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Travel startups are taking off

The second wave of Internet-era travel companies has captured the attention of venture capitalists.

In the last five years, travel companies have raised more than $1 billion in venture capital funding. That includes short-term rental startups, travel and tourism apps, marketplaces for “experiences” and other travel or hospitality tech platforms. Airbnb, a $38 billion company and an anomaly in the category, has raised $3 billion in that same time frame, according to PitchBook.

In the last few months alone, aspiring Concur-competitor TripActions and travel activities platform Klook entered the “unicorn” club with large venture rounds that valued both of the businesses at more than $1 billion. Meanwhile, luggage maker Away raised $50 million at a $400 million valuation and smaller startups in the space like Freebirds, IfOnly, KKDay, Duffel and RedDoorz all closed modest funding rounds.

“Something is really happening in the industry; something bigger than us,” TripActions co-founder Ariel Cohen said in a recent conversation with TechCrunch about his company’s $154 million Series C financing. “Different startups are identifying the opportunity here and the fact that companies want to make sure their employees are happy while they are on the go. That’s why you see investments in companies like Brex and like TripActions.”

Brex, though not classified as a travel startup, lets startup employees earn extra points on business travel with its corporate credit card for startups. It recently raised a $125 million Series C at a $1.1 billion valuation.

Global travel and tourism is one of the most valuable industries worth some $7 trillion. The online travel market, in particular, is expected to grow to $817 billion by 2020. VCs are hunting for tech-enabled startups poised to dominate that slice.

“You have a new wave of businesses where all of that digital infrastructure is set up, so the focus can be on things like efficiency, improved customer service, scale and growth — you have a ton of companies popping up catering to those needs,” Defy Partners co-founder Neil Sequeira told TechCrunch. Sequeira was a managing director at General Catalyst when the firm made its first investment in Airbnb.

On the other hand, you have a whole cohort of travel business founded amid the dot-com boom that are looking to technology startups for a much-needed infusion of innovation. Many of those larger companies have become active acquirers, fueling VC interest in the space. SAP Concur, for example, acquired the formerly VC-backed travel-booking startup Hipmunk in 2016. Before that, it bought travel planning company TripIt for $120 million, among others.

Expedia has gobbled up a number of travel brands too, like travel photography community Trover; Airbnb-competitor HomeAway, which it paid a whopping $3.9 billion for in 2015; and most recently, both Pillow and ApartmentJet.

Many of these acquisitions are for peanuts, which is far from ideal for a venture-funded company. And building a travel business is cash intensive, hence the $4.4 billion Airbnb has raised to date or even TripActions’ $236 million in total VC funding. To keep momentum in the space, companies need to be striking larger M&A deals.

It doesn’t help that many in and around the venture capital industry are predicting an imminent turn in the market. Travel companies, which are reliant upon a consumer’s tendency to spend excess cash, will be among the first sectors to be impacted by hostile economic conditions.

“If the market turns, people aren’t going to spend $10,000 on a trip to Zimbabwe,” Sequeira said, referencing companies like IfOnly, which sells curated experiences.

Travel startups should raise now while the market is hot. The conditions may not remain favorable for long.

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A tale of two scooter cities

The kids in Madrid’s El Retiro Park are loving their new on-demand joyriding toys. Lime launched its scooters in the Spanish capital this summer.

Spending a weekend in the city center last month the craze was impossible to miss. Scooters parked in clusters vying for pay-to-play time. Sometimes lined up tidily. All too often not.

The bright Lime rides really stood out, though it’s not the only brand in town. Scooter startups have been quick to hop on the international expansion bandwagon as they gun for growth.

Grandly proportioned El Retiro clearly makes a great spot for taking a scooter for a spin. Test rides beget joyrides, and so the kids were hopping on. Sometimes two to one.

The boulevard linking the Prado with the Reina Sofia was another popular route to scoot.

While a busy central bar district was a hot ride-ditching spot later on. Lines of scooters were vying for space with the vintage street bollards.

The appeal was obvious: Bowl up to the bar and drink! No worries about parking or how to get your ride home afterwards. But for Saturday night revellers there was suddenly a new piece of street furniture to lurch around, with slouching handlebars sticking up all over the place. Anyone trying to navigate the pavement in a wheelchair wouldn’t have had much fun.

