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Among the many problems with the prison system are enormous fees for things like video calls, which a handful of companies provide at grossly inflated rates. Ameelio hopes to step in and provide free communication options to inmates; its first product, sending paper letters, is being welcomed with open arms by those with incarcerated loved ones.
Born from the minds of Yale Law students, Ameelio is their attempt to make a difference in the short term while pushing for reform in the long term, said co-founder and CEO Uzoma Orchingwa.
“I was studying mass incarceration, and the policy solutions I was writing about were going to take a long time to happen,” Orchingwa said. “It’s going to be a long battle before we can make even little inroads. So I was thinking, what can I do in the interim while I work on the longer-term project of prison reform?”
He saw reports that inmates with regular communication with loved ones have better outcomes when released, but also that in many prisons, that communication was increasingly expensive and restricted. Some prisons have banned in-person meetings altogether — not surprising during a pandemic — leaving video calling at extortionate rates the only option for speaking face to face with a loved one.
Sometimes costing a dollar a minute, these fees add up quickly and, naturally, this impacts already vulnerable populations the most. Former FCC Commissioner Mignon Clyburn, for whom this was an issue of particular interest during her term, called the prison communication system “the clearest, most glaring type of market failure I’ve ever seen as a regulator.”
It’s worth noting that these private, expensive calling services weren’t always the norm, but were born fairly recently as the private prison industry has expanded and multiplied the ways it makes money off inmates. Some states ban the practice, but others have established relationships with the companies that provide these services — and a healthy kickback to the state and prison, of course.
This billion-dollar industry is dominated by two companies: Securus and Global Tel Link. The service they provide is fairly rudimentary compared with those we on the outside take for granted. Video and audio calls are scheduled, recorded, skimmed for keywords and kept available to authorities for a few months in case they’re needed.
At a time when video calls are being provided for free to billions around the world who have also been temporarily restricted from meeting in person, charging at all for it seems wrong — and charging a dollar a minute seems monstrous.
Ameelio’s crew of do-gooder law students and developers doesn’t think they can budge the private prison system overnight, so they’re starting with a different product, but one that also presents difficulties to families trying to communicate with inmates: letters.
Written mail is a common way to keep in contact with someone in prison, but there are a few obstacles that may prevent the less savvy from doing so. Ameelio facilitates this by providing an up-to-date list of correct addresses and conventions for writing to any of the thousands of criminal justice facilities around the country, as well as the correct way to look up and identify the inmate you’re trying to contact — rarely as simple as just putting their name at the top.
“The way prison addresses work, the inmate address is different from the physical address. So we scraped addresses and built a database for that, and built a way to find the different idiosyncrasies, like how many lines are necessary, what to put on each line, etc.,” said co-founder Gabe Saruhashi.
Once that’s sorted, you write your letter, attach a photo if you want, and it’s printed and sent (via direct-mail-as-a-service startup Lob). It’s easy to see how removing the friction and cost of printing, addressing and so on would lead to more frequent communication.
Since starting a couple months ago and spreading word of the service on Facebook groups and other informal means, they’ve already sent more than 4,000 letters. But while it’s nice for people to be able to send letters, Ameelio plans to cater to larger organizations that use mail at larger scales.
“The communications challenges that families have are the same challenges that criminal justice organizations and lawyers have when communicating with their clients,” explained Orchingwa. They have to manage the addresses, letter-writing and sending, and a network of people to check on recipients and other follow-up actions. “We’re talking to them, and a lot were very interested in the service we’re offering, so we’re going to roll out a version for organizations. We’re creating a business model in which these organizations, and some of them are well funded, can pay us back but also pay it forward and help keep it free for others.”
Sending letters is just the opening play for Ameelio, though, but it’s also a way to make the contacts they need and research the market. Outcry against the private calling systems has been constant, but the heterogeneous nature of prisons run under state policies means “we don’t have one system, we have 51 separate systems,” as Orchingwa put it. That and the fact that it makes a fair amount of money.
“There’s a lot of movement around getting Securus and Global Tel out,” he said. “But it would shift from families to the state paying, so they need to make back the money they were making from kickbacks.”
Some states have banned paid calls or never allowed them, but others are only changing their policies now in response to external pressure. It’s with these that Ameelio hopes to succeed first.
