Monthly Archives: August 2013

India's Visa Maze Ensnares Foreign Entrepreneurs



Carrying all the right documentation for his five-year business visa, Alex (not his real name) embarked on what he thought would be his fourth and final visit to the Indian immigration authority. He believed his wild goose chase was almost at an end. However, his awkwardly smiling assassin, the elusive office supervisor, had other ideas.

“Sorry, you can’t get your visa now, please come back in some time,” the supervisor said, fatally.

Alex’s plight shows the difficulties entrepreneurs face in trying to access the booming market of India today. This is his story.

The economics graduate moved to India about a year ago to co-found a social business with his peers. The government made them wait the best part of a year before approving their application to be incorporated as a local not-for-profit — a vital credential to navigate the country’s Catch-22 regulatory system. With incorporation certificate in hand, Alex was confident the last piece of his visa puzzle, namely attaining a five-year authorisation to work to improve the quality of life for Indians, was about to fall into place.

How wrong he was.

Stepping into the office was like entering Punxsutawney, Pennsylvania, on Groundhog Day, endlessly waiting for a weasley little oracle to emerge from his hovel in order to deliver bad news. Alex was forced to return to the office three times because he “didn’t have the right documentation.”

On the fourth visit, the bureaucrat, ensconced in his glass bubble, again said he didn’t have the right documents and would have to come back again. At the end of his wits, Alex didn’t buy it. After failing to plead his case with the front-line worker, he asked to speak with the manager lurking in the background. The bureaucrat turned meekly, skulked over, and relayed the request to his superior who took one look at the fiery redhead on the wrong side of the counter and scurried away to his glass-walled office, deep in the bubble. The clerk returned and, as if the whole spectacle had not been witnessed, told Alex the manager was unavailable.

“The manager is right there,” he said, pointing to the anonymous office. “I just need to speak with him for two minutes. I’ve already met him before. He knows my case.”

“Sorry sir, he is not available,” the bureaucrat said, reciting a well-used line. “You’ll have to send him an email to organise an appointment.”

Email? Alex was all too familiar with India’s digital black hole, where bits may have even travelled backwards and forwards in time, even to alternate universes, because they never seemed to reach their intended destination.

He whipped out his laptop and emailed the appointment request to the teller who was sitting down before him, but also included a stern warning: “I’m not leaving until I can speak with him.”

The bureaucrat retreated to discuss the latest turn of events.

Alex briefly took a minute to survey his surroundings. The same situation was playing out at three or four adjacent counters.

“This is the fourth time you’ve asked me to come back for a five-year business visa. I have all the right documentation, I have had it all along. Why won’t you accept my application?” railed another aggrieved applicant.

Alex snapped back to attention when the manager emerged from his den. He was face-to-face with his tormentor.

“What’s the problem, sir?” the manager asked.

“You know what my problem is! We’ve already spoken about it, you told me to come back with more information and I did. I’ve come back four times with the correct documentation and you’re still telling me I won’t be approved?!” he said.

“I’m sorry sir but we can’t process this visa application now, please come back in some time,” he said, wearing a weak smile.

“Why not?”

“I’m sorry sir but we can’t do this now, please apply in some time,” he repeated, like a broken record.

No matter how he always received the same answer and result but despite the frustrating experience he plans to come back and try again. He’s chasing that sweet feeling of victory that can only be earned by simultaneously exerting extreme amounts of effort and patience to achieve ordinarily routine tasks.

The Red Tape At The Finish Line

For an entrepreneur, there’s a lot to like about India. The subcontinent’s diversity, population, and economic disparity offers near endless problems to solve, as well as the scale to make a meaningful impact and return. But if you get too far ahead of yourself, the red-tape woven noose dangling around your neck will rein you back in. The rope becomes dangerously short as you enter the government maze, where searching for the right approvals demands long wait times, repeated visits, and constant apprehension as to whether the application will even be received. It’s an exercise in humility.

Saju James, partner at Fragomen Global Immigration Services, said the visa process was straight forward — if you know the procedures. This means that you must give the consulates the right information, right down to using the correct vernacular in the application.

“If you don’t stick to the template, exactly what the consulate is looking for, the chances of getting denials are much higher,” said James, whose firm has processed close to 1,000 work permits, less than two percent of which have been rejected.

This is a legacy of the way that visa offices were run before 2009, James said, when the Indian government didn’t have direct oversight of the approval process. Previously, each visa office and consulate operated as its own fiefdom; and a single supervisor served as judge, jury, and executioner.

“It was very arbitrary and the consulate officers had the power to decide, simply based on the interview,” he said. “They would say, ‘no, I’m not convinced this candidate should go on a work permit, he needs to apply for a business visa,’ and the reverse would happen as well.”

That changed as the government took direct control of the process and released specific guidelines and processes to be followed. Most importantly, it started measuring workers on how many visa applications they actually processed, as opposed to simply documenting the number of hours they worked.

It was a vast improvement.

“The only difference is that they have not published the formats for when you apply for a visa application, so some offices still give a difficult time to applicants.”

James said it was difficult to track the efficiency because the agencies themselves did not record the rejection rates. However, he estimated that the number of unsuccessful applications previously ranged into the double-digit percentages.

This is all little comfort to Alex, who still goes to bed every night in fear of being woken up by that same Sonny and Cher song and seeing his visa application, as complete as it always was, lying unapproved on his cheap desk.

[Image via Flickr]

CrunchWeek: iPhone Trade-Ins, The New New Foursquare, And Twitter's Blue Lines Problem



This weekend, summer is sadly coming to a close (in the Northern Hemisphere, at least.) But all is not lost! At least we still have CrunchWeek, the show that brings a few of us TechCrunch writers together to chat about the most interesting tech news stories from the past seven days.

This time around, Leena Rao, Anthony Ha and I discussed the ins and outs of Apple’s new iPhone trade-in program, the latest big update to the Foursquare app (and the rumors of a possible Microsoft investment), and Twitter’s latest redesign with lots of controversial blue lines.

How Amazon Is Tackling Personalization And Curation For Sellers On Its Marketplace



When it comes to personalization, Amazon has been one of the pioneers in mining and using data to create a more curated e-commerce experience for consumers. But by now, nearly all e-commerce companies and marketplaces have caught on and are using more personalized recommendations to enhance the user experience when shopping and browsing.

Amazon has been particularly focused over the past few years on extending its personalization features for its sellers on the marketplace, both on the front-end consumer experience and on the backend.

We sat down with Peter Faricy, vice president and general manager of the Amazon Marketplace, to talk about how he and his team are approaching personalization for the company’s 2 million third-party sellers worldwide across 10 global marketplaces. Read our Q&A, which begins with Faricy providing some background information about Amazon Marketplace.

Peter Faricy: We have over 2 million sellers around the world selling across Amazon Marketplaces in 10 different countries around the world, and serving more than 200 million customers all over the world. So it’s that business that me and my team are responsible for. What we specifically do is we provide all of the technology and the products and services that sellers need around the world to run their business on Amazon.

