The next healthcare revolution will have AI at its center

The global pandemic has heightened our understanding and sense of importance of our own health and the fragility of healthcare systems around the world. We’ve all come to realize how archaic many of our health processes are, and that, if we really want to, we can move at lightning speed. This is already leading to a massive acceleration in both the investment and application of artificial intelligence in the health and medical ecosystems.

Modern medicine in the 20th century benefited from unprec­edented scientific breakthroughs, resulting in improvements in every as­pect of healthcare. As a result, human life expectancy increased from 31 years in 1900 to 72 years in 2017. Today, I believe we are on the cusp of another healthcare revolution — one driven by artificial intelligence (AI). Advances in AI will usher in the era of modern medicine in truth.

Over the coming decades, we can expect medical diagnosis to evolve from an AI tool that provides analysis of options to an AI assistant that recommends treatments.

Digitization enables powerful AI

The healthcare sector is seeing massive digitization of everything from patient records and radiology data to wearable computing and multiomics. This will redefine healthcare as a data-driven industry, and when that happens, it will leverage the power of AI — its ability to continuously improve with more data.

When there is enough data, AI can do a much more accurate job of diagnosis and treatment than human doctors by absorbing and checking billions of cases and outcomes. AI can take into account everyone’s data to personalize treatment accordingly, or keep up with a massive number of new drugs, treatments and studies. Doing all of this well is beyond human capabilities.

AI-powered diagnosis

I anticipate diagnostic AI will surpass all but the best doctors in the next 20 years. Studies have shown that AI trained on sizable data can outperform physicians in several areas of medical diagnosis regarding brain tumors, eye disease, breast cancer, skin cancer and lung cancer. Further trials are needed, but as these technologies are deployed and more data is gathered, the AI stands to outclass doctors.

We will eventually see diagnostic AI for general practitioners, one disease at a time, to gradually cover all diagnoses. Over time, AI may become capable of acting as your general practitioner or family doctor.

#artificial-intelligence, #biotechnology, #cancer, #column, #drug-discovery, #ec-column, #ec-enterprise-health, #ec-robotics, #health, #healthcare, #medical-imaging, #pharmaceuticals, #precision-medicine, #robotics, #startups

What we can learn from edtech startups’ expansion efforts in Europe

It’s a story common to all sectors today: investors only want to see ‘uppy-righty’ charts in a pitch. However, edtech growth in the past 18 months has ramped up to such an extent that companies need to be presenting 3x+ growth in annual recurring revenue to even get noticed by their favored funds.

Some companies are able to blast this out of the park — like GoStudent, Ornikar and YouSchool — but others, arguably less suited to the conditions presented by the pandemic, have found it more difficult to present this kind of growth.

One of the most common themes Brighteye sees in young companies is an emphasis on international expansion for growth. To get some additional insight into this trend, we surveyed edtech firms on their expansion plans, priorities and pitfalls. We received 57 responses and supplemented it with interviews of leading companies and investors. Europe is home 49 of the surveyed companies, six are based in the U.S., and three in Asia.

Going international later in the journey or when more funding is available, possibly due to a VC round, seems to make facets of expansion more feasible. Higher budgets also enable entry to several markets nearly simultaneously.

The survey revealed a roughly even split of target customers across companies, institutions and consumers, as well as a good spread of home markets. The largest contingents were from the U.K. and France, with 13 and nine respondents respectively, followed by the U.S. with seven, Norway with five, and Spain, Finland, and Switzerland with four each. About 40% of these firms were yet to foray beyond their home country and the rest had gone international.

International expansion is an interesting and nuanced part of the growth path of an edtech firm. Unlike their neighbors in fintech, it’s assumed that edtech companies need to expand to a number of big markets in order to reach a scale that makes them attractive to VCs. This is less true than it was in early 2020, as digital education and work is now so commonplace that it’s possible to build a billion-dollar edtech in a single, larger European market.

But naturally, nearly every ambitious edtech founder realizes they need to expand overseas to grow at a pace that is attractive to investors. They have good reason to believe that, too: The complexities of selling to schools and universities, for example, are widely documented, so it might seem logical to take your chances and build market share internationally. It follows that some view expansion as a way of diversifying risk — e.g. we are growing nicely in market X, but what if the opportunity in Y is larger and our business begins to decline for some reason in market X?

International expansion sounds good, but what does it mean? We asked a number of organizations this question as part of the survey analysis. The responses were quite broad, and their breadth to an extent reflected their target customer groups and how those customers are reached. If the product is web-based and accessible anywhere, then it’s relatively easy for a company with a good product to reach customers in a large number of markets (50+). The firm can then build teams and wider infrastructure around that traction.

#column, #ec-column, #ec-edtech, #ec-how-to, #edtech, #education, #europe, #finland, #france, #norway, #owl-ventures, #spain, #startups, #sweden, #switzerland, #united-kingdom, #united-states, #venture-capital

Demand Curve: How to get social proof that grows your startup

When people are uncertain, they look to others for behavioral guidance. This is called social proof, which is a physiological effect that influences your decisions every day, whether you know it or not.

At Demand Curve and through our agency Bell Curve, we’ve helped over 1,000 startups improve their ability to convert cold traffic into repeat customers. We’ve found that effectively using social proof can lead to up to 400% improvement in conversion.

This post shares exactly how to collect and use social proof to help grow your SaaS, e-commerce, or B2B startup.

Surprisingly, we’ve actually seen negative reviews help improve conversion rates. Why? Because they help set customer expectations.

How businesses use social proof

Have you ever stopped to check out a restaurant because it had a large line of people out front? That wasn’t by chance.

It’s common for restaurants to limit the size of their reception area. This forces people to wait outside, and the line signals to people walking past that the restaurant is so good it’s worth waiting for.

But for Internet-based businesses, social proof looks a bit different. Instead of people lining up outside your storefront, you’re going to need to create social proof that resonates with your target customers — they’ll be looking for different clues to signal whether doing business with your company is “normal” or “acceptable” behavior.

Social proof for B2B

People love to compare themselves to others, and this is especially true when it comes to the customers of B2B businesses. If your competitor is able to get a contract with a company that you’ve been nurturing for months, you’d be upset (and want to know how they did it).

Therefore, B2B social proof is most effective when you display the logos of companies you do business with. This signals to people checking out your website that other businesses trust you to deliver on your offer. The more noteworthy or respected the logos on your site, the stronger the influence will be.

Social proof for SaaS

Depending on the type of SaaS product or service you’re selling, you’ll either be selling to an individual or to a business. The strategy remains the same, but the channels will vary slightly.

The most effective way to generate social proof for SaaS products is through positive reviews from trusted sources. For consumer SaaS, that will be through influential bloggers and YouTubers speaking highly of your product. For B2B SaaS, it will be through positive ratings on review sites like G2 or Capterra. Proudly display these testimonials on your site.

Social proof for e-commerce brands

E-commerce brands will typically sell directly to an individual through ads, but because anyone can purchase an ad, you’re going to need to signal trust in other ways. The most common way we see e-commerce brands building social proof is by nurturing an organic social media following on Instagram or TikTok.

This signals to new customers that you’ve gotten the seal of approval from others like them. Having an audience also allows you to showcase user-generated content from your existing customers.

How to collect social proof

There are five avenues startups can tap to collect social proof:

  1. Product reviews
  2. Testimonials
  3. Public relations and earned media
  4. Influencers
  5. Social media and community

Here are a few tactics we’ve used to help startups build social proof.

#assistant, #cloud, #column, #e-commerce, #e-sports, #ec-column, #ec-growth-marketing, #ecommerce, #growth-marketing, #marketing, #review-tools, #saas, #social-media, #social-networks, #social-proof, #startups, #user-generated-content, #verified-experts

Choices and constraints: How DTC companies decide which strategy to follow

Companies typically have to settle on strategies that align with their customers, employees, investors, and regulators. The more they know about how the other side will decide, the clearer their own strategies become.

If regulators always prefer choice for consumers, then it is easy for a platform to allow multiple payment choices: Shopify allows multiple payment options from its partners, Apple doesn’t.

By regulatory intervention, it will have to now.

Nash equilibrium and Netflix time

Nash equilibrium is a fascinating, post-facto explanation for some of the interesting decisions you will often see in business.

In simple terms, Nash equilibrium states that if you have clarity on the other side’s decision, you can make yours without regret. In other words, there is no incentive to change strategy once each side knows what the optimal position of the other side is, in their combined transaction.

All physical products cannot escape retail, because ignoring retail means a smaller serviceable market. But it is a choice companies can make.

I see this playing out every weekend at home. I don’t mind reading a book alone or watching Netflix with my kid, but when I am available for Netflix and my kid decides to read a book, it is a bummer.

DTCs, DNVBs and game theory

In DTC, how companies decide their omnichannel strategy depends on how well they know what their customers’ choices are and what their ideal strategy will be. In many transactions, constraints are actually good forcing functions — they narrow down choices and help you arrive at an equilibrium faster and cheaper.

