Adopting a ratings system for social media like the ones used for film and TV won’t work

Internet platforms like Google, Facebook, and Twitter are under incredible pressure to reduce the proliferation of illegal and abhorrent content on their services.

Interestingly, Facebook’s Mark Zuckerberg recently called for the establishment of “third-party bodies to set standards governing the distribution of harmful content and to measure companies against those standards.” In a follow-up conversation with Axios, Kevin Martin of Facebook “compared the proposed standard-setting body to the Motion Picture Association of America’s system for rating movies.”

The ratings group, whose official name is the Classification and Rating Administration (CARA), was established in 1968 to stave off government censorship by educating parents about the contents of films. It has been in place ever since – and as longtime filmmakers, we’ve interacted with the MPAA’s ratings system hundreds of times – working closely with them to maintain our filmmakers’ creative vision, while, at the same time, keeping parents informed so that they can decide if those movies are appropriate for their children.  

CARA is not a perfect system. Filmmakers do not always agree with the ratings given to their films, but the board strives to be transparent as to why each film receives the rating it does. The system allows filmmakers to determine if they want to make certain cuts in order to attract a wider audience. Additionally, there are occasions where parents may not agree with the ratings given to certain films based on their content. CARA strives to consistently strike the delicate balance between protecting a creative vision and informing people and families about the contents of a film.

 CARA’s effectiveness is reflected in the fact that other creative industries including televisionvideo games, and music have also adopted their own voluntary ratings systems. 

While the MPAA’s ratings system works very well for pre-release review of content from a professionally- produced and curated industry, including the MPAA member companies and independent distributors, we do not believe that the MPAA model can work for dominant internet platforms like Google, Facebook, and Twitter that rely primarily on post hoc review of user-generated content (UGC).

Image: Bryce Durbin / TechCrunch

 Here’s why: CARA is staffed by parents whose judgment is informed by their experiences raising families – and, most importantly, they rate most movies before they appear in theaters. Once rated by CARA, a movie’s rating will carry over to subsequent formats, such as DVD, cable, broadcast, or online streaming, assuming no other edits are made.

By contrast, large internet platforms like Facebook and Google’s YouTube primarily rely on user-generated content (UGC), which becomes available almost instantaneously to each platform’s billions of users with no prior review. UGC platforms generally do not pre-screen content – instead they typically rely on users and content moderators, sometimes complemented by AI tools, to flag potentially problematic content after it is posted online.

The numbers are also revealing. CARA rates about 600-900 feature films each year, which translates to approximately 1,500 hours of content annually. That’s the equivalent of the amount of new content made available on YouTube every three minutes. Each day, uploads to YouTube total about 720,000 hours – that is equivalent to the amount of content CARA would review in 480 years!

 Another key distinction: premium video companies are legally accountable for all the content they make available, and it is not uncommon for them to have to defend themselves against claims based on the content of material they disseminate.

By contrast, as CreativeFuture said in an April 2018 letter to Congress: “the failure of Facebook and others to take responsibility [for their content] is rooted in decades-old policies, including legal immunities and safe harbors, that actually absolve internet platforms of accountability [for the content they host.]”

In short, internet platforms whose offerings consist mostly of unscreened user-generated content are very different businesses from media outlets that deliver professionally-produced, heavily-vetted, and curated content for which they are legally accountable.

Given these realities, the creative content industries’ approach to self-regulation does not provide a useful model for UGC-reliant platforms, and it would be a mistake to describe any post hoc review process as being “like MPAA’s ratings system.” It can never play that role.

This doesn’t mean there are not areas where we can collaborate. Facebook and Google could work with us to address rampant piracy. Interestingly, the challenge of controlling illegal and abhorrent content on internet platforms is very similar to the challenge of controlling piracy on those platforms. In both cases, bad things happen – the platforms’ current review systems are too slow to stop them, and harm occurs before mitigation efforts are triggered. 

Also, as CreativeFuture has previously said, “unlike the complicated work of actually moderating people’s ‘harmful’ [content], this is cut and dried – it’s against the law. These companies could work with creatives like never before, fostering a new, global community of advocates who could speak to their good will.”

Be that as it may, as Congress and the current Administration continue to consider ways to address online harms, it is important that those discussions be informed by an understanding of the dramatic differences between UGC-reliant internet platforms and creative content industries. A content-reviewing body like the MPAA’s CARA is likely a non-starter for the reasons mentioned above – and policymakers should not be distracted from getting to work on meaningful solutions.

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It’s the end of movies as we know them (and I feel fine)

“How Will The Movies Survive The Next Ten Years?” demands the New York Times, in a series of interviews with 24 major Hollywood figures. Good question! I’ve been asking it myself, here, for six years now. Very unlike music, television, books, and home video, the theatrical movie experience has proved remarkably resistant to online disruption…

…so far.

I’ve argued before that Hollywood and Silicon Valley have many parallels: VCs are like studios, angel investors are like individual producers, founders are like directors, etcetera. However, they also have some striking differences. For most of the last 25 years, the cost to launch a groundbreaking, potentially world-shaking startup has decreased — though that may well be changing — whereas the total cost to make, market, and distribute a theatrical release has decidedly not.

Furthermore, movie theaters, built around repeat screening of 90-to-180-minute self-contained films, face new direct-to-streaming-services competition with far more range, from bingewatching 22-episode series to short clips on YouTube. Even in the arena of “movies” as we know them, this competition seems exponentially more intense every year — there’s no way “Bright” and “Bird Box” would have been direct-to-Netflix as little as five years ago — and will hit a whole new fervor with the launch of the Disney Plus launch date later this year.

We can analogize that, maybe, to some extent, to downloadable software vs. software-as-a-service. There can be only one winner, right? Right? And note that, despite the runaway successes of Avengers: Endgame and Captain Marvel, 2019’s US box office is still tracking a full 10% behind last year‘s. There may be a trend here.