So we are sort of your e-commerce engine, if you will. And the technology we develop helps them run their business on the Amazon Marketplace and reach customers and grow their business very successfully. So that’s kind of the quick background, if you will.

Leena Rao: So, one of the things that Amazon has been known for is being the pioneer of personalization and data mining to make the consumer shopping experience a much more curated type of shopping experience. So I am curious, sort of your view on this, and then how has that personalization strategy changed over time?

PF: Well, in the case of the Marketplace, we think about customers in two ways; we obviously think about the Amazon-buying customers and what they need and everything kind of starts with those customers in mind. But we also think of sellers on the Amazon Marketplace as our customers.

And sellers years ago began asking us questions around, what are the things that they can do to improve their business? How can they manage inventory better? What products should they be adding? How do they serve customers better?

So what I think you are referring to in this personalization, we developed some super-innovative technology three or four years ago that makes proactive, data-driven recommendations to each and every seller on the platform. And they range from suggestions on inventory quantities to new selections they should consider adding, to products they should consider fulfilling using a different surface than they use today.

We developed some super-innovative technology three or four years ago that makes proactive, data-driven recommendations to each and every seller on the platform.

And we have had great success with our sellers. We get a lot of positive feedback from developing these recommendations. And most of all, the way we kind of judge how helpful these are to sellers is how much they are used, and we know that sellers are actively using these recommendations to run and grow their business.

The part that’s been interesting for me is that it’s all self-service. So there is– when you mention how has it changed over time, we make every single day tens of millions of recommendations across all those different sellers. And on average a typical seller might have 100-plus recommendations in their queue in these different categories we have talked about before.

So we send them emails with recommendations. They can also take a look on our portal called Seller Central. On the Gateway page there is a platform called Selling Coach or Seller Coach and all the recommendations are also stored there.

And then we have many sellers that also plug into our business reports in different ways, and the recommendations are also available on our business reports. So we have got to serve up the recommendations in the manner that’s most effective for each seller, but try to give them the benefit of the data we have, our evaluation of their performance, and try to help make recommendations on what they can do to grow their business.

LR: When did you start doing this?

PF: Yeah, I think we started our first test in 2009, and probably went full-scale in 2010, and now it’s available in every country that we run a Marketplace in across the world, and every one of our sellers can access these recommendations.

LR: So what about the data and the signals you are using to help sellers personalize the Amazon experience for the end user, for me, who is, say, buying diapers on Amazon. How are you helping sellers then kind of draw the customer in through personalization?

PF: Yeah, I will try to give you a couple specific examples. I mean, as a customer one of the things that you rely upon is making sure that every product you are searching for is in stock.

And so sellers really value, they have told us, our guidance on when they are about to run out of stock and how much inventory quantity they should carry. And depending on the season of the year, particularly during the holiday season, it’s difficult to know how much inventory to have in stock, as the sales ramp up closer to the holiday season, in November, December.

So one example is that we give — one of our most popular recommendations is called straightforward enough, almost out of stock. So we take a look at how much you are selling; we take a look at the inventory that you have in stock on Amazon, and we make a recommendation based on what we think the forward-looking demand for your product will be, how much more you should add to inventory.

So that’s a super simple one, but honestly one of the most powerful ones for serving customers better, managing your inventory in e-commerce is very, very challenging, and sellers tell us they really find our recommendations useful.

LR: What are some of the other way’s that you are using data to kind of serve up additional recommendations which then brings traffic to sellers?

PF: When customers go to search for something on Amazon, and either they can’t find the product at all, which we call no search results, or the search results are of low relevancy, we have a way to measure how relevant the results are we return. We take that information and immediately surface it back up to sellers who already sell similar products and recommend that they also begin to carry these products that customers are looking for.

LR: It sounds like Amazon wants to go beyond just providing the kind of access around the stock or in the fulfillment, but also help them on the backend with their sales and business and things like that.

PF: Yeah, exactly, I think that’s a good way to say it. I mean, right now the most popular areas we are helping sellers on are things like inventory, which we talked about; helping them find new selection, new products to add to Amazon. We’ve got a lot of positive feedback on those recommendations.

Also, the fulfillment recommendations are super-critical, because we do offer a service called Fulfillment by Amazon, which is very popular with sellers, and some sellers choose to keep some inventory that they manage the fulfillment on their own. But for some of the more challenging inventory to fulfill for example, they may use Fulfillment by Amazon. And so we make recommendations based on the characteristics of how difficult these products are to fulfill or the seller’s own performance of doing a great job on serving customers and getting the products there fast and easily.

And so for sellers who have a more challenging time doing that we make recommendations in fulfillment. And then you know the area that’s been really growing quite a bit in popularity, is we are beginning to help sellers identify areas where they can improve the sharpness of their pricing.

So, for example, on the pricing world we surface up the sellers of all the different products you carry on Amazon, which of the products that you knot the lowest price on, and that allows them to go back and take a look at those products easily and determine whether or not it makes sense for their case to lower the price for customers.

LR: When it comes to social data, I am curious how sellers are responding to that sort of data when it comes to commerce. And do you feel like additional data from the customer is something that sellers are becoming more excited about?

PF: Yeah, I think, clearly “social” being a kind of a broad term certainly in an area that sellers understand how important that is to customers. And one of the ways that we try to connect customers and sellers on the Amazon detail page, is a new feature we introduced earlier this year called Ask, A-S-K, and you could see now, but if you go down some of our detail pages, we do something really interesting which is that we allow customers to ask a question about a product.

One of the things that our sellers love about selling on Amazon is they are really in complete control of their business.

Let’s say they are buying a camera and they want to know how good this camera is for shooting their children’s sporting events. And it’s kind of one of those questions, it isn’t exactly covered by the data that is provided about the camera, but it’s kind of a more “ask a friend” kind of a question. And we serve those questions up in an anonymous way to both the sellers of the items and also customers who previously purchased that item.

And so far we’ve had a great response rate. We’ve had answers come back very, very quickly and very, very thoughtful for people who already own the product or are selling the product.

So in the case of sellers who participate in this I think they have been pleased that they can, in this case, use kind of a more social angle to help customers find the product that’s best for them.

LR: Do you think that social data is something to allocate from Facebook, and are there different types of social data that work and some that don’t?

PF: Well, we don’t publicly discuss what kind of data we use for the recommendation, but certainly social data that’s publicly available like you are describing is certainly one of the inputs we use.

LR: From the sellers’ standpoint, Peter, how do you balance serendipity versus discovery? I think that a lot of sellers want, I am imagining, their product to be discoverable. How do you balance that need for discovery with also having millions of sellers on the platform?

