company “identified a couple places where we want to be world-class, like data analytics.” With Pincus back at the helm, it seems like, once again, there’s going to be a shift in the direction and nature of the company.

It feels very much like one of the classic moves that Pincus is known for — and one, it seems, that was necessary in the eyes of shareholders. Shares of Zynga rose more than 6 percent after beating expectations and news of the layoffs. Pincus told Re/code he is also slashing that staff from corporate and central services and is exiting the sports genre.

That data-driven nature served Zynga very well during the Facebook era, as the company’s ability to propel the virality and revenue of its games made it a tech darling and led to one of the largest tech IPOs since Google. Zynga’s greatest strength, in particular, was that it built a playbook that was able to produce another viral hit as a prior was was beginning to fade. As FarmVille entered its twilight years, the company came out with CityVille, which became a major success.

Pincus’ analytical focus was ever-present within the gaming company. In “greenlight” meetings (which determine what games move on to full development) Pincus was known for relentlessly asking questions about how well a game could monetize and how it could engineer virality, according to insiders I’ve spoken to over the years.

That’s great for business, but according to insiders, it was also seen as a barrier to creativity. In an industry that was very hit-driven, it wasn’t clear that the playbook that worked on Facebook would continue to succeed.

As most gaming shifted to mobile devices, Zynga was caught flat-footed with few truly viral mobile titles and a playbook that only worked on the web and Facebook. The company was usurped by mobile-first companies like Supercell and King.com, as well as games like Clash of Clans and Candy Crush Saga. The notion of virality was dramatically different, and the focus shifted to games that were high-quality, natively mobile and social in a way that worked well on mobile devices.

That’s when Mattrick was brought in, to shift the company to one that was mobile-focused that looked much more like a gaming studio than an analytics company that happened to make money off games. Shareholders were initially very pleased with the decision — it was clear that Zynga needed a change in direction. But, to be sure, Mattrick’s strategy also didn’t seem to be working.

zyngastock

In the years prior to his departure, the role of Pincus’ lieutenant was essentially a revolving door, regularly seeing new stars to rise only to promptly lose their power and depart the company. EA alumnus John Schappert was brought on to help the company go public, but was then subsequently replaced by David Ko, who was known for his strong business sense.

Then, when Mattrick came in, Ko departed after being passed over for the CEO role. The company’s last COO, Clive Downie, left in April after Pincus took over.

Pincus’ moves show that he is still in deep control of — and deep love with — Zynga, and wants the company to continue operating. It’s probably for good reason: He built Zynga from the ground up into one of the most successful gaming companies in the world with a strategy that was essentially orthogonal to what most gaming companies were doing at the time.

Is the new Zynga going to find a way to be a successful mobile gaming company, or will Pincus’ analytical nature fail once again to mesh with the new era of mobile gaming? That’s still an unknown. Perhaps his brief recess from the company has changed his focus. But for the most part, it’s hard to feel surprised by what’s emerged within Zynga in the past month.


Wed, 06 May 2015 20:44:36 +0000
Mark Pincus Is Back — And His Vintage Management Style Might Be, Too
About two years ago, Mark Pincus brought on former Xbox executive Don Mattrick to run the company, and he took a step back. This was actually a tremendous surprise to the industry.Pincus has a reputation of being a bit of a micro manager and is not often able to delegate responsibility or empower his lieutenants. It was seen as a change in direction for Zynga, which became one of the most successful gaming companies in the world on the strength of its Facebook games. It seemed the company would go from an analytically driven social gaming company driven by virality to, essentially, a more traditional gaming company in the vein of Electronic Arts and Activision-Blizzard.

We’ve found the tech company that isn’t hiring.

Zynga reported its first-quarter financial performance today following the bell, sending its shares skyrocketing as investors cheered its revenue beat and plans to cut around 18 percent of its workforce, or more than 300 people.

Zynga had revenue of $183.3 million in the quarter, and bookings of $167.4 million ahead of investor expectations of a slimmer $147.7 million. The company’s adjusted loss of $0.01 was better than expectations of a larger-than-expected $0.02 loss per share. On a GAAP basis, using normal accounting techniques, Zynga lost a steeper $0.05 per share.

Boom.

Boom.

The company’s revenue beat has helped send its shares north more than 10 percent in after-hours trading. Helping to fuel that pop is the company’s stated $100 million plan to cut costs. That reduction in expense is predicated on a plan to fire a large percentage of its workforce. The company was blunt in its release (emphasis mine):

Today, Zynga announced a cost reduction plan expected to generate pre-tax savings of approximately $100 million, excluding an estimated $18 million to $22 million pre-tax restructuring charge in the second quarter of 2015. As part of the plan, Zynga expects to complete a reduction of approximately 18% of our current workforce across its studios, including contractors, and implement additional cost reduction measures, including lowering costs and eliminating spend on outside and centralized services.