“We can start in states where there’s no strong relationship to these companies,” said Orchingwa. “You’re going to have state and county officials being asked by their constituents, ‘why are we using them when there’s a free alternative?’ ”
You may wonder whether it’s possible for a fresh young startup to build a video calling platform ready for deployment in such a short time. The team was quick to explain that the actual video call part of the product is something that, like sending letters, can be accomplished through a third party.
“The barrier right now is not at all the video infrastructure — enterprise and APIs will provide that. We already have an MVP of how that will look,” said Saruhashi. Even the hardware is pretty standard — just regular Android tablets stuck to the wall.
“The hard part is the dashboard for the [Department of Corrections],” Saruhashi continued. “They need a way to manage connections that are coming in, schedule conversations, get logs and review them when they’re done.”
But they’re also well into the development of that part, which ultimately is also only a medium-grade engineering challenge, already solved in many other contexts.
Currently the team is evaluating participation in a number of accelerators, and is already part of Mozilla’s Spring MVP Lab, the precursor to a larger incubator effort announced earlier today. “We love them,” said Mozilla’s Bart Decrem.
Right now the company is definitely early stage, with more plans than accomplishments, and they’re well aware that this is just the start — just as establishing better communications options is just the start for more comprehensive reform of the prison and justice system.
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After testing the waters this spring with its incubator-esque MVP Lab, Mozilla is doubling down on the effort with a formal program dangling $75,000 investments in front of early-stage companies. The focus on “a better society” and the company’s open-source clout should help differentiate it from the other options out there.
Spurred on by the success of a college hackathon using a whole four Apple Watches in February, Mozilla decided to try a more structured program in the spring. The first test batch of companies is underway, having started in April an 8-week program offering $2,500 per team member and $40,000 in prizes to give away at the end. Developers in a variety of domains were invited to apply, as long as they fit the themes of empowerment, privacy, decentralization, community and so on.
It drew the interest of some 1,500 people in 520 projects, and 25 were chosen to receive the full package and stipend during the development of their MVP. The rest were invited to an “Open Lab” with access to some of Mozilla’s resources.
One example of what they were looking for is Ameelio, a startup whose members are hoping to render paid video calls in prisons obsolete with a free system, and provide free letter delivery to inmates as well.
“The mission of this incubator is to catalyze a new generation of internet products and services where the people are in control of how the internet is used to shape society,” said Bart Decrem, a Mozilla veteran (think Firefox 1.0) and one of the principals at the Builders Studio. “And where business models should be sustainable and valuable, but do not need to squeeze every last dollar (or ounce of attention) from the user.”
“We think we are tapping into the energy in the student and professional ‘builder communities’ around wanting to work on ideas that matter. That clarion call really resonates,” he said. Not only that, but students with canceled internships are showing up in droves, it seems — mostly computer science, but design and other disciplines as well. There are no restrictions on applicants, like country of origin, previous funding, or anything like that.
The new incubator will be divided into three tiers.
First is the “Startup Studio,” which involves a $75,000 investment, “a post-money SAFE for 3.5% of the company when the SAFE converts (or we will participate in an already active funding round),” Decrem clarified.
Below that, as far as pecuniary commitment goes, is the “MVP Lab,” similar to the spring program but offering a total of $16,000 per team. And below that is the Open Lab again, but with 10 $10,000 prizes rather than a top 3.
There are no hard numbers on how many teams will make up the two subsidized tiers, but think 20-30 total as opposed to 50 or 100. Meanwhile, collaboration, cross-pollination and open-source code is encouraged, as you might expect in a Mozilla project. And the social good aspect is strong as well, as a sampling of the companies in the spring batch shows.
Neutral is a browser plugin that shows the carbon footprint of your Amazon purchases, adding some crucial guilt to transactions we forget are powered by footsore humans and gas-guzzling long-distance goods transport. Meething, Cabal and Oasis are taking on video conferencing, team chat and social feeds from a decentralized standpoint, using the miracles of modern internet architecture to accomplish with distributed systems what once took centralized servers.
This summer will see the program inaugurated, but it’s only “the beginning of a multiyear effort,” Decrem said.
