January 2021 – Page 82 – Digital Pulse

News: Indian electronics and lifestyle brand Boat raises $100 million from Warburg Pincus

January 5, 2021
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Boat, an electronics and lifestyle startup in India, has raised $100 million in a new financing round that many independent investors termed as the most successful hardware startup story in the world’s second largest internet market. An affiliate of Warburg Pincus, a New York-headquartered private equity firm, financed the entire Series B round for the

An affiliate of Warburg Pincus, a New York-headquartered private equity firm, financed the entire Series B round for the four-year-old Indian startup, which sells low-cost, durable headphones, earphones and other mobile accessories.

The round gives Boat, which had raised about $3 million in equity and debt financing prior to the new round, a post-money valuation of about $300 million, a person familiar with the matter told TechCrunch. Executives of Boat declined to comment on the valuation, other than saying that Warburg Pincus had bought a “significant minority stake” in the startup.

An investor who did not want to be named said Boat has grown to be an anomaly case among hardware startups in India. There aren’t many hardware startups in India. Among those that do exist, very few have been able to raise much money. And on top of that, Boat is also profitable — and it has been for several years, said Sameer Mehta, co-founder of the startup, in an interview with TechCrunch.

The secret sauce of Boat, at least in part, is that it has managed to keep the price points of its accessories low while also making them aesthetically appealing. The startup counts the young generation as its target audience, who want good-looking accessories at low prices but also tend to upgrade every few months.

Boat has expanded into several categories in recent years, following the same strategy all along. Its fitness wearable starts at Indian rupees 1,799 ($24.5), smartwatches at $34, charging cables at $3.4, home theatre soundbars at $54, wireless speakers at $13.5, headphones at $5.5, and AirPod-like earbuds at $27.

According to marketing research firm IDC, Boat commands over 30% of the wearable market in India and is the fifth largest brand globally in the category.

The startup sells through both online and offline retail channels. Its devices are available through Flipkart, Amazon India, Reliance Retail, as well as Tata Stores, Croma, and Vijay Sales. Analysts at HDFC bank estimated in a note last month that Boat Lifestyle’s products are available through over 5,000 retail stores across India and it plans to enter global markets.

“We see a compelling growth story in boAt and believe the company is well-poised to build upon the strong leadership position it has carved out within the industry and stands to benefit from the secular tailwinds of e-commerce growth in India. Warburg Pincus is excited to partner with the management team of boAt led by Aman [the other co-founder] & Sameer in this journey and we look forward to supporting them through the next phase of the company’s growth,” said Vishal Mahadevia, Managing Director and Head of Warburg Pincus India, in a statement.

Mehta said the startup will deploy the fresh capital to shift more of its manufacturing from China to India, and expand to more categories including gaming keyboards.

More to follow…

News: How Segment redesigned its core systems to solve an existential scaling crisis

January 5, 2021
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The systemic issues became apparent the way they often do — when customers began complaining.

Segment, the startup Twilio bought last fall for $3.2 billion, was just beginning to take off in 2015 when it ran into a scaling problem: It was growing so quickly, the tools it had built to process marketing data on its platform were starting to outgrow the original system design.

Inaction would cause the company to hit a technology wall, managers feared. Every early-stage startup craves growth and Segment was no exception, but it also needed to begin thinking about how to make its data platform more resilient or reach a point where it could no longer handle the data it was moving through the system. It was — in a real sense — an existential crisis for the young business.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost.

Segment’s engineering team began thinking hard about what a more robust and scalable system would look like. As it turned out, their vision would evolve in a number of ways between the end of 2015 and today, and with each iteration, they would take a leap in terms of how efficiently they allocated resources and processed data moving through its systems.

The project that came out of their efforts was called Centrifuge, and its purpose was to move data through Segment’s data pipes to wherever customers needed it quickly and efficiently at the lowest operating cost. This is the story of how that system came together.

Growing pains

The systemic issues became apparent the way they often do — when customers began complaining. When Tido Carriero, Segment’s chief product development officer, came on board at the end of 2015, he was charged with finding a solution. The issue involved the original system design, which like many early iterations from startups was designed to get the product to market with little thought given to future growth and the technical debt payment was coming due.

“We had [designed] our initial integrations architecture in a way that just wasn’t scalable in a number of different ways. We had been experiencing massive growth, and our CEO [Peter Reinhardt] came to me maybe three times within a month and reported various scaling challenges that either customers or partners of ours had alerted him to,” said Carriero.

The good news was that it was attracting customers and partners to the platform at a rapid clip, but it could all have come crashing down if the company didn’t improve the underlying system architecture to support the robust growth. As Carriero reports, that made it a stressful time, but having come from Dropbox, he was actually in a position to understand that it’s possible to completely rearchitect the business’s technology platform and live to tell about it.