The company expects to save more than $40 million per year from the layoffs, with the firings wrapping in the fourth quarter of 2015. That dollar figure is roughly equivalent to the company’s first-quarter net loss, using standard accounting techniques.

A reduced cost structure, a revenue beat, a return-of-the-CEO, and new games are a formula that investors appear to cheer. For the employees that get to stay, Zynga seems healthier than it has in some time. For the employees whose exit will lead to the financial structure that might help the company work towards GAAP profits? Well, it’s different.

Zynga is a company famous for its early work on the Facebook platform that missed the boat on mobile. However, the company, not unlike Facebook itself, has picked up the mobile game: In the first quarter, Zynga generated 63 percent of its bookings from mobile. As the company said, that figure is up 84 percent from the prior year. The result of the result is that Zynga can call itself a mobile company without blushing.

It’s a good quarterly result for — most — of Zynga. And about time at that.


Sun, 12 Apr 2015 17:32:24 +0000
Zynga Pops On Q1 Revenue Beat, Plans To Fire Lots Of People
We've found the tech company that isn't hiring.Zynga reported its first-quarter financial performance today following the bell, sending its shares skyrocketing as investors cheered its revenue beat and plans to cut around 18 percent of its workforce.

Twitter just gave the bird to startups, and I am not talking about their logo.

By now, you have probably heard that Twitter is going to cut off third-party access to its firehose of data. DataSift, one of several startups that rely on this access for their business, are now scrambling to reassure customers that their product is going to continue to work. “Blindsided” is how DataSift’s CEO Nick Halstead described his reaction.

Twitter, of course, has a right to shut off access to its platform at any time – they do own it after all. But it was definitely a Dick (Costolo) move.

Startups developed their products on top of Twitter’s platform after being aggressively courted by the company in recent years as a solution to the social network’s continuing profitability and growth problems. The idea was that while Twitter would control its end-user clients, startups were free and encouraged to build datasets and analytics packages on top of Twitter’s data. Now, Twitter is building out its own function in-house through its acquisition of Gnip.

But that may not even be the worst news this week. Mark Pincus, the founder of Zynga, is returning to the company following quarters of disappointing earnings. Discussion was mostly positive among the Valleyerati, as this tweet typifies:

I understand the Jobsian sentiment, but really, why is that the case here? This is the CEO who led Zynga to have among the most hostile work cultures in Silicon Valley, if its workplace reviews are any indication. The low morale and and long hours have become so notorious that it has led to such headlines as “Zynga’s Tough Culture Risks a Talent Drain” and “One Horrifying Account Of Working At Zynga.” Maybe things have gotten better since Pincus left, but as an employee, I would not be thrilled to have him returning.

Even worse than how Zynga treated its employees was how it treated other startups. The company became notorious under Pincus for copying successful games, most notably Tiny Tower, which was published by NimbleBit. After the small studio refused a takeover offer, Zynga simply made their own game called Dream Heights, whose similarities were truly breathtaking to behold.

Maybe Pincus has reformed since he walked out as CEO several years ago. But few seem to believe that, with the stock falling more than 8% after the announcement was made. If anyone can identify a Sith Lord coming home, its Wall Street.

We can argue that all of this is just competition and capitalism doing its job. It’s not like investment banks on Wall Street are cuddly feel-good places that want to make just a few dollars and then go home and relax with their competitors. DataSift chose to be dependent on Twitter, bad move. Game developers –- Zynga is coming for you, and they have more money so you might as well just take that buyout when it comes or they will destroy you. It’s a dangerous world out there, young padawan.

Silicon Valley’s success, not just against other economic regions in America, but also against other innovation centers around the world, comes from the incredible levels of trust that exist here. Yes, there is competition, but designers from Lyft and Uber can still go to the same event and share best practices. There is a camaraderie here that comes from the pursuit of the future that is above cutthroat month-to-month revenue growth figures and our selfish desire to win.

That trust is endangered every time a company decides to rip off another idea, or simply jettisons their API access program without warning. It increases our paranoia and vulnerability, and those are not the kinds of emotions that are going to help us innovate and build the next-generation of great products.

Just a few weeks ago, I argued that Silicon Valley had become the most powerful single economic force in the world. What I tried to avoid then was bringing up the classic line that power corrupts and absolute power corrupts absolutely. I avoided it because I want to believe that we are better than all of our predecessors in this position, industries like banking which massively profited and then left the global economy in tatters. Technology is one space that is both highly-profitable and can make the world a better place.

As competition intensifies in our region though, it is hard to maintain trust. Google had no real competitors in its rise to power, and neither did Facebook. Today, companies can barely get started before a myriad of startups are competing for the same space (just take a look at the battle between Uber, Lyft and Sidecar). Increased competition forces us to focus more on our present state rather than the future, the exact opposite conditions required for confidence and trust.

Furthermore, as the number of people in our industry increases, the sort of community social ties that ensure we maintain trust and honor also decline. There are now enough founders that no VC or journalist can ever possibly meet them all, much less get to know them and understand their dreams and challenges. With less social inhibition, we just start seeing everyone else as the other, and do whatever it takes to win.