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Parenting benefits company Cleo is partnering with on-demand childcare service UrbanSitter to address a problem facing many parents today amid the pandemic: a lack of childcare, even as they’re required to return to work. With summer camps, daycares and schools shut down for the months ahead, parents who need to work outside the home (or even inside, but without distraction) no longer have options. Cleo’s new solution, Cleo Care, powered by UrbanSitter, aims to address this problem. The company is offering a package to employers that will help connect families with vetted caregivers via concierge support or, as an alternative, with family co-op options, depending on the parents’ preference.
The program will additionally include access to other Cleo support programs, like one-on-one coaching and age-appropriate programs focused on developmental milestones, delivered weekly.
The launch of the new product arrives at a time when the coronavirus outbreak has caused a childcare crisis in the U.S. Working parents have become homeschool teachers, on top of their already overwhelming number of duties. Parents fortunate enough to work from home, however, are continually interrupted by children’s needs, leading to longer working hours to accomplish tasks, and often mental and physical exhaustion.
Cleo surveyed its member base in April 2020, roughly 80% of whom are in the U.S., and found that more than 50% of respondents didn’t have any childcare options due to the pandemic’s impact. It also learned that 1 in 5 families (with two parents) were considering having one partner leave the workforce in order to manage the care of the children. Meanwhile, 37% were considering having family move in.
Among those who were working, more than half felt their productivity was 75% or less than usual. And 1 in 4 felt their productivity was less than 50% of baseline.
The problem is massive. In the U.S. alone, there are 30.5 million working families, based on Bureau of Labor Statistics.
The Cleo Care solution will be made available to U.S. employers this month to give parents more options, as well as help employers to bring their staff back to work, when the time comes.
Of course, there’s a variety of opinions about how and when the U.S. should re-open its economy. But the reality is that some parents will need to return to their jobs ahead of the re-opening of child care centers or summer camp programs, many of which have been canceled. In Facebook groups, parents are already trying to solve the problem for themselves by organizing with neighbors for childcare co-ops or by hiring teens or college students for daytime babysitting jobs.
But not everyone has these options. And employers can’t just direct staff to Facebook to find a caregiver.
Instead, the Cleo Care program will provide member parents with concierge support for finding vetted care providers from the UrbanSitter network. Or if the families would prefer to work with neighbors, the solution can also offer to match network members interested in co-op solutions.
These features are new to UrbanSitter, which has never before offered co-op matching and is making the new concierge service exclusive to Cleo Care.
“As working moms desperate for a solution to the crisis facing parents today, we were focused on developing a solution that didn’t just work for our members and enterprise clients, but also one that we’d use ourselves. After experimenting and trying everything from virtual care to scheduling shifts to looking for new caregivers ourselves, we realized the only solution that would work for families would require a new model of childcare designed for the unique issues COVID-19 has created,” said Cleo CEO Sarahjane Sacchetti.
Sacchetti, the former chief marketing officer of Collective Health, stepped in to lead Cleo after its original co-founder Shannon Spanhake was ousted following issues around company culture and a falsified resumé. Since then, Cleo has been expanding its business in the form of numerous partnerships, including those with Natalist, Milk Stork, Playfully, Dadi and others.
The solution will roll out in pilot testing with large U.S. employers to start, the company says. International employers will have access to its Cleo Kids coaching solution while Cleo looks for partnerships with care provider networks outside the U.S.
The employers will pay a combined monthly membership fee for access to Cleo Kids and UrbanSitter as well as one-time matching fees for co-op matching or care provider matching and placement, when used by a family. Cleo says it’s working with employers to explore models to cover some of the matching costs, which can be supported if an employer offers a dependent care FSA.
A sign-up form is here.
Image credits: Cleo
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On May 21 at 3pm ET/12pm PT, we’re hosting an Extra Crunch Live session with Steve Case and Clara Sieg of Revolution.
This chat is the latest in our growing series featuring notable investors, entrepreneurs and technologists. Previously, TechCrunch editorial staff sat down (virtually, of course) with Cowboy Ventures’ Aileen Lee and Ted Wang, Sequoia’s Roelof Botha and Mark Cuban, to name a few.
There’s a lot to talk about with Case and Sieg, and Extra Crunch members are encouraged to come with their own set of questions to ask these renowned investors. Revolution is known for its wide range of investments, inside and out of the Valley, so we’re curious how the firm is addressing the COVID-19 crisis.