PF: Well, one of the things that our sellers love about selling on Amazon is they are really in complete control of their business. So when it comes to these data-driven recommendations we allow them to opt in and opt out. We make over 50 different recommendations today and they can choose which recommendations we service up to them based on the ones that are most important to them or most important for their product.

We challenge ourselves and we measure how useful they are. We know the majority of our sellers actually use our recommendation today, because we measure and track that. Then we also track how much improvement to their business did they get from using our recommendation and we hold ourselves accountable.

LR: What would you say the most popular tool that sellers using when it comes to personalizion? using some of these personal additional tools you offer?

PF: The No. 1 is an email called the Almost Out-of-Stock email. So those words “Almost Out-of-Stock” are almost like their own brand in the seller world. So that still remains by far the most popular type of recommendation we make today, because you could imagine for sellers who either sell a lot of products in total or who are trying to manage their inventory through different types of seasonality or who are also trying to manage their inventory across multiple marketplaces. Many of our largest sellers sell on other marketplaces in addition to Amazon.

So they have a really big challenge to keep up with the demands of managing their inventory well. So, the “almost out of stock” set of recommendations, this has been the most popular.

But I will say what’s been increasing dramatically, is the appetite from sellers, and our ability to help them in adding new products to Amazon. And so we have millions of unique products at Amazon today and yet, I can tell you we have an opportunity to add millions more.

Our goal is to make it very easy for them to come join Amazon and very easy for [sellers] to make money, and we know that it’s really a win-win.

And so we surface up recommendation for sellers and we kind of do it in a way that’s smart and effective for them. So, if there is a seller who is selling lacrosse goals, and lacrosse sticks, and we notice there is an opportunity to add lacrosse jerseys and lacrosse balls, I obviously make those recommendations to them and so sellers really find, from the feedback they’ve given us, really find our selection recommendations to be really, really helpful and help them grow their business.

LR: What else is on a seller’s mind and what are you thinking about when it comes to future products?

PF: One of the things that sellers give us very positive feedback on is that we don’t charge sellers extra in order to receive these recommendations, and so you may see other participants in e-commerce taking other strategies here. But, we’ve for as long as the marketplace has existed, we don’t charge sellers listing fees and we don’t charge sellers fees for our recommendation.

So our goal is to make it very easy for them to come join Amazon and very easy for them to make money, and we know that it’s really a win-win. If we could help sellers to serve customers better, our customers will be happy, sellers will get to grow their business and of course that creates a great Amazon Marketplace.

So, the fact that this is a really innovative service free of charge I think is also kind of unique even in today’s world of e-commerce.

On the forward-looking front, I think without question there is a couple of topics that are on sellers’ minds; one is that many of them see the opportunity to grow their business beyond the current geography or country they are in.

So we’re beginning to make more and more recommendations for sellers on products they can sell outside their home country. And I think this is a game-changer, Leena, because if you think about the history of business, the only way you could experience it geographically was to maybe go plant the flag and open up a new office and add lots of capital and lots of overhead trying to figure out how to serve a new country. Being able to reach 10 countries on the Amazon Marketplace alone, plus customers from all over the world who shop those 10 marketplaces, is becoming a bigger and bigger opportunity for sellers. So that’s one.

And then I think the other is back to this topic of selection. I think there are a lot of interesting categories at Amazon that customers are really happy with and want to find more and more selection. And one example would be softlines; so clothing, apparel, accessories, shoes. That’s an area where we’re beginning to have really great customer experience, and we’re able to provide sellers with better and better recommendations of new products and new brands we love to see them add to the marketplace.

The Decline And Fall Of Flowtab, A Startup Story



It started with an idea: How can we get our drinks more quickly at the bar? Dreamed up at 2 a.m. in Coloft, a Los Angeles coworking space, future founder Mike Townsend doodled up an iPad application mockup that he called Apptini to answer the question.

Apptini, a portmanteau of application and martini, wouldn’t last, but the product later known as Flowtab had been born. Its life became a startup story that most don’t tell: A company that didn’t make it. Technology as an industry worships success — the bigger and splashier the better. What’s often left unsaid or swept under the rug or buried under the guise of a micro acqui-hire is failure. And lots of it.

Young companies die by the hundreds in Silicon Valley, but you would hardly know it by reading your local blog. Flowtab, now a shuttered product, did something following its demise that I’ve never seen before — released a death chronicle of sorts. Their timeline and notes showcase the mistakes that the company made during its short life. Contracts, failed television appearances, deals that fell through, and more were published. If you work in technology, it’s a compelling set of documents.

I know Townsend, and have been in bars that at one point used Flowtab technology, so when the now former founders released their material, I caught up with both of them to talk through their history. What follows is the story of their dream, their company, struggle, failed pivots and an Australian mining magnate.

Beginnings

The pitch was simple: Flowtab would be a better way to order and pay for drinks. It would speed up service, as bartenders would no longer deal with payments, something that the software handled for the bar. No more bar tabs, no more lost or forgotten credit cards and IDs, or soggy receipts and dry pens. All that was replaced by an iPad behind the bar that displayed drink orders as they were logged by folks pecking on their smartphones. Customers then picked up their drinks when they were ready. Simple.

The idea was akin to a real-time GrubHub for the bar that you were currently sitting in. Flowtab would sport menus, and allow for tipping directly inside the app. Founders Townsend and Kyle Hill wanted to help you get your tipsy on.

Townsend took his iPad mockup and a short demo to 12 bars in the Santa Monica area, pitching a product that was utterly unbuilt. Response, Hill and Townsend recount, was good enough to keep moving on the project. Following the offline testing period, in mid-May of 2011, Flowtab put together a landing page. As Internet companies go, Flowtab had planted its flag. Two months later, the first version of Flowtab, coded in HTML5, was complete.

However, Flowtab was severely understaffed, and needed far more development firepower than it currently had in-house. Money was scarce, and Flowtab wanted someone truly top-notch. This created something of a problem. A friend of Hill’s had worked with a developer by the name of Alex Kouznetsov on an application in the past. Hill flew to see him in San Francisco. Kouznetsov, who has a Ph.D. in computer science and worked in Oakland at the time, started to contribute at nights and on weekends as the company’s CTO.

The first version of Flowtab was extremely limited. You could select the bar that you were in, pick a drink, set a tip amount, and hit order. But nothing more.

Eventually, Kouznetsov helped the Flowtab crew wrap their HTML5 up into a native shell (using Appcelerator), and get it into both the Android and iOS app stores. That launch, in February of 2012, proved premature, as Flowtab had zero bars using its technology for users to actually visit. Users of the application were therefore greeted with an empty app. Well, there were a few fake bars listed.

Ironically, Apple featured Flowtab for a week, sending it users that couldn’t actually use the app. At this stage, however, Flowtab remained focused more on talking to bar owners than acquiring users. The idea behind the focus was that, in the words of Townsend, “geographic density is absolutely key for any mobile payments application.”

That fact that Apple had noticed the app at all was good augur. The Flowtab boys were now ready to land some bars.

Bar Acquisition: Commence

Flowtab held its coming out party at the Copa d’Oro bar in Santa Monica, processing around $1,200 in transactions throughout the evening. The mayor even showed up, and ordered a Coke using the app. Getting the mayor wasn’t easy for Townsend and Hill, who admitted to emailing him around 20 times, begging him to show up. It worked. Throughout the evening, customers placed 150 orders. It was a real, if moderate, success.

From left: Flowtab co-founder Mike Townsend, Santa Monica Mayor Richard Bloom, co-founder Kyle Hill and CTO Alex Kouznetsov

To get people in the door, Flowtab was picking up the bill for the evening’s revelry. But that was secondary to the event proving that, when its technology flowed properly, Flowtab had built something that worked and people seemed to enjoy.

After the launch party, Flowtab was invited to present in the LA Startup Competition, an annual event. They won, besting 14 other startups, but turned down the offered investment from VoiVoida Ventures. The location of VoiVoida was far from Flowtab’s Santa Monica digs, and the company didn’t want to move. Still, the win felt good. Townsend called it a “confidence boost.”

Still in the learning stage of their venture, Team Flowtab went to the Nightclub and Bar Convention in Las Vegas. The company didn’t acquire new bar customers for its technology, but the trip did convince them that a business model idea that they were kicking around wouldn’t work: Flowtab could not be distributed through partnership with companies that sell Point of Sale (POS) systems.

Flowtab would therefore have to build its own sales team, it realized. That meant more overhead, more staff, and more work for the little company that remained dramatically under-capitalized.

By now, Flowtab had worked its way into three bars in L.A., but was seeing nothing like critical mass or organic growth. At its tender age and size, Flowtab had now decided that it needed intellectual property protection.

My IP Is My IP Not Your IP

You want to protect your IP, right? Well, maybe not. Flowtab filed a patent concerning the “ability for merchant sellers and servers in hospitality establishments to use point-of-sale applications to send one-click/one-touch order-status notifications to mobile devices of their customers.” It wasn’t a good move.

Looking back, founders Hill and Townsend describe the effort as a waste of time, and a drain on their finances. It burned “lots of energy” and yielded nothing more than an “investor talking point,” they told me. Hill explained that the largest “value that [Flowtab] got out of the patent was convincing investors that it actually meant something.”

At this early stage in its corporate life, with only a few bars on its platform, and a user base in the hundreds, Flowtab spent and invested scarce resources into something that would eventually yield it nothing.

Better Apps, So Let’s Party Our Faces Off

Landing July 1, 2012, the second version of Flowtab was done. Still coded in HTML5 that was wrapped into native code, the second iteration was a dramatic improvement on its predecessor. The bar-facing iPad app could now load drink orders asynchronously, limiting meaningless refreshes. The new version of Flowtab, like the two before it, was aimed more at responding to bartender requests than answering users’ needs.

With the new app in place, Flowtab wanted to bump up its usership figures, which meant that it planned another party. Flowtab wasn’t attracting many users on its own in the bars it was installed in, so it wanted to bring more to its locations, and do it in a very public fashion. The resulting event was a comical cockup.

Flowtab teamed up with Uber and Thrillist for the three-bar crawl. Each of the bars that Flowtab was installed in would be in play. Thrillist sold tickets, Uber ferried folks, and Flowtab was in charge of making sure that the drinks kept pouring.

“At this point,” said Hill, “we thought we were hot shit.” Three-hundred people were invited. The event was a catastrophe.

The app failed, the bars were understaffed, and drink orders piled up, leaving 35 in the queue at once in the second pub the group visited. That bar had a single bartender. It was stuffed with 150 patrons who were told that Flowtab could get them a drink, fast.

It’s great to go out and get your ass kicked.

Finally, Flowtab’s server went down, scuttling the entire operation. Hill started handing out margaritas by the fistful to keep everyone happy. The Flowtab team buckled under the stress. After the abortive bar bashes wound down, Hill went to the beach, wearing his Flowtab shirt, and sat down for an hour by himself. The app picked up a number of 1-star reviews following the debacle.

Looking back, Hill and Townsend have a slightly positive take on the experience: It’s great to go out and get your ass kicked, they told me. Not that they would ever want to go through the agony of being in charge of hundreds of people wanting a drink as their server failed again, but it was like middle school: good to have done once. Hill claims that the situation provided “fuel” to keep going.

The event did lead to product improvements, including limiting the number of drinks that could be placed into the iPad app queue at a time. This cut bartender confusion, and helped staunch lines where people picked up their drinks. If the queue was full, you had to wait.

Another lesson: Sometimes you need to wade into new territory slowly, instead of cannonballing in, guns blazing, servers crashing.

Money

Flowtab now needed two things: money and guidance. After applying to a number of incubators in the L.A. area, Flowtab couldn’t find an open door. Local groups found it odd that their CTO was in the Bay Area and part time. Concerns were also raised about the size and approachability of the market that Flowtab had selected.

However, Mike Jones, the CEO of L.A.-based incubator and studio Science, helped the small company out by introducing it to DexOne, which sells advertising in the Yellow Pages. It’s a public firm, with a market capitalization of over $100 million. So, Flowtab linked up with the guys who print and leave massive phone books outside your apartment each year. DexOne has an experimental arm, which would prove important for Flowtab as it was a potential answer to its distribution question.

Technologists aren’t always salesman, but founders should be.

Around this time, Hill and Townsend went on Shark Tank, the reality TV investment program. In Hills’ words, it was a “long and drawn out process” that was “very involved.” The show wanted drama, and in the end not only did Flowtab not land a deal, but their pitch session didn’t make it onto TV, depriving the group of any free advertising they might have hoped for.

After the accelerators didn’t bite, and Shark Tank had done little more than nibble, Flowtab decided to move north to San Francisco, where they hoped they would have more access to capital.

What about the bars in L.A.? Well, following the riotous bar crawl, they weren’t exactly enthused with the Flowtab product. The company cut loose, and following an endless wave of others, landed in the Bay Area.

The company raised $50,000 within the first month in the city.

DexOne: A Needed Friend

DexOne, the Yellow Pages company that sold nearly $2 billion of that product in 2012, was Flowtab’s shot at distribution. DexOne has a team of 12 that it partners with small tech companies to try out new things. Somewhat progressive, and perhaps interesting for a company so traditional, DexOne had what Flowtab did not: capital and manpower.

DexOne developed a pilot program to sell Flowtab in Colorado. It put six full-time sales people on the ground to push the new product. The partnership landed the largest strip club in Denver, Shotgun Willies, where the model worked moderately well. Culture, however, appeared to work against them. Folks in the strip club didn’t seem too excited about using their phones to order a drink.

The DexOne deal landed a few other bars, as well, but as in L.A., the growth was slow, and only garnered by firm grind. Back in San Francisco, the Flowtab team was experimenting with new ways to grab bars, and hopefully, paying customers.