The marketing and public-market filing languages make for a fascinating read into the minds of companies.

When Warby Parker filed its IPO prospectus last month, the company referred to its digitally-native status in the past tense. The model was effectively flipped in 2020, as its share of online sales to total sales dropped from 65% to 40%. Meanwhile, its physical store count increased from 126 to 145.

#d2c, #direct-to-consumer, #dtc, #ec-column, #ec-ecommerce-and-d2c, #ecommerce, #growth-marketing, #marketing, #marketing-strategy, #merchandising, #omnichannel, #online-shopping, #startups, #verified-experts

4 ways to leverage ROAS to triple lead generation

Businesses that don’t invest in their future may not have a future to look forward to.

Whether you’re investing in your human resources or in critical tech, some outlay in the short term is always needed for long-term success. That’s true when it comes to marketing as well — you can’t market your product or service without investing in advertising. But if that investment isn’t turning into leads and conversions, you’re in trouble.

A “good” ROAS score is different for each company and campaign. If your figure isn’t where you’d like it to be, you can leverage ROAS data to create targeted campaigns and personalized experiences.

It’s vital to identify and apply the most suitable metrics based on business goals, and there’s no one best practice or one-size-fits-all method.

However, smart use of the return on advertising spend (ROAS) data can triple lead generation, as I discovered when I joined Brightpearl to restructure the marketing campaigns. Let’s take a look at some of the ways Brightpearl used ROAS to improve campaigns and increase lead generation. The key is to work out what represents a healthy ROAS for your business so that you can optimize accordingly.

Use the right return metric

It is paramount to choose the right return metric to calculate your ROAS. This will depend partly on your sales cycle.

Brightpearl has a lengthy sales cycle. On average it’s two to three months, and sometimes up to six months, meaning we don’t have tons of data on a monthly basis if we want to use new customer’s revenue data as the return metric. A company with a shorter sales cycle could use revenue, but that doesn’t help us to optimize our campaigns.

We chose to use the sales accepted opportunity (SAO) value instead. It usually takes us about a month to measure, so we can get more ROAS data at the same time. It’s the last sales stage before a win, and it’s more in line with our company goal (to grow our recurring annual revenue), but takes less time to gather the data.

By the SAO stage, we know which leads are good quality­ — they have the budget, are a good fit, and our software can meet their requirements. We can use them to measure our campaign performance.

When you choose a return metric, you need to make sure it matches your company goal without taking ages to get the data. It also has to be measurable at the campaign level, because the aim of using ROAS or other metrics is to optimize your campaigns.

Accept that less is more

I’ve noticed that many companies harbor a fear of missing out on opportunities, which leads them to advertise on all available channels instead of concentrating resources on the most profitable areas.

Prospects usually do their research on multiple channels, so you might try to cover all the possible touch points. In theory, this could generate more leads, but only if you had an unlimited marketing budget and human resources.

#advertising-tech, #column, #customer-relationship-management, #ec-column, #ec-how-to, #ec-marketing-tech, #lead-generation, #marketing, #roas, #sales, #search-engine-optimization, #social-media, #sql, #startups

Crypto’s networked collaboration will drive Web 3.0

Web 1.0 was the static web, and Web 2.0 is the social web, but Web 3.0 will be the decentralized web. It will move us from a world in which communities contribute but don’t own or profit, to one where they can through collaboration.

By breaking away from traditional business models centered around benefiting large corporations, Web3 brings the possibility of community-centered economies of scale. This collaborative spirit and its associated incentive mechanisms are attracting some of the most talented and ambitious developers today, unlocking projects that were previously not possible.

Web3 might not be the final answer, but it’s the current iteration, and innovation isn’t always obvious in the beginning.

Web3, as Ki Chong Tran once said, is “The next major iteration of the internet, which promises to wrest control from the centralized corporations that today dominate the web.” Web3-enabled collaboration is made possible by decentralized networks that no single entity controls.

In closed-source business models, users trust a business to manage funds and execute services. With open-source projects, users trust the technology to perform these tasks. In Web2, the bigger network wins. In Web3, whoever builds the biggest network together wins.

In a decentralized world, not only is participation open to all, the incentive structure is designed so that greater the number of participants, the more everybody succeeds.

Learning from Linux

Linux, which is behind a majority of Web2’s websites, changed the paradigm for how the internet was developed and provides a clear example of how collaborative processes can drive the future of technology. Linux wasn’t developed by an incumbent tech giant, but by a group of volunteer programmers who used networked collaboration, which is when people freely share information without central control.

In The Cathedral & The Bazaar, author Eric S. Raymond shares his observations of the Linux kernel development process and his experiences managing open source projects. Raymond depicts a time when the popular mindset was to develop complex operating systems carefully coordinated by a small, exclusionary group of people — “cathedrals,” which are corporations and financial institutions.

Linux evolved in a completely different way. Raymond explains, “Quality was maintained not by rigid standards or autocracy, but by the naively simple strategy of releasing every week and getting feedback from hundreds of users within days, creating a sort of Darwinian selection on the mutations introduced by developers. To the amazement of almost everyone, this worked quite well.” This Linux development model, or “bazaar” model as Raymond puts it, assumes that “bugs are generally shallow phenomena” when exposed to an army of hackers without significant coordination.

#blockchain, #column, #cryptocurrency, #decentralization, #ec-column, #linux, #operating-systems, #proof-of-stake, #web3

3 strategies to make adopting new HR tech easier for hiring managers

Recruiting for technical roles can be challenging. There are often too many roles to fill, too many or too few candidates to interview and not enough time to get it all done and develop relationships with your key stakeholders: Hiring managers and the executive team.

Working with talent acquisition (TA) leaders and technical recruiters can help companies scalably, accurately and fairly assess potential candidates’ technical skills to fill high-value engineering roles. Technology also offers many advantages that help achieve TA objectives. But in my experience, many TA and HR leaders get frustrated when new tools fail to launch or deliver underwhelming results, because they aren’t adequately adopted, trusted or utilized by end users.

I find that hiring managers are more open-minded to “mechanical” or automated hiring tools if those tools aren’t evaluated on their own, but are evaluated relative to status quo hiring processes.

All of this leads to technical decision-makers and stakeholders developing a natural skepticism for mechanical or automated hiring tools. If your hiring managers seem doubtful about using tech for hiring, here are three strategies to help them embrace hiring tools.

Expect skepticism, it’s natural

Researchers studying how to make scientific hiring tools more effective have discovered an interesting phenomenon: Human beings are naturally skeptical of tools that outsource our decisions (Highhouse, 2008). Left to our own devices, we are hardwired to trust gut instinct over external data points, especially when developing and nurturing new relationships, including who we work with.

Scientists have offered up a few explanations for this preference of gut over data. Some people consider external, mechanical decision-making aids as less trustworthy because of a lack of familiarity with how they work, or because using them reflects poorly on the decision-maker’s value and worth as a leader or manager.

It could also be because there’s a fear of surrendering control and agency to a tool that doesn’t seem to consider or understand context clues. However, research has shown that people make better choices when using mechanical decision support tools than when either humans or mechanical tools make decisions alone.

#column, #ec-column, #ec-enterprise-applications, #ec-how-to, #hiring, #hiring-engineers, #hr-tech, #management, #personnel, #recruitment, #startups, #tc

The responsibilities of AI-first investors

Investors in AI-first technology companies serving the defense industry, such as Palantir, Primer and Anduril, are doing well. Anduril, for one, reached a valuation of over $4 billion in less than four years. Many other companies that build general-purpose, AI-first technologies — such as image labeling — receive large (undisclosed) portions of their revenue from the defense industry.

Investors in AI-first technology companies that aren’t even intended to serve the defense industry often find that these firms eventually (and sometimes inadvertently) help other powerful institutions, such as police forces, municipal agencies and media companies, prosecute their duties.

Most do a lot of good work, such as DataRobot helping agencies understand the spread of COVID, HASH running simulations of vaccine distribution or Lilt making school communications available to immigrant parents in a U.S. school district.

The first step in taking responsibility is knowing what on earth is going on. It’s easy for startup investors to shrug off the need to know what’s going on inside AI-based models.

However, there are also some less positive examples — technology made by Israeli cyber-intelligence firm NSO was used to hack 37 smartphones belonging to journalists, human-rights activists, business executives and the fiancée of murdered Saudi journalist Jamal Khashoggi, according to a report by The Washington Post and 16 media partners. The report claims the phones were on a list of over 50,000 numbers based in countries that surveil their citizens and are known to have hired the services of the Israeli firm.

Investors in these companies may now be asked challenging questions by other founders, limited partners and governments about whether the technology is too powerful, enables too much or is applied too broadly. These are questions of degree, but are sometimes not even asked upon making an investment.