I am focusing on two cases, and maybe Twitter’s behavior this week and Zynga’s past behavior are highly unusual. One can hope that they are not indicative of what the future has in store.

Part of building trust though is ostracizing those who abuse it. If you are interviewing at Twitter and Zynga in the coming weeks, ask your interviewers for a response to their actions. Apply elsewhere if you don’t like their answers. Trust is what built up Silicon Valley over the past few decades of the internet age, and wary of the rise of the dark side we must be.


Fri, 10 Apr 2015 20:21:49 +0000
The Valley Of The Sith Lords
Twitter just gave the bird to startups, and I am not talking about their logo. By now, you have probably heard that Twitter is going to cut off third-party access to its firehose of data. DataSift, one of several startups that rely on this access for their business, are now scrambling to reassure customers that […]

Welcome to another Friday and another episode of CrunchWeek. This week we had a treat in that two-thirds of our staff’s Sarahs sat down to dig in and rake over the news.

We presume that you are bleary eyed due to staying up all night trying to fend off both nerds and tech press — redundant though the juxtaposition may be — to order an Apple watch. Also popping this week was Zynga’s share price, in the negative direction, and HBO Now has finally come out to the joy of Millennials and “Game of Thrones” fans. But again, same difference.

So pour something stiff, sit on something soft, and sip along with us as we repine our way into the weekend.


Wed, 08 Apr 2015 21:07:13 +0000
CrunchWeek: Apple Built A Watch, Zynga Recycles CEOs, And HBO Cuts The Cord
Welcome to another Friday and another episode of CrunchWeek. This week we had a treat in that two-thirds of our staff’s Sarahs sat down to dig in and rake over the news. We presume that you are bleary eyed due to staying up all night trying to fend off both nerds and tech press — redundant though […]

He’s back. Today, following the cessation of trading, Zynga announced that its former CEO Mark Pincus will return to the role. Now-prior CEO Don Mattrick is out of two chairs: The one atop the company’s leadership structure and his seat on the board.

The company’s shares fell more than 10 percent in the wake of the news, but have since recovered to a more modest negative 8 percent. Investors do not appear wildly enthused about the change, perhaps for no other reason than the fact that leadership transitions are often sufficient smoke to call fire.

Zynga has been improving from a financial perspective for some time. The company recently reported several quarters of revenue growth, and narrowing losses on both dollar and per-share terms. Zynga remains well-capitalized.

In a statement, Pincus noted that under Mattrick’s leadership, the company grew its mobile bookings to 60 percent of revenue from 27 percent when the  joined. Zynga is infamous for being slow to transition from Facebook’s platform to the mobile gaming revolution that we continue to experience as an industry.

Before the news was announced, Zynga was worth $2.57 billion. Presuming a 10 percent loss on the news, Zynga’s value will remain comfortably over the $2 billion mark.

The news came as a surprise. The installation of Mattrick as leader after he didn’t win CEO Bingo at Microsoft wasn’t wildly shocking. That the executive would depart this quickly is more notable. A source familiar with Mattrick’s time at Microsoft told TechCrunch that the executive was intelligent and well-liked. It isn’t clear what precipitated the change.

For now, Zynga has its old leader back to direct the company out of the cold.


Fri, 27 Mar 2015 14:30:14 +0000
Zynga Drops 8% After Hours On News That Former CEO Mark Pincus Will Return To Lead The Firm
He's back. Today, following the cessation of trading, Zynga announced that its former CEO Mark Pincus will return to the role. Now-prior CEO Don Mattrick is out of two chairs: The one atop the company's leadership structure and his seat on the board. The company's shares fell more than 10 percent in the wake of the news, but have since recovered to a more modest negative 8 percent. Investors do not appear wildly enthused about the change, perhaps for no other reason than the fact that leadership transitions are often sufficient smoke to call fire.

Editor’s Note: Fabrice Grinda is an Internet entrepreneur, angel investor, and co-founder of OLX, one of the largest free classifieds sites in the world. This piece is excerpted from a larger report due to be posted on Grinda’s site, Musings of an Entrepreneur

As the first quarter of 2015 draws to a close, it’s clear that the venture capital industry is evolving.

Since 2005, thousands of new millionaires have been minted by the IPOs of Alibaba Group, Lending Club, Go Pro, Box, Zendesk, Facebook, Pandora, Zynga, Linkedin, Homeaway, Zipcar and countless others.

Many of those have become angel investors, a path facilitated by the emergence of Angel List and Funders Club.

Incubators are also proliferating and investing more than ever before: Techstars, 500 Startups and many others have appeared on the scene and Y Combinator classes are bigger than ever. The spring 2015 Y Combinator class has well over 100 startups! Even the emergence of Kickstarter and other crowdfunding startups is tilting the tables in favor of entrepreneurs.