“One of the things I learned from my past life [at Dropbox] is when you have a problem that’s just so core to your business, at a certain point you start to realize that you are the only company in the world kind of experiencing this problem at this kind of scale,” he said. For Dropbox that was related to storage, and for Segment it was processing large amounts of data concurrently.

In the build-versus-buy equation, Carriero knew that he had to build his way out of the problem. There was nothing out there that could solve Segment’s unique scaling issues. “Obviously that led us to believe that we really need to think about this a little bit differently, and that was when our Centrifuge V2 architecture was born,” he said.

Building the imperfect beast

The company began measuring system performance, at the time processing 8,442 events per second. When it began building V2 of its architecture, that number had grown to an average of 18,907 events per second.

News: Extra Crunch Perks: 20% discount on all TechCrunch 2021 events

January 5, 2021
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We’ve announced our slate of 2021 events, and we’d like to take this time to remind you that annual or two-year Extra Crunch members can receive a 20% discount on all TechCrunch 2021 virtual events. How to get the discount If you’re an annual or two-year subscriber, contact extracrunch@techcrunch.com to request your event ticket discount

How to get the discount

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News: GitHub alumni are building Rewatch, a solution for your Zoom fatigue

January 5, 2021
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The rise of distributed teams in response to the coronavirus has led to more video-conferencing meetings for all of us. As offices remain closed, distributed work is forcing companies to figure out a better way than Zoom or Google Hangouts to meet with employees across time zones and teams. Rewatch wants to make meetings more

Rewatch wants to make meetings more efficient, and maybe even shorter. Co-founded by Connor Sears and Scott Goldman, Rewatch creates and organizes private video channels for companies to store meetings so employees can sift through them on their own time.

And at its core, Rewatch is a counterintuitive play: The startup thinks it can combat ‘Zoom fatigue’ by giving employees more ways to watch video-conferencing calls.

The product works like this: companies can record their meetings, over Google Hangouts or Zoom, and then Rewatch archives the meetings into a database. Using tags and notes, the videos become more searchable and easier to find. For example, you can tag a co-worker in a meeting they got an unexpected shout out in. Or you can search for the last time a manager brought up the project you’re working on.

The video libraries, which the company describes as “mini-YouTube channels,” also include transcriptions of all meetings. Rewatch is turning synchronous meetings into asynchronous bulletins and documents.

“In the past, the only way to scale a meeting was just to have a longer meeting, or more meetings,” Sears said.

If Rewatch works, the founders hope to see meetings shift from squares of muted floating heads to interactive across various teams and timezones with text and annotations.

Sears first had the idea for Rewatch when he was an employee at GitHub, a space for developers. GitHub, which is fully distributed, created an internal YouTube channel to enable employees across time zones to work with one another. Now, the two co-founders are trying to take one of GitHub’s internally loved features and bring them, and more, to the mainstream.

So far, the startup has been able to land a number of customers, including Github, although it wouldn’t disclose total numbers. When it launches, the company will charge a subscription fee, but Sears and Goldman have not disclosed the pricing yet.

One of Rewatch’s competitors is Google Drive, which has lagged in creativity around storing and structuring video content. The startup competes with the tool by adding more search-friendly features for video like live transcriptions. Other competitors include Berlin-based Acapela, which is working on asynchronous meetings, and Storyboard, a podcast company that helps directors publish on-demand audio content to their stakeholders. Both companies have recently raised millions of dollars.

While innovation around how meetings are held certainly feels important, Rewatch and others are betting that employees will turn to these content repositories on a semi-often basis and engage with them in a meaningful way. But how many of us watch the standup we missed while on vacation? The business is contingent on that singular consumer habit.

This reality doesn’t mean innovation isn’t welcome. It just means that a huge shift in consumer habits needs to change in order for this startup, and many others, to be successful. And that too-early-to-know reality makes the fact that investors have put millions into the startup even more compelling.

Rewatch has convinced a number investors on its vision. The startup tells TechCrunch that it has raised a $2 million pre-seed round led by Semil Shah at Haystack with participation from Kent Goldman at Upside Partnership. Other investors include Gumroad CEO Sahil Lavingia, GitHub CTO Jason Warner, and SVP of Zendesk Jason Smeale.

News: Kyte raises $9 million to deliver rental cars to your doorstep

January 5, 2021
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More than two years ago, Ludwig Schoenack, Nikolaus Volk and Francesco Wiedemann looked at the bevy of scooter services, ride-hailing apps, public transit and car-sharing options available in most urban centers in the United States and saw a gap in the mobility market. Consumers who didn’t want to own a car, but needed one for

Consumers who didn’t want to own a car, but needed one for a few days or weeks had two options: head to a car rental center, likely located at an airport or outside the city center, or turn to a car-sharing platform. The three friends — all German immigrants whose paths had crossed in San Francisