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VMware acquires CloudHealth Technologies for multi-cloud management

Published August 27, 2018

VMware is hosting its VMworld customer conference in Las Vegas this week, and to get things going it announced that it’s acquiring Boston-based CloudHealth Technologies. They did not disclose the terms of the deal, but Reuters is reporting the price is $500 million.

CloudHealth provides VMware with a crucial multi-cloud management platform that works across AWS, Microsoft Azure and Google Cloud Platform, giving customers a way to manage cloud cost, usage, security and performance from a single interface.

Although AWS leads the cloud market by a large margin, it is a vast and growing market and most companies are not putting their eggs in a single vendor basket. Instead, they are looking at best of breed options for different cloud services.

This multi-cloud approach is great for customers in that they are not tied down to any single provider, but it does create a management headache as a consequence. CloudHealth gives multi-cloud users a way to manage their environment from a single tool.

CloudHealth multi-cloud management. Photo: CloudHealth Technologies

VMware’s chief operating officer for products and cloud services, Raghu Raghuram, says CloudHealth solves the multi-cloud operational dilemma. “With the addition of CloudHealth Technologies we are delivering a consistent and actionable view into cost and resource management, security and performance for applications across multiple clouds,” Raghuram said in a statement.

CloudHealth began offering support for Google Cloud Platform just last month. CTO Joe Kinsella told TechCrunch why they had decided to expand their platform to include GCP support: “I think a lot of the initiatives that have been driven since Diane Greene joined Google [at the end of 2015] and began really driving towards the enterprise are bearing fruit. And as a result, we’re starting to see a really substantial uptick in interest.”

It also gave them a complete solution for managing across the three of the biggest cloud vendors. That last piece very likely made them an even more attractive target for a company like VMware, who apparently was looking for a solution to buy that would help customers manage across a hybrid and multi-cloud environment.

The company had been planning future expansion to manage not just the public cloud, but also private clouds and data centers from one place, a strategy that should fit well with what VMware has been trying to do in recent years to help companies manage a hybrid environment, regardless of where their virtual machines live.

With CloudHealth, VMware not only gets the multi-cloud management solution, it gains its 3000 customers which include Yelp, Dow Jones, Zendesk and Pinterest.

CloudHealth was founded in 2012 and has raised over $87 million. Its most recent round was a $46 million Series D in June 2017 led by Kleiner Perkins. Other lead investors across earlier rounds have included Sapphire Ventures, Scale Venture Partners and .406 Ventures.

Microsoft is about to announce Xbox All Access subscription

Published August 27, 2018

Microsoft published a news item announcing Xbox All Access on the Xbox blog and then unpublished it. But multiple news outlets spotted the article before Microsoft could take the post down. So now that the cat is out of the bag, it looks like Microsoft’s new hardware and software subscription is real. (Update: Microsoft has published the announcement for real.)

There have been rumors over the past few weeks that Microsoft was planning to announce a new subscription. Today’s announcement lines up with those rumors. Microsoft is launching Xbox All Access in the U.S., which includes a console, Xbox Live Gold and Xbox Game Pass.

You get to choose between an Xbox One S for $22 per month or an Xbox One X for $35 per month. After paying for 24 months, the subscription stops and the console is yours. You can then choose to keep paying for Xbox Live Gold and Xbox Game Pass or you can cancel your subscriptions — it’s your console after all.

So let’s do the math. You can currently buy an Xbox One S for around $299. Xbox Live Gold lets you play multiplayer games and access free games for $60 per year. The Xbox Game Pass lets you download and play games from a library of 100+ games for $9.99 per month — it’s a sort of Spotify for video games.

If you buy a console and subscribe for two years, you’ll end up paying around $659. An Xbox All Access subscription lets you save around $130. If you already planned on subscribing to those two services, it sounds like a good deal. If you didn’t really care about Xbox Game Pass, you’ll end up paying more than buying a console the normal way.

The Xbox One X currently costs around $499. If you add two years of Xbox Live Gold and Xbox Game Pass, the bottom line is $859. Two years of Xbox All Access with the Xbox One X costs $840. So it’s not that good a deal if you’re interested in the Xbox One X.

With this new offering, Microsoft shows that it wants to shift its gaming strategy to subscriptions. Buying a console every few years isn’t as lucrative as buying an all-in-one Xbox subscription. Subscriptions increase customer loyalty and create predictable recurring revenue.

More importantly, gaming consoles won’t stick around forever. At some point, games will run on expensive servers in the cloud and you’ll subscribe to a service. Rumor has it that Microsoft is already getting ready to launch a low-powered system to stream games from the cloud. This is what Microsoft is thinking about with Xbox All Access.

Rebuilding employee philanthropy from the bottom up

Published August 26, 2018

In tech circles, it would be easy to assume that the world of high-impact charitable giving is a rich man’s game where deals are inked at exclusive black tie galas over fancy hors d’oeuvre. Both Mark Zuckerberg and Marc Benioff have donated to SF hospitals that now bear their names. Gordon Moore has given away $5B – including $600M to Caltech – which was the largest donation to a university at the time. And of course, Bill Gates has already donated $27B to every cause imaginable (and co-founded The Giving Pledge, a consortium of billionaires pledging to donate most of their net worth to charity by the end of their lifetime.)

For Bill, that means he has about $90B left to give.

For the average working American, this world of concierge giving is out of reach, both in check size, and the army of consultants, lawyers and PR strategists that come with it. It seems that in order to do good, you must first do well. Very well.

Bright Funds is looking to change that. Founded in 2012, this SF-based startup is looking to democratize concierge giving to every individual so they “can give with the same effectiveness as Bill and Melinda Gates.” They are doing to philanthropy what Vanguard and Wealthfront have done for asset management for retail investors.