Steve Case was a co-founder of AOL and led the company as it became the internet giant of the ’90s — and did so outside of Silicon Valley. Because of this, he’s long been a champion of startups from other regions. Yet the firm still has a presence in Silicon Valley, and Clara Sieg has run that effort since 2012 after joining in 2010.
We’re curious how Case, Sieg and other partners are advising startups to weather this storm. With investments throughout the country, Revolution is in a unique position to have a holistic perspective on how the COVID-19 crisis is affecting startups.
Are they still funding startups right now? What metrics are they looking for? What regions of the country do they see less effected than others and which are hardest hit?
We have questions and we hope they have answers.
Extra Crunch members can ask their own questions directly in the Zoom Q&A. So come prepared! You can find the full information for the chat below. See you there!
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The gifting feature can be found here.
Extra Crunch membership is designed for startup teams, entrepreneurs, investors and business school students, and it includes more than 100 exclusive articles per month:
Extra Crunch membership can save you time time with an exclusive newsletter, no banner ads, Rapid Read mode and our List Builder tool. Annual and two-year members can also save money with discounts on events and access to Partner Perks. Our Partner Perks provide discounted access to services from companies like AWS, Brex, DocSend, Crunchbase, Typeform and more.
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If there are other features you’d like to see us add to Extra Crunch, please let us know by leaving a comment on this post or emailing me directly at travis@techcrunch.com.
TechCrunch readers can find the Extra Crunch gifting feature here.
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SoftBank Investment Advisers and WeWork Labs say they’ve officially kicked off the first session of Emerge, an accelerator program designed for underrepresented founders.
In their press release, the companies describe Emerge as “launched by SoftBank with support from WeWork Labs” (that’s the co-working company’s global accelerator program), with a goal of bringing more equality to tech and venture capital.
It’s an equity-free, eight-week program that includes workshops, access to mentors from SoftBank and the WeWork community and sessions with SoftBank executives. It all culminates in a showcase event for investors and SoftBank partners.
The Emerge website describes the program as based in San Mateo, Calif. — but given COVID-19, the sessions and programming are all virtual.
“Supporting underrepresented founders is a top priority for us, ensuring we see more diverse startups across the tech ecosystem,” said Catherine Lenson, managing partner and chief human resources officer at SoftBank Investment Advisers, in a statement. “There is a lack of diversity in the sector as a whole, and we need to do more to address it. That is why we’re excited to launch this program and to see the positive impact that these inspiring founders will have.”
This is also a reminder that while the larger corporate entities are currently embroiled in a legal and financial dispute, WeWork and its largest investor remain closely intertwined.
Here are the 14 startups in the initial program:
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A little over a year after its graduation from Y Combinator’s demo day, the on-demand construction materials delivery service Curri is beginning to offer its services in all 50 states.
Co-founded by Matt Lafferty and Brian Gonzalez, Curri aims to solve one of the major hurdles for local construction suppliers who miss out on sales because of an inability to deliver to contractors when they need it.
The company estimates that it saves its customers roughly half the cost of deploying an in-house fleet for delivery.
“They act as a wholesaler doing all the sales, but they’re also acting as a logistics company as well,” said Lafferty. “We provide a solution for them to flex up or down and save money.”
After graduating from Y Combinator in the summer of 2019, the company tested its services in the Southern California region. Now, as construction looks ready to return to a more normal schedule in the aftermath of the COVID-19 epidemic, the company is capitalizing on increased demand to offer its services nationwide.
“Construction has stayed essential through this whole crisis,” said Lafferty. “Depending on how states were handling it there were different levels of what was seen as essential construction. Industry-wide there was what I would call a great pause… [But] since April we’ve grown week-over-week and even more so now when things are really lifting.”
The company charges its customers by mile traveled and operates with a similar business model to Uber or Lyft, says Lafferty. The drivers are all gig workers, but Lafferty says they’re paid a premium to other delivery services because of the urgency of the company’s deliveries. “We have high-dollar items that are going out and they’re typically more urgent,” Lafferty said. “We’re able to pay our driver 25% to 30% better.”
The Los Angeles-based company raised seed funding from Initialized Capital, the firm founded by Garry Tan and Alexis Ohanian (which also employs former TechCrunch staffer, Kim-Mai Cutler… Hi Kim-Mai!)