I’ve had the privilege of talking to a lot of people with lots of perspectives — CEOs of big companies, founders of (currently!) small companies and politicians — since publishing “The AI-First Company” and investing in such firms for the better part of a decade. I’ve been getting one important question over and over again: How do investors ensure that the startups in which they invest responsibly apply AI?

Let’s be frank: It’s easy for startup investors to hand-wave away such an important question by saying something like, “It’s so hard to tell when we invest.” Startups are nascent forms of something to come. However, AI-first startups are working with something powerful from day one: Tools that allow leverage far beyond our physical, intellectual and temporal reach.

AI not only gives people the ability to put their hands around heavier objects (robots) or get their heads around more data (analytics), it also gives them the ability to bend their minds around time (predictions). When people can make predictions and learn as they play out, they can learn fast. When people can learn fast, they can act fast.

Like any tool, one can use these tools for good or for bad. You can use a rock to build a house or you can throw it at someone. You can use gunpowder for beautiful fireworks or firing bullets.

Substantially similar, AI-based computer vision models can be used to figure out the moves of a dance group or a terrorist group. AI-powered drones can aim a camera at us while going off ski jumps, but they can also aim a gun at us.

This article covers the basics, metrics and politics of responsibly investing in AI-first companies.

The basics

Investors in and board members of AI-first companies must take at least partial responsibility for the decisions of the companies in which they invest.

Investors influence founders, whether they intend to or not. Founders constantly ask investors about what products to build, which customers to approach and which deals to execute. They do this to learn and improve their chances of winning. They also do this, in part, to keep investors engaged and informed because they may be a valuable source of capital.

#ai, #artificial-general-intelligence, #artificial-intelligence, #column, #cybernetics, #ec-column, #machine-learning, #nso, #palantir, #private-equity, #startup-company, #startups, #venture-capital

5 things you need to win your first customer

A startup is a beautiful thing. It’s the tangible outcome of an idea birthed in a garage or on the back of a napkin. But ask any founder what really proves their startup has taken off, and they will almost instantly say it’s when they win their first customer.

That’s easier said than done, though, because winning that first customer will take a lot more than an Ivy-educated founder and/or a celebrity investor pool.

To begin with, you’ll have to craft a strong ideal customer profile to know your customer’s pain points, while developing a competitive SWOT analysis to scope out alternatives your customers can go to.

Your target customer will pick a solution that will help them achieve their goals. In other words, your goals should align with your customer’s goals.

You’ll also need to create a shortlist of influencers who have your customer’s trust, identify their decision-makers who make the call to buy (or not), and create a mapped list of goals that align your customer’s goals to yours.

Understanding and executing on these things can guarantee you that first customer win, provided you do them well and with sincerity. Your investors will also see the fruits of your labor and be comforted knowing their dollars are at good work.

Let’s see how:

1. Craft the ideal customer profile (ICP)

The ICP is a great framework for figuring out who your target customer is, how big they are, where they operate, and why they exist. As you write up your ICP, you will soon see the pain points you assumed about them start to become more real.

To create an ICP, you will need to have a strong articulation of the problem you are trying to solve and the customers that experience this problem the most. This will be your baseline hypothesis. Then, as you develop your ICP, keep testing your baseline hypothesis to weed out inaccurate assumptions.

Getting crystal clear here will set you up with the proper launchpad. No shortcuts.

Here’s how to get started:

  1. Develop an ICP (Ideal Customer Profile) framework.
  2. Identify three target customers that fit your defined ICP.
  3. Write a problem statement for each identified target customer.
  4. Prioritize the problem statement that resonates with your product the most.
  5. Lock on the target customer of the prioritized problem statement.

Practice use case:

You are the co-founder at an upcoming SaaS startup focused on simplifying the shopping experience in car showrooms so buyers enjoy the process. What would your ICP look like?

2. Develop the SWOT

The SWOT framework cannot be overrated. This is a great structure to articulate who your competitors are and how you show up against them. Note that your competitors can be direct or indirect (as an alternative), and it’s important to categorize these buckets correctly.

#business, #business-intelligence, #column, #customer-experience, #ec-column, #ec-how-to, #growth-marketing, #market-research, #marketing, #startup-advice, #startup-tips, #startups, #tc, #verified-experts

Dear Sophie: Should I apply for citizenship if I have a conviction?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

At Burning Man a few years ago, I was arrested and charged with a misdemeanor for smoking marijuana in public (in my car) and driving under the influence.

I currently have a green card and want to apply for U.S. citizenship next year.

Can I? If so, how should I handle my criminal record?

— Remorseful About the Reefer

Dear Remorseful,

As you’ve discovered, you have to be extra careful when you’re an immigrant: Obviously, you should never break the law, but as an immigrant, if you do, it can have severe and lasting consequences.

You even need to be careful to avoid doing things that an immigration officer might consider to be outside the bounds of good moral character, even if they are not crimes. All immigrants should remember that even though limited use of marijuana for recreational and medical uses is legal in several states, it’s illegal under federal law.

My law partner, Anita Koumriqian, recently podcasted on how various crimes can impact your green card status and affect your ability to become a U.S. citizen. Take a listen and (always in this situation) consult an experienced immigration attorney. Tell your attorney about your DUI and marijuana charges, any subsequent marijuana use, any other arrests or citations, and even things you might consider minor such as speeding, parking or jaywalking tickets. An immigration attorney can determine whether you should proceed with applying for U.S. citizenship and if so, when and how to do so.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

What is good moral character?

As you know, you must be a permanent resident (green card holder) for at least five years — or three years if you have a green card through marriage — to be eligible to apply for U.S. citizenship. Additionally, you must demonstrate “good moral character” during the five- or three-year statutory period.

#column, #diversity, #ec-column, #green-card, #immigration-law, #labor, #lawyers, #sophie-alcorn, #tc, #united-states, #verified-experts

Creative ad tech is on the cusp of a revolution, and VCs should take note

2021 has been a good year to be an ad tech investor. Valuations are surging, Wall Street is happy and exits are frequent and satisfying. It’s the perfect time to double down and invest in an area that has been largely ignored but is poised for major upside in the next few years: Digital creative ad technology.

Think about it. When was the last time we saw a major ad tech funding round that was directed at the actual ads themselves — the messages people actually see everyday? I’d argue that now is the perfect time.

The adtech startups that can figure out how to adapt ads that can interact with the remote control, a synced smartphone or voice commands — maybe even make them shoppable — can theoretically produce a game-changer.

Here are five reasons why VCs should consider ratcheting up their investment into ad tech startups building the next generation of creative tools:

Creative tech is far from being saturated

Consider how much has been spent over the 15 years on digital advertising mechanics such as targeting, serving, measuring and verification. Not to mention the trillions that have gone toward helping brands keep track of customer data and interactions — the marketing clouds, DMPs and CDPs.

Yet you can count the number of creative-centric ad tech companies on one hand. This means there is a lot of room for innovation and early leaders. VideoAmp, which helps brands make ads for various social platforms, pulled in $75 million earlier this year. Given how fast platforms like TikTok and Snap are growing, it won’t be the last.

Digital ad targeting is being squeezed

Ads need to do more work today. Between regulation, cookies going away and Apple locking down data collection, we’ve seen a renewed interest in contextual advertising, including funding for the likes of GumGum, as well as identity resolution firms like InfoSum.

But the digital ad ecosystem can’t get by only using broader data-crunching techniques to replace “retargeting.” The medium is practically crying out for a creative revival that can only be sparked by scalable tech. The recent funding for creative testing startup Marpipe is a start, but more focus is needed on actual tech-driven ideation and automation.

#advertising-tech, #column, #digital-advertising, #digital-marketing, #e-commerce, #ec-column, #ec-marketing-tech, #ecommerce, #machine-learning, #startups, #targeted-advertising, #tc, #venture-capital

Use creative automation software to amp up your brand’s lower-funnel assets

With the holiday season around the corner, growth marketers are gearing up for their busiest time of the year. E-commerce brands are now leaning heavily on social sales and digital advertising, but should also expect an omnichannel shopper — 62% of shoppers plan to purchase both online and in-store this holiday season, according to Celtra.

The marketplace is crowded. Digital marketing requires high volumes of on-brand creative assets, and it is tough to produce them fast enough without compromising on brand equity or storytelling. While marketing channels have exploded in volume, most creative production workflows are the same as they were 50 years ago.

But marketing is a monster that feeds on creative assets, requiring more and more each quarter.

The reality is, any paid impression is also a brand impression and a chance to differentiate in the market. In fact, paid impressions are often the only chance you get to influence some shoppers. That’s why creative — your brand, your design and your message — matters. In growth marketing, traffic, subscriptions, direct-to-consumer channels, testing and, ultimately, revenue all rely on creative to succeed.