In particular, they are looking to unlock dollars from the underutilized corporate benefit of matching funds for donations, which according to Bright Funds is offered by over 60% of medium to large enterprises, but only used by 13% of employees at these companies. The need for such a service is clear — these programs are cumbersome, transactional, and often offline. Make a donation, submit a receipt, and wait for it to churn through the bureaucratic machine of accounting and finance before matching funds show up weeks later.

Bright Funds is looking to make your company’s matching funds benefit as accessible and important to you as your free lunches or massages. Plus, Bright Funds charges companies per seat, along with a transaction fee to cover the cost of payment processing, sparing employees any expense.

It’s a model that is working. According to Bright Fund’s CEO Ty Walrod, Bright Funds customers see on average a 40% year-over-year increase in funds donated through the platform. More importantly, Bright Funds not only transforms an employee’s relationship to personal philanthropy, but also to the company they work for.

Grassroots Giving

This model of bottoms-up giving is a welcome change from the big foundation model which has recently been rocked by scandal. The Silicon Valley Community Foundation was the go-to foundation for The Who’s Who of Silicon Valley elite. It rode the latest tech boom to become the largest community foundation in eleven short years with generous stock donations from donors like Mark Zuckerberg ($1.8 billion), GoPro’s Nicholas Woodman ($500 million), and WhatsApp co-founder Jan Koum ($566 million). Today, at $13.5 billion, it surpasses the 80+ year old Ford Foundation in endowment size.

However, earlier this year, their star fundraiser Mari Ellen Loijens (credited with raising $8.3B of the $13.5B) was accused of repeatedly bullying and sexually harassing coworkers, allegations that the Foundation had “known about for years” but failed to act upon. In 2017, a similar case occurred when USC’s star fundraiser David Carrera stepped down on charges of sexual harassment after leading the university’s historic $6 billion fundraising campaign.

While large foundations and endowments do important work, their structure relies too much on whale hunting for big checks, giving an inordinate amount of power to the hands of a small group of talented fund raisers.

This stands in contrast to Bright Funds’ ethos — to lead a grassroots movement in empowering individual employees to make their dollar of giving count.

Rebuilding charitable giving for the platform age

Bright Funds is the latest iteration of a lineup of workplace giving platforms. MicroEdge and Cybergrants paved the way in the 80s and 90s by digitizing the giving experience, but was mainly on-premise, and lacked a focus on user experience. Benevity and YourCause arrived in 2007 to bring workplace giving to the cloud, but they were still not turnkey solutions that could be easily implemented.

Bright Funds started as a consumer platform, and has retained that heritage in its approach to product design, aiming to reduce friction for both employee and company adoption. This is why many of their first customers were midsized tech startups with limited resources and looking for a turnkey solution, including Eventbrite, Box, Github, and Contently . They are now finding their way upmarket into larger, more established enterprises like Cisco, VMWare, Campbell’s Soup Company, and Sunpower.

Bright Funds approach to product has brought a number of innovations to this space.

The first is the concept of a cause-focused “fund.” Similar to a mutual fund or ETF, these funds are portfolios of nonprofits curated by subject-matter experts tailored to a specific cause area (e.g. conservation, education, poverty, etc.). This solves one of the chief concerns of any donor — is my dollar being put to good use towards the causes I care about? Passionate about conservation? Invest with Jim Leape from the Stanford Woods Institute for the Environment, who brings over three decades of conservation experience in choosing the six nonprofits in Bright Fund’s conservation portfolio. This same expertise is available across a number of cause areas.

Additionally, funds can also be created by companies or employees. This has proven to be an important rallying point for emergency relief during natural disasters, where employees at companies can collectively assemble a list of nonprofits to donate to. In 2017, Cisco employees donated $1.8 million (including company matching) through Bright Funds to Hurricanes Harvey, Maria, and Irma as well as the central Mexico earthquakes, the current flooding in India and many more.

The second key feature of their product is the impact timeline, a central news feed to understand where your dollars are going across all your cause areas. This transforms giving from a black box transaction to an ongoing dialogue between you and your charities.

Lastly, Bright Funds wants to take away all the administrative burden that might come with giving and volunteering — everything from tracking your volunteer opportunities and hours, to one-click tax reporting across all your charitable donations. In short, no more shoeboxes of receipts to process through in April.

Doing good & doing well

Although Bright Funds is focused on transforming the individual giving experience, it’s paying customer at the end of the day is the enterprise.

And although it is philanthropic in nature, Bright Funds is not exempt from the procurement gauntlet that every enterprise software startup faces — what’s in it for the customer? What impact does workplace giving and volunteering have on culture and the bottom line?

To this end, there is evidence to show that corporate social responsibility has a an impact on recruiting the next generation of workers. A study by Horizon Media found that 81% of millennials expect their companies to be good corporate citizens. A separate 2015 study found that 62% of millennials said they’d take a pay cut to work for a company that’s socially responsible.

Box, one of Bright Fund’s early customers, has seen this impact on recruiting firsthand (disclosure: Box is one of my former employers). Like most tech companies competing for talent in the Valley, Box used to give out lucrative bonuses for candidate referrals. They recently switched to giving out $500 in Bright Funds gift credit. Instead of seeing employee referrals dip, Box saw referrals “skyrocket,” according to Box.org Executive Director Bryan Breckenridge. This program has now become “one of the most cherished cultural traditions at Box,” he said.

Additionally, like any corporate benefit, there should be metrics tied to employee retention. Benevity released a study of 2 million employees across 118 companies on their platform that showed a 57% reduction in turnover for employees engaged in corporate giving or volunteering efforts. VMware, one of Bright Fund’s customers, has seen an astonishing 82% of their 22,000 employees participate in their Citizen Philanthropy program of giving and volunteering, according to VMware Foundation Director Jessa Chin. Their full-time voluntary turnover rate (8%) is well below the software industry average of 13.2%.