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With the global economy still sorting itself out in the face of the pandemic, we’re hearing about fewer new venture capital funds these days. However, today is an exception, as Cathay Innovation has raised a $550 million second fund, which is about double the size of its first fund and, according to its leader Denis Barrier, is larger than the firm’s “original target.”
Cathay Innovation’s initial fund had some winners. The firm, which is part of the same org but distinct from private-equity outfit Cathay Capital, invested in Pinduoduo. The Chinese e-commerce giant raised money from Cathay Innovation when it was an early-stage startup. It’s worth around $70 billion today. Cathay Innovation’s first fund also led Chime’s Series B; that company is now worth nearly $6 billion.
We got on the horn with Barrier to learn a bit more about what’s changed for his firm and what its plans are for the new capital.
With its new fund, Barrier told TechCrunch that his firm’s model — target stage, target ownership percentage, etc. — isn’t changing. So if the model isn’t changing, why raise more money? What will it do with the surplus cash?
According to Barrier, two things. First, more money will allow the fund to follow winners a bit more over time. According to the VC, fund one might have put more capital into Pinduoduo and Chime if it had had the capacity to do so. Some venture firms use one-off special purpose vehicles (SPVs) for this sort of work. The other option is to raise a larger fund. And second, Barrier wants to do more deals in Southeast Asia.
This geographic expansion fits into Cathay Innovation’s model. The firm has offices around the world, and tries to share information from one geo to another. The goal is to learn from one and apply that knowledge elsewhere in order to spot impending trends in, say, America, after watching, say, China. The hope is that this sort of information sharing allows it to make earlier, better bets.
Indeed, this concept is something that Barrier has stressed to TechCrunch before. In our most recent chat he noted two examples of the concept in action. The first being that his firm saw the rise of neobanks (challenger banks) in Europe before they really got off the ground in the United States. Hence the Chime deal. And the Cathay Innovation executive noted that because his firm has an office in China, it had a 45-day advance on the rest of the world regarding COVID-19, giving it the chance to tell its portfolio companies what was coming.
It’s an interesting model that worked in its first fund; the real proof of the firm’s ability to see around corners will come with its second fund’s results. Given that this new capital vehicle is about twice as large as its first it has lots more returns to generate. It will need more breakout deals, and will need to ensure that it pours capital into them.
On that point, there is one more potential difference between the first and second funds. Barrier told TechCrunch that his team can now lead larger rounds if it wants. This could, again, help the firm get larger cuts of companies it believes will deliver outsize returns.
And for all the founders out there, Cathay Innovation says its investing pace is about the same as before, so if you are looking for capital, here’s a new fund that’s hunting for deals.
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If you’ve been lucky enough to keep your job or business, you almost certainly know someone who wasn’t so fortunate.
Thousands have lost their jobs as companies significantly reduce workforces to adjust to uncertainties and economic challenges created by COVID-19. Many of these people in tech are now faced with a number of questions, from how they’ll pay next month’s rent to whether they’re eligible for unemployment. One area that is particularly confusing is what to do if your compensation package was tied to equity.
Here are some ways I suggest approaching the issue.
Layoffs have become part and parcel of the current economic crisis with unemployment figures skyrocketing to record highs as a result of COVID-19. From multinational conglomerates to mom-and-pop stores, everyone is feeling the impact, and the startup sector is no different.
Despite difficult circumstances, the silver lining for employees is that we have seen many management teams go the extra mile to help their teams, especially when it comes to equity. Compared to traditional layoff situations, companies in the COVID-19 era are offering generous extensions and accelerated vesting on their options, which is undeniably good news for employees with equity.
Typically, equity plans come with a 90-day exercise window after employment termination. That means that if you leave the company, you will have to exercise your options within 90 days or they go back to the company. However, lots of management teams have decided to extend these deadlines many years out given the circumstances.
While layoffs are not easy, it’s been great to see management teams doing the right thing when it comes to equity for their employees who have been laid off. Offering extensions is a benefit that employers should be offering their employees who have helped build the company.
If your company is not offering this, consider negotiating and asking for an extension. This is the right thing to do for employees who are now out of work and a paycheck for the foreseeable future. Both options do not require the company to pay cash at the moment, so there are few reasons a company should deny this request in this environment.