San Francisco

Crowdsourcing might be a dead buzzword, but hiring out grunt work is as popular as ever. Flowtab, in a bid to reach more bars, hired a call center in the Philippines to call potential bars in San Francisco. The idea was to massively scale their initial outreach, and then send in the founders to lock down deals that the call center would set up for them.

The lesson according to Flowtab: Technologists aren’t always salesman, but founders should be.
After the call center didn’t perform, Flowtab hired Trevor Bisset, who promptly cut the call center on his first day on the job. Weeks later, he had landed the group’s first bar in the city, McTeague’s.

A short note on McTeague’s. The bar is located on Polk Street here in San Francisco. It’s a fine place to be Monday through Thursday, a low-key sports bar that won’t be too crowded unless the Giants are on a streak. But Fridays and weekends at McTeague’s are a complete zoo. Amateurs from four counties descend on the place, turning it into a part club, part bar, and complete goat rodeo. You can’t get to the bar, let alone get a drink.

So, if there were ever a bar that Flowtab should work at, it was McTeague’s. Anything to break the logjam would be welcome. McTeague’s remains the only bar in San Francisco to my knowledge that has a sign in the bathroom stating that drug use is not allowed, and that bar staff will be checking to ensure that things remain clean. People still do coke, presumably, but the place would prefer it if they didn’t.

McTeague’s was a get for Flowtab, but they had eyes on a bigger prize: the San Francisco Marriott Marquis. With 1,500 rooms, it’s massive. It has three bars. Landing the hotel would have been a coup. The team designed and pitched a presentation. But in the end, Flowtab’s lack of feature capability to integrate with the Marquis’s point of sale system (Micros) scuttled the idea.

Startups are human endeavors, and around this time, a friend of the company, Brandon Zacharie, started contributing for beer and pizza. The team credits Zacharie with getting them off FTP and onto Git where they belonged. According to Hill, Zacharie specifically helped the team “integrate web socket connection between the user app and the [bar’s] iPad” application.

Meanwhile In Denver

Three bars locked down but not doing much in San Francisco, the DexOne work in Colorado was ramping up. Little Flowtab found itself a bit more stretched than it could manage. The team would later liken the moment to tossing logs onto a small fire, choking it.

Flowtab wasn’t performing well in the bars close to its core team. How could DexOne flog the product successfully? Despite the fact that people were not organically flocking to the app in bars, DexOne wanted to press ahead and get Flowtab into even more locations. A doubling-down in Denver? Yes. Orlando? DexOne wanted to go there. Portland? Yeah.

But Flowtab, far away from the Rockies, didn’t have enough money to support that many cities, and had concerns about its business model, which at that point charged users $1 to file an order.

The handful of bars that were signed up in Denver through the DexOne deal paid $1,200 to get started with Flowtab. It wasn’t a small sum, but the cash went to providing them with the hardware that they needed to run the service (an iPad, etc.).

Worried about money and consumer reaction to the product in its current form, Flowtab declined the expansion that DexOne wanted.

Lyft

Ironically, one of the most successful efforts that Flowtab found to accumulate new users was killed by the ridesharing service Lyft. Don’t fret, Lyft had every right to do so. Flowtab recruited Lyft drivers to hand out free drink coupons to riders heading to bars that it was installed in. Drivers got $5 every time a rider signed up and ordered, and that drink was free for the new user. Around 30 drivers took part, and more than 1,000 drinks were given away.

Ask forgiveness, not permission was the idea here. It worked until it didn’t, and it didn’t when Lyft asked them politely to knock it off. Still, for three months Flowtab was picking up new users at a decent pace, a rare moment of encouraging growth for the company.

Empty Distribution

With a fresh $25,000 note from a technology investor at a venture capital group in Palo Alto, Flowtab had 12 active bars in three cities by January 2013 but little in the way of active users. The company set a small goal: By March 1, they wanted to have at least 50 active users, who were using Flowtab several times per month.

As a company, Flowtab was beleaguered by inconsistent usage; most folks just didn’t go back to the same bar every week, so a new user might enjoy Flowtab, but not use the service again for months until they were back in the bar they signed up in.

Order volume was low, and as a company Flowtab was starting to doubt its model. Were they only able to pick up new users through gimmicks? Would they always have to show up to a bar to get people to sign up? Order volume could spike over 60 orders in a day if Flowtab had a presence at a bar. But when they weren’t it would fall, sometimes to single digits.

It was time to prove that Flowtab could scale. With 12 bars, the company had enough market presence to test its service. It would get users to the bars, and then see if it could keep them around. Hill and Townsend came up with 12 new ways to get users, including Facebook ads. Each effort, according to  Hill, “fell flat on its face.” Nothing spurred organic growth, and Flowtab didn’t have the funds to keep buying users that were at best infrequent revenue sources.

As a final effort to see what could be done, Flowtab decided to have a much smaller party. McTeague’s and the nearby Mayes were pressed into service for the Super Bowl-themed event. About 100 attendees floated between the two bars. Unlike the L.A. pub crawl meltdown, the event cost Flowtab a modest $500.

They acquired 92 new users, which worked out to around $5.50 per. That was cheaper than the Lyft effort, which cost $5 for the drivers plus a drink for the new user.

The economics were difficult to make work. Flowtab’s $1-per-order fee meant that even at $5.50 per new account, the average user would have to make six orders in the history of their usership to allow Flowtab to break even. People were not drinking enough to make that feasible.

More Money And A New Business Model

The DexOne partnership had proven that some bars were willing to pay for Flowtab, but a few checks of $1,200 apiece were not going to float the company. Flowtab wanted to raise $300,000, but in the face of its challenges, the sum was daunting.

And with its current business model floundering, Flowtab decided it was time to pivot. So, instead of charging users to pay an extra fee to use its service, Flowtab flipped around and decided to sell advertising to alcohol companies inside of its application. About to order whiskey? Why not a Jim Beam?

It made some sense: Bars and users were not rich, but the corporate interests behind Bacardi and Johnnie Walker certainly were. And they are banned from advertising inside of a bar.

Flowtab felt that since it was a mobile application, the law did not apply to them. However, after meeting with six small and large liquor and beer companies, it became clear that Flowtab simply did not have the scale needed to land a deal large enough to matter.

Alcohol Apocalypse

February 2013 was a brutal month for the other small companies looking to execute something similar to Flowtab. BarTab, which had raised more than $1.5 million, essentially went offline. Coaster, a local competitor, in the words of Flowtab, “began losing bars.”

The shakeup of its better-funded rivals unnerved Flowtab: If folks with more money and distribution than themselves couldn’t make the model work, what shot did they have?

It was stock-taking time. Flowtab had, in its own estimation, zero organic growth and few if any regular users, and it couldn’t find a conduit to new users that would scale. New efforts would cause a minor rise that would anti-soufflé the moment the monetary influx halted.

Six weeks into the process, and given its doubts about its model, Flowtab put fundraising on ice. They had $20,000 left in the bank, and its hopes to pull off its bar model were tanking.

It was time for another pivot.

Pivot 2.0

It’s now March 2013. Flowtab had burned through a total of $110,000. It had fewer than 2,000 users, and the team had come to the conclusion that they did not have product-market fit. I suspect the team could have come to this conclusion far sooner if they knew a year prior what they knew in March.

In the end, the team decided that their problem was distance. GrubHub, which is comically successful, brings something to you that is far from you. Flowtab wasn’t saving you enough time or energy to make it a compelling experience.

However, the team had built a technology stack and had a few dollars left in the bank. They began looking for a new application for their software. After poking around golf courses, hotels, and other potential venues, Flowtab decided that stadiums were the best bet for its tech. Beer as a Service? Something like that.

In startup style, Hill and Townsend called every stadium in California — there are 114 if you were wondering — and met face to face with a few, including the Giants, Warriors, and A’s. However, even as they were starting to sour on the prospect of stadiums (too much regulation and other issues), a different company called Bypass raised $3.5 million, partially from AEG, which manages 50 stadiums. eBay-owned StubHub also took part in the raise.

If there had been a slightly open door to apply Flowtab to the stadium business, it had closed.

Flowtab was “just like……… fuck” at that point, according to its founders.

Mike Jones, Final Round

Mike Jones of Science, who had helped Flowtab land the DexOne deal, met with the company again. The team needed counsel. After explaining their stadium exploits, Jones agreed that it didn’t make sense as an avenue for the firm. The company was also all but flat broke.

“The last two years have been a huge learning experience, and we believe the real failure would be not sharing our story with the world.”

Seven days after Bypass’s raise was announced, on April 17, Flowtab was shuttered. Trevor the sales guy went to a startup in Portland. Friend of the company Zacharie went full time at a different startup, and the erstwhile CTO kept to his day job.

Jones offered to hire Hill and Townsend into Science — it was a non-monetary acquisition of sorts — where they worked on and recently launched HomeHero, a marketplace for home care of seniors.

As part of the Science deal, both Hill and Townsend are back in Los Angeles, full circle from where they started. It was a long, eventful, often ridiculous, and always stressful experience. But to hear the founders tell it, it was a rollercoaster, but one that had them grinning through nearly all of its twists and turns.

Post Script: The Australian Mining Magnate

The oddest piece of Flowtab history started with a random email that was almost deleted. A dude in Australia loved the product and the idea and wanted to chat. This was in February 2013.

The Aussie, who had made his money in mining, liked Flowtab enough to fly out to meet the fledgling firm. Three months later, a month after the company had been shuttered and the team scattered, an acquisition offer was made.

But with new roles at Science, and no team to speak of, they turned it down. Flowtab was no more. “In the end, Flowtab failed in the sense that we never IPO’d or sold the company,” Hill concluded. “But the last two years have been a huge learning experience, and we believe the real failure would be not sharing our story with the world.”

Read, examine their documents, and do not repeat their mistakes.

Top Image Credit: John Picken McTeague’s Image: Tom Hilton. Lyft Image: Alfredo Mendez Empty bar: Alexandra Zakharova Jim Beam: Jamie Giant’s Stadium: Jon Lee Clark Other Images: Flowtab

Former Waywire CEO Nate Richardson Joins AOL As President Of AOL Live



A few weeks ago we reported that Nate Richardson, the CEO and co-founder of Waywire, would be leaving the company as it makes a strategic shift from content creation to content curation. Well now we know where he’s landed: Richardson has joined our parent company AOL* as the President of AOL Live, TechCrunch has learned.

Richardson was one of the co-founders of Waywire, along with Newark mayor and Senate candidate Cory Booker and Sarah Ross. The company originally set out to focus on creating its own high-quality video content, but recently shifted direction to become more of a personalized hub for curated content. Richardson exited the company while the curation site was still in beta, and we’ve heard Waywire is looking to announce a new CEO soon.

We heard rumors that Richardson was being courted by AOL around the time of his departure from Waywire, but apparently he hadn’t joined the company at that time. That said, the decision to become part of AOL isn’t totally surprising, as Richardson has a long history of working in media. In addition to serving as the CEO of Waywire, years ago he had also been the CEO of ContentNext Media, former home of tech blogs such as paidContent and MocoNews.

Joining the AOL team also means that Richardson will be reunited with my boss’ boss’ boss’ boss, AOL Brand Group CEO Susan Lyne. Those two worked together while Lyne was CEO of Gilt Groupe and Richardson held various roles at the company, including Gilt City president and GM of Gilt Groupe’s Men’s section.

At AOL Live, Richardson will oversee the new live streaming video channel that the company is putting together. That channel has yet to officially launch, but the idea seems to be to offer up a continuous lineup of news and interviews that will match the type of content you’d expect to see on the AOL.com homepage. So lots of celebrity and entertainment news, sprinkled with light doses of sports, finance, and quirky lifestyle stories.

There will be lots of opportunity for AOL to experiment with that channel, as the company did when it held an open casting call for anchor auditions. Over the course of two days in June, AOL had anchor hopefuls come in and read the news of the moment, with a hilarious hodgepodge of characters swinging by the studio to try out.

The live auditions weren’t the only experiment that AOL Live will be testing out — apparently the company sees an opportunity to have live brand messages interspersed in the content, in addition to the usual pre-roll ads that will appear when someone starts up the stream.

The hope is that viewers will watch AOL Live in the same way they might leave daytime TV on while going about their day. Lyne told Adweek a few months ago that viewers could eventually get into the habit of leaving a live AOL player on minimized all day at work.

Anyway, it all sounds like an interesting new endeavor for Richardson.

==
* While we’ve been told that TechCrunch is an integral part of the AOL franchise, neither AOL PR nor Richardson responded to a request for comment at the time of publication.

But hey, it’s the Friday before a holiday weekend. I get it.

Target Ticket, Target's Video Download & Rental Service, Nears Launch



Target’s answer to Walmart’s Vudu, Netflix, and iTunes, is preparing to launch. Employees at the Minneapolis-headquartered retailer were told this week that Target Ticket, as the service is called, will soon be offered to consumers, allowing them to rent and purchase digital copies of movies and television shows like they do on Apple’s iTunes, then play them back across all the devices they own, including smartphones, tablets, TVs, Blu-ray players, and game consoles.

Details surrounding Target Ticket were first revealed earlier this year, when word got out that the concept was in testing with employees. At the time, the beta website appeared, saying that Target Ticket would offer users instant access to 15,000 titles, including new releases, classics, and TV shows. The company then would only say that the service was in a trial period that would help it gather data to help inform its future plans.