Yet, lower-funnel assets are rarely brilliant in branding or even remotely interesting. Teams are limited in meeting global demands across more channels than ever, and the creative they produce is suffering. Brands don’t have the luxury of spending time on design craft and storytelling at scale. Conversely, most creative automation solutions that can assist with efficiency aren’t currently equipped to scale high-quality creative that prioritizes branding and design excellence.

Enterprises are suffering from a creative gap where their content and asset needs are growing fast while team resources and budgets are stagnant or even declining.

Unfortunately, there isn’t a magic AI bullet to solve the challenge. You can’t just buy creative technology in the hopes that it alone will bridge the gap. You need to rethink workflows and team collaboration. If you’re serious about elevating your growth marketing creative, you need to invest in tools that are built for scale and brand governance at once.

#advertising-tech, #artificial-intelligence, #brand-management, #column, #digital-advertising, #digital-marketing, #ec-column, #ec-ecommerce-and-d2c, #marketing, #marketing-automation, #online-advertising, #tc

3 keys to pricing early-stage SaaS products

I’ve met hundreds of founders over the years, and most, particularly early-stage founders, share one common go-to-market gripe: Pricing.

For enterprise software, traditional pricing methods like per-seat models are often easier to figure out for products that are hyper-specific, especially those used by people in essentially the same way, such as Zoom or Slack. However, it’s a different ball game for startups that offer services or products that are more complex.

Most startups struggle with a per-seat model because their products, unlike Zoom and Slack, are used in a litany of ways. Salesforce, for example, employs regular seat licenses and admin licenses — customers can opt for lower pricing for solutions that have low-usage parts — while other products are priced based on negotiation as part of annual renewals.

You may have a strong champion in a CIO you’re selling to or a very friendly person handling procurement, but it won’t matter if the pricing can’t be easily explained and understood. Complicated or unclear pricing adds more friction.

Early pricing discussions should center around the buyer’s perspective and the value the product creates for them. It’s important for founders to think about the output and the outcome, and a number they can reasonably defend to customers moving forward. Of course, self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.

This process will take time, so here are three tips to smoothen the ride.

Pricing is a journey

Pricing is not a fixed exercise. The enterprise software business involves a lot of intangible aspects, and a software product’s perceived value, quality, and user experience can be highly variable.

The pricing journey is long and, despite what some founders might think, jumping head-first into customer acquisition isn’t the first stop. Instead, step one is making sure you have a fully fledged product.

If you’re a late-seed or Series A company, you’re focused on landing those first 10-20 customers and racking up some wins to showcase in your investor and board deck. But when you grow your organization to the point where the CEO isn’t the only person selling, you’ll want to have your go-to-market position figured out.

Many startups fall into the trap of thinking: “We need to figure out what pricing looks like, so let’s ask 50 hypothetical customers how much they would pay for a solution like ours.” I don’t agree with this approach, because the product hasn’t been finalized yet. You haven’t figured out product-market fit or product messaging and you want to spend a lot of time and energy on pricing? Sure, revenue is important, but you should focus on finding the path to accruing revenue versus finding a strict pricing model.

#artificial-intelligence, #aws, #column, #ec-column, #ec-enterprise-applications, #ec-how-to, #enterprise, #enterprise-software, #product, #saas, #salesforce, #startups, #tc

3 methodologies for automated video game highlight detection and capture

With the rise of livestreaming, gaming has evolved from a toy-like consumer product to a legitimate platform and medium in its own right for entertainment and competition.

Twitch’s viewer base alone has grown from 250,000 average concurrent viewers to over 3 million since its acquisition by Amazon in 2014. Competitors like Facebook Gaming and YouTube Live are following similar trajectories.

The boom in viewership has fueled an ecosystem of supporting products as today’s professional streamers push technology to its limit to increase the production value of their content and automate repetitive aspects of the video production cycle.

The largest streamers hire teams of video editors and social media managers, but growing and part-time streamers struggle to do this themselves or come up with the money to outsource it.

The online streaming game is a grind, with full-time creators putting in eight- if not 12-hour performances on a daily basis. In a bid to capture valuable viewer attention, 24-hour marathon streams are not uncommon either.

However, these hours in front of the camera and keyboard are only half of the streaming grind. Maintaining a constant presence on social media and YouTube fuels the growth of the stream channel and attracts more viewers to catch a stream live, where they may purchase monthly subscriptions, donate and watch ads.

Distilling the most impactful five to 10 minutes of content out of eight or more hours of raw video becomes a non-trivial time commitment. At the top of the food chain, the largest streamers can hire teams of video editors and social media managers to tackle this part of the job, but growing and part-time streamers struggle to find the time to do this themselves or come up with the money to outsource it. There aren’t enough minutes in the day to carefully review all the footage on top of other life and work priorities.

Computer vision analysis of game UI

An emerging solution is to use automated tools to identify key moments in a longer broadcast. Several startups compete to dominate this emerging niche. Differences in their approaches to solving this problem are what differentiate competing solutions from each other. Many of these approaches follow a classic computer science hardware-versus-software dichotomy.

Athenascope was one of the first companies to execute on this concept at scale. Backed by $2.5 million of venture capital funding and an impressive team of Silicon Valley Big Tech alumni, Athenascope developed a computer vision system to identify highlight clips within longer recordings.

In principle, it’s not so different from how self-driving cars operate, but instead of using cameras to read nearby road signs and traffic lights, the tool captures the gamer’s screen and recognizes indicators in the game’s user interface that communicate important events happening in-game: kills and deaths, goals and saves, wins and losses.

These are the same visual cues that traditionally inform the game’s player what is happening in the game. In modern game UIs, this information is high-contrast, clear and unobscured, and typically located in predictable, fixed locations on the screen at all times. This predictability and clarity lends itself extremely well to computer vision techniques such as optical character recognition (OCR) — reading text from an image.

The stakes here are lower than self-driving cars, too, since a false positive from this system produces nothing more than a less-exciting-than-average video clip — not a car crash.

#artificial-intelligence, #athenascope, #column, #computer-graphics, #ec-column, #ec-gaming, #gaming, #nvidia, #overwolf, #software-development-kit, #tc

Is it so bad to take money from Chinese venture funds?

China is becoming a superpower in the tech industry. According to Straits Times, China is the only place in the world where it takes less than six years for a startup to become a unicorn — it takes seven years in the U.S., eight years in the U.K. and 11 years in Germany. Despite geopolitical tensions and recent amendments in CFIUS, it is hard to ignore China.

When I joined Runa Capital almost a year ago, my task was to help our portfolio companies enter the Chinese market, find the right partners and raise funding from Chinese investors. And almost on every call with our startups, colleagues from Runa or other global VCs, I heard: Is it a good idea to raise from a Chinese VC? Is it OK to co-invest with Chinese investors? I was surprised to learn that there is little research answering such questions, as there is a lack of adequate information in English about Chinese investments.

Access to the Chinese market seems to be an obvious reason to invite Chinese funds aboard, but only about 20% of Western startups with Chinese capital have operations in China.

So as a Mandarin-speaking specialist, I decided to fill this gap by conducting a study based on Chinese VC database ITjuzi (the Chinese version of Crunchbase) with the help of our powerful data science resources developed by Danil Okhlopkov.

Below, I will try to answer the following questions using statistics and a case-based approach:

  • How much do Chinese funds invest abroad?
  • What is the current trend?
  • Can Chinese investors bring any value to Western startups?
  • Who are the most active Chinese investors abroad?
  • In which areas can Chinese funds bring the most value?
  • What value can Chinese investors bring?
  • When is it better to invite a Chinese investor?

Chinese investors are interested in Western startups

After studying data from ITjuzi, we estimated that Chinese funds invested around $250 billion in 2020 (three times higher than the figure in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.

Comparison of investment amount from different countries in 2020, $bn. Source: Crunchbase, ITjuzi

Fig. 1 — Comparison of investment from different countries in 2020, $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

However, only 15% of investments in 2020 and 17% of investments in the first half of 2021 were in companies outside China, significantly lower than in 2019. This appears to be because during COVID, China’s economy recovered much faster than other countries’, so many Chinese investors preferred to redirect their capital flows to the domestic market.

On the other hand, there is great potential for overseas investments to rebound as soon as the borders reopen and the global economy starts to recover.

Dynamics of Chinese investments. $bn. Source: Crunchbase, ITjuzi

Fig. 2 — Dynamics of Chinese investments. $bn. Source: Crunchbase, ITjuzi. Image Credits: Denis Kalinin

We can also see that Chinese investors are eyeing European startups favorably, which is related to U.S.-China geopolitical tensions as well as the fact that the European VC market is becoming mature.

#china, #column, #ec-china, #ec-column, #ec-east-asia, #funding, #private-equity, #singapore, #startups, #tc, #unicorn, #venture-capital

Is India’s BNPL 2.0 set to disrupt B2B?

Both as a term and as a financial product, “buy now, pay later” has become mainstream in the past few years. BNPL has evolved to assume various forms today, from small-ticket offerings by fintechs on consumer checkout platforms and marketplaces, to closed-loop products offered on marketplaces such as Amazon Pay Later (which they are now extending for outside use as well). You can also see some variants offered by companies that want to expand the scope of consumption and consumer credit.

Globally, BNPL has seen the most growth in the consumer segment and has driven retail consumption and lending over the past few years. Consumer BNPL offerings are a good alternative to credit cards, especially for people who do not have a credit history and can’t get credit from banks. That said, a specific vertical of BNPL products is gaining traction — one targeted toward small and medium enterprises (SMEs). This new vertical is known as “SME BNPL.”

BNPL can be particularly useful when flow-based underwriting or transaction-based underwriting is used to offer credit to small businesses.

B2B commerce in India is moving online

E-commerce has seen tremendous growth in India over the past decade. Skyrocketing smartphone and internet penetration led to rapid growth in e-commerce across large cities and smaller towns alike. Consumer credit has also taken off in parallel as credit cards and digital lending spurred credit-based consumption across offline and online stores.

However, the large B2B supply chain enabling the burgeoning retail market was plagued by bottlenecks and inefficiencies because it involved a plethora of intermediaries and streamlining became a big problem. A number of tech players responded by organizing the previously disorganized B2B commerce market at various touch points, inserting convenience, pricing and easier product access through tech-enabled logistics and a modern supply chain.

Online B2B and B2C penetration in India in 2019

Image Credits: Redseer

India’s B2B e-commerce space has developed rapidly since 2020. Small businesses have moved from using paper to smartphone apps for running a significant part of their day-to-day business, leading to widespread disruption in how businesses transact today. The COVID-19 pandemic also forced small businesses, which were earlier using physical means to procure goods and services, to try new and online models to conduct their affairs.

Graph depicting growth of India's B2B retail market

Image Credits: Redseer

Moreover, the Indian government’s widespread promotion of an instant payments system in the form of the Unified Payments Interface (UPI) has changed how people send money to each other or pay merchants for their goods and services. The next step for solving the digital B2B puzzle is to embed credit inside every transaction and invoice.

Investments in online B2B in india 2016-19

Image Credits: Redseer

If we compare online B2B transactions to the offline world, there is only one missing link: The terms offered to small businesses by their supplier/distributor or vendor. Businesses, unlike consumers, must buy goods and services to eventually trade them, or add value and sell to consumers or others down the value chain. This process is not immediate and has a certain time cycle attached.

The longer sales cycle means many small businesses require credit payment terms when buying inventory. As B2B commerce scales and grows through digital means, a BNPL product that caters to the needs of SMEs can support their growth and alleviate the burden on their cash flows.

How does consumer BNPL differ from SME BNPL?

An SME BNPL product is a purchase financing product for small businesses transacting with suppliers, distributors, aggregator platforms or B2B marketplaces.

#asia, #bnpl, #column, #e-commerce, #ec-column, #ec-fintech, #ec-india, #ec-indian-subcontinent, #finance, #india, #online-lending, #online-shopping, #retail, #small-business, #startups, #supply-chain, #tc

Have ‘The Privacy Talk’ with your business partners

As a parent of teenagers, I’m used to having tough, sometimes even awkward, conversations about topics that are complex but important. Most parents will likely agree with me when I say those types of conversations never get easier, but over time, you tend to develop a roadmap of how to approach the subject, how to make sure you’re being clear, and how to answer hard questions.

And like many parents, I quickly learned that my children have just as much to teach me as I can teach them. I’ve learned that tough conversations build trust.

I’ve applied this lesson about trust-building conversations to an extremely important aspect of my role as the chief legal officer at Foursquare: Conducting “The Privacy Talk.”

The discussion should convey an understanding of how the legislative and regulatory environment are going to affect product offerings, including what’s being done to get ahead of that change.

What exactly is ‘The Privacy Talk’?

It’s the conversation that goes beyond the written, publicly-posted privacy policy, and dives deep into a customer, vendor, supplier or partner’s approach to ethics. This conversation seeks to convey and align the expectations that two companies must have at the beginning of a new engagement.

RFIs may ask a lot of questions about privacy compliance, information security, and data ethics. But it’s no match for asking your prospective partner to hop on a Zoom to walk you through their broader approach. Unless you hear it first-hand, it can be hard to discern whether a partner is thinking strategically about privacy, if they are truly committed to data ethics, and how compliance is woven into their organization’s culture.

#column, #digital-advertising, #digital-rights, #ec-column, #ec-how-to, #foursquare, #identity-management, #lawyers, #privacy, #security, #startups, #terms-of-service, #verified-experts

What China’s new data privacy law means for US tech firms

China enacted a sweeping new data privacy law on August 20 that will dramatically impact how tech companies can operate in the country. Officially called the Personal Information Protection Law of the People’s Republic of China (PIPL), the law is the first national data privacy statute passed in China.

Modeled after the European Union’s General Data Protection Regulation, the PIPL imposes protections and restrictions on data collection and transfer that companies both inside and outside of China will need to address. It is particularly focused on apps using personal information to target consumers or offer them different prices on products and services, and preventing the transfer of personal information to other countries with fewer protections for security.

The PIPL, slated to take effect on November 1, 2021, does not give companies a lot of time to prepare. Those that already follow GDPR practices, particularly if they’ve implemented it globally, will have an easier time complying with China’s new requirements. But firms that have not implemented GDPR practices will need to consider adopting a similar approach. In addition, U.S. companies will need to consider the new restrictions on the transfer of personal information from China to the U.S.

Implementation and compliance with the PIPL is a much more significant task for companies that have not implemented GDPR principles.

Here’s a deep dive into the PIPL and what it means for tech firms:

New data handling requirements

The PIPL introduces perhaps the most stringent set of requirements and protections for data privacy in the world (this includes special requirements relating to processing personal information by governmental agencies that will not be addressed here). The law broadly relates to all kinds of information, recorded by electronic or other means, related to identified or identifiable natural persons, but excludes anonymized information.

The following are some of the key new requirements for handling people’s personal information in China that will affect tech businesses:

Extra-territorial application of the China law

Historically, China regulations have only been applied to activities inside the country. The PIPL is similar in applying the law to personal information handling activities within Chinese borders. However, similar to GDPR, it also expands its application to the handling of personal information outside China if the following conditions are met:

  • Where the purpose is to provide products or services to people inside China.
  • Where analyzing or assessing activities of people inside China.
  • Other circumstances provided in laws or administrative regulations.

For example, if you are a U.S.-based company selling products to consumers in China, you may be subject to the China data privacy law even if you do not have a facility or operations there.

Data handling principles

The PIPL introduces principles of transparency, purpose and data minimization: Companies can only collect personal information for a clear, reasonable and disclosed purpose, and to the smallest scope for realizing the purpose, and retain the data only for the period necessary to fulfill that purpose. Any information handler is also required to ensure the accuracy and completeness of the data it handles to avoid any negative impact on personal rights and interests.

#asia, #china, #column, #computer-security, #data-protection, #data-security, #ec-china, #ec-column, #ec-east-asia, #encryption, #european-union, #general-data-protection-regulation, #government, #internet, #iphone, #privacy, #tc

Investors are doubling down on Southeast Asia’s digital economy

Southeast Asian tech companies are drawing the attention of investors around the world. In 2020, startups in the region raised over $8.2 billion, about four times more than they did in 2015. This trend continued in 2021, with regional M&A hitting a record high of $124.8 billion in the first half of 2021, up 83% from a year earlier.

This begs the question: Who exactly is investing in Southeast Asia?

Let’s explore the three key types of investors pouring money into and driving the growth of Southeast Asia’s tech ecosystem.

Over 229 family offices have been registered in Singapore since 2020, with total assets under management of an estimated $20 billion.

Big tech

Southeast Asia has become an attractive market for U.S. and Chinese tech firms. Internet penetration here stands at 70%, higher than the global average, and digital adoption in the region remains nascent — it wasn’t until the pandemic that adoption of digital services such as e-wallets and online shopping took off.

China’s tech giants Tencent and Alibaba were among the first to support early e-commerce growth in Southeast Asia with investments in Sea Limited and Lazada, and have since expanded their footprint into other internet verticals. Alibaba has backed Akulaku, M-Pay (eMonkey), DANA, Wave Money and Mynt (GCash), while Tencent has invested in Voyager Innovations (PayMaya), SHAREit, iflix, Ookbee and Sanook.

U.S. tech firms have also recently entered the scene. In June 2020, Gojek closed a $3 billion Series F round from Google, Facebook, Tencent and Visa. Google, together with Singapore’s Temasek Holdings, invested some $350 million in Tokopedia in October. Meanwhile, Microsoft invested an undisclosed amount in Grab in 2018 and has invested $100 million in Indonesian e-commerce firm Bukalapak.