In another of Spain’s big tourist cities the scooter story is a little different: Catalan capital Barcelona hasn’t had an invasion of on-demand scooter startups yet but scooters have crept in. In recent years locals have tapped in of their own accord — buying not renting.

Rides are a front-of-store sight in electronics shops, big and small — costing a few hundred euros. Even for a flashy Italian design…

Electronic scooters

Take a short walk in one of the more hipster barrios and chances are you’ll pass someone who’s bought into the craze for nipping around on two wheels. There’s lots of non-electric scooters too but e-scooters do seem to have carved out a growing niche for themselves with a certain type of Barcelona native.

Again, you can see the logic: Well-dressed professionals can zip around narrow streets that aren’t always great for finding a place to (safely) lock up a bike.

There’s actually a pretty wide variety of wheeled e-rides in play for locals with the guts to get on them. Some with seats and/or handles, others with almost nothing. (The hands-in-pockets hipsters on self-balancing unicycles are quite the sight.)

In both of these Spanish cities it’s clear people are falling for — and, well, sometimes off — the micro-mobility trend.

But the difference between the on-demand scooters being toyed with in Madrid vs Barcelona’s locally owned two wheelers is a level of purpose and intent.

The Lime rides in Madrid’s center seemed mostly a tourist novelty. At least for now, having only had a couple of months to bed in.

Whereas the organic growth of scooters in Barcelona barrios is about people who live there feeling a need.

Even the unicycling hipsters seem to be actually on their way somewhere.

Hop on

What does this mean for scooter startups? It’s another example of how technology’s utility and wider societal impacts can vary when you parachute a new thing into a market and hope people jump on board vs growth being organic and more gradual because it’s led by real-world demand.

And it’s essential to think about impacts where scooters and micro-mobility is concerned because all this stuff must piggyback on shared public spaces. No one has the luxury of being able to avoid what’s buzzing up and down their street.

That’s why lots of on-demand scooters have ended up trashed and vandalized — as residents make their feelings known (having not been asked about the alien invaders in the first place).

In Europe there’s a further twist because the spaces scooter startups are seeking to colonize are already well served with all sorts of public transport options. So there’s a clear and present danger that these new kids on the block won’t displace anything. And will just mean more traffic and extra congestion — as happened with ride-hailing.

In Madrid, the first tranche of on-demand scooters seems to be generating pretty superficial and additive use. Offering a novel alternative to walking between sights or bars on a trip to-do list. Just possibly they’re replacing a short taxi or metro hop.

In the park, they were being used 100% for fun. Perhaps takings are down at the boating lake.

Barcelona has plenty of electro-powered joyriding down at the beach front in summer — where shops rent all sorts of wheels to tourists by the hour. But away from the beach locals don’t seem to be wasting scooter charge riding in circles.

They’re stepping out for regular trips like commuting to and from work. In other words, scooters are useful.

Given all this activity and engagement micro-mobility does seem to offer genuine transformative potential in dense urban environments. At least where the climate doesn’t punish for most of the year.

This is why investors are so hot on scooters. But the additive nature of micro-mobility underlines a pressing need for the technology to be properly steered if cities, residents and societies are to get the best benefits.

Scooters could certainly replace some moped trips. Even some local car journeys. So they could play an important role in reducing pollution and noise by taking trips away from petrol- and diesel-powered vehicles.

Because they offer a convenient, low-barrier-to-entry alternative with populist pull.

Not being too high speed also means, in and of themselves, they’re fairly safe.

If you’re just barrio hopping or can map most of your social life across a few city blocks there’s no doubting their convenience. Novelty is not the only lure.

Hop off

Though, equally, the local-level journeys that scooters are best suited for could just as easily be completed on foot, by bike or via public transit options like a metro.

And Barcelona’s congested streets don’t look any less packed with petrol engines — yet.

Which means scooters are both an opportunity and a risk.

If policymakers get the regulations right, a smart city could leverage their fun factor to nudge commuters away from more powerful but less environmentally friendly vehicles — with, potentially, some very major gains up for grabs.

Subsidized scooters coupled with a framework of congestion zones that levy fees on petrol/diesel engines is one simple example.

A clever policy could open the possibility of excluding cars almost entirely from city centers — so that streets could be reclaimed for new leisure and retail opportunities that don’t demand masses of parking space on tap.

Pollution is a chronic problem in almost all large cities in the world. So reshaping city centers to be more people-centric and less toxic to human health by displacing cars would be an incredible win for micro-mobility.