It seems that Hollywood is finally aware of the change. Some striking quotes from that NYT piece: “This is the biggest shift in the content business in the history of Hollywood” — Jason Blum. “For a long time, people have been saying the business is changing, but that’s undeniable now” — JJ Abrams. “I don’t feel particularly optimistic about the traditional theatrical experience” — Jordan Horowitz, producer of La La Land. “There’s a lot more work, but it’s a lot harder to make money on anything.” — Elizabeth Banks.

…But with risk comes opportunity, especially for people who haven’t had much before.
“I’ve seen a lot of female filmmakers get opportunities at Netflix and Amazon that they haven’t gotten through the studio system. So I’m very, very happy about the new shape our industry is taking” — Jessica Chastain. ‘A really huge studio told us, “Hey, a woman of color should be the lead of this movie.” And we went, “Great!” I don’t think we would have heard that five years ago from a major studio’ — Kumail Nanjiani

Perhaps “Hollywood,” as the maker and purveyor of huge-budget, huge-footprint, in-theaters-everywhere entertainment, is indeed a dinosaur finally starting to diminish … but if streaming services are allowing more and more people to create scripted entertainment of every kind, on every budget, then their success is no bad thing. I don’t think movies are going to die. I think there will long be people like me, who so prefer the immersive experience of a theater to the in-passing one of streaming at home that we’re willing to pay for it.

But I can envision a future in which a Hollywood Movie is no longer the alpha king of cultural experiences — where, instead, shared worlds spread across many entertainment form-factors, including lower-cost ones, made by a diverse crowd of contributors, take prime position in our collective mindshare. In that future, theatrical releases become a relatively niche market compared to streaming.

In such future the theatrical business model will change, too, and rightly so. I’m still baffled why I couldn’t see the last season of Game of Thrones in any nearby theater, for instance. But there will be far more kinds of entertainment to choose from, undercutting the century-long dominance of “three acts in two hours,” from far more kinds of people. Even to a hardcore cinemaphile like me, the more I think about such a future, the more it seems better to me than the status quo.

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Cozycozy is an accommodation search service that works with hotels and Airbnb

French startup Cozycozy.com wants to make it easier to search for accommodation across a wide range of services. This isn’t the first aggregator in the space and probably not the last one. But this time, it isn’t just about hotels.

When you plan a trip with multiple stops, chances are you end up with a dozen tabs of different services — on Airbnb to look at listings, on a hotel review platform and on a hotel booking platform. Each service displays different prices and has a different inventory.

While there are a ton of services out there, most of them belong to just three companies: Booking Holdings (Booking.com, Priceline, Kayak, Agoda…), Expedia Group (Expedia, Hotels.com, HomeAway, Trivago…) and TripAdvisor (TripAdvisor, HouseTrip, Oyster…). They all operate many different services in order to address as many markets and as many segments as possible.

Cozycozy.com wants to simplify that process by aggregating a ton of services in a single interface — you can find hotels, Airbnb listings, campsites, hostels, boats, home-exchanging apartments… You can filter your results by price or you can exclude some accommodation styles.

The company doesn’t work with hotels and doesn’t handle bookings directly. Instead, the service searches across all the usual suspects. When you want to book, you get redirected to the original listing on Airbnb, Booking.com, Hostelworld, etc.

The startup recently raised a $4.5 million funding round (€4 million) from Daphni, CapDecisif, Raise and many different business angels, such as Xavier Niel, Thibaud Elzière and Eduardo Ronzano.

Cozycozy.com co-founder and chairman Pierre Bonelli also previously founded Liligo.com. It is one of the most popular flight comparison website in France. It was acquired by SNCF in 2010 and then eDreams ODIGEO in 2013.

cozycozy com page de resultats

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Week-in-Review: Auditing a dark age in Apple design

Hello, weekend readers. This is Week-in-Review where I give a heavy amount of analysis and/or rambling thoughts on one story while scouring the rest of the hundreds of stories that emerged on TechCrunch this week to surface my favorites for your reading pleasure.

Last week, I talked about how YouTube was letting its commenting system turn from a festering wasted opportunity into a liability.


Screen Shot 2019 06 28 at 8.37.42 PM

The big story

Plenty happened this week, though most of the news signified something larger looming on the horizon, more on that in a bit.

One undoubtedly meaty news item was that Jony Ive, Apple’s most iconic executive persona, announced that he was leaving the company this year.

Ive has undoubtedly been a powerhouse of industrial design who has helped craft some of the most iconic products from one of the most influential tech companies. The issue is perhaps what Apple’s vision of industrial design transformed into in his final years at the helm.

Jony Ive is leaving Apple to launch a new firm

Ive shifted away from managerial roles in 2015, but the Chief Design Officer’s influence has been evident it the past several years of very beautiful devices designed around the occasional flawed hypothesis.

Poor design is more than the oft-memed Apple Pencil jutting out of an iPad lightning port or the Mighty Mouse with a charger piercing its underbelly. The company’s aesthetic choices in how they curve their screens or shape their aluminum have stayed true but you don’t have to look too far to find a pattern of carelessness in a number of Apple’s device which occasionally have prioritized svelte profiles over actually even working.

Ive is design genius, but like all people we elevate with that title, he and his design ethos grew further disassociated with the public over time. All designers miss the mark occasionally, but an obsession with minimalism pushed the company in some troublesome directions that the company is only now coming to reckon with.

Apple’s design degradation is perhaps nowhere more visible than in the ill-fated AirPower. The device, which designed to charge your iPhone, AirPods and Apple Watch simultaneously, was beautiful, but Apple’s aggressive design left physics in the rearview mirror. Ambition is one thing but letting function drive form to the point that you publicly announce a product that wasn’t physically possible showcases where Apple’s marketing showmanship butt heads with actual device capabilities. Apple abruptly cancelled AirPower this year, more than a year after its expected release.