It is surreal to observe investors with no technology experience commit millions in startups after a 2 minute pitch at Y Combinator demo days.

The number of startups and entrepreneurs is also proliferating.The clearest and scariest sign of this bubbliness is seeing investment bankers, management consultants and others, who never normally consider entrepreneurship, join or create startups. This is typically a clear sign that we may be nearing the peak of the investment cycle.

The amount of seed stage capital available has increased more than the amount of startups pushing up valuations, especially for those that somehow become hot (which at the seed stage is not always correlated with actual traction).

This is reflected in the type of deals, we are seeing as angel investors at the seed stage.

I am glad that uncapped notes that peaked in 2013 seem to be mostly on their way out. They were the reason we only made 20 investments in 2013 vs. 41 in 2014. However, valuations of seed stage startups with limited traction out of Y Combinator have dramatically increased to $8-12 million.

It is surreal to observe investors with no technology experience commit millions in startups after a 2 minute pitch at Y Combinator demo days. The YC demo day non-withstanding, we are not in a bubble yet.

Having lived through the bubble, I remember clearly companies with no revenues going public and being worth billions, if not tens of billions of dollars. Today’s top companies like Uber and Airbnb may appear expensive, but they have billions in revenues, are growing extremely rapidly (they are some of the fastest growing companies in history from a revenue perspective) and have real business models.

As global interest rates are at record lows, people are yield chasing. As the tech sector is one of the engines of growth and wealth creation it’s experiencing what Henry Blodget defines as a boom.

bubble

Despite Frothiness At The Earliest Stages, Later Stage Opportunities Abound

While there has been seed stage inflation, it only appears ridiculous for YC companies. The valuation of seed stage companies out of Techstars, 500 Startups or entrepreneur-led are more reasonable, albeit significantly higher than 5-10 years ago.

This is by no means a criticism of YC. They select amazing entrepreneurs who build amazing companies many of which we end up backing either out of YC or at later stages – especially if they are in categories where we feel we can bring a lot of value.

We are not in a bubble yet.

At the same time venture firms are moving to later stages. Many of the firms that used to raise $100-400 million funds to write $4-8 million Series A checks have now raised $500+ million funds and sometimes $1+ billion funds. They are realizing that they need to invest larger checks, pushing them naturally to later stages.

This is creating lots of competition for later stage deals and allowing breakout seed companies to bypass the traditional Series A completely and raise large rounds at what used to be Series B valuations. However, many companies that do well, but not extraordinarily well have a hard time raising Series A money given that you have many more seed fund startups chasing fewer Series A dollars.

Large seed extensions have now become common as well as Series A rounds led by lesser known firms. Rather than investing in a team and product with no traction in a note with a $10-12 million cap, we now often wait 6-12 months for the company to be doing $150 – $500k / month in gross sales and join the seed extension or series A which ends up being priced at $12-20 million – a small premium we are more than happy to pay given that the business is now more proven.

Entrepreneurs would do well to remember that 99% of startups sell for less than $30 million, many for less than $10 million.

We will also pay up for breakout companies. We remain unit-economics driven and price sensitive, but will bend that price sensitivity rule if the company is growing by leaps and bounds and we can reasonably expect it to grow into its valuation – especially with the capital that it is raising.

Entrepreneurs would do well to remember that 99% of startups sell for less than $30 million, many for less than $10 million. Entrepreneurs think that raising money at a high valuation or with a high cap is a badge of honor, but raising money at a high valuation also prices you out of exits and makes it harder to raise follow-on capital.

Companies Are Staying Private Longer

Companies used to go public once they were worth a few hundred million dollars.

IPO Market Capitalization:

If anything Apple’s market capitalization of $1.78 billion at IPO in 1980 was the exception. These days the very best companies stay private much longer. Facebook went public at a $100 billion valuation in 2012, 8 years after it was created. Alibaba Group went public in 2014 at a $225 billion valuation, 15 years after its creation.

According to the NVCA, the average time for a venture-backed company to IPO has gone from 3.1 years in 2000 to 7.4 years in 2013. The very best companies like Uber and Airbnb are raising money at tens of billions of dollars in valuation to stay private longer. If anything the companies that are going public at $1 billion valuations like Box seem to be the ones that have no financing alternatives.

As a result there are more private companies worth $1 billion or more than ever before.

tech-ipo-pipeline-chart

This makes eminent sense. The explicit and implicit costs of going public have increased dramatically. As an Internet entrepreneur I used to dream of taking my company public. No longer!

At the same time, the cost of staying private longer have decreased dramatically:

Historically the arrival of non-traditional actors has been the harbinger that we are near the peak of a bubble. However, this time may actually be different. Public market actors feel they must enter the private market because the value that used to accrue to public investors (e.g.; Microsoft’s increase in value from $500 million to $336 billion) is now accruing to private investors. Public investors in Facebook only saw a 2.2x return from $100 billion to $220 billion. Private investors at every stage got the vast majority of the upside.