Even as the hop on, hop off ease of scooters offers a suggestive glimpse of what’s possible if we dare to rethink urban architecture to put people rather than four-wheeled vehicles first.

Yet get the policy wrong and scooters could end up — at very best — a frivolous irrelevance. A joyride that disrupts going nowhere. Yet another nuisance on already choked streets. An optional extra that feels disposable and gets rudely discarded because no one feels invested.

In this scenario the technology is not socially transformative. It’s more likely an antisocial nuisance. And a pointless drain on resources because it’s doing no more than disrupting walking.

Scooter startups have already run into some of these issues. And that’s not surprising given how fast they’ve been trying to grow. Their early expansionist playbook does also risk looking like Uber all over again.

Yet Uber could have pioneered micro-mobility itself. But being ‘laser focused on growth’ seemingly gave the company tunnel vision. Only now, under a new CEO, it’s all change. Now Uber wants to be a one-stop platform for all sorts of transport options.

But how many years did it waste missing the disruptive potential of micro-mobility coming down the road because it was too busy trying to fit more cars into cities — and ignoring how residents felt about that?

An obsession with growth at all costs may well be a side effect of major VC dollars flooding in. But for startups it really does pay to stay self-aware, perhaps especially when you’re rolling in money. Else you might find your investors funding your biggest blind spot — if you end up missing the next even more transformative disruption.

The really clever trick to pull off is not ‘scale fast or die trying’; it’s smart growth that’s predicated upon applying innovative technologies in ways that bring whole communities along with them. That’s true transformation.

For scooters that means not just dumping them on cities without any thought beyond creaming a profit off of anything that moves. But getting residents and communities engaged with the direction of travel. Partnering with people and policymakers on the right incentives to steer innovation onto its best track.

Move people around cities, yes, and shift them out of their cars.

There’s little doubt that Uber’s old ‘growth at any cost’ playbook was hugely wasteful and damaging (not least to the company’s own reputation). And now it’s having to retrofit a more inclusive approach at the same time as unpicking an ‘environmentally insensitive’ legacy that original playbook really doesn’t look so smart.

Scooter startups are still young and have made some of their own mistakes trying to chase early scale. But there are reasons to be cheerful about this new crop of mobility startups too.

Signs they see value and opportunities in being pro-actively engaged with the environments they’re operating in. Having also learnt some hard early lessons about the need to be very sensitive to shared spaces.

Bird announced a program this summer offering discounted rides to people on low incomes, for example. Lime has a similar program.

These are small but interesting steps. Here’s hoping we’re going to see a lot more.

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Microsoft adds RPG makers InXile and Obsidian to Xbox developer stable

Microsoft is continuing to invest in a broad spectrum of developers for its Xbox gaming ecosystem with the acquisition of Obsidian and InXile, makers of complex RPGs primarily aimed at PC users. The two studios will join four others snatched up in June, significantly bolstering Xbox’s first-party development resources.

The company announced the acquisitions (rumored for some time) at its XO18 event alongside numerous other interesting developments for the Xbox One and Windows gaming platforms. Xbox Director of Programming Larry Hyrb, better known by his pseudonym Major Nelson, welcomed them to the Microsoft Studios team of owned but independent devs:

So happy to welcome @Inxile_Ent and @Obsidian to the Xbox family. Look forward to working with you and your teams on future projects! pic.twitter.com/j5YormTwU6

— Larry Hryb @ X018 (@majornelson) November 10, 2018

Of the two studios Obsidian is probably the best known; Fallout: New Vegas is a modern classic of the open world genre, while Pillars of Eternity and its enormous sequel are a welcome revival of the classic isometric PC RPG. InXile is a bit more niche, though also successful: the Wasteland, Torment, and Bard’s Tale games are similarly appreciated by RPG lovers. The studios will, like the others in Microsoft’s stable, be given significant operational independence, not folded into some internal unit.

Microsoft announced the acquisition of Compulsion, Undead Labs, Ninja Theory, and Playground Games in June. But what’s clear from the more recent gets, that the earlier ones didn’t necessarily indicate, is a big focus on core PC gamers. Microsoft has had a rather mixed mission in that it wants to ensure the success of its Xbox One (and future) consoles, but also wants to bring the huge population of PC gamers into the fold somehow. It would help offset the significant but yet necessarily decisive lead Sony has in the ongoing console wars.

Numerous efforts over the years have failed to impress them and some are in fact still ridiculed. But the collection of some seriously PC-first developers commanding a hardcore audience may help bring some PC gaming wisdom to the Xbox world.

Although console exclusives are not as appreciated as they once were — gamers value cross-platform play far more — it doesn’t help to have a couple to sway undecided buyers or even tempt consumers to buy both. These acquisitions suggest an investment in Microsoft’s first-party development platform that could help close the gap, or prepare a real blitz for the next generation of consoles.

The studios issued videos talking about their take on the development, which you can watch below:

And now, a very special announcement from us here at Obsidian on becoming a part of the Microsoft family!https://t.co/bq5GGrM2UC

— Obsidian (@Obsidian) November 10, 2018

Some big news for #inXile Entertainment today! Here to talk about it is inXile CEO @BrianFargo. We’re excited about the future and our ability to continue to bring you great role playing games! https://t.co/C4FTh5whQ5

— InXile Entertainment (@Inxile_Ent) November 10, 2018

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How issues of microtransit, congestion and parking are closing in on cities

Earlier this week in a new experimental newsletter I’ve been helping Danny Crichton on, we briefly discussed transit pundit Jarrett Walker’s article in The Atlantic arguing against the view that ridesharing and microtransit will be the future of mass transit. Instead, his thesis is that a properly operated and well-resourced bus system is much more efficient from a coverage, cost, space, and equality perspective.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on.  I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.

From an output perspective, Walker argues that by operating along variable routes based on at-your-door pick ups, microtransit actually takes more time to pick up fewer people on average. Walker also gives buses the edge from a cost and input perspective, since labor makes up 70% of transit operating costs in a pre-autonomous world and buses allow you to service more customers for the price of one driver.

“The driver’s time is far more expensive than maintenance, fuel, and all the other costs involved.  In almost every public meeting I attend, citizens complain about seeing buses with empty seats, lecturing me about how smaller vehicles would be less wasteful. But that’s not the case. Because the cost is in the driver, a wise transit agency runs the largest bus it will ever need during the course of a shift. In an outer suburb, that empty big bus makes perfect sense if it will be mobbed by schoolchildren or commuters twice a day.”

But transit is not solely an issue of volume and unit economics, but one of managing public space. Walker explains that to ensure citizens don’t use more than their fair share of space, cities can either provide vehicles that are only marginally bigger than a human body, i.e. bikes and scooters, or have many people share large-scale vehicles, i.e. mass transit. Doing the latter through a mass fleet of on-demand microtransit solutions, Walker argues, increases congestion and makes it harder to manage scheduling and allocate infrastructure.

While the article offers an effective comparison of unit economics and acts as a useful primer on the various considerations for city transit agencies, some of the conclusions are a bit binary.  The discussion is a bit singular in its focus of microtransit as a replacement of public transit rather than an additive service and doesn’t give much credit to the trip planning and space management capabilities of many microtransit services, nor changes in consumer expectations towards transportation.

But despite some of the gaps in the piece, Walker highlights two ideas that spill over to some broad areas that have caught my interest lately: Tolls and Parking.

Tolls

Photo by Michael H via Getty Images

“To succeed, microtransit would have to help people get around cities better, not just make them feel good about hailing a ride on a phone. Full automation of vehicles, if indeed it ever arrives, might solve the labor problem—although it would put thousands of drivers out of work. But the congestion problem will remain.”

Like many, Walker argues that ridesharing aggravates city traffic rather than alleviates it.  Even though ridesharing’s long-term impact on traffic is widely contested, nearly everyone agrees that a solution to urban congestion is desperately needed.

What’s interesting is that regardless of the discourse that surrounds them, trends in US tolling mechanisms seem to suggest American cities may be moving closer to congestion pricing methods.

As an example, solutions to congestion are top of mind behind the New York state election that saw Democrats taking control of both state legislative houses. Though it seems like the argument resurfaces every few years, the elections have brought renewed debate over the possible implementation of congestion pricing in New York City.  In essence, congestion pricing is a system where drivers would pay higher prices for using high-traffic streets or entering high-traffic zones, allowing cities to better dictate the flow of drivers and reduce congestion.   

Outside of the obvious political tension created by effectively implementing a new tax, some lawmakers have pushed back on the effectiveness of a congestion pricing policy, with some arguing that it can aggravate income inequality or that a policy addressing construction and pedestrians, rather than vehicles, would have a bigger impact on traffic.

However, over the past year or so, an increasing number of states have been rolling out highway tolls that are priced dynamically, instead of using traditional fixed-price tolls. The exact drivers behind the toll prices vary, with some cities charging prices based on traffic conditions and others charging varying prices for the use of express and HOV lanes.

Several new technologies and companies have also made it easier for local governments to implement more sophisticated, adjustable toll pricing or congestion fees at a much lower cost. In the past, congestion pricing systems around the world have required physical detection systems that can be extremely costly to implement.

Now, companies like ClearRoad are helping governments use a wide range of connected vehicle technologies to establish and collect road usage pricing from any location without the need for physical infrastructure. Oregon is one geography working with ClearRoad to manage its new opt-in road usage program where the state is able to calculate drivers’ usage of certain roads and their gas consumption, and then reimburse them for gas taxes they’re paying.

So even though people are still screaming at each other in state capitols, it seems like we may be closer to seeing congestion pricing in major cities than we think. And while executing these programs can be difficult and painfully slow (often needing to satisfy city regulations and tax laws forty layers deep), if these smaller-scale programs we’re seeing in the US are actually effective, congestion pricing may be a solution to plug chunky budget gaps, better finance infrastructure projects and replace lost gas tax revenue in an electric vehicle future.

Parking

In his piece, Walker goes back to some basic principles of urban design, highlighting that at their core, functioning cities come down to how millions of people share a comparatively tiny amount of space.  

Walker explains that city dwellers that travel with cars and solo rideshare trips rather than with large-scale shared transit are effectively taking up more than their fair share of public space.  While the argument is made in the context of ridesharing and congestion, the same idea applies to the less-discussed impact mass-transit ridesharing can have on city parking.

At least in the near-term, certain cities have seen ridesharing actually increase vehicle usage rather than reduce it (a claim rideshare companies dispute), resulting in an even wider gap between the supply and demand for available parking spots.  And if people are using ridesharing but still choosing to own cars regardless, in an indirect fashion, they are similarly reducing the stock of available parking space by more than their fair share.

And while it makes sense that rideshare vehicles should receive a larger portion of the parking stock, given that it serves more passengers, the use of available parking by these vehicles can and has caused tension with local residents that have to store their cars further away.

There are companies like the mobility-focused data platform, Coord, that are working on tools geared towards helping cities and citizens more effectively allocate and plan parking strategies for the future multi-modal transportation network. And theoretically, ridesharing should reduce the number of vehicles in search of parking in the long-term. But at least for now, the impact on parking congestion is just another unintended consequence that weakens the argument for ridesharing as mass transit.

And lastly, some reading while in transit:

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Bubble lets you create web applications with no coding experience

Meet Bubble a bootstrapped startup that has been building a powerful service that lets you create a web application even if you don’t know how to code. Many small and big companies rely on Bubble for their website.

I have to say I was quite skeptical when I first heard about Bubble. Many startups have already tried to make coding as easy as playing with Lego bricks. But it’s always frustratingly limited.

Bubble is more powerful than your average website building service. It recreates all the major pillars of web programming in a visual interface.

It starts with a design tab. You start with a blank canvas and you can create web pages by dragging and dropping visual elements on the screen. You can put elements wherever you want, resize maps, text boxes, images and more. You can click on the preview button to see the development version of your time whenever your want.

In the second tab, you can create the logic behind your site. It works a bit like Automator on the Mac. You add blocks to create a chronological action. You can set some conditions within each block.

In the third tab, you can interact with your database. For instance, you can create a sign up page and store profile information in the database. At any time, you can import and export data.

There are hundreds of plugins that let you accept payments with Stripe, embed a TypeForm, use Intercom for customer support via chat, use Mixpanel, etc. You can also use your Bubble data outside of Bubble. For instance, you can build an iPhone app that relies on your Bubble database.

Many small companies started using Bubble, and it’s been working fine for some of them. For instance, Plato uses Bubble for all its back office. Qoins and Meetaway run on Bubble. Dividend Finance raised $365 million and uses Bubble.

The startup takes care of hosting your application for you. Every time you resize your instance as your application gets bigger, you pay more.

Even though the company never raised any money, it already generates $115,000 in monthly recurring revenue. Bubble is still a small startup, which can be scary for bigger customers. But the company wants to improve the product so that customers don’t see the limitations of Bubble. Now, the challenge is to grow faster than customers’ needs.

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Nested, the online estate agent that makes home sellers ‘chain-free’, raises further £120M

Nested, the London-based “data-driven” estate agency that provides a cash advance to help you buy a new home before you’ve sold your old one, has raised a further £120 million in funding. The new round is a mixture of equity and debt: £20 million and £100 million, respectively. Leading the equity round is Northzone, and Balderton Capital, while the debt finance comes from an unnamed institutional investor.

It is noteworthy that Balderton has only just invested in Nested several rounds into the company’s existence, considering that the London-based venture capital firm typically invests earlier at Series A. Balderton is also a backer of GoCardless, the payments company previously co-founded by Nested founder Matt Robinson. That said, Balderton General Partner Tim Bunting did invest in Nested in a personal capacity very early on.

Launched in late 2016, Nested competes with high-end estate agents by providing all of the services needed to sell your house, but with a key difference. In addition to handling valuation, marketing and sales, the startup will loan you up to 95 per cent of the market value of your property as a cash advance, that way you’re able to purchase a new home prior to your old one selling. Before Brexit and the uncertainty it has caused with regards to London house prices, that figure was up to 97 percent of the market value of the property, and I understand Nested hopes to return to that percentage once things settle down.

More broadly, the idea behind Nested is to eliminate much of the stress and uncertainty of selling and buying a home, including what your final budget will be, and also ensure that you’re never caught up in the dreaded property ‘chain’ and miss out on your desired home, or are kept in limbo indefinitely waiting for your property to sell. By becoming a cash buyer, it also puts you in the strongest possible position to negotiate on your onward purchase. Robinson says this typically sees savings of 2-4 percent.

In return, Nested charges a fee from 2-4 per cent (plus VAT) depending on how soon you want to receive the advance, and takes a loss if it fails to sell the property for an amount above its initial advance. The idea is to incentivise the startup to always try to get you the genuine market price or more.

TechCrunch’s Steve O’Hear giving Nested’s Matt Robinson (pictured right) a hard time at Startup Grind London earlier this year.

Asked how well that is working out so far, Robinson tells me historical valuation accuracy is on average within 1.5 percent of what the company predicted. Better still, Nested is running at 100 percent accuracy for 2018 and is confident enough to make this data public.

“The traditional agents don’t even track it and the online players do their best to obscure the fact that they sell only roughly 4/10th of properties they take on i.e. most customers pay them £1,000 up-front to not sell their house and are left out-of-pocket!” says the Nested founder.

To date, Nested has helped over 400 home-owners, and, aside from increasing volume, including helping property owners outside of London, the company says it plans to further expand its product offering. The bulk of these new products will continue to target sellers to “radically improve the selling experience”. However, I understand that since sellers are buyers, too, future services could also include using Nested’s data, tech and expertise to help with the buying process as well.

Adds Robinson in a statement: “We’re excited to receive the backing from some of Europe’s top VCs who share our vision for fixing the age-old problem of buying and selling homes. We are building an incredible team to offer an unassailable service with the most progressive technology in the property industry. This investment will allow us to continue solving the problems that prevent people from moving home with ease”.

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Growing pains at venture-backed Moogsoft lead to layoffs

Eight months after bringing in a $40 million Series D, Moogsoft‘s co-founder and chief executive officer Phil Tee confirmed to TechCrunch that the IT incident management startup had shed 18 percent of its workforce or just over 30 employees.

The layoffs took place at the end of October; shortly after, Moogsoft announced two executive hires. Among the additions was Amer Deeba, who recently resigned from Qualys after the U.S. Securities and Exchange Commission charged him with insider trading.

Founded in 2012, San Francisco-based Moogsoft provides artificial intelligence for IT operations (AIOps) to help teams work more efficiently and avoid outages. The startup has raised $90 million in equity funding to date, garnering a $220 million valuation with its latest round, according to PitchBook. It’s backed by Goldman Sachs, Wing Venture Capital, Redpoint Ventures, Dell’s corporate venture capital arm, Singtel Innov8, Northgate Capital and others. Wing VC founder and long-time Accel managing partner Peter Wagner and Redpoint partner John Walecka are among the investors currently sitting on Moogsoft’s board of directors.

Tee, the founder of two public companies in Micromuse and Riversoft, admitted the layoffs affected several teams across the company. The cuts, however, are not a sign of a struggling business, he said, but rather a right of passage for a startup seeking venture scale.

“We are a classic VC-backed startup that has sort of grown up,” Tee told TechCrunch earlier today. “In pretty much every successful company, there is a point in time where there’s an adjustment in strategy … Unfortunately, when you do that, it becomes a question of do we have the right people?”

Moogsoft doubled revenue last year and added 50 Fortune 200 companies as customers, according to a statement announcing its latest capital infusion. Tee said he’s “extremely chipper” about the road ahead and the company’s recent C-suite hires.

Moogsoft’s newest hires, CFO Raman Kapur (left) and COO Amer Deeba (right).

Moogsoft announced its latest executive hires on Nov. 2, only one week after completing the round of layoffs, a common strategy for companies looking to cast a shadow on less-than-stellar news, like major staff cuts. Those hires include former Splunk vice president of finance Raman Kapur as Moogsoft’s first-ever chief financial officer and Amer Deeba, a long-time Qualys executive, as its chief operating officer.

Deeba spent the last 17 years at Qualys, a publicly-traded provider of cloud-based security and compliance solutions. In August, he resigned amid allegations of insider trading. The SEC announced its charges against Deeba on Aug. 30, claiming he had notified his two brothers of Qualys’ missed revenue targets before the company publicly announced its financial results in the spring of 2015.

“Deeba informed his two brothers about the miss and contacted his brothers’ brokerage firm to coordinate the sale of all of his brothers’ Qualys stock,” the SEC wrote in a statement. “When Qualys publicly announced its financial results, it reported that it had missed its previously-announced first-quarter revenue guidance and that it was revising its full-year 2015 revenue guidance downward. On the same day, Deeba sent a message to one of his brothers saying, ‘We announced the bad news today.’ The next day, Qualys’s stock price dropped 25%. Although Deeba made no profits from his conduct, Deeba’s brothers collectively avoided losses of $581,170 by selling their Qualys stock.”

Under the terms of Deeba’s settlement, he is ineligible to serve as an officer or director of any SEC-reporting company for two years and has been ordered to pay a $581,170 penalty.

Tee, for his part, said there was never any admission of guilt from Deeba and that he’s already had a positive impact on Moogsoft.

“[Deeba] is a tremendously impressive individual and he has the full confidence of myself and the board,” Tee said.

 

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Limiting social media use reduced loneliness and depression in new experiment

The idea that social media can be harmful to our mental and emotional well-being is not a new one, but little has been done by researchers to directly measure the effect; surveys and correlative studies are at best suggestive. A new experimental study out of Penn State, however, directly links more social media use to worse emotional states, and less use to better.

To be clear on the terminology here, a simple survey might ask people to self-report that using Instagram makes them feel bad. A correlative study would, for example, find that people who report more social media use are more likely to also experience depression. An experimental study compares the results from an experimental group with their behavior systematically modified, and a control group that’s allowed to do whatever they want.

This study, led by Melissa Hunt at Penn State’s psychology department, is the latter — which despite intense interest in this field and phenomenon is quite rare. The researchers only identified two other experimental studies, both of which only addressed Facebook use.

One hundred and forty-three students from the school were monitored for three weeks after being assigned to either limit their social media use to about 10 minutes per app (Facebook, Snapchat and Instagram) per day or continue using it as they normally would. They were monitored for a baseline before the experimental period and assessed weekly on a variety of standard tests for depression, social support and so on. Social media usage was monitored via the iOS battery use screen, which shows app use.

The results are clear. As the paper, published in the latest Journal of Social and Clinical Psychology, puts it:

The limited use group showed significant reductions in loneliness and depression over three weeks compared to the control group. Both groups showed significant decreases in anxiety and fear of missing out over baseline, suggesting a benefit of increased self-monitoring.

Our findings strongly suggest that limiting social media use to approximately 30 minutes per day may lead to significant improvement in well-being.

It’s not the final word in this, however. Some scores did not see improvement, such as self-esteem and social support. And later follow-ups to see if feelings reverted or habit changes were less than temporary were limited because most of the subjects couldn’t be compelled to return. (Psychology, often summarized as “the study of undergraduates,” relies on student volunteers who have no reason to take part except for course credit, and once that’s given, they’re out.)

That said, it’s a straightforward causal link between limiting social media use and improving some aspects of emotional and social health. The exact nature of the link, however, is something at which Hunt could only speculate:

Some of the existing literature on social media suggests there’s an enormous amount of social comparison that happens. When you look at other people’s lives, particularly on Instagram, it’s easy to conclude that everyone else’s life is cooler or better than yours.

When you’re not busy getting sucked into clickbait social media, you’re actually spending more time on things that are more likely to make you feel better about your life.

The researchers acknowledge the limited nature of their study and suggest numerous directions for colleagues in the field to take it from here. A more diverse population, for instance, or including more social media platforms. Longer experimental times and comprehensive follow-ups well after the experiment would help, as well.

The 30-minute limit was chosen as a conveniently measurable one, but the team does not intend to say that it is by any means the “correct” amount. Perhaps half or twice as much time would yield similar or even better results, they suggest: “It may be that there is an optimal level of use (similar to a dose response curve) that could be determined.”

Until then, we can use common sense, Hunt suggested: “In general, I would say, put your phone down and be with the people in your life.”

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Sony’s PlayStation Classic uses an open-source emulator to play its games

The worm has turned, it seems. Emulators, which let people run old console games on their computers, were once the scourge of the gaming industry. Now Sony is using one of the very pieces of software the industry decried as the basis for its PlayStation Classic retro console.

In the licenses list for the console can be found PCSX ReArmed, as Kotaku noticed in its review yesterday. That’s the ARM port of PCSX Reloaded, itself an offshoot of the original PCSX emulator, which ceased development in 2003.

Don’t worry, it’s not a crime or anything: Sony is well within its rights to do this. It’s just ironic, and indicative of the hard work emulator developers have done for over two decades, that a tool most famously (though by no means exclusively) used for piracy is being deployed officially like this. PCSX and its derivatives are open source under GPL.

It’s a huge vindication of these rogue developers, as you might call them, whose software based on reverse-engineering the proprietary systems of major companies has grown to be not just useful but the best option for running these old games — as chosen by Sony itself! Gaming historian Frank Cifaldi has an interesting thread about why this is so mind-blowing for some of us.

It also makes sense to a certain extent: Sony would have had to dedicate a non-trivial amount of resources to building an emulator from scratch, or (even more complex) rebuilding the PlayStation hardware in some fashion. Why not use a high-quality, open-source emulator with years of active development and testing?

Not every company has made that same choice, though: Nintendo, for its NES and SNES Classic mini-consoles, developed its own emulators, as it did before for Virtual Console (and indeed inside Animal Crossing on GameCube). But even then, those devices run on a custom Linux build, which of course uses a similar open-source license. So one way or the other the gaming world is finding itself in bed with the open-source community.

It’s true that the emulators themselves were never really illegal — unless they used some proprietary code or something. It was always the ROMs themselves, copies of games, that companies fought hardest against. But emulators have always lived in a sort of grey area, even if few actions were taken against them. The last few years have seen a resurgence in interest for retro games and a willingness to pay for them, but if emulators hadn’t been letting us do that for free for decades, there’s a good chance that many of these games would have been forgotten.

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Utah man pleads guilty to causing 2013 gaming service outages

A Utah man has pleaded guilty to computer hacking charges, after admitting to knocking several gaming services offline five years ago.

Austin Thompson, 23, launched several denial-of-service attacks against EA’s Origin, Sony PlayStation and Valve’s Steam gaming services during the December holiday season in 2013.

At the time, those denial-of-service attacks made it near-impossible for some gamers to play — many of whom had bought new consoles or games in the run-up to Christmas, including League of Legends and Dota 2, because they required access to the network.

Specifics of Thompson’s plea deal were not publicly available at the time of writing, but prosecutors said Thompson — aged 18 at the time of the attacks — flooded the gaming giants’ networks “with enough internet traffic to take them offline.”

Thompson would take to his Twitter account, @DerpTrolling, to announce his targets ahead of time, and posted screenshots of downed services in the aftermath of his attacks. Thompson’s attacks caused upwards of $95,000 in damages, prosecutors said.

“The attacks took down game servers and related computers around the world, often for hours at a time,” said Adam Braverman, district attorney for Southern California, in a statement.

“Denial-of-service attacks cost businesses millions of dollars annually,” said Braverman. “We are committed to finding and prosecuting those who disrupt businesses, often for nothing more than ego.”

Thompson faces up to 10 years in prison and is scheduled to be sentenced in March.

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