If AirPower was a pithy signifier, the degradation of the company’s Mac line has been Apple’s abasement opus.

The problematic keyboards, the useless TouchBar and the shrinking number of ports on its laptops have defined the past five years of the company’s laptop line. There isn’t much that needs to be said about the anti-consumer design decisions that took Apple’s best generation of the MacBook Pro in the 2011/2012 era and cursed it with an unneeded rethinking.

The about-face that the company took on its Mac Pro line shows just how misguided its thinking was and how Ive and company let innovative design poison the good will it had built up with customers. The company’s 2019 line is a total rejection of the 2013 trash can which showcased some major design hubris.

These missteps don’t fundamentally complicate the legacy of Ive or Apple. The past decade has also seen thoughtful designs take shape from the Apple Watch to the iPhone X to the iPad Pro, but industrial design is a means to an end and the manner in which Apple has determined where the customer fits into its design ethos could perhaps use some rethinking as the company enters a new design era.

Send me feedback
on Twitter @lucasmtny or email
lucas@techcrunch.com

On to the rest of the week’s news.

space starship 4

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context.

  • SpaceX preps for a Starship payday
    Elon Musk is still trying to get SpaceX’s Starship off the ground, but the company’s leadership is already planning for the reusable rocket’s commercial heyday. Read more about the aggressive timeline here.
  • SF throws Juul the bird
    San Francisco doesn’t always operate on the right side of interacting with new technologies and startups, but the city government took final steps to be the first city to ban sales of electronic cigarettes, taking aim at Juul, which seems to be one of the more morally bankrupt SF startups out there. Read more on the ban here.
  • Reddit takes steps to isolate r/The_Donald
    Reddit has had a tough time growing up over the past several years, part of that has been a handful of problem communities on the site. This week, Reddit took the unique step of quarantining r/The_Donald after threats against public officials and members of the police. Read more about the quarantine here.
  • Tesla’s cell jealousy
    Tesla electric vehicles are awfully reliant on Panasonic’s battery cells and the company is investigating how it can reduce that dependency, though the company’s significant demands suggest that even if they succeed in the aggressive move, it would take an awful long time to scale to meet their needs. Read more on the report here.

GAFA Gaffes

How did the top tech companies screw up this week? This clearly needs its own section, in order of badness:

  1. Facebook’s head of spin makes a push:
    [Facebook makes another push to shape and define its own oversight]
  2. FB isn’t sure what to do:
    [Facebook’s content oversight board plan is raising more questions than it answers]

Extra Crunch

Our premium subscription service had another week of interesting deep dives. We had a story that should be interesting to a lot of younger founders that are scaling their entrepreneurial ambitions while they’re still in classes.

How to scale a startup in school

“…Once you have a job in an industry you want to be in, network like your life depends on it. Get to know the talented people around you and try to help them as much as you can…”

Here are some of our other top reads this week for premium subscribers. This week, we talked a bit about the future of marketplaces and you should think about naming your startup.

Want more TechCrunch newsletters? Sign up here.

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Equity transcribed: SoftBank-backed startup cracks under pressure to scale

Welcome back to the transcribed edition of the popular podcast Equity. This week, TechCrunch writers Kate Clark and Connie Loizos were joined in the studio by Canvas Ventures’ general partner Rebecca Lynn.

This week, the crew talked about the big rounds raised by shoe resale marketplace StockX, which raised  $110 million at a $1 billion valuation. And Cameo, which provides personally recorded messages by celebrities and influencers to whomever will pay for them, raised $50 million at a reported $300 million valuation.

The group then discussed Brandless and the amount of money that SoftBank poured into it. Being the recipient of such large sums at an early age adds a lot of pressure to produce.

Kate Clark: …Brandless raised this $240 million round, only one year after launching. So they’re a very young company. And now fast forward another year, SoftBank is pressuring them to be profitable. But right now they’re only two years old. So I mean, what two year old startup is even at that point?

Rebecca Lynn: Well and what other SoftBank company is profitable?

Clark: Yeah.

Connie Loizos: Right.

Lynn: So I think when you look at this, I think for me as an investor, I don’t know the ins and outs of what’s happening here exactly. But for me this just really underscores the importance of having a very aligned set of goals and missions and values and everything else, when you sign up to work with an investor, right? I mean the company and the investor have to be sort of in lockstep. And when you have an investor that hasn’t been around for a really long time and you don’t know how they’re going to behave really in a downturn or when the company runs into bumps.

And I think that kind of behavior sort of through the highs and the lows is a really important thing that founders and other investors need to take a very close look at.

And finally they talked about WeWork’s latest acquisition, Waltz, a smartphone app and reader that allows users to enter different properties with a single credential.

Want more Extra Crunch? Need to read this entire transcript? Then become a member. You can learn more and try it for free. 

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Researchers developed a sensing system to constantly track the performance of workers

Researchers have come up with a mobile-sensing system that can track and rate the performance of workers by combining a smartphone, fitness bracelets and a custom app.

The mobile-sensing system, as the researchers call it, is able to classify high and low performers. The team used the system to track 750 U.S. workers for one year. The system was able to tell the difference between high performers and low performers with 80% accuracy.

The aim, the researchers say, is to give employees insight into physical, emotional and behavioral well-being. But that constant flow of data also has a downside, and if abused, can put employees under constant surveillance by the companies they work for.

The researchers, including Dartmouth University computer science professor Andrew Campbell, whose earlier work on a student monitoring app provided the underlying technology for this system, see this as a positive gateway to improving worker productivity.