Even if you are granted an extension to exercise your options, employees that hold incentive stock options (ISOs) should look into exercising their options now to maximize their equity’s value.
Many companies are offering extensions for option exercises. While this is great in that it gives employees more time to figure out their exercise situation, waiting past the 90-day window may have much bigger tax consequences that employees need to consider.
ISOs are much more tax advantageous compared to non-qualified stock options (NSOs). They are not taxed under standard income tax and if you sell the stock two years after grant date and one year after exercise date, you sell them as part of a qualifying disposition. In short, this allows you to effectively convert everything north of your strike price to preferential long-term capital gain rates.
As part of offering these tax advantages, the tax code has limitations on ISOs. Most relevant to us at this point is that the fact that you cannot have ISOs past 90 days after you are no longer an employee. This means that even if your company allows an extension on your stock options past the typical 90-day expiration window, your ISOs will convert to NSOs and lose their tax benefit.
This creates a potential planning opportunity that employees who have been laid off need to consider. If you feel good about the upside of the company, then you should consider exercising your ISOs today to capture the potential tax benefits rather than letting them convert to NSOs. Employees who wait risk putting themselves in the same difficult situation once the extension ends at typically less favorable conditions due to an increased 409A valuation.
In light of the economic slowdown many companies have begun to cut costs. Reduced pay or furloughing employees has become the new norm as businesses of all sizes struggle to navigate these changing times.
It can obviously be concerning if you find yourself in this situation. But for startup employees, the COVID-19 crisis could provide an opportunity to negotiate your compensation package to make up for this decrease, and even set yourself up to prosper in the future.
Startups typically offer equity as a means of deferred compensation and as a way to incentivize employees to own a piece of the company they are building. The compensation is deferred as most startups are cash-strapped and cannot afford to pay you what a larger company may be able to.
If your company is now asking you to take a pay cut, or even take no pay during this time, you should consider asking for additional equity to make up for the lost compensation. While not all companies may be amenable to offering more equity, there is no cash outlay from the company’s standpoint, so it’s an efficient way for your company to compensate you for your sacrifice while preserving their cash.
In addition, offering more equity shows a commitment from management to their employees during this difficult time. It may be the win-win scenario for your company and yourself in the long-run so it’s worth having the conversation with management to discuss if this is available for you.
If your company does offer you more equity, make sure you ask whether the 409A (or fair market value) of the company is being updated. With revised forecasts given the COVID-19 situation, it may be possible for your company to issue your stock at a lower strike price if the company revalues its 409A.
I can sympathize with startup employees right now because I faced a similar situation when I left a startup that I had joined as employee number four and was forced to wave goodbye to the equity I had banked on.
If you want to take action on equity but don’t know where to start, now might be a good time to brush up on how your stock options work. As the economy begins to reopen, there’s a good chance we’ll see a rush for candidates in tech as companies compete to bring in some of the extremely talented folks who lost their jobs this week.
Those who have a good understanding of equity may be positioned for a big payday down the line.
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Around the world, the COVID-19 pandemic is disrupting calendars — along with travel budgets and marketing plans — by canceling events ranging from major league sports to tech conferences. This has impacted the startup and tech industries on all levels; by early March, economic losses from tech event cancellations alone amounted to more than $1.1 billion.
In response, many businesses have taken events online. Teleconferencing tools are being used more than ever, and Zoom registered 200 million daily users in March, up from a record of 10 million. Business figures and organizations can harness these online tools to minimize the blow of the worldwide shutdown, reach their target audiences and position themselves as thought leaders, but moving events online has its own problems.
The more meetups are generated, the more likely it is that yours will get lost in a sea of options. It’s also significantly easier for people to “attend” an event — and ignore it or exit early. There are plenty of studies demonstrating that internet users have shorter attention spans.
So you have to stand out and keep people engaged while speaking to people through a screen thousands of miles away. Over the past decade I have run more than 100 webinars with over 100,000 live attendees, and am one of the largest Meetup organizers in the world. Through trial and error I have developed a set of best practices that will keep people engaged in online events.
Transmitting real value by computer is certainly more challenging than face-to-face, but following these three pointers will help you get there.
We all know what a badly prepared organized meeting looks like: frozen screens, buffering videos and broken audio.
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