Most movies on the soon-to-launch service will cost around $14.99 (though some were less at $12.99), and movie rental prices will be on par with iTunes at $3.99/$4.99. Individual TV show episodes tend to be around $2.99, depending on the show, and TV seasons will be around $34.99, again depending on the show.

However, Target Ticket doesn’t offer a comparable alternative to iTunes’ “Season Pass,” as you can’t purchase a TV season until after it has aired.

Networks including ABC, AMC, CBS, CW, Fox, FX, HBO, The WB, NBC, Showtime, Starz, and USA have content on Target’s service.

The TV shows and movies can run nearly anywhere, including on iOS and Android smartphones and tablets, as well as on streaming players, TVs and gaming consoles like the Xbox 360. However, support for the service on TVs is currently limited by manufacturers. Employees were told that only Samsung TVs and Blu-ray players will work with Target Ticket during training, but now the site lists Samsung, Panasonic, LG, Philips and Funai brands as “coming soon” under compatible devices.

Unfortunately, Apple device owners will not have quite as smooth of an experience than those on other platforms, as it seems that they’ll have to first download the movie to their computer, then sync it to their devices manually. The iOS app itself only displays the movies you own, but doesn’t offer a purchasing option.

Beta applications for iOS (iPhone and iPad) and Android were published to the app stores earlier this year, but received a significant update this month. Currently, the app description says that Target Ticket is only for “team members and REDcard holders,” the latter presumably being beta testers. (It’s worth noting also that on iOS, the app says it can play back content already purchased on TargetTicket.com while the Android version says users can “stream or download movies and shows in your library.”)

After renting a movie, you have 30 days to start watching it, but after starting, you have 48 hours to finish viewing it. You can also watch it as many times as you want during that period. The 30-day window is similar to iTunes, but iTunes U.S. users only have 24 hours to watch their movie, while outside the U.S., it’s 48 hours.

The company is offering some movies available for purchase ahead of DVD releases, including Paramount’s “Star Trek: Into Darkness,” and more will be available in the future.

Movies have also been organized into collections for end users’ ease of access, like “End of World Movies,” or “Marvel Movies,” for example.

Target has partnered with UltraViolet, the digital movie locker service backed by studios like Sony Pictures, NBCUniversal, Fox, and Paramount, Warner Bros. and others on Target Ticket. Designed to allow DVD movie buyers to keep digital copies of movies in the cloud, UltraViolet also powers things like Walmart’s Vudu’s disc-to-digital program, Flixster’s movie streaming, and Paramount’s standalone website.

Internally, Target is positioning Target Ticket to employees as an alternative to Netflix and Hulu, as well as iTunes, but that’s not entirely accurate. Although some of the content may be the same, you don’t pay a monthly subscription fee for all-you-can-eat access on Target Ticket, but rather pay for individual rentals and purchases.

While the pricing is competitive with iTunes, Target will be incentivizing its customers to choose its service by tying it to the company’s REDcard discount program. Target REDcard holders will see their same 5 percent in-store discount applied to rentals and purchases made in Target Ticket just like they would on Target.com, and employees can also use their 10 percent discount here.

Another aspect to Target Ticket which Target is asking employees to tout are the parental controls. Parents can create profiles, and then limit access not only by MPAA and TV Parental Guidelines, but also optionally by Common Sense Media more fine-grained controls. That’s a step up from the profiles and controls Netflix recently introduced, as Common Sense Media ratings include both an age-appropriateness score and overall quality rating that help parents choose not just “safe” content but also “worthy” content.

The retailer has been busying itself with digital initiatives this year, having recently launched a Facebook-enabled digital savings program and mobile app called Cartwheel, which now has over a million members, for example. But in terms of competing on the digital movie landscape, Target is late to the party. Walmart, as noted above, already offers Vudu, while Toys R Us launched its own family-friendly movie service last fall with some 4,000 titles. Walmart encourages users to sign up to Vudu by offering 10 free movies, and Target Ticket, apparently, will do the same.

Target declined to comment these specific details, saying again that it’s just testing the service with team members. Of course, the Target Ticket app store description already indicates that the service is opening to REDcard holders. On the main website, non-employee testers will be able to enter a promo code to sign up ahead of the broader public launch. Employees have now been trained on the service and how to pitch it to customers, but have not yet been given the go live date.

Microsoft's Next CEO Will Not Spin Off Xbox, Unless They Abdicate The Company's Larger Strategic Direction



A story published by Bloomberg floats the idea that Microsoft might spin off its Xbox business, which it calls “more likely [following current CEO Steve Ballmer’s] exit.” The publication values Xbox at around $17 billion, a figure based on a comparative revenue multiple with Nintendo.

This is precisely the sort of bilge that cavorts and pretends to be serious analysis. The Bloomberg piece leans on the words of a fund manager, Todd Lowenstein, who claims that Xbox “looks like an attractive standalone business that could hold up on its own.” He continues that it “seems like it would be the most mature candidate with the best growth potential and the most established to stand on its own.”

You could argue that Xbox is currently undervalued inside of Microsoft. However, that potential is not exactly material. Presuming for the moment that the $17 billion figure is reasonable, Xbox as a group would represent 6.1 percent of Microsoft’s current market capitalization, a slim segment.

Presuming a 50 percent lower market valuation while under the aegis of the larger Microsoft corporation (the tax of being part of Microsoft, the value that could be unlocked), Xbox could represent $8.5 billion in lost value to investors. That’s about 3 percent of Microsoft’s worth. So, the potential upside isn’t too great.

The potential downside, however, is hilariously large.

Key Platform Plank vs. Un-Lucrative Short-Term Financial Ploy

Microsoft could spin off Xbox, reap a short-term financial gain from the transaction, and return that money to shareholders via stock buybacks or a special dividend. The former would have a small, but real long-term impact on Microsoft’s earnings per share, perhaps leading to a higher per-share value in the future. The latter would be a waste, as a previous Microsoft special dividend demonstrated.

So, Microsoft would gain little from the deal as a company, even though institutional investors might enjoy a special dividend boosting their quarterly numbers. That’s nice, but not what Microsoft lives to do. In fact, Microsoft’s job is not to worry about the spreadsheets of external financial entities, but instead to build great products, grow new platforms, make oodles of money, and take care of its employees as it does so.

Therefore, the short-term potential financial gain is not core to what Microsoft needs to worry itself with.

Does the idea of spinning off Xbox make product sense? No it does not. At all. Microsoft is working around the clock to expand the Windows platform to every screen that you view, from the desktop, to your laptop, tablet, phone and, you guessed it, your television.

Windows on my TV, you might think, I don’t want that! Chill fam, it’s fine. What Microsoft is up to is simple: A common set of APIs and foundational code called the Shared Windows Core will underpin all Microsoft platforms. It’s in Windows 8, and Windows Phone 8, and is also present in the forthcoming Xbox One.

As the traditional PC market declines, Microsoft is endeavoring to extend its Windows software to work everywhere. And Xbox is core piece to this gambit, which is a bet that developers matter, and that as a company Microsoft needs to cater to them.

Essentially, Microsoft wants to create a single mega platform, one in which any developer with a shared code base can reach consumers and companies on screens of every size: Tablet, phone, laptop, desktop, and TV. No company offers that, and HTML5 is far from reaching the point in which it can deliver anything similar.

Now, why does Xbox matter for Microsoft? It matters as it has high levels of developer support at the Triple A tier – think ‘Gears of War’ and that sort of game. Xbox has a subscription revenue system that is a key part, and has been a critical antecedent to its new services strategy. And, finally, Xbox allows Microsoft to offer music and video to a family across quite literally all their devices.

If Microsoft were to sell off or spin off or otherwise cut ties with Xbox, which, by the way, makes utterly no sense under the current reorganized structure — it would cede the living room to third parties. The company is not willing to do that. Just as it was not willing to fail in search, or mobile.

So the financial upside of the deal isn’t large enough for Microsoft to particularly care, especially given its ample — if mostly foreign — cash reserves. And the exit of Xbox would tear at the fabric of its company-wide plan to unite all screens under the Windows flag.

Sacrifice the end-game of Windows for the potential of a few billion in shareholder equity? No.

Top Image Credit: Marco Verch

Strike Social Analyzes The Performance Of Your YouTube Videos For Free



A new startup called Strike Social says its tools give YouTube publishers a way track how their content is performing on the video site and on social networks, and at a pretty compelling price — free.

The first big piece of the Strike Social product is a number, called the Strike Score, that reflects the overall performance of your YouTube content. CEO Patrick McKenna said the company looks at “more than 100 datasets” from YouTube, Facebook, and Twitter to calculate the score, and tracking that number over time should give you a sense of whether your performance is improving.

You can dig in to get more detailed data too, looking at the total number of views, engagements, and subscribers for your channel, and at the performance of individual videos. Publishers can also look at what people are saying about the video, sort those comments based on the size of each commenter’s social media following, and respond to specific remarks from within Strike Social — in particular, McKenna that the tools are “more actionable on the Facebook side” than the competition.

So why offer these tools for free? Well, McKenna wants to charge eventually for premium services, but he said everything that he showed me will remain free, and that the company will also be selling advertising tools. (When the company’s Frequently Asked Questions page addresses the free question, it says, “Strike Social is chock-full of YouTube marketing experts and we hope to earn your online video promotion business.”)

He acknowledged that paid products offer some features beyond what Strike Social can offer for free, but he argued that the product is competitive, with advantages like the Facebook engagement features mentioned above, and for that reason “it’s going to be tough” for competitors to justify their prices to clients.

(In that specific discussion, he didn’t mention a specific company, but vidIQ came up at a couple of other points in our discussion. When I asked about his pricing, co-founder and CEO Robert Sandie pointed out that vidIQ also offers a free version, while he said pricing for the premium plan starts at $2,000 a month.)

McKenna also described the current product as version “0.1″, and he said he wants to add features that give more insight into the distribution channels, geographies, and social networks where content performs best, and to provide more recommendations around publishing and advertising videos.

MoPub's Optimizer Lets Mobile Publishers Automatically Prioritize Their Most Lucrative Ad Networks



MoPub is releasing a new tool called the Optimizer that should allow mobile publishers to take an entirely automated, hands-off approach to managing their ad networks — and increase revenue too.

The team gave me a demo of the new feature, saying the technology uses a “waterfall” approach, moving down a list of possible networks from which to serve an ad, starting with the one that had the highest estimated CPM (price paid per thousand impressions). Normally, MoPub prioritizes those networks based on CPM estimates provided by the publisher. The problem: Those estimates are often wrong. (MoPub has been trying to address the lack of transparency and data about the performance of individual ad networks with its new dashboard.)

Now, when publishers hit the Optimizer button, MoPub will automate that prioritization process based on its own data and the data it has acquired from various networks, so that it can predict the likely CPM, clickthrough rate, latency, and more on a given ad. Ideally, for each impression MoPub should be serving an ad from the network that’s likely to make the most money for the publisher.

“It seems like a really simple concept, but our publishers haven’t seen anything like it before and they’re basically blown away,” said Marketing Director Elain Szu.

The data used for prioritization is supposed to be as specific as possible. In other words, when possible, MoPub will calculate CPMs and so forth using data specific to that publisher and that geography, but when necessary it will use more general data, and in some cases, when there’s really no data available, it may just fall back on the estimates provided by the publishers.

Not every publishers is going to embrace this for all of their campaigns, Szu added. Instead, she suggested it could be particularly useful for small publishers who don’t have the resources to manage their ad networks in a very hands-on way, as well as for larger publishers who may have a number of geographic segments to monitor. Those larger publishers may want to pay close attention in more mature markets like the United States while taking a more automated approach in small-but-growing markets.

The MoPub team also showed me the results of some early campaigns, particularly how the share of ads from different networks shifted when the Optimizer was turned on, and continued shifting over time. (In some cases the Optimizer would even shift money away from the MoPub Marketplace to other ad networks.) In each case, the CPMs went up compared to past performance and compared to apps that weren’t using the Optimizer — you can see one example in the (anonymized) chart above.

Microsoft Surrenders Ballmer Bump, Shares Up Just 2.4% Since The News Of His Exit



On the day Microsoft announced the eventual exit of its CEO a week ago today, its stock jumped past the $35 mark before settling at $34.75 in normal trading after closing the previous day at $32.39. At one point, Microsoft was worth $18 billion more than it was before Steve Ballmer announced his decision to step down.

But since then, investors have lost their head of steam, and Microsoft has drifted lower. At current trading levels, Microsoft is up a mere 2.4 percent from its pre-Ballmer levels. This indicates that any enthusiasm that Ballmer’s exit engendered among investors was short-lived.

Another perspective on the slip is that the Ballmer jump was more the expectation of a rally leading to that reality, as opposed to mature investor sentiment that the news was good for Microsoft’s long-term prospects. Microsoft has managed a gain in only one trading day this week, and is off over 1 percent in today’s regular trading.

The above matters as it contextualizes commentary written since Ballmer stunned the technology world that he was stepping down, pushing back slightly against the narrative that he alone is responsible for holding the market value of his company back.

The exit of a CEO can lead to a rally in a company’s stock, as Groupon learned when it fired founder and then head exec Andrew Mason. In April, two months after the end of the Mason era, Groupon had risen more than 40 percent. Smaller companies can fluctuate more wildly in the market, certainly, but for Microsoft’s CEO-change-delta to be under 3 percent in just a week indicates that investors are either unenthused by the change, or simply don’t think that it will make a difference. Or both.

Whatever the case, if there will be a Ballmer bump in Microsoft’s stock price due to his exit, it appears that it will only come on the back of improved product and financial performance brought on by his successor, and not his actual departure.

Top Image Credit: Microsoft Sweden

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