“This is a radically new approach to evaluating workplace performance using passive sensing data from phones and wearables,” said Campbell. “Mobile sensing and machine learning might be the key to unlocking the best from every employee.”

The researchers argue that the technology can provide a more objective measure of performance than self-evaluations and interviews, which they say can be unreliable.

The mobile-sensing system developed by the researchers has three distinct pieces. A smartphone tracks physical activity, location, phone use and ambient light. The fitness tracker monitors heart functions, sleep, stress and body measurements like weight and calorie consumption. Meanwhile, location beacons placed in the home and office provide information on time at work and breaks from the desk.

From here, cloud-based machine learning algorithms are used to classify workers by performance level.

The study found that higher performers typically had lower rates of phone usage, had longer periods of deep sleep and were more physically active.

Privacy experts and labor advocates have long raised concerns about the practice of tracking employees. That hasn’t stopped companies from incentivizing employees to wear fitness tracks in exchange for savings on insurance or other benefits. Startups have popped up to offer even more ways to track employees.

For instance, WeWork acquired in February Euclid, a data platform that tracks the identity and behavior of people in the physical world. Shiva Rajaraman, WeWork’s chief product officer, told TechCrunch at the time that the Euclid platform and its team will become integrated into a software analytics package that WeWork plans to sell to companies that aren’t renting WeWork space but want to WeWork-ify their own offices.

Meanwhile, the team of researchers suggests that while its system of continuous monitoring via wearables and other devices is not yet available, it could be coming in the next few years. It’s unclear if the team is making a calculated guess or if there are designs to try and launch this system as a product.

The team, led by Dartmouth University, included researchers from University of Notre Dame, Georgia Institute of Technology, University of Washington, University of Colorado Boulder, University of California, Irvine, Ohio State University, University of Texas at Austin and Carnegie Mellon University .

A paper describing the study will be published in the Proceedings of the ACM on Interactive, Mobile Wearable and Ubiquitous Technology.

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The IPO’d learn investing at First Round’s Angel Track

Startups depend on the angel lifecycle. A few flush post-exit individuals put the first cash into a fresh venture. With some skill and plenty of luck, the early team grows the company into a big success. It sells or goes public and those team members earn a fortune. They then pay it forward by investing in the next generation of startups.

If they hoard their spoils they starve the early-stage ecosystem or leave founders stuck with dumb money from non-strategic financiers. If they redistribute their winnings, they can influence startup culture by deciding what, and more importantly, who gets funding.

But how does a co-founder or VP learn to be a mini-VC? That’s the goal of First Round Capital’s Angel Track, a free three-month workshop series in San Francisco and New York for learning how to source, vet, close, and support angel investments.

Angel Track Class 1

A scene from Angel Track’s first cohort

Every two weeks, an expert on some part of the investing process like finding deals or interviewing founders talks to the class, does Q&A, and then leaves the group to openly discuss what they learned and how to use it. Angel Track sessions have been tought by some of the smartest people in the valley like growth master Elad Gil, #ANGELS founding partner and former Twitter VP of corp dev Jessica Verrilli, and Precursor Ventures managing partner Charles Hudson.

Hundreds of startup execs apply for the 15 spots on each coast. After two classes in SF and one in NYC, today First Round unveiled its recently-graduated third cohort from programs in both cities. Those include Lucy Zhang who sold Facebook her chat startup Beluga that became the foundation of Messenger, and Mented Cosmetics co-founder and CEO KJ Miller. By the end of the program they’re taking joint pitch meetings from startups, showing each other the best questions to ask.

As with Y Combinator, it’s as much about the fellowship between new investors as the education. “It’s both a community and a masterclass” says First Round general partner Hayley Barna who oversees the NYC Angel Track. “It’s about bringing a talented group of emerging angels together to build a productive cohort of collaborators.”

She says diversity and inclusion is a big goal of the program, and it features 50% women and 20% underrepresented minorities. Being rich is not a pre-requisite. Barna declares “We’re not pulling in the bankers and the traders doing angel investing as a side-hustle.”

GettyImages 11334896151

LOS ANGELES, CA – MARCH 29: Confetti falls as Lyft CEO Logan Green (C) rings the Nasdaq opening bell celebrating the company’s initial public offering (IPO) on March 29, 2019 in Los Angeles, California. The ride hailing app company’s shares were initially priced at $72. (Photo by Mario Tama/Getty Images)

After a slew of big 2019 IPOs from Uber, Lyft, Pinterest, Slack, and Zoom, there are plenty of newly-minted potential angels for First Round to teach. The venture firm benefits by building a cadre of co-investors or alternative backers for deals it vets, and through added visibility into the next top fundraises. Unlike some VC scout programs, there’s no formal obligation to send opportunities to First Round or pledge funding alongside it. That keeps it appealing to future investors that innovation hubs need to keep the circle of life flowing.

First Round Logo“A lot of angel investors that got their start in the mid-to late 2000s, they’re almost all fund managers now. They went from angels or super angels to venture investors” First Round partner Brett Berson tells me. “There haven’t been a lot of people who’ve come in and filled that gap”, which could stunt the ecosystem’s growth. Graduates ramp up their angel investing while often staying in their operating roles, though some like former Pinterest head of culture Cat Lee who became a partner at Maveron turn investing into their day job.

First Round partner Ben Cmelja who helped launch the program explains that “Some people are doing it for the financial return. Some people want access to new ideas and are curious. Some people have a specific type of community they want to support with their investments.”