Unless there are major changes in the rules for going public, this trend seems here to stay.

Global Macroeconomic And Political Factors Mean More Attention To US Companies

Charts.001

Beyond a rebalancing of our US investments from NY to San Francisco and Silicon Valley, we changed our global investment mix to focus much more in the US. Until 2012, only 48% of our investments were in the US. France, Brazil, the UK and Russia combined accounted for 36% of our investments. 

Before 2012

 

and_then

However in 2014, 70% of our investments were in the US. We were only reasonably active in Germany (15% of the investments) and merely opportunistic in other countries.

2014

2014

This change was very deliberate. We observed the economic and political mistakes that various countries were making and decided to lower our involvement there:

By contrast, the US has once again become the engine of the world economy. The US has benefited from decreases in manufacturing costs brought about by the fracking and shale oil revolution, productivity increases driven by the technology sector, and increases in spending by corporations and households as their balance sheets have been repaired,

The US startup ecosystem is more robust than ever.

An Internet ecosystem has the following components:

The US already benefited from the strength of the fully fledged Silicon Valley Internet ecosystem. Capital is available for companies of every size and exits happen at every point in the life of a company.

In most countries there are entrepreneurs and angels, but a real lack of Series A & B capital. American investors find you again once you cross $100 million in value, but getting the capital to get there is difficult. At the same time, exits are often limited to companies that become large enough that they attract American acquirers or can go public. By definition this only happens to a small subset of startups.

Only Beijing and Berlin have reasonably robust ecosystems outside of the US. It’s also why we focused our investments in Germany and large markets like Brazil where the domestic markets are large enough that the companies can reach $100+ million in value.

In addition to the macro-economic tailwinds pushing the US, the recent evolution of the Internet market has made the American startup ecosystem more robust than ever before:

 


Thu, 19 Mar 2015 17:51:03 +0000
A Super Angel’s View On Venture Capital In 2015
As the first quarter of 2015 draws to a close, it's clear that the venture capital industry is evolving.Since 2005, thousands of new millionaires have been minted by the IPOs of Alibaba Group, Lending Club, Go Pro, Box, Zendesk, Facebook, Pandora, Zynga, Linkedin, Homeaway, Zipcar and countless others.

Remember the early days of web surfing? You’d be happily browsing through your favorite sites, clicking links – then, boom! – your screen was littered with pop-up advertisements! The problem became so prevalent, people began installing pop-up blocking software on their PCs as a solution to the ongoing annoyance. Today, as users make the transition to mobile, a new irritation is beginning to take hold – web links that unexpectedly redirect you from your browser to the app store, or even those that immediately launch mobile apps themselves.

And this time, there’s no third-party solution you can use to address the problem. Instead, mobile consumers will have to rely on companies like Apple and Google to shut down the loopholes that advertisers and others are now abusing. But sometimes, there’s nothing the OS makers themselves can even do about the problem, it seems.

The Return Of The Auto-Redirect Ad

We first made mention of this problem last year when a number of mobile users began to experience problems that involved them automatically being redirected to the iTunes App Store or Google Play when they were only trying to click a link and read a news article, for example, or use one of the mobile apps they already had installed on their phone.

At the time, a number of high-profile companies were impacted by the problem, including Imgur, the AP, NBC, Hearst properties, various newspaper sites and blogs, eBay, Perez Hilton, SomethingAwful, WeatherUnderground, TwitPic, Cheezburger.com, Slickdeals, Twitchy, NHL, and many others. And unfortunately, it wasn’t the first time this sort of abuse took place, either – it just came to a head because so many popular online destinations were affected around the same time.

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The problem had to do with shady third-party ad networks that would run auto-redirecting ads on the sites and apps, which were hard for the properties themselves to detect or block because the advertisers would sometimes change their ad to behave this way after it was approved. Plus, some networks would sometimes buy inventory from others, blurring the line as to who’s responsible for the rogue ads in the first place.

Apple addressed this particular problem with an updated beta release of iOS 8 last year, preventing ads from automatically redirecting people to the App Store without user interaction first taking place.

But in recent days, the same problem has popped up again. According to information provided by AraLabs, which researches advertising fraud, they identified another case of the infamous automatic App Store redirect in the wild. That seems to indicate the fix provided by Apple either wasn’t fully viable (or it never actually made it into the full iOS 8 release).

The current redirect they uncovered is being used by Zynga, which redirects users to their apps from online ads. In one example, they found that Slate was one of the affected publishers. They were serving an ad hosted on the AppNexus platform which was causing the problem. (AppNexus has since pulled the offending ad, and is following up with Clove Network, the responsible ad network).

AraLabs details the technique involved with the auto-redirect in a blog post on its site, which is fairly technical to delve into here. But company CTO Hadi Shiravi explains to us that the technique itself is still “very much working” and can be used by any ad network today.

“It would be extremely difficult to solve this problem on Apple’s side since differentiating between this redirect and other redirects is not trivial,” he also notes.