Towards a Brighter Future

Bright Funds still has a lot of work to do. CEO Walrod says that one of his top priorities is to expand the platform beyond US charities, finding ways to evaluate and incorporate international nonprofits.

They have also not given up their dream of becoming a truly consumer platform, perhaps one day competing in the world of donor-advised funds, which today is largely dominated by big names like Fidelity and Schwab who house over $85B of assets. In the short term, Walrod wants to make every Bright Funds account similar to a 401K account. It goes wherever you work, and is a lasting record of the causes you care about, and the time and resources you’ve invested in them.

Whether the impetus is altruism around giving or something more utilitarian like retention, companies are increasingly realizing that their employees represent a charitable force that can be harnessed for the greater good. Bright Funds has more work to do like any startup, but it is empowering the next set of donors who can give with the same effectiveness as Gates, and one day, at the same scale as him as well.

For IGTV, Instagram needs slow to mean steady

Published August 25, 2018

Instagram has never truly failed at anything, but judging by modest initial view counts, IGTV could get stuck with a reputation as an abandoned theater if the company isn’t careful. It’s no flop, but the long-form video hub certainly isn’t an instant hit like Instagram Stories. Two months after that launched in 2016, Instagram was happy to trumpet how its Snapchat clone had hit 100 million users. Yet two months after IGTV’s launch, the Facebook subsidiary has been silent on its traction.

“It’s a new format. It’s different. We have to wait for people to adopt it and that takes time,” Instagram CEO Kevin Systrom told me. “Think of it this way: we just invested in a startup called IGTV, but it’s small, and it’s like Instagram was ‘early days.’”

It’s indeed too early for a scientific analysis, and Instagram’s feed has been around since 2010, so it’s obviously not a fair comparison, but we took a look at the IGTV view counts of some of the feature’s launch partner creators. Across six of those creators, their recent feed videos are getting roughly 6.8X as many views as their IGTV posts. If IGTV’s launch partners that benefited from early access and guidance aren’t doing so hot, it means there’s likely no free view count bonanza in store from other creators or regular users.

They, and IGTV, will have to work for their audience. That’s already proving difficult for the standalone IGTV app. Though it peaked at the #25 overall US iPhone app and has seen 2.5 million downloads across iOS and Android according to Sensor Tower, it’s since dropped to #1497 and seen a 94 percent decrease in weekly installs to just 70,000 last week.

Instagram will have to be in it for the long haul if it wants to win at long-form video. Entering the market 13 years after YouTube with a vertical format no one’s quite sure what to do with, IGTV must play the tortoise. If it can avoid getting scrapped or buried, and offer the right incentives and flexibility to creators, IGTV could deliver the spontaneous video viewing experience Instagram lacks. Otherwise, IGTV risks becoming the next Google Plus — a ghost town inside an otherwise thriving product ecosystem.

A glitzy, glitchy start

Instagram gave IGTV a red carpet premiere June 20th in hopes of making it look like the new digital hotspot. The San Francisco launch event offered attendees several types of avocado toast, spa water and ‘Gram-worthy portrait backdrops reminiscent of the Color Factory or Museum of Ice Cream. Instagram hadn’t held a flashy press event since the 2013 launch of video sharing, so it pulled out all the stops. Balloon sculptures lined the entrance to a massive warehouse packed with social media stars and ad execs shouting to each other over the din of the DJ.

But things were rocky from the start. Leaks led TechCrunch to report on the IGTV name and details in the preceding weeks. Technical difficulties with Systrom’s presentation pushed back the start, but not the rollout of IGTV’s code. Tipster Jane Manchun Wong sent TechCrunch screenshots of the new app and features a half hour before it was announced, and Instagram’s own Business Blog jumped the gun by posting details of the launch. The web already knew how IGTV would let people upload vertical videos up to an hour long and browse them through categories like “Popular” and “For You” by the time Systrom took the stage.

IGTV’s launch event featured Instagram-themed donuts and elaborate portrait backdrops. Images via Vicki’s Donuts and Mai Lanpham

“What I’m most proud of is that Instagram took a stand and tried a brand new thing that is frankly hard to pull off. Full-screen vertical video that’s mobile only. That doesn’t exist anywhere else,” Systrom tells me. It was indeed ambitious. Creators were already comfortable making short-form vertical Snapchat Stories by the time Instagram launched its own version. IGTV would have to start from scratch.

Systrom sees the steep learning curve as a differentiator, though. “One of the things I like most about the new format is that it’s actually fairly difficult to just take videos that exist online and simply repost them. That’s not true in feed. That basically forces everyone to create new stuff,” Systrom tells me. “It’s not to say that there isn’t other stuff on there but in general it incentivizes people to produce new things from scratch. And that’s really what we’re looking for. Even if the volume of that stuff at the beginning is smaller than what you might see on the popular page [of Instagram Explore].”

Instagram CEO Kevin Systrom unveils IGTV at the glitzy June 20th launch event

Instagram forced creators to adopt this proprietary format. But it forget to train Stories stars how to entertain us for five or 15 minutes, not 15 seconds, or convince landscape YouTube moguls to purposefully shoot or crop their clips for the way we normally hold our phones.

IGTV’s Popular page features plenty of random viral pap, foreign language content, and poor cropping

That should have been the real purpose of the launch party — demonstrating a variety of ways to turn these format constraints or lack thereof into unique content. Vertical video frames people better than places, and the length allows sustained eye-to-lens contacts that can engender an emotional connection. But a shallow array of initial content and too much confidence that creators would figure it out on their own deprived IGTV of emergent norms that other videographers could emulate to wet their feet.

Now IGTV feels haphazard, with trashy viral videos and miscropped ports amongst its Popular section alongside a few creators trying to produce made-for-IGTV talk shows and cooking tutorials. It’s yet to have its breakout “Chewbacca Mom” or “Rubberbanded Watermelon” blockbuster like Facebook Live. Even an interview with mega celeb Kylie Jenner only had 11,000 views.

Instagram wants to put the focus on the author, not the individual works of art. “Because we don’t have full text search and you can’t just search any random thing, it’s about the creators” Systrom explains. “I think that at its base level that it’s personality driven and creator driven means that you’re going to get really unique content that you won’t find anywhere else and that’s the goal.”

Yet being unique requires extra effort that creators might not invest if they’re unsure of the payoff in either reach or revenue. Michael Sayman, formerly Facebook’s youngest employee who was hired at age 17 to build apps for teens and who now works for Google, summed it up saying: “Many times in my own career, I’ve tried to make something with a unique spin or a special twist because I felt that’s the only way I could make my product stand out from the crowd, only to realize that it was those very twists and spins that made my products feel out of place and confusing to users. Sometimes, the best product is one that doesn’t create any new twists, but rather perfects and builds on top of what has been proven to already be extremely successful.”

A fraction of feed views

The one big surprise of the launch event was where IGTV would exist. Instagram announced it’d live in a standalone IGTV app, but also as a feature in the main app accessible from an orange button atop the home screen that would occasionally call out that new content was inside. It could have had its own carousel like Stories or been integrated into Explore until it was ready for primetime.

Instead, it was ignorable. IGTV didn’t get the benefit of the home screen spotlight like Instagram Stories. Blow past that one orange button and avoid downloading the separate app, and users could go right on tapping and scrolling through Instagram without coming across IGTV’s longer videos.

View counts of the launch partners reflect that. We looked at six launch partner creators, comparing their last six feed and IGTV videos older than a week and less than six months old, or fewer videos if that’s all they’d posted.

Only one of the six, BabyAriel, saw an obvious growth trend in her IGTV videos. Her candid IGTV monologues are performing the best of the six compared to feed. She’s earning an average of 243,000 views per IGTV video, about a third as many as she gets on her feed videos. “I’m really happy with my view counts because IGTV is just starting” BabyAriel tells me. She thinks the format will be good for behind-the-scenes clips that complement her longer YouTube videos and shorter Stories. “When I record anything, It’s vertical. When I turn my phone horizontal I think of an hour-long movie.”

Lele Pons, a Latin American comedy and music star who’s one of the most popular Instagram celebrities, gets about 5.7X more feed views than on her IGTV cooking show that averages 1.9 million hits. Instagram posted some IGTV highlights from the first month, but the most popular of now has 4.3 million views — less than half of what Pons gets on her average feed video.

Fitness guides from Katie Austin averaged just 3,600 views on IGTV while she gets 7.5X more in the feed. Lauren Godwin’s colorful comedy fared 5.2X better in the feed. Bryce Xavier saw the biggest differential, earning 15.9X more views for his dance and culture videos. And in the most direct comparison, K-Pop dancer Susie Shu sometimes posts cuts from the same performance to the two destinations, like one that got 273,000 views in feed but just 27,000 on IGTV, with similar clips fairing an average of 7.8X better.

Again, this isn’t to say IGTV is a lame horse. It just isn’t roaring out of the gates. Systrom remains optimistic about inventing a new format. “The question is can we pull that off and the early signs are really good,” he tells me. “We’ve been pretty blown away by the reception and the usage upfront,” though he declined to share any specific statistics. Instagram promised to provide more insight into traction in the future.

YouTube star Casey Neistat is less bullish. He doesn’t think IGTV is working and that engagement has been weak. If IGTV views were surpassing those of YouTube, creators would flock to it, but so far view counts are uninspiring and not worth diverting creative attention, Neistat says. “YouTube offers the best sit-back consumption, and Stories offers active consumption. Where does IGTV fit in? I’m not sure” he tells me. “Why create all of this unique content if it gets lower views, it’s not monetizable, and the viewers aren’t there?”

Susie Shu averages 7.8X more video views in the Instagram feed than on IGTV

For now, the combination of an unfamiliar format, the absence of direction for how to use it and the relatively buried placement has likely tempered IGTV’s traction. Two months in, Instagram Stories was proving itself an existential threat to Snapchat — which it’s in fact become. IGTV doesn’t pose the same danger to YouTube yet, and it will need a strategy to support a more slow-burn trajectory.

The chicken and the IG problem

The first step to becoming a real YouTube challenger is to build up some tent-pole content that gives people a reason to open IGTV. Until there’s something that captures attention, any cross-promotion traffic Instagram sends it will be like pouring water into a bucket with a giant hole in the bottom. Yet until there’s enough viewers, it’s tough to persuade creators to shoot for IGTV since it won’t do a ton to boost their fan base.

Fortnite champion Ninja shares a photo of IGTV launch partners gathered backstage at the press event

Meanwhile, Instagram hasn’t committed to a monetization or revenue-sharing strategy for IGTV. Systrom said at the launch that “There’s no ads in IGTV today,” but noted it’s “obviously a very reasonable place [for ads] to end up.” Without enough views, though, ads won’t earn enough for a revenue split to incentivize creators. Perhaps Instagram will heavily integrate its in-app shopping features and sponsored content partnerships, but even those rely on having more traffic. Vine withered at Twitter in part from creators bailing due to its omission of native monetization options.

So how does IGTV solve the chicken-and-egg problem? It may need to swallow its pride and pay early adopters directly for content until it racks up enough views to offer sustainable revenue sharing. Instagram has never publicly copped to paying for content before, unlike its parent Facebook, which offered stipends ranging into the millions of dollars for publishers to shoot Live broadcasts and long-form Watch shows. Neither have led to a booming viewership, but perhaps that’s because Facebook has lost its edge with the teens who love video.

Instagram could do better if it paid the right creators to weather IGTV’s initial slim pickings. Settling on ad strategy creators can count on earning money from in the future might also get them to hang tight. Those deals could mimic the 55 percent split of mid-roll ad breaks Facebook gives creators on some videos. But again, the views must come first.

Alternatively, or additionally, it could double down on the launch strategy of luring creators with the potential to become the big fish in IGTV’s small-for-now pond. Backroom deals to trade being highlighted in its IGTV algorithm in exchange for high-quality content could win the hearts of these stars and their managers. Instagram would be wise to pair these incentives with vertical long-form video content creation workshops. It could bring its community, product and analytics leaders together with partnered stars to suss out what works best in the format and help them shoot it.

The cross-promo spigot

Once there’s something worth watching on IGTV, the company could open the cross-promo traffic spigot. At first, Instagram would send notifications about top content or IGTV posts from people you follow, and call them out with a little orange text banner atop its main app. Now it seems to understand it will need to be more coercive.

Last month, TechCrunch tipster Jane Manchun Wong spotted Instagram showing promos for individual IGTV shows in the middle of the feed, hoping to redirect eyeballs there. And today, TechCrunch researcher Matt Navarra found Instagram getting more aggressive by putting a bigger call out featuring a relevant IGTV clip with preview image above your Stories tray on the home screen. It may need to boost the frequency of these cross-promotions and stick them in-between Stories and Explore sections as well to give IGTV the limelight. These could expose users to creators they don’t follow already but might enjoy.

“It’s still early but I do think there’s a lot of potential when they figure out two things since the feature is so new,” says John Shahidi, who runs the Justin Bieber-backed Shots Studios, which produces and distributes content for Lele Pons, Rudy Mancuso and other Insta celebs. “1. Product. IGTV is not in your face so Instagram users aren’t changing behavior to consume. Timeline and Instagram Stories are in your face so those two are the most used features. 2. Discoverability. I want to see videos from people I don’t follow. Interesting stuff like cooking, product review, interesting content from brands but without following the accounts.” In the meantime, Shots Studios is launching a vertical-only channel on YouTube that Shahidi believes is the first of its kind.

Instagram will have to balance its strategic imperative to grow the long-form video hub and avoid spamming users until they hate the brand as a whole. Some think it’s already gone too far. “I think it’s super intrusive right now,” says Tiffany Zhong, once known as the world’s youngest venture capitalist who now runs Generation Z consulting firm Zebra Intelligence. “I personally find all the IGTV videos super boring and click out within seconds (and the only time I watch them are if I accidentally tapped on the icon when I tried to go to my DMs instead).” Desperately funneling traffic to the feature before there’s enough great content to power relevant recommendations for everyone could prematurely sour users on IGTV.

Systrom remains optimistic he can iterate his way to success. “What I want to see over the next six to 12 months is a consistent drumbeat of new features that both consumers and creators are asking for, and to look at the retention curve and say ‘are people continuing to watch? Are people continuing to upload?,’” says Systrom. “So far we are seeing that all of those are healthy. But again trying to judge a very new kind of audacious format that’s never really been done before in the first months is going to be really hard.”

Differentiator or deterrent?

The biggest question remains whether IGTV will remain devout to the orthodoxy of vertical-only. Loosening up to accept landscape videos too might nullify a differentiator, but also pipe in a flood of content it could then algorithmically curate to bootstrap IGTV’s library. Reducing the friction by allowing people to easily port content to or from elsewhere might make it feel like less of a gamble for creators deciding where to put their production resources. Instagram itself expanded from square-only to portrait and landscape photos in the feed in 2015.

“My advice would be to make the videos horizontal. We’ve all come to understand vertical as ‘short form’ and horizontal as ‘long form,’” says Sayman. “It’s in the act of rotating your phone to landscape that you indicate to yourself and to your mobile device that you will not be context switching for the next few minutes, but rather intend to focus on one piece of content for an extended period of time.” This would at least give users more to watch, even if they ended up viewing landscape videos with their phones in portrait orientation.

This might be best as a last-ditch effort if it can’t get enough content flowing in through other means. But at least Instagram should offer a cropping tool that lets users manually select what vertical slice of a landscape video they want to show as they watch, rather than just grabbing the center or picking one area on the side for the whole clip. This could let creators repurpose landscape videos without things getting awkwardly half cut out of frame.

Former Facebook employee and social investor Josh Elman, who now works at Robinhood, told me he’s confident the company will experiment as much as necessary. “I think Facebook is relentless. They know that a ton of consumers watch video online. And most discover videos through influencers or their friends. (Or Netflix). Even though Watch and IGTV haven’t taken the world by storm yet, I bet Facebook won’t stop until they find the right mix.”

There’s a goldmine waiting if it does. Unlike on Facebook, there’s no Regram feature, you can’t post links, and outside of Explore you just see who you already follow on Instagram. That’s made it great at delivering friendly video and clips from your favorite stars, but leaves a gaping hole where serendipitous viewing could be. IGTV fills that gap. The hours people spend on Facebook watching random videos and their accompanying commercials have lifted the company to over $13 billion in revenue per quarter. Giving a younger audience a bottomless pit of full-screen video could produce the same behavior and profits on Instagram without polluting the feed, which can remain the purest manifestation of visual feed culture. But that’s only if IGTV can get enough content uploaded.

Puffed up by the success of besting its foe Snapchat, Instagram assumed it could take the long-form video world by storm. But the grand entrance at its debutante ball didn’t draw enough attention. Now it needs to take a different tack. Tone down the cross-promo for the moment. Concentrate on teaching creators how to find what works on the format and incentivizing them with cash and traffic. Develop some must-see IGTV and stoke a viral blockbuster. Prove the gravity of extended, personality-driven vertical video. Only then should it redirect traffic there from the feed, Stories, and Explore.

YouTube’s library wasn’t built overnight, and neither will IGTV’s. Facebook’s deep pockets and the success of Instagram’s other features give it the runway necessary to let IGTV take off. With 1 billion monthly users, and 400 million daily Stories users gathered in just two years, there are plenty of eyeballs waiting to be seduced. Systrom concludes, “Everything that is great starts small.” IGTV’s destiny will depend on Instagram’s patience.

Amazon isn’t the only tech company getting tax breaks

Published August 25, 2018

Amazon has a big target on its back these days, and because of its size, scope and impact on local business, critics are right to look closely at tax breaks and other subsidies they receive. There is nothing wrong with digging into these breaks to see if they reach the goals governments set in terms of net new jobs. But Amazon isn’t alone here by any means. Many states have a big tech subsidy story to tell, and it isn’t always a tale that ends well for the subsidizing government.

In fact, a recent study by the watchdog group, Good Jobs First, found states are willing to throw millions at high tech companies to lure them into building in their communities. They cited three examples in the report including Tesla’s $1.25 billion 20-year deal to build a battery factory in Nevada, Foxconn’s $3 billion break to build a display factory in Wisconsin and the Apple data center deal in Iowa, which resulted in a $214 million tax break.

Good Jobs First executive director Greg LeRoy doesn’t think these subsidies are justifiable and they take away business development dollars from smaller businesses that tend to build more sustainable jobs in a community.

“The “lots of eggs in one basket” strategy is especially ill-suited. But many public leaders haven’t switched gears yet, often putting taxpayers at great risk, especially because some tech companies have become very aggressive about demanding big tax breaks. Companies with famous names are even more irresistible to politicians who want to look active on jobs,” LeRoy and his colleague Maryann Feldman wrote in a Guardian commentary last month.

It doesn’t always work the way you hope

While these deals are designed to attract the company to an area and generate jobs, that doesn’t always happen. The Apple-Iowa deal, for example, involved 550 construction jobs to build the $1.3 billion state-of-the-art facility, but will ultimately generate only 50 full-time jobs. It’s worth noting that in this case, Apple further sweetened the pot by contributing “up to $100 million” to a local public improvement fund, according to information supplied by the company.

One thing many lay people don’t realize, however, is that in spite of the size, cost and amount of real estate of these mega data centers, they are highly automated and don’t require a whole lot of people to run. While Apple is giving back to the community around the data center, in the end, if the goal of the subsidy is permanent high-paying jobs, there aren’t very many involved in running a data center.

It’s not hard to find projects that didn’t work out. A $2 million tax subsidy deal between Massachusetts and Nortel Networks in 2008 to keep 2200 jobs in place and add 800 more failed miserably. By 2010 there were just 145 jobs left at the facility and the tax incentive lasted another 4 years, according to a Boston.com report.

More recent deals come at a much higher price. The $3 billion Foxconn deal in Wisconsin was expected to generate 3000 direct jobs (and another 22,000 related ones). That comes out to an estimated cost of between $15,000 and $19,000 per job annually, much higher than the typical cost of $2457 per job, according to data in the New York Times.

Be careful what you wish for

Meanwhile states are falling all over themselves with billions in subsidies to give Amazon whatever its little heart desires to build HQ2, which could generate up to 50,000 jobs over a decade if all goes according to plan. The question, as with the Foxconn deal, is whether the states can truly justify the cost per job and the impact on infrastructure and housing to make it worth it?

What’s more, how do you ensure that you get a least a modest return on that investment? In the case of the Nortel example in Massachusetts, shouldn’t the Commonwealth have protected itself against a catastrophic failure instead of continuing to give the tax break for years after it was clear Nortel wasn’t able to live up to its side of the agreement?

Not every deal needs to be a home run, but you want to at least ensure you get a decent number of net new jobs out of it, and that there is some fairness in the end, regardless of the outcome. States also need to figure out the impact of any subsidy on other economic development plans, and not simply fall for name recognition over common sense.

These are questions every state needs to be considering as they pour money into these companies. It’s understandable in post-industrial America, where many factory jobs have been automated away that states want to lure high-paying high tech jobs to their communities, but it’s still incumbent upon officials to make sure they are doing due diligence on the total impact of the deal to be certain the cost is justified in the end.

Fortnite’s Android installer shipped with an Epic security flaw

Published August 25, 2018

Google has clapped back in tremendous fashion at Epic Games, which earlier this month decided to make the phenomenally popular Fortnite available for Android via its own website instead of Google’s Play Store. Unfortunately, the installer had a phenomenally dangerous security flaw in it that would allow a malicious actor to essentially install any software they wanted. Google wasted exactly zero time pointing out this egregious mistake.

By way of a short explanation why this was even happening, Epic explained when it announced its plan that it would be good to have “competition among software sources on Android,” and that the best would “succeed based on merit.” Everyone of course understood that what he meant was that Epic didn’t want to share the revenue from its cash cow with Google, which takes 30 percent of in-app purchases.

Many warned that this was a security risk for several reasons, for example that users would have to enable app installations from unknown sources — something most users have no reason to do. And the Play Store has other protections and features, visible and otherwise, that are useful for users.

Google, understandably, was not amused with Epic’s play, which no doubt played a part in the decision to scrutinize the download and installation process — though I’m sure the safety of its users was also a motivating factor. And wouldn’t you know it, they found a whopper right off the bat.

In a thread posted a week after the Fortnite downloader went live, a Google engineer by the name of Edward explained that the installer basically would allow an attacker to install anything they want using it.

The Fortnite installer basically downloads an APK (the package for Android apps), stores it locally, then launches it. But because it was stored on shared external storage, a bad guy could swap in a new file for it to launch, in what’s called a “man in the disk” attack.

And because the installer only checked that the name of the APK is right, as long as the attacker’s file is called “com.epicgames.fortnite,” it would be installed! Silently, and with lots of extra permissions too, if they want, because of how the unknown sources installation policies work. Not good!

Edward pointed out this could be fixed easily and in a magnificently low-key bit of shade-throwing helpfully linked to a page on the Android developer site outlining the basic feature Epic should have used.

To Epic’s credit, its engineers jumped on the problem immediately and had a fix in the works by that very afternoon and deployed by the next one. Epic InfoSec then requested Google to wait 90 days before publishing the information.

As you can see, Google was not feeling generous. One week later (that’s today) and the flaw has been published on the Google Issue Tracker site in all its… well, not glory exactly. Really, the opposite of glory. This seems to have been Google’s way of warning any would-be Play Store mutineers that they would not be given gentle handling.

Epic Games CEO Tim Sweeney was likewise unamused. In a comment provided to Android Central — which, by the way, predicted that this exact thing would happen — he took the company to task for its “irresponsible” decision to “endanger users.”

Epic genuinely appreciated Google’s effort to perform an in-depth security audit of Fortnite immediately following our release on Android, and share the results with Epic so we could speedily issue an update to fix the flaw they discovered.

However, it was irresponsible of Google to publicly disclose the technical details of the flaw so quickly, while many installations had not yet been updated and were still vulnerable.

An Epic security engineer, at my urging, requested Google delay public disclosure for the typical 90 days to allow time for the update to be more widely installed. Google refused. You can read it all at https://issuetracker.google.com/issues/112630336

Google’s security analysis efforts are appreciated and benefit the Android platform, however a company as powerful as Google should practice more responsible disclosure timing than this, and not endanger users in the course of its counter-PR efforts against Epic’s distribution of Fortnite outside of Google Play.

Indeed, companies really should try not to endanger their users for selfish reasons.

Hear how to build a brand from Tina Sharkey, Emily Heyward and Philip Krim at Disrupt

Published August 24, 2018

For startups, especially e-commerce companies, branding is everything.

A slogan, an ad, even the design of the logo can make the difference between success and failure. But understanding how to develop a brand and strategically evolve that brand over time isn’t the easiest task. Luckily, three experts are coming to Disrupt to talk through the ins and outs.

Red Antler’s Emily Heyward, Brandless’ Tina Sharkey, and Casper CEO Philip Krim will join us at TC Disrupt SF in early September, and it’s a conversation you won’t want to miss.

Emily Heyward cofounded Red Antler in 2007 after working in advertising at Saatchi & Saatchi. She graduated magna cum laude from Harvard with a degree focused on postmodern theory and consumer culture. At Red Antler, she serves as Chief Strategist and has helped brands like AllBirds, BirchBox and Casper find their unique voice in a cluttered market.

Tina Sharkey hails from Brandless, the new e-commerce company that brings its own line of household and food items to the market for $3 each. Brandless has raised nearly $300 million since launching in 2016, an impressive feat on its own. What makes Brandless so attractive to investors? Tina Sharkey’s unwavering focus on understanding her customers. Alongside democratizing these products, and bringing eco-friendly and FDA-approved ‘safer choice’ goods to the masses, Sharkey makes data around consumer behavior a priority at the company, which helps with insights on how to sell Brandless’s portfolio of more than 300 products.

Heyward and Sharkey will be joined by Casper CEO and cofounder Philip Krim. Casper sprung onto the market in 2013 with a relatively simple premise: sell a quality mattress for cheaper. While it makes sense, it’s not the sexiest brand proposition. But with the help of Heyward and Red Antler, and a keen sense of the type of customer who chooses Casper over a traditional mattress, Casper has become one of the most effectively marketed brands out there right now.

We’re thrilled to hear from this trio of greatness at Disrupt SF.

Check out the full agenda here. Tickets are still available even though the show is less than two weeks away. Grab one here.

A majority of U.S. teens are taking steps to limit smartphone and social media use

Published August 24, 2018

It’s not just parents who are worrying about their children’s device usage. According to a new study released by Pew Research Center this week, U.S. teens are now taking steps to limit themselves from overuse of their phone and its addictive apps, like social media. A majority, 54% of teens, said they spend too much time on their phone, and nearly that many – 52% – said they are trying to limit their phone use in various ways.

In addition, 57% say they’re trying to limit social media usage and 58% are trying to limit video games.

The fact that older children haven’t gotten a good handle on balanced smartphone usage points to a failure on both parents’ parts and the responsibilities of technology companies to address the addictive nature of our devices.

For years, instead of encouraging more moderate use of smartphones, as the tools they’re meant to be, app makers took full advantage of smartphones’ always-on nature to continually send streams of interruptive notifications that pushed users to constantly check in. Tech companies even leveraged psychological tricks to reward us each time we launched their app, with dopamine hits that keep users engaged.

Device makers loved this addiction because they financially benefited from app sales and in-app purchases, in addition to device sales. So they built ever more tools to give apps access to users’ attention, instead of lessening it.

For addicted teens, parents were of little help as they themselves were often victims of this system, too.

Today, tech companies are finally waking up to the problem. Google and Apple have now both built in screen time monitoring and control tools into their mobile operating systems, and even dopamine drug dealers like Facebook, Instagram and YouTube have begun to add screen time reminders and other “time well spent” features.

But these tools have come too late to prevent U.S. children from developing bad habits with potentially harmful side effects.

Pew says that 72% of teens are reaching for their phones as soon as they wake up; four-in-ten feel anxious without their phone; 56% report that not have their phone with them can make them feel lonely, upset or anxious; 51% feel their parents are distracted by phones during conversations (72% of parents say this is true, too, when trying to talk to teens); and 31% say phones distract them in class.

The problems are compounded by the fact that smartphones aren’t a luxury any longer – they’re in the hands of nearly all U.S. teens, 45% of whom are almost constantly online.

The only good news is that today’s teens seem to be more aware of the problem, even if their parents failed to teach balanced use of devices in their own home.

Nine-in-ten teens believe that spending too much time online is a problem, and 60% say it’s a major problem. 41% say they spend too much time on social media.

In addition, some parents are starting to take aim at the problem, as well, with 57% reporting they’ve set some screen time restrictions for their teens.

Today’s internet can be a toxic place, and not one where people should spend large amounts of time.

Social networking one the top activities taking place on smartphones, reports show.

But many of these networks were built by young men who couldn’t conceive of all the ways things could go wrong. They failed to build in robust controls from day one to prevent things like bullying, harassment, threats, misinformation, and other issues.

Instead, these protections have been added on after the fact – after the problems became severe. And, some could argue, that was too late. Social media is something that’s now associated with online abuse and disinformation, with comment thread fights and trolling, and with consequences that range from teen suicides to genocide.

If we are unable to give up our smartphones and social media for the benefits they do offer, at the very least we should be monitoring and moderating our use of them at this point.

Thankfully, as this study shows, there’s growing awareness of this among younger users, and maybe, some of them will even do something about it in the future – when they’re the bosses, the parents, and the engineers, they can craft new work/life policies, make new house rules, and write better code.

PayPal revamps its app to remove clutter, add more personalization

Published August 24, 2018

PayPal is revamping its mobile app. Again. In an effort to keep pace with newcomers like the bank-owned Zelle, PayPal says its new app will focus on making it easier to use its core features – that is, sending and requesting money. That means many of the app’s homescreen buttons – like Offers, Donate, Order Ahead and others are being tucked away underneath a new “More” menu to eliminate some of the clutter.

The PayPal homescreen had gotten a little too busy with all the extra features it has been promoting, which aren’t central to the PayPal experience. For example, it threw in a button suggesting “Invest with Acorns,” after taking a stake in the mobile investing app that rounds up purchases and automatically invests the extra change on your behalf. It has been pushing its Order Ahead functionality for years, even though no one thinks to launch a payments app when they’re hungry. Now these buttons no longer get top billing and valuable homescreen space.

Above: PayPal’s app today, before the update

However, even though PayPal is removing a lot of these extras from the homescreen, it’s not actually giving its “Send” and “Request” buttons more room. In fact, they’re getting a little less.

Today, those buttons are in the center of the homescreen, hosted in a big, greenish-blue banner. The updated app relocates them to a bottom bar.

However, it reverts the app’s color scheme to PayPal’s more familiar dark blue-and-white branding, so the relocated buttons are actually easier to see.

The homescreen instead dedicates most of its room to a new personalized notifications section.

Here, users will see alerts about money they’ve received or payment requests from others in big, blue cards you can swipe through horizontally. Below this, is a strip of profile icons and names of those you’ve recently paid – the theory being that PayPal is often used among the same set of family, friends or businesses. This makes it easier to make your next payment to one of your “regulars.”

Beneath this strip, your PayPal balance is displayed, while other notifications and settings are accessed through small buttons at the top of the screen, as before.

The overall design feels more in tune with PayPal’s brand than the last update. Though the prior big revamp, which was over two years ago, modernized things up a bit, it did so with too-light icons, small fonts and odd, off-brand color choices.

PayPal says the new app is rolling out now on Android to select markets, including Australia and Italy. It will then roll out to the U.S. and other markets worldwide, followed by a release on iOS.

Epic Games just gave a perk for folks to turn on 2FA; every other big company should, too

Published August 24, 2018

Let’s talk a bit about security.

Most internet users around the world are pretty crap at it, but there are basic tools that companies have, and users can enable, to make their accounts, and lives, a little bit more hacker-proof.

One of these — two-factor authentication — just got a big boost from Epic Games, the maker of what is currently The Most Popular Game In The World: Fortnite.

Fortnite players can unlock a new emote if they enable two-factor authentication

Epic is already getting a ton of great press for what amounts to very little effort.

Son: Do you know what two-factor authentication is?
Me: Uh, yeah?
Son: I get a free dance on @Fortnitegame if I enable two factor. Can we do that?

Incentives matter.

— Dennis (@DennisF) August 23, 2018

The company is giving users a new emote (the victory dance you’ve seen emulated in airports, playgrounds and parks by kids and tweens around the world) to anyone who turns on two-factor authentication. It’s one small (dance) step for Epic, but one giant leap for securing their users’ accounts.

The thing is any big company could do this (looking at you Microsoft, Apple, Alphabet and any other company with a huge user base).

Apparently the perk of not getting hacked isn’t enough for most users, but if you give anyone the equivalent of a free dance, they’ll likely flock to turn on the feature.

It’s not that two-factor authentication is a panacea for all security woes, but it does make life harder for hackers. Two-factor authentication works on codes, basically tokens, that are either sent via text or through an over-the-air authenticator (OTA). Text messaging is a pretty crap way to secure things, because the codes can be intercepted, but OTAs — like Google Authenticator or Authy — are sent via https (pretty much bulletproof, but requiring an app to use).

So using SMS-based two-factor authentication is better than nothing, but it’s not Fort Knox (however, these days, even Fort Knox probably isn’t Fort Knox when it comes to security).

Still, anything that makes things harder for crimes of opportunity can help ease the security burden for companies large and small, and the consumers and customers that love them (or at least are forced to pay and use them).

I’m not sure what form the perk could or should take. Maybe it’s the promise of a free e-book or a free download or an opportunity to have a live chat with the celebrity, influencer or athlete of a user’s choice. Whatever it is, there’re clearly something that businesses could do to encourage greater adoption.

Self-preservation isn’t cutting it. Maybe an emote will do the trick.