What Investors Learn From Angel Track

Becoming a successful angel means a lot more than evaluating term sheets. Just like how ideas are a dime a dozen and it’s about who can execute, fundraises are frequent but getting into the right ones takes hard work. First Round focuses on many of the soft skills required to win. Participants receive mentorship on how to:

  • Develop an area of expertise and personal brand
  • Mine their network for deals and post-investment assistance
  • Assess market opportunities rigorously
  • Judge an unproven startup’s team and product
  • Convince a founder to let them into a round and negotiate terms
  • Support their portfolio companies without being annoying

How to approach the delicate power balance of meetings with entrepreneurs can be especially tricky, so I spoke at length with First Round’s Phin Barnes about the session he teaches on founder interviews. I wanted to get a taste for what it’d be like in the classroom, despite First Round declining to let me attend the real thing. Turns out having a journalist in the room can disrupt a safe learning environment for budding angels.

PhinBarnes 1 600x600

First Round partner Phin Barnes

“Investing is a sell-side product” Barnes stresses. “Capital is a commodity, especially in this market. What you’re saying with a term sheet is that you think the founder’s equity is worth more than your dollars.” That means investors have to close the value gap with sweat.

Barnes gives me what he calls the ‘chocolate soufflé or brownies’ scenario. “The danger of being a smart, talented executive or entrepreneur is that when a founder talks to you about sugar and flour and butter, you start imagining a molten lava soufflé cake you’d build with the ingredients. You invest, and then the founder comes back with a tray of brownies. ‘That’s not what I thought I invested in!’”

The mistake comes in envisioning what you’d do rather than really listening to the founder — the one who’s cooking. Instead of trying to hijack the roadmap or being disappointed by the direction, angels need to help make those brownies as tasty as possible. That means entering into interviews with an open mind.

“You should be positively inclined to invest and have some critical questions. If you don’t think you should invest, you shouldn’t have the meeting in the first place” Barnes explains. “You want to hold that perspective loosely and as new information comes to light, you want to check ‘Am I still interested?’ By the end you want to know what you don’t know, and the open questions you need to answer to validate your hypothesis.”

The four main areas of evaluation are:

The market — Why does this category of product need to exist? What would the world look like if they dominate the category? Can they clearly explain to a five-year old the problem they’re trying to solve? What’s their contrarian thinking? And what motivation will keep them persevering to address the problem despite setbacks and opportunity cost?

The product — Is addressing this specific customer problem unique and defensible? It’s less about if the product is good or bad, or should the button be red or blue. It’s more about how the founder took the inputs and made the decision and how they process information. Have them walk you through the go-to-market plan and see how they shift between high-level strategy and ground-level tactics.

The team — Do they have on-paper talent like PhDs or experience? Can they iterate quickly? You have to weed out victims and look for people who are learners that evolve when faced with adversity. Do your homework on who they are before so you can dig deeper into how they tick. Ask how they show trust in their team and how they get their team to trust them. Have them tell you about the most important thing that happened at the company in the last week to understand their priorities and emotional connection to the process.

The relationship with the founder — Investors need to ask what the best way to work with them is, and what founders are looking for in support from an investor. Do they want a hands-off investor who only chimes in when summoned, or do they expect frequent co-building sessions? Do they need more help accessing a bigger network for hiring and partnerships, or industry-specific expertise to navigate complex decisions?

angelmoney e1458658630848

“We have two roles. We interview and then we coach” Barnes says, providing tips for both. “The very best questions are open-ended. They start with a how/what/why and end with a question mark. Double-barreled questions are terrible. Ask them what would you do, and stop. Get comfortable with silence. They’ll usually fill the silence with something off-script that reveals a deeper truth.” Only once has a founder asked Barnes ‘are you ok?’ in response to his inquisitive stare.

Being able to summarize what you’ve learned lets you quickly cross-check your assumptions with the founder and get helpful corrections. That helps you figure out what questions you still need to ask and keep a diligent list of what you’ll need to research after.

When it comes to giving an answer on whether you’ll invest, “Second best to a quick yes is a quick no with a strong point of view and information for the entrepreneur. The worst is ghosting people. 90% of people operate that way but that’s not the way to do it” Barnes emphasizes. “If you walk out without a yes, no, or what to learn more about in specific detail, you’ve failed as an investor and wasted the time of the entrepreneur.”

The antidote to dumb money

“It was like the perfect mix of your favorite college seminar and a super practical apprenticeship” says Ariana Poursartip, the VP of product for fintech startup Petal who was in the first NYC Angel Track class. “I came away with a better sense of my personal investing approach, and a community of fellow angel investors who I’ll continue to learn from for years.”‘

Fostering better educated angels is crucial for enabling founders. “Dumb money” from investors without expertise in a relevant space, connections they’ll leverage to help, or an understanding of what startups need can be dangerous. It can lead founders to raise more but inefficient capital and make slower progress that puts them at risk of a future down-round that can trigger a startup death spiral.

First Round Angel Track Cohort 3

First Round’s Angel Track cohort 3

First Round is far from the only one trying to fill the angel gap. “Initiatives like Spearhead, YC’s Startup Investor School, and scout programs help lower the barrier to entry for many people who will be terrific and helpful investors for startups” says Cmejla. Sequoia, General Catalyst, Village Global and more run their own scout networks. There are some questionable programs out there too, though, like Venture University which charges from $4,000 to $65,000 for its programs that require students to source deals in exchange for a hazy profit-sharing agreement.

Cmejla insists “It isn’t about providing the capital, a short crash course, or a path to becoming a full-time VC, but about building a durable community that members can lean on and lean into as they level up.” Instead, First Round scores a way to connect founders it funds with relevant angels from its classes. That incentivizes the firm to teach savvy etiquette. Barna warns “You want to be thorough, but if you’re putting in a small check, you can’t ask founders to jump through too many hoops . . . and spend five hours just to get that dinky paycheck.”