Venture capitalists

In Q1 2021, Southeast Asian startups raised $6 billion, according to DealStreetAsia, positioning 2021 as another record year for VC investment in the region.

The region is also rising in prominence as a destination for investment capital relative to the rest of Asia. Regional VC investment grew 5.2 times to $8.2 billion in 2020 from $1.6 billion in 2015, as we can see in the table below.

Venture capital investment by region 2015-2020

Image Credits: Jungle VC

Southeast Asia also has many opportunities for VC investment relative to its market size. From 2015 to 2020, China saw VC investment of nearly $300 per person; for Southeast Asia — despite a recent investment boom — this metric sits at just $47.50 per person, or just a sixth of that in China. This implies a substantial opportunity for investments to develop the region’s digital economy.

The region’s rising population and growth prospects are higher due to China’s population growth challenges, alongside the latter’s higher digital economy market saturation and maturity.

#alibaba, #asia, #asia-pacific, #bridgewater-associates, #china, #column, #e-commerce, #ec-column, #ec-southeast-asia-oceania, #facebook, #ggv-capital, #google, #internet-penetration, #james-dyson, #joseph-phua, #lazada, #lazada-group, #microsoft, #online-shopping, #paul-allen, #private-equity, #ray-dalio, #sergey-brin, #singapore, #southeast-asia, #startups, #temasek-holdings, #tencent, #tokopedia, #united-states, #venture-capital

Fintech is transforming the world’s oldest asset class: Farmland

Farmland as an asset class has proven itself to be a stable investment decade after decade. Farmland’s negative correlation with the Dow Jones Industrial Average sits at an eye-popping -43% for a three-year hold period, making it an excellent hedge against market volatility.

The asset has also been a steady appreciator since 1987, when institutional investors began incorporating farmland into their portfolios. Equally, investments into sustainably managed farmland have the potential to transform agriculture from one of the largest sources of greenhouse gas emissions to one of the largest carbon sinks.

While farmland investments can provide passive income and a hedge during just about any economic condition, direct investments into the asset have been largely inaccessible to date.

However, while farmland is among the oldest investment classes around, the average investor hasn’t had access to farmland the way that billionaires and institutional investors have.

Revolutions in fintech and a host of startups are changing this.

Why farmland?

COVID-19 affected the world in ways we couldn’t have predicted, and the markets were no exception. The S&P 500 plummeted in mid-March and shed 34% of its pre-COVID peak value. But unlike past crises, the index rebounded just a month later.

This doesn’t mean that financial markets have fully recovered, however. We’ve seen plenty of volatility since, both in the form of rallies and losses. This has caused many investors to move some of their portfolio out of equities.

This is where farmland entered the discussion.

A historically stable asset class

Wild stock market fluctuations existed well before COVID-19. The latest era of volatility began in 2018 and continued even as the economy grew prior to the pandemic. Given the unpredictability of the equities market, investors need to counterbalance what’s in store for stocks and funds.

#column, #ec-column, #ec-food-climate-and-sustainability, #finance, #financial-technology, #food-supply, #greenhouse-gas-emissions, #investment, #startups

Debt versus equity: When do non-traditional funding strategies make sense?

The U.S. produces more new startups and unicorns each year than any other country in the world, but 90% of startups fail, with cash flow often being a major challenge.

Entrepreneurs trying to raise funding for their new businesses are faced with a maze of options, with most taking the common route of equity rounds. There’s clearly a lot of venture money to be raised — and most tech entrepreneurs happily take it in exchange for equity. This works for some, but too often founders find themselves diluting their equity to unrecoverable portions rather than considering other financing options that allow them to hold on to their company — options like debt capital.

Even if you’re growing quickly, not all founders want to set a valuation for their company. In that case, you can offer investors “convertible debt.”

Despite the VC flurries of 2020 creating an ecosystem of seemingly endless equity, it’s important for entrepreneurs and founders to understand that there is no one-size-fits-all model for raising capital. Debt capital, which refers to capital raised by taking out a loan, is an alternative route that entrepreneurs should consider.

Understanding the real cost of venture debt and when it makes more sense than the traditional equity route relies on an understanding of what you and your company hope to achieve.

Understanding your goals

We mainly see two kinds of startups today: Those that want to try something new, and the ones that focus on making things faster, cheaper or simpler. Facebook, Twitter and Instagram are good examples of the first kind — social media didn’t exist before the internet. Discount airlines, cell phones (not smartphones) and integrated circuits are good examples of the “faster, cheaper, simpler” variety, because they simply displaced familiar incumbents.

Many entrepreneurs are eager to be the next “try something new” success story, and I applaud them for feeling that way. Carving out your own market is a fast-track to entrepreneurial stardom if you’re successful. But unless your main goal is to be famous, it’s often impractical and distracting.

People tend to think that category creation is less risky than incumbent disruption. However, as long as you’re truly faster, cheaper and simpler, patience and strategy can propel you to where you want to be.

 

Just as there are different market approaches, there are a number of funding strategies that work best for your goals. Landing investments from leading VC firms has benefits and is a good avenue to opt for if you’re a young startup carving out a market and in need of validation and experience. These firms bring trusted advisers that are laser-focused on growth and have the resources and experience to navigate the murky waters of category creation.

#column, #ec-column, #ec-how-to, #entrepreneurship, #finance, #funding, #private-equity, #startups, #unicorn, #venture-capital, #venture-debt

Dear Sophie: When can I apply for my US work permit?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

My husband just accepted a job in Silicon Valley. His new employer will be sponsoring him for an E-3 visa.

I would like to continue working after we move to the United States. I understand I can get a work permit with the E-3 visa for spouses.

How soon can I apply for my U.S. work permit?

— Adaptive Aussie

Dear Adaptive,

Thanks for your question and congrats on the new employment opportunities for both you and your husband! Listen to my podcast episode on work permits, or Employment Authorization Documents (EADs) as they are officially known, to find out who qualifies for one, when you can apply for one, what you can do with one and how long it takes to get one.

You can apply for a work permit once you arrive in the United States in E-3 status (a professional work visa for Australians in the U.S.). It’s not possible to apply for a work permit at the consulate in Sydney when you apply for your E-3 visas. To do that, you will need to submit Form I-765 (Application for Employment Authorization) and supporting documents to U.S. Citizenship and Immigration Services (USCIS). If USCIS approves your application, you will not be able to start working until you receive the physical, plastic EAD card, which proves to prospective employers that you are authorized to work in the United States.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

How long will it take?

USCIS is currently backlogged and is taking about 11 months to process EAD applications. Since any mistakes or omissions in an EAD application can create further delays, I recommend hiring an immigration attorney to submit the application on your behalf. An immigration attorney can also discuss other options that could enable you to start working sooner.

#column, #ec-column, #ec-future-of-work, #green-card, #labor, #lawyers, #sophie-alcorn, #sports, #tc, #verified-experts

Meet retail’s new sustainability strategy: Personalization

We have been raised to believe in recycling, but it has mostly been a sham — only 9% of all plastic waste produced in 2018 was recycled. The beauty industry produces over 120 billion units of packaging every year, little of which is recycled. Globally, an estimated 92 million tons of textile waste ends up in landfills.

Reducing waste is key to meeting environmental milestones, and some retail firms have narrowed in on a unique approach to minimize what their customers throw away: personalization. Accurate personalization can guide consumers to the right products, reducing waste while increasing conversion and loyalty.

Reducing waste is key to meeting environmental milestones, and some retail firms have narrowed in on a unique approach to minimize what their customers throw away: personalization.

For big brands and retailers, personalization is expected to be the top category for tech investment this year. Moreover, personalization holds high appeal, with 80% of survey respondents indicating they are more likely to do business with a company if it offers personalized experiences and 90% indicating that they find personalization appealing, according to a survey by Epsilon.

Startups that deliver sustainable personalization solutions that also improve business for retailers and brands fall into three categories:

  • AR virtual try-on with shade matching.
  • Advanced virtual fitting rooms with VR/AR for fashion.
  • Smart packaging with IoT and distributed ledger technology.

AR virtual try-on with shade matching

Faces are easy to map, since it’s not difficult to virtually place a lipstick color on a face, but using AR and AI to recommend skin-tone-matching makeup products has been challenging for many AR virtual try-on companies. “I’ve been searching for an intuitive foundation-shade-finder tool since launching Cult Beauty in 2008, and nothing has lived up to the experience of having a professional match you in daylight until I discovered MIME,” says Alexia Inge, founder of Cult Beauty. “There are so many variables like light, skin tones, prevalent undertones, device, screen, OS, formula density, formula oxidation, as well as preferences for coverage levels, finish, brand and skin type,” she says.

MIME founder and CEO Christopher Merkle said, “Virtual try-on has exploded in the past few years, but for color cosmetics, the technology doesn’t help solve the primary customer pain point: shade matching. From day one, I decided to focus our company’s R&D efforts exclusively on color accuracy. I want to make sure that when the consumer receives their foundation or concealer in the mail, it’s the perfect shade once applied to their skin.”

MIME’s Shade Finder AI allows consumers to take a photo of themselves, answer a few questions, then get matched with a makeup color that pairs with their skin tone. MIME helps retailers and brands increase their online and in-store purchase conversion by up to five times. More than 22% of beauty returns are due to poor customer color purchases, but Merkle says MIME can get returns as low as 0.1%.

#amazon, #apple-inc, #arkit, #artificial-intelligence, #augmented-reality, #body-labs, #column, #cosmetics, #ec-column, #ec-consumer-applications, #ec-ecommerce-and-d2c, #ec-food-climate-and-sustainability, #ecommerce, #marketing, #new-york, #online-shopping, #personalization, #startups, #tc, #true-ventures, #virtual-reality, #walmart

5 factors that can make or break a startup’s growth journey

The “health” of a startup’s growth can be a strong predictor of how large and valuable it can become. Our generation’s most valuable startups have all sustained a high rate of user/revenue growth over an extended period of time. As such, founders, employees and investors are all trying to figure out if their startup can achieve sustainable growth to create a large and enduring business over time.

Simply looking at top-line growth tells you relatively little. Two startups that are currently growing users or revenue 300% every year can each have different long-term prospects. It’s almost like looking at two people of the same age, height and weight, and projecting the same quality of life and longevity for both — there are many more factors that can help you make better predictions. Startups are similar, and it’s important to dig deeper into the health of a startup’s early growth and work to build the right foundation from an early stage.

Paid marketing can be a useful tool in your toolkit to accelerate an already humming flywheel. Just don’t let it be the only one.

Prior to becoming a VC at Defy, I founded two companies and was Eventbrite’s VP of growth for over six years from startup through IPO. Working across all stages from founding through to public company and advising many other startups along the way, I’ve landed on five critical factors for healthy and sustained growth that can be the difference between a startup failing, getting to a modest exit or building a valuable and enduring billion-dollar company.

Healthy engagement and retention are key

At its core, any successful product or service delivers more value to the user/customer than it costs to use (money or time). To see if your product is delivering true value, ask if it is achieving strong user engagement and customer retention. My friend and growth guru Casey Winters captures this well: “Product-market fit is retention that allows for sustained growth.”

Consumer startups can evaluate this via through cohort-based retention analysis of how frequently customers use the service, and how long they are retained for. SaaS businesses should be talking with customers often to gauge their happiness while also looking at logo retention as well as gross and net revenue retention — ideally, the business should show early signs of being a net-negative churn business, wherein revenue from existing customers actually grows over time, even after accounting for churned customers.

Many people incorrectly think “startup growth = customer acquisition.” In reality, retention is the most fundamental aspect underlying sustainable growth.

Customer obsession creates “pull” from the market

Customer obsession, plus organic pull from the market, are indicators of early product-market fit and signals of future growth potential.

Here are a couple ways to measure this:

See if a healthy percentage of the business is growing without paid spend, generally through word of mouth or some other form of virality. If your business is seeing more than 50% organic growth at a fast rate (200% to 300%+ year over year), you’re solving people’s needs well enough that they’re now sharing with others and creating a positive viral effect.

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How engaged are your employees?

Managers are occasionally evaluated by their team’s occupational wellness — the sometimes-hazy calculation that rates employees’ professional and personal contentment. What may not be as commonly tested is the connected concept of employee engagement, which measures how committed employees are to helping their company succeed. While 71% of executives cite employee engagement as essential to their success, a mere 15% of U.S. employees consider themselves engaged.

Unfortunately for employers, when we look through either the contentment or engagement lens, we see a workforce in crisis — upward of 70% of U.S. workers are so unhappy in their roles that they are thinking about and/or actively looking for a new job.

What’s behind all this? Developmental stagnation at work and the opportunity for a better role elsewhere, often defined not merely as one with more pay, but as one presenting a pathway toward personal and professional growth and upward mobility.

Rather than list out the litany of errors, let’s gauge your company’s employee development and engagement efforts.

The pandemic has only exacerbated the dissatisfaction of many employees — at varied levels — who feel stuck in unfulfilling jobs, with little guidance on how to advance or pivot in their careers and achieve the dignity of meaningful, impactful work.

This piece aims to deliver a simple action plan for assessing your employees’ engagement level and taking targeted steps to build the kind of committed and reliable workforce necessary to survive and thrive in today’s marketplace.

Common failures in corporate career development efforts

While researching employee retention when building our startup, we identified a number of common and recurring shortcomings in career-development practices — ones that are likely to be familiar to most Fortune 500 companies, as well as scaling, high-growth startups.

We focused on the activities and strategies companies use to align their skills needs with workers’ capabilities and aspirations — specifically, their approach to advancing staff toward jobs deemed both desirable to employees and essential to employers.

We found significant behavioral-design failure points across three main areas: Their strategic framework for employee engagement and advancement; implementation process and templates; and goal setting and rewards.

To understand the companies’ strategic framework, we examined upskilling and tuition reimbursement policies and spend; individualized employee future-fit assessments; tools for employee career pathway modeling and advancement; and early-in-career and diverse-hire career-progression programs.

For implementation processes and templates, we examined onboarding; employee performance and development cycle; manager feedback; and succession planning.

For goal setting and rewards, we examined manager and VP-level goals and rewards connected directly to their activities and performance in developing and advancing employee careers.

Take this employee development survey

Let’s gauge your company’s employee development and engagement efforts. How many of the following can you answer with a “yes”?

  1. Has your company run a process to define skills or talent-gaps across organizations in the past two years?
  2. As part of such a process, did your company define a role taxonomy for essential roles?
  3. Do you have a process and the tools for mapping existing personnel to that taxonomy, whether from within or outside the relevant organization?

    #column, #ec-column, #ec-how-to, #employee-engagement, #employee-learning, #employee-management, #employee-wellness, #employment, #hiring, #human-resource-management, #performance-management, #startups

A founder’s guide to effectively managing your options pool

There’s an old startup adage that goes: Cash is king. I’m not sure that is true anymore.

In today’s cash rich environment, options are more valuable than cash. Founders have many guides on how to raise money, but not enough has been written about how to protect your startup’s option pool. As a founder, recruiting talent is the most important factor for success. In turn, managing your option pool may be the most effective action you can take to ensure you can recruit and retain talent.

That said, managing your option pool is no easy task. However, with some foresight and planning, it’s possible to take advantage of certain tools at your disposal and avoid common pitfalls.

In this piece, I’ll cover:

  • The mechanics of the option pool over multiple funding rounds.
  • Common pitfalls that trip up founders along the way.
  • What you can do to protect your option pool or to correct course if you made mistakes early on.

A minicase study on option pool mechanics

Let’s run through a quick case study that sets the stage before we dive deeper. In this example, there are three equal co-founders who decide to quit their jobs to become startup founders.

Since they know they need to hire talent, the trio gets going with a 10% option pool at inception. They then cobble together enough money across angel, pre-seed and seed rounds (with 25% cumulative dilution across those rounds) to achieve product-market fit (PMF). With PMF in the bag, they raise a Series A, which results in a further 25% dilution.

The easiest way to ensure you don’t run out of options too quickly is simply to start with a bigger pool.

After hiring a few C-suite executives, they are now running low on options. So at the Series B, the company does a 5% option pool top-up pre-money — in addition to giving up 20% in equity related to the new cash injection. When the Series C and D rounds come by with dilutions of 15% and 10%, the company has hit its stride and has an imminent IPO in the works. Success!

For simplicity, I will assume a few things that don’t normally happen but will make illustrating the math here a bit easier:

  1. No investor participates in their pro-rata after their initial investment.
  2. Half the available pool is issued to new hires and/or used for refreshes every round.

Obviously, every situation is unique and your mileage may vary. But this is a close enough proxy to what happens to a lot of startups in practice. Here is what the available option pool will look like over time across rounds:

 

Option pool example

Image Credits: Allen Miller

Note how quickly the pool thins out — especially early on. In the beginning, 10% sounds like a lot, but it’s hard to make the first few hires when you have nothing to show the world and no cash to pay salaries. In addition, early rounds don’t just dilute your equity as a founder, they dilute everyone’s — including your option pool (both allocated and unallocated). By the time the company raises its Series B, the available pool is already less than 1.5%.

#capitalization-table, #column, #ec-column, #ec-how-to, #entrepreneurship, #funding, #hiring, #options, #startups, #stock-options

Use cohort analysis to drive smarter startup growth

Cohort analysis is a way of evaluating your business that involves grouping customers into “cohorts” and observing how they behave over time. A commonly used approach is monthly cohort analysis, where customers are grouped by the month they signed up, allowing you to observe how someone who joined in November compares to someone who signed up the month before.

Cohort analysis gives you a multivariable, forward-looking view of your business compared to more simple and static values like averages or totals.