AraLabs isn’t the only one to uncover the resurgence of this nasty ad problem.

A post on the blog 9to5Mac this week also referenced the return of the auto-redirect advertisements, and even included a video of the issue in action. Writes Benjamin Mayo for the site, “I am now experiencing this myself, and it makes browsing on the iPhone unusable. Browsing to websites such as Reddit and Reuters and others now automatically open the App Store. In many cases, there is no way for me to read the actual content on the pages,” he says.

Shiravi confirms that what Mayo is seeing are the auto-redirect ads AraLabs had described. And because this is an ad network problem, it’s going to be difficult for Apple to do anything to fix it, he says.

Advertisers Aren’t The Only Ones Forcing Web Users Into Native Apps

Unfortunately, advertisers aren’t the only ones abusing the ability to use redirects to take web surfers directly to mobile applications unexpectedly. In some cases, businesses themselves have taken advantage of new technologies to push mobile web users into their native apps (as opposed to the app store app), even when that wasn’t the users’ intent.

According to mobile ad technology firm Tapstream, Pandora last year began abusing Android’s “intents,” which allowed them to send mobile users who visited Pandora.com to their native application instead. Google noticed the problem and filed it as a bug. But it wasn’t really a bug – Pandora was just taking advantage of technology that allowed it to identify who already had the app installed on their phone, then take them straight into the native mobile app.

Google confirms to us it has just addressed this specific problem in the latest release of its mobile Chrome browser, which no longer allows these sorts of links (deeplinks, as they’re called) to be triggered by a web page unless there’s been some sort of user interaction first. That means that an unsuspecting web surfer won’t be able to type in a search box, then find themselves automatically shuffled off into a mobile app, but it doesn’t mean that Google is ending support for deep linking.

Google search results on mobile today include links that take Android users directly to pages within mobile applications as the company is working to make a transition from being a company that organizes and makes searchable the worldwide web to one that indexes the world of mobile apps and the information they contain. But in these cases, Google says the links are highlighted as being those that take users to apps – users aren’t surprised by those clicks. (Well, they might be, but at least they’re being disclosed.)

Chrome developer advocate Paul Kinlan describes the company’s solution to this redirect problem in technical detail, also explaining Google’s philosophy behind the matter.

“If a user enters a URL into the address bar of the system, then the intention of the user is to visit the page in question,” he says. “We don’t believe that the user intended to go to the app. Ergo, redirecting the user to the app is a poor user experience.”

While businesses themselves pushing people to their mobile app isn’t quite as abusive as the above-mentioned auto-redirect ads, it can still be a jarring experience for mobile users – which is why it’s a good thing that Google addressed the problem with the changes to Chrome. However, as mobile becomes an increasingly important platform for businesses in general, their desire to push web surfers to native mobile experiences will continue. And that means they’ll likely find other loopholes to exploit in the future. Stay tuned.


Thu, 12 Feb 2015 21:22:30 +0000
Mobile Web Surfers Again Facing Unexpected Redirects To App Store, Native Apps
Remember the early days of web surfing? You'd be happily browsing through your favorite sites, clicking links - then, boom! - your screen was littered with pop-up advertisements! The problem became so prevalent, people began installing pop-up blocking software on their PCs as a solution to the ongoing annoyance. Today, as users make the transition to mobile, a new irritation is beginning to take hold - web links that unexpectedly redirect you from your browser to the app store, or even those that immediately launch mobile apps themselves.

Zynga reported its fourth quarter financial performance today after the bell, including revenue of $192.5 million and earnings per share of $0.00. Investors had expected the company to earn $0.00 on revenue of $201.11 million. The firm also reported bookings in the quarter of $182.4 million.

The company’s flat earnings per share is based on adjusted profit. Using normally accepted accounting methods, Zynga lost $45.13 million, or $0.05 per share. In the year-ago period, Zynga had revenue of $176.36 million, on which it lost $25.24 million, or $0.03 cents per share. So, Zynga grew its revenue by just over 9 percent in the last year.

Zynga announced in its earnings that it will close its games studio in China, impacting 71 employees. The company anticipates savings of $7 million per year.

The company was off around 5 percent today in regular trading, and, following its missed earnings has tanked nearly 10 percent after hours.

On a more positive note, Zynga has cash and equivalents of $1.15 billion, and saw its “monthly mobile consumers” rise 87 percent on a year-over-year basis. So, the company has plenty of cash to keep growing its mobile business.

Zynga, a company that grew massively on the back of Facebook’s platform years ago, struggled to execute a shift to mobile gaming. The company’s revenue’s slid from north of $300 million, to under $200 million. The company hired a new CEO, Don Mattrick, from Microsoft to aid in its turn around.

International revenue, as compared to top line from domestic sources, totaled 35 percent, a figure that is inside the normal band of deviation for the gaming company.