Past Angel Track participants like Poursartip and Instacart VP of growth Bengaly Kaba tell me they wish the program got them spending more time together both during and after the class, which could spur deeper alliances. “Currently the program ends and there is no formal programming to keep the alumni cohorts engaged and connected” Kaba notes. Many already back startups brought to the class by their peers. Still, Square Cash app product lead Ayo Omojola wanted a stronger structure like perhaps a syndicate so cohort-mates could do more investing together. 

What they all cited was the massive value of learning to codify what they’re looking for and what they bring to the table. Kaba highlighted how he enjoyed “Hearing how Elad Gil, [Floodgate co-founding partner] Ann Muira-Ko, Charles Hudson and other guest speakers defined their investment theses around macro trends, industry specific insights, and founder traits.”

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When the lock-ups expire on recent IPOs and employees start getting liquidity, “you’re going to see a whole new generation of investors get going over the next couple of years” says Berson.

Not every company spawns the same quality of investor, though. Companies like Uber that empower less-senior team members as the ride sharing company does with regional general managers tend to develop talent with the self-direction and conviction to be great angels. Looking back, you similarly see more angels and founders emerging from more decentralized Google than top-down Apple.

As software eats the world, unicorns proliferate, and the proceeds of tech’s winning streak are spread wide, more and more people will be ready to write angel checks. “It will most likely materially accelerate over the next 12-24 months” Berson concludes. Those without the skills could squander what they’ve earned. Angels who know what makes them special and can evaluate startups without getting swept up in the hype will crown the queens of tomorrow.

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What’s up with Lidar, crypto mafias, influencer marketing, Shuttl, and assistive tech

Reminder: Extra Crunch discount on Sessions: Enterprise tickets

Come and watch TechCrunch interview enterprise titans and rising founders at the premier of TechCrunch Sessions: Enterprise in San Francisco on September 5th. Join 1000+ enterprise enthusiasts for a day of talks, demos, startups, and networking.

Book your $249 Early Bird tickets today and save an extra 20% as an Extra Crunch annual subscriber. Just contact extracrunch@techcrunch.com to snag your discounted tickets.

Startups at the speed of light: Lidar CEOs put their industry in perspective

Our science and AI correspondent Devin Coldewey has a blockbuster look at the current state of affairs in the lidar industry. What started as those gyrating “spinners” on top of partially autonomous cars has evolved into a variety of mechanisms like metameterials, all the while VCs have dumped hundreds of millions of dollars on to new ventures.

The big challenge today though is to move from curios in the lab to production-ready hardware prepared for the open road. While some startups have netted early partnerships with car manufacturers like BMW, nothing is set in stone yet, even as a consolidation of the industry seems absolutely imminent.

There’s no shortage of lidar alternatives — as long as you don’t need something that’s ready to roll off the production line.

“Almost everything is in R&D, of which 95 percent is in the earlier stages of research, rather than actual development,” explained Austin Russell, founder and CEO of Luminar . “The development stage is a huge undertaking — to actually move it towards real-world adoption and into true series production vehicles. Whoever is able to enable true autonomy in production vehicles first is going to be the game changer for the industry. But that hasn’t happened yet.”

And

“I’ve been approached at least four times in the last two months with an offer to buy a lidar company,” said Innoviz CEO Omer Keilaf. “It doesn’t surprise me to see some convergence. While there are 20 or 30 car makers, only a few are early adopters — companies like BMW, Daimler, Audi — and they’re built in a way to do that. They have dedicated teams for working with companies like us, making sure everything goes right in such a complicated project. And that trend is even stronger when it’s related to functional safety.”

The rise of the new crypto “mafias”

Accomplice’s lead crypto investor Ash Egan offered up his research onto the crypto world, tracking the lineage of almost 200 startups to determine where they all started. His conclusion is that a handful of institutions — among them Stanford, Google, and Goldman Sachs — lead the pack as the best academies for crypto startup founders.

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Softbank and Toyota-backed mobility venture gains five more automakers

MONET Technologies, a joint venture launched by Softbank and Toyota to provide on-demand mobility services eventually with an autonomous module bus, has five new partners.

Five Japanese automakers including Isuzu Motors, Suzuki Motor Corp., Subaru, Daihatsu and Mazda will each invest 2% in the venture. Softbank and Toyota each own 35% of the company. Honda and Toyota’s truck-making unit Hino each have 10% ownership.

The venture launched in September aims to launch an on-demand mobility service with buses and cars in Japan next year. Toyota’s autonomous vehicles — based on its e-palette vehicle that debuted at CES 2018 — will eventually become a central piece of the service.

The e-Palette electric vehicle has a modular interior that is designed to allow for it to be used for a variety of services including shuttling people, packages, even mobile food preparation.

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The venture involves more than simply investing capital. The automakers are also sharing data. Datasets are essential to build a mobility-as-a-service platform with autonomous vehicles, according to MONET President and CEO Junichi Miyakawa.

Earlier this year, Toyota began piloting an on-demand bus service that lets people order a ride via an app. The pilot was being conducted in the Ohara district within Toyota City. The venture also conducted a demonstration project involving a multi-purpose shuttle for Fukuyama-shi Hattori school district.

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How a martial arts gym trained me to build an inclusive culture

A wave of unease immediately swept through my body. Constant puffing and growling echoed around me as heavily-tattooed fighters threw forceful punches into the heavy bags. This was the scene I encountered when I stepped into Five Points Academy, a martial arts fighting gym in New York, for the first time a few years ago. Having grown up in a sheltered environment — the last time I had gotten into a fight was in kindergarten — I wasn’t sure I would fit in.

Emily, one of the instructors, immediately introduced herself and showed me some basic Muay Thai movements. The class focused on pad work, so students paired up and held Thai pads for each other to practice their moves. Emily rotated me through different partners during the class, offering me a taste of what it was like to hit pads, and I was hooked.