Cohort analysis is flexible and can be used to analyze a variety of performance metrics including revenue, acquisition costs and churn.

Let’s imagine you’re the CMO of the “Bluetooth Coffee Company.” You sell a tech-enabled “coffee composer” that brews coffee, tracks consumption and orders replacement coffee when users are running low. The longer your customers are subscribers, the more money you make. You recently ran a Black Friday feature on a popular deals site and you’re interested to know if you should run it again.

The chart below is a simple analysis you might do to gauge your marketing performance. It shows the total customers added each month, and a clear spike in November following the Black Friday promotion. At first glance, things look good — you brought in more than double the monthly customers in November compared to October.

Marketing campaign results in significant uptick to users added

Image Credits: Sagard & Portage Ventures

But before you rebook the promotion, you should ask if these new Black Friday consumers are as valuable as they seem. Comparing monthly customer percentage is a good way to find out.

Below is a monthly cohort analysis of new customers between September 2020 and February 2021. Like our previous chart, we’ve listed the monthly cohort size, but we’ve also included the customer engagement rate (calculated by dividing daily active users by monthly active users or DAU/MAU for each month (M1 is month 1, M2 is month 2, and so on).

This analysis lets us see how the customer engagement of each monthly cohort compares to the next.

Customer engagement by cohort

Image Credits: Sagard & Portage Ventures

From the figures above, we see that most cohorts have a customer engagement rate in their first month (M1, 42%-46%), meaning 42%-46% of new customers use the coffee composer everyday. The November cohort however has materially lower engagement (M1, 30%), and remains lower in subsequent months (M2, 26%) and (M3, 27%). Interestingly, the customer engagement rate only drops with the November cohort, returning to normal with the December cohort (M1, 45%).

#business, #business-intelligence, #column, #customer-engagement, #customer-lifetime-value, #customer-retention, #ec-column, #ec-how-to, #facebook, #product-marketing, #startups, #tc

All the reasons why you should launch a credit or debit card

Over the previous two or three years we’ve seen an explosion of new debit and credit card products come to market from consumer and B2B fintech startups, as well as companies that we might not traditionally think of as players in the financial services industry.

On the consumer side, that means companies like Venmo or PayPal offering debit cards as a new way for users to spend funds in their accounts. In the B2B space, the availability of corporate card issuing by startups like Brex and Ramp has ushered in new expense and spend management options. And then there is the growth of branded credit and debit cards among brands and sports teams.

But if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users.

To learn more about launching a card product, TechCrunch spoke with executives from Marqeta, Expensify, Synctera and Cardless about the pros and cons of launching a card product. So without further ado, here are all the reasons you should think about doing so, and one big reason why you might not want to.

Because it’s (relatively) easy

Probably the biggest reason we’ve seen so many new fintech and non-fintech companies rush to offer debit and credit cards to customers is simply that it’s easier than ever for them to do so. The launch and success of businesses like Marqeta has made card issuance by API developer friendly, which lowered the barrier to entry significantly over the last half-decade.

“The reason why this is happening is because the ‘fintech 1.0 infrastructure’ has succeeded,” Salman Syed, Marqeta’s SVP and GM of North America, said. “When you’ve got companies like [ours] out there, it’s just gotten a lot easier to be able to put a card product out.”

While noting that there have been good options for card issuance and payment processing for at least the last five or six years, Expensify Chief Operating Officer Anu Muralidharan said that a proliferation of technical resources for other pieces of fintech infrastructure has made the process of greenlighting a card offering much easier over the years.

#banking, #business-intelligence, #cardless, #credit-card, #debit-cards, #ec-column, #ec-fintech, #expensify, #finance, #financial-services, #financial-technology, #fintech-infrastructure, #fintech-startup, #marqeta, #mastercard, #mobile-payments, #online-payments, #payment-processing, #payment-processor, #payments, #startups, #synctera, #tc

6 tips for establishing your startup’s global supply chain

Startups are hard work, but the complexities of global supply chains can make running hardware companies especially difficult. Instead of existing within a codebase behind a screen, the key components of your hardware product can be scattered around the world, subject to the volatility of the global economy.

I’ve spent most of my career establishing global supply chains, setting up manufacturing lines for 3D printers, electric bicycles and home fitness equipment on the ground in Mexico, Hungary, Taiwan and China. I’ve learned the hard way that Murphy’s law is a constant companion in the hardware business.

But after more than a decade of work on three different continents, there are a few lessons I’ve learned that will help you avoid unnecessary mistakes.

Expect cost fluctuations, especially in currency and shipping

Shipping physical products is quite different from “shipping” code — you have to pay a considerable amount of money to transport products around the world. Of course, shipping costs become a line item like any other as they get baked into the overall business plan. The issue is that those costs can change monthly — sometimes drastically.

At this time last year, a shipping container from China cost $3,300. Today, it’s almost $18,000 — a more than fivefold increase in 12 months. It’s safe to assume that most 2020 business plans did not account for such a cost increase for a key line item.

Shipping a buggy hardware product can be exponentially costlier than shipping buggy software. Recalls, angry customers, return shipping and other issues can become existential problems.

Similar issues also arise with currency exchange rates. Contract manufacturers often allow you to maintain cost agreements for any fluctuations below 5%, but the dollar has dropped much more than 5% against the yuan compared to a year ago, and hardware companies have been forced to renegotiate their manufacturing contracts.

As exchange rates become less favorable and shipping costs increase, you have two options: Operate with lower margins, or pass along the cost to the end customer. Neither choice is ideal, but both are better than going bankrupt.

The takeaway is that when you set up your business, you need to prepare for these possibilities. That means operating with enough margin to handle increased costs, or with the confidence that your end customer will be able to handle a higher price.

Overorder critical parts

Over the past year, many businesses have lost billions of dollars in market value because they didn’t order enough semiconductors. As the owner of a hardware company, you will encounter similar risks.

The supply for certain components, like computer chips, can be limited, and shortages can arise quickly if demand increases or supply chains get disrupted. It’s your job to analyze potential choke points in your supply chain and create redundancies around them.

#column, #ec-column, #ec-hardware, #ec-how-to, #ec-manufacturing-and-supply-chain, #hardware, #logistics, #manufacturing, #semiconductors, #startups, #supply-chain, #supply-chain-management

Lessons from COVID: Flexible funding is a must for alternative lenders

Rachael runs a bakery in New York. She set up shop in 2010 with her personal savings and contributions from family and friends, and the business has grown. But Rachael now needs additional financing to open another store. So how does she finance her expansion plans?

Because of stringent requirements, extensive application processes and long turnaround times, small and medium-sized businesses (SMBs) like Rachael’s bakery seldom qualify for traditional bank loans. That’s when alternative lenders — who offer short and easy applications, flexible underwriting and quick turnaround times — come to the rescue.

Alternative lending is any lending that occurs outside of a conventional financial institution. These kinds of lenders offer different types of loans such as lines of credit, microloans and equipment financing, and they use technology to process and underwrite applications quickly. However, given their flexible requirements, they usually charge higher interest rates than traditional lenders.

Securitization is another cost-effective option for raising debt. Lenders can pool the loans they have extended and segregate them into tranches based on credit risk, principal amount and time period.

But how do these lenders raise funds to bridge the financing gap for SMBs?

As with all businesses, these firms have two major sources of capital: equity and debt. Alternative lenders typically raise equity funding from venture capital, private equity firms or IPOs, and their debt capital is typically raised from sources such as traditional asset-based bank lending, corporate debt and securitizations.

According to Naren Nayak, SVP and treasurer of Credibly, equity generally constitutes 5% to 25% of capital for alternative lenders, while debt can be between 75% and 95%. “A third source of capital or funding is also available to alternative lenders — whole loan sales — whereby the loans (or merchant cash advance receivables) are sold to institutions on a forward flow basis. This is a “balance-sheet light” funding solution and an efficient way to transfer credit risk for lenders,” he said.

Let’s take a look at each of these options in detail.

Funding sources for alternative lenders.

Image Credits: FischerJordan

Equity capital

Venture capital or private equity funding is one of the major sources of financing for alternative lenders. The alternative lending industry is said to be a “gold mine” for venture capital investments. While it is difficult for such companies to receive credit from traditional banks because of their stringent requirements in the initial stages, once the founders have shown a commitment by investing their own money, VC and PE firms usually step in.

However, VC and PE firms can be expensive sources of capital — their investment dilutes the ownership and control in the company. Plus, obtaining venture capital is a long, involved and competitive process.

Alternative lenders that have achieved good growth rates and scaled their operations have another option: An IPO lets them quickly raise large amounts of money while providing a lucrative exit for early investors.

#bank, #bluevine, #column, #corporate-finance, #credit, #ec-column, #ec-fintech, #finance, #forward, #funding, #kabbage, #lendingclub, #loans, #money, #new-york, #ondeck,