On the vanity metric side of GAAP, Zynga reported that it had 25 million daily active users (DAUs), and 108 million monthly active users (MAUs). Those compare to the sequentially preceding quarter’s 26 million, and 112 million, respectively.

The company’s revenue miss does not fully explain why Zynga is down as sharply as it is in after-hours trading. The rest of that answer guidance. The company anticipates that it will generate between $155 and $165 million in revenue, and lose between $60 and $52 million. On an adjusted basis, Zynga expects to lose $0.03 to $0.02 in the current quarter.

Investors had anticipated that it would report flat adjusted profit, and revenue of $200.87 million. Ouch.


Fri, 12 Sep 2014 17:42:47 +0000
Zynga Drops 9% After Its $192M Q4 Revenue And Guidance Disappoint
Zynga reported its fourth quarter financial performance today after the bell, including revenue of $192.5 million and earnings per share of $0.00. Investors had expected the company to earn $0.00 on revenue of $201.11 million. The firm also reported bookings in the quarter of $182.4 million. The company’s flat earnings per share is based on adjusted […]

Andy Kleinman, who was chief business officer at Los Angeles-based gaming company Scopely and a general manager at Zynga, left the company to start a mobile products-focused studio called MobLabs.

Kleinman previously co-founded Vostu, a Latin American social gaming company, and later joined Three Melons, a studio that was acquired by Playdom (which was later acquired by Disney). Then he later went onto serve as a general manager at Zynga, before jumping into Scopely, which publishes and distributes mobile games.

“What I wanted to do was get out of games,” Kleinman said. “It’s been too many years of games.” This is funny because that’s literally what he said after he left Zynga too.

Kleinman said he wasn’t able to share too many specifics about what MobLabs is working on.

It’s a studio that’s intended to build and launch mobile products for massive audiences. That conceptually doesn’t sound too different from the kinds of incubators that others like Kevin Rose are building with North. MobLabs has 14 people total on the team and they’re spread out from the U.S. to China. There are three other co-founders, but Kleinman said they’re still finalizing their paperwork. The team has experience at companies like Zynga, Scopely, Disney and Yahoo.

“I was thinking about how to leverage all the stuff I learned from games,” he said. “I thought, why don’t we put a team together with competencies around these areas in mobile.”


Wed, 30 Jul 2014 12:36:59 +0000
Zynga, Scopely Exec Leaves To Start Mobile Studio MobLabs
Andy Kleinman, who was chief business officer at Los Angeles-based gaming company Scopely and a general manager at Zynga, left the company to start a mobile products-focused studio called MobLabs.Kleinman previously co-founded Vostu, a Latin American social gaming company, and later joined Three Melons, a studio that was acquired by Playdom (which was later acquired by Disney). Then he later went onto serve as a general manager at Zynga, before jumping into Scopely, which publishes and distributes mobile games.

Three former Zynga developers have raised $2.5 million to build out their new gaming studio, JuiceBox Games, on the back of the release of their first gaming title HonorBound.

With 3 million downloads and counting, JuiceBox’s first game is already generating revenue for the company. The game is ranked 94 on the list of top-grossing apps with a daily revenue estimate of $14,726 and 2,261 daily downloads, according to the site, ThinkGaming.

Those numbers were attractive enough to ensnare a clutch of top venture capital investors like Initial Capital, General Catalyst, Index Ventures, and Maveron, and individual investors like Zynga founding team member Scott Dale and former Electronic Arts chief executive John Riccitiello.

The investment comes even as many venture capital firms have seemingly soured on the gaming market. “This was my first time raising money for a company and it seemed really hard to raise money for this,” says Michael Martinez, the JuiceBox Games chief executive and founder.

Martinez previously worked as a senior product manager at Zynga, developing the Zynga Poker and FarmVille franchises, and was one of the first employees at the company working on its breakout FarmVille 2 hit. Joining him in the JuiceBox are two other Zynga veterans; Jason McGuirk, who serves as the company’s chief technology officer and its creative director, Zak Pytlak.

Screen Shot 2014-07-30 at 8.30.16 AM“If there was a team that people should invest in or place a bet on it would be us,” says Martinez. “I had one VC ask me “How do you become a billion dollar business?” And while I’m confident in our plan to get to hundreds of millions of dollars in revenue, for that next step we’ll just have to see.”

While the fundraising process was an education for Martinez, at least one of his investors needs no lessons in the potential money that exists in the gaming world. Index Ventures has seen some big wins with Supercell and King.

“It is a hits-driven business,” Martinez says of the gaming industry. “When you make a good enough game, which still absolutely comes down to the team and the game itself, it can produce numbers that allow the game to grow incredibly.”

So what is the game? With its first title, JuiceBox drew inspiration from Asian card-based games like Pokemon and the blood-soaked world depicted in HBO’s “Game of Thrones”.

Players put together a cadre of heroes and then travel through the HonorBound world looking to conquer territory and defeat other cadres of characters. There’s also an asynchronous multi-player aspect to the game where players can challenge each other.