A year ago, my friend, Diane Wu, wrote a wonderful post arguing that “inclusion is the cause, and diversity is the effect. When an inclusive mindset is in place, diversity naturally follows.” My experience at Five Points reflects this sentiment. Despite being in a traditionally male-dominant field, roughly 40% of our instructors, half of our fighters, and half of our members are women. It’s not a coincidence that they are also widely regarded as one of the most inclusive and least “bro-y” fighting gyms in New York.

Tech has only been male-dominant in the last few decades — the first coders in the 1940s were women — while martial arts has been male-dominant for the last few millennia. If a martial arts gym can overcome systemic obstacles, we, in tech, can do better. After interviewing the owners, coaches, fighters, and members of the gym, here is what I learned about how they created an inclusive community.

Culture starts from the top

Studies have shown that culture stems from leadership, and this is demonstrated by the three owners of Five Points, Steve, Simon, and Kevin. Multiple members noted that Steve’s laid-back demeanor, Simon’s British humor, and Kevin’s always-friendly attitude were a big part of what made Five Points feel like family. As Steve explained, “People learn better if you’re encouraging as opposed to intimidating.” This welcoming culture from the top certainly encouraged a wider range of people to join and prosper, especially among more recreational fighters.

Companies are no different when it comes to establishing cultures from the top. If inclusivity is a priority, executives have to demonstrate that.

I’ve seen cases where the CEO created a committee to collaborate on establishing core values for the company, only to scrap that conversation and send out a survey asking employees to rate cultural values the CEO personally came up with. Over time, people with different viewpoints left the company, and the ones who stayed were predominantly from the same backgrounds in terms of work experience, gender, and ethnicity. Ultimately, building a culture of inclusion requires both executive buy-in and genuine follow-through actions, or else it will be hard to sustain.

“Inclusion” includes everyone

Five Points didn’t start out aiming to achieve gender parity or market to certain demographics. Instead, they focused on creating a community where everyone was welcomed. Simon summarized it well, “An inclusive culture includes everyone. By not having the right culture, you might turn away a person — not just women, but also other men — that can potentially help improve your gym directly.” He further elaborated, “We don’t want an asshole culture not just because women might be turned off—but men would, too.”

This is an important distinction. For example, it is tempting to generalize that a frat-house gym culture could keep women away. However, many men dislike such a culture as well. Instead of lumping people into groups, we can look at each individual and ask ourselves, “what environment would be welcoming for him or her?” For instance, Kevin always makes sure to take time to understand each prospective new member, give them a tour of the facilities, and discuss how the academy could cater to their needs.

We can extend this idea further: surface-level characteristics are often times just a proxy for deeper attributes, so why not go straight to the root? When I took Muay Thai classes at other gyms, the instructor would often remind everyone, “Guys, if you are paired with a girl, please go lighter.” This gender-based generalization is just a proxy for the root attribute: size. At Five Points, the instructor would instead say, “Guys (and gals), if you are paired with someone a lot smaller than you, please adjust your power to keep your partner safe.” Safety is a concern for anyone facing a bigger opponent, regardless of the gender they identify themselves with.

In tech, there has been a lot of discussion around creating a more inclusive environment for underrepresented demographics. I believe we can be more effective by augmenting this effort. In addition to asking “how can we make women feel comfortable contributing to meetings?”, we can also ask “how can we help all employees feel comfortable contributing to meetings?”[1] In addition to discussing “how can we provide support mechanisms for minorities?”, we can also discuss “how can we provide support mechanisms for employees who are not well-versed in mainstream corporate America culture?” I believe this hybrid approach can cover more ground and ensure that help is delivered to the people who need it most [2].

Treat everyone equally

A common theme among the female coaches and members I interviewed was that they felt that gender was something that did not cross their minds during class. Multiple members have commented that the instructors treated everyone equally. For example, if you were late, independent of what demographic or skill level you were, you had to do 30 pushups [3]. Giving everyone the same standards ensured that people couldn’t pick on others or make snide comments such as “Amy got off easier because she was a girl.”

One of the rules during Muay Thai drills class is to lower the power level and focus on technique. One time, Steve took Emily’s Muay Thai drills class and hit his partner a bit too hard. Emily immediately reminded Steve, “that was probably a bit too hard.” It didn’t matter that Steve was an owner and Emily was an employee — as the instructor of the class she made sure everyone followed the same rules.

Likewise, treating everyone equally starts from the beginning: the candidate experience. A common question I get is “how do we improve diversity without lowering the bar?” What I propose is to define a set of capabilities that all candidates need to demonstrate. For example, if a productive software engineer needs to be good at algorithms, system design, communication, teamwork, and breaking problems down, we should evaluate each of the five areas fairly during recruiting.

Unfortunately, many companies only look at the first two, which not only results in a non-diverse group of employees, but also those with skillsets that don’t fully map to their jobs. By communicating the standards transparently, we ensure that all employees understand that they belong, and are equally a part of the community.

Pay attention to details

Details often reflect the thoughtfulness put in to creating a culture. Ting, a Kali (a weapons-based martial art) instructor and former fighter, explained, “Many martial arts gym are dirty and smell like sweat. Five Points pays attention to details: there are hair ties and multiple hair dryers for women’s locker rooms. The mats are mopped every hour in between classes. This removes one extra stress for a lot of women who want to try out martial arts.”

Needless to say, the attention to detail applies to classes as well. A new member shared the following story with me: “Once I was getting ready to do a private session with Steve after Emily’s Muay Thai class. Emily went to Steve and said ‘she needs more work on her left roundhouse kick.’ Of course Steve then made me do left roundhouses for 30 minutes straight.”

While the member was cursing inside, she was also grateful for the attention Emily paid to her. Sonya, a long-time Kali student, also recalled that Simon would often notice when she’s flustered with a particular drill. With his classic British humor, he would remark “too much water in the bucket?” before proceeding to break down the drill further to ensure she could absorb the information.