The company says it created more than 500 character art pieces in its in-house studio to make the game seem more animated — a nod to the company’s target audience of mid-core gamers (folks who tend to spend a lot of time playing games, but aren’t buying gear and spending hours in front of screens).

Part of the reticence from investors in backing gaming companies stems from the sheer profusion of games now available on Android, Amazon, and iOS.

“It is terrifying to how many games are being released on a weekly basis,” says Martinez. “I went to GDC right after our game launched and I was like… holy shit. Thank god I didn’t go to these conferences and see how many games are launched.”

However, 90% of those games don’t have a chance, according to Martinez. “Either the team is too small, the game isn’t designed well, or the business behind the game is fundamentally flawed.”

And it’s not as if there aren’t recent examples of highly successful games launching in app stores.

While the game is free to play and gamers can advance naturally through HonorBound without having to pay for anything, JuiceBox does have ways to separate players from their cash. PLayers are able to buy heroes in the game, instead of having to capture them, or buy experience, resources and tools, and money. “Everything is for sale, but nothing is only for sale,” says Martinez.

That business model is an extension of the lessons that Martinez and his crew learned at Zynga. “Our team grew up together making social games at Zynga. We understand how to apply the freemium model, and are applying it to these new games that we love to play.”


Wed, 09 Jul 2014 20:00:11 +0000
Ex-Zynga Developers Land $2.5 Million For New Studio JuiceBox Games
Three former Zynga developers have raised $2.5 million to build out their new gaming studio, JuiceBox Games, on the back of the release of their first gaming title HonorBound.With 3 million downloads and counting, JuiceBox's first game is already generating revenue for the company. The game is ranked 94 on the list of top-grossing apps with a daily revenue estimate of $14,726 and 2,261 daily downloads, according to the site, ThinkGaming.Those numbers were attractive enough to ensnare a clutch of top venture capital investors like Initial Capital, General Catalyst, Index Ventures, and Mavron, and individual investors like Zynga founding team member Scott Dale and former Electronic Arts chief executive John Riccitiello.

Zynga is announcing a new addition to its board of directors — Regina E. Dugan, vice president of engineering and head of the Advanced Technology and Projects group at Google.

In a memo sent to the company’s employees, CEO Don Mattrick said Dugan will be “a true catalyst for creative thinking at Zynga.” As highlighted at the recent Google I/O developer conference, Dugan’s team is working on projects like a temporary electronic tattoo that can unlock your smartphone. (She described the group as “pirates trying to do epic shit.”)

Before joining Google/Motorola Mobility, Dugan served as director of the Defense Advanced Research Projects Agency, better known as DARPA — she was the agency’s first female leader. Zynga’s press release highlights a bunch of media-related honors as well, but I’m partial to reporter Liz Gannes’ complimentary description: “Google’s Regina Dugan Is a Badass.”

The appointment follows the departure of LinkedIn co-founder Reid Hoffman and DreamWorks Animation CEO Jeffrey Katzenberg from Zynga’s board last month. Those departures meant that Zynga was no longer in compliance with a NASDAQ listing rule that required boards to have a majority of independent directors, as noted in a regulatory filing. With Dugan’s appointment, Zynga should be compliant again. There are now five independent directors (Dugan, Stanley J. Meresman, Sunil Paul, Ellen F. Smirnoff, and John Doerr, who is now the lead independent director). The other board members are founder and chairman Mark Pincus, Bing Gordon and Mattrick.

Dugan will chair the board’s nominating and governance committee and will also be a member of the product committee. In the release, she said:

I believe we need to play. Zynga is full of creative thinkers who embrace the power of play. Einstein famously stated that ‘combinatory play seems to be the essential feature in productive thought,’ and this spirit is embodied in Zynga’s products, which have brought new technology to games. Games that help people connect, share, rest and energize through play. I look forward to working with Don and the board on the company’s next chapter

Despite some high-profile struggles and layoffs, Zynga actually came in slightly ahead of analyst estimates in its most recent earnings report. At the time, it also announced that Pincus (who was replaced by Mattrick as CEO last year) would be stepping down from an operational role at the company.

Update: You can see the regulatory filing related to Dugan’s appointment here. The filing also mentions Mattrick vesting stock as a result of his first anniversary at the company, and a related stock sale “to satisfy the Company’s statutory tax withholding obligations in connection with the vesting of the [restricted stock units].”



Googler, And Former DARPA Director, Regina Dugan Joins Zynga’s Board Of Directors
Zynga is announcing a new addition to its board of directors — Regina E. Dugan, vice president of engineering and head of the Advanced Technology and Projects group at Google.In a memo sent to the company's employees, CEO Don Mattrick said Dugan will be "a true catalyst for creative thinking at Zynga." As highlighted at the recent Google I/O developer conference, Dugan's team is working on projects like a temporary electronic tattoo that can unlock your smartphone. (She described the group as "pirates trying to do epic shit.")
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