There are many zero-cost things companies can do that could make the employees feel taken care of. For example, in the early days, Palantir, my former employer, would proactively offer employees the option to early-exercise their stock options. They also brought in tax accountants to explain how to handle the alternative minimum tax (AMT). However, I’ve also seen companies with 60+ employees where no one was given the option to early-exercise, even though it financially costs the company practically nothing.

Be adaptive to change and proactively improve

When Five Points first started, they followed the Western boxing mindset where members sparred hard. The mentality was to identify fighters who were tough and wanted it so bad they’d return after getting beaten up. Over time, as Steve and Simon traveled to Thailand, they witnessed a different style of sparring, where fighters sparred lightly and focused on technique and timing.

They revamped their sparring classes to “Thai Style Technical Sparring,” and had a few designated “hard sparring” classes. Although a few fighters were upset, Steve and Simon were convinced that this was the right approach. As Steve explained, “the old style can help you find tough people but not necessarily the best people.” Furthermore, the best fighter can come in all shapes, sizes, genders, and backgrounds, not necessarily the “tough person” who comes in day one wanting to fight.

This open mindset certainly uncovered many great fighters they wouldn’t have found otherwise, increasing the diversity of the community. One of their fighters, a former model and actress, came to Five Points never thinking she would fight. The welcoming environment and emphasis on technique during sparring made her feel safe as she leveled up her skills. Three years in, Steve asked her if she wanted to do a fight. She ended up getting hooked and went on to win multiple US Kickboxing Association International Championships.

This adaptive mindset is applicable to other areas as well. When I interviewed at Google, one of my interviewers told me that for a long time Google focused heavily on brain-teasers and algorithmic puzzles. As a result, during lunch with his team, the predominantly white and Asian male engineers with backgrounds in coding would discuss brain teasers and algorithmic puzzles.

Over time, Google’s leadership realized that brain teasers and algorithmic puzzles have little correlation with one’s performance. They then restructured their interview process, and the diversity of the team improved. Obviously there are still areas for improvement, but being able to recognize issues and adapt to new findings is critical to fostering an inclusive culture.

Enforce the rules fairly when needed

The journey to building a diverse and inclusive martial arts community is not without the occasional bumps. As a community grows bigger, there will inevitably be bad actors, and how a leader responds to them will set the tone for how the culture develops.

Emily has kicked students out of her class a few times when a bigger or more experienced fighter beat up on a smaller or less-experienced student. It did not matter if the bully was highly skilled or fought for the gym — she enforced the rules fairly with everyone. Similarly, after a 200+ lbs experienced man repeatedly beat up others during Muay Thai sparring and refused to let go on locks during Brazilian Jiu Jitsu classes, Steve asked him to leave the gym.

On the contrary, in a work environment, I have witnessed situations where someone would repeatedly yell at colleagues in front of everyone — including executives — during meetings. It got so toxic that four people from various departments requested to switch projects because they did not want to work with the person anymore. However, because the employee was deemed important by executives, they continued to let him yell at others during meetings with no repercussions.

Culture is not just slogans hung on the walls of your conference rooms. UCSF Psychiatry professor Cameron Sepah says, “Your Company Culture is Who You Hire, Fire, and Promote.” One of the triggers for a recent employee walk-out at Google was because the company paid ex-executives tens of millions of dollars after discovering allegations of sexual misconduct. Ensuring improper behavior is dealt with immediately and fairly is vital to fostering an inclusive culture.

Success breeds success

When an initiative has early traction, it is much easier to continue the momentum. Culture is the same way. When Five Points first started in 2002, they already had three high-level female fighters—one of them, Emily, even went on to win the Muay Thai World Championships. Having diversity early on helped provide role models for members from underrepresented backgrounds who were interested in fighting.

Once an inclusive culture is established, the community members will continue to be inclusive and others will want to join. One of the coaches and fighters, Gianna, explained, “Nobody made me feel like sh*t when I was new, so I want to make sure other noobs don’t feel that way either.”

Another Kali student, Sonya, who describes herself as a “girly girl,” had to work extra hard honing her skills because she did not come from an athletic background like most of the other members. However, Simon was always patient with her, continually breaking down techniques until she grasped them. Looking back, she is extremely appreciative that Simon tried very hard to make her feel comfortable, and now she recommends all her female friends to try out Kali. Her motivation? “I want girly girls to know that they’re welcome here.”

The same applies to the tech industry. I have seen series A companies with 50 employees struggle to hire women due to their gender imbalance (15% female), only to see the ratio further decrease as the company grows (10%). On the other hand, Flatiron Health, also a former employer, focused on diversity & inclusion from the get-go, including hiring senior female leaders across all functions early on. When I was there, they had roughly 50% female employees and 50% female managers.

From inclusion to diversity

Five Points Academy never started with the intent of building a gym with 50% women and members from all different ethnic and socio-economic backgrounds. Instead, the owners simply wanted to build a gym where anyone can belong, and anyone can enjoy being part of the community. By starting with inclusion, diversity followed.

I am not at all advocating for halting initiatives on diversity. It is important that we focus on diversity, and many companies are doing just that. However, just like Five Points Academy, we also need to invest in building an inclusive culture to help people thrive and grow at the company, which will further attract more diverse employees.

Footnotes

[1] Studies have shown that a man’s ideas are often taken more seriously than a woman’s. As a result, many women choose not to participate in meetings but ask a male colleague of theirs to present their ideas.
[2] For example, according to Ascend Research, Asians score the lowest in executive parity index, doing worse than Blacks and Hispanics. However, they are not considered an “underrepresented minority,” so relatively little has been done to mentor young Asian professionals on career progression.
[3] If you had physical limitations, you could substitute them with pushups on knees or another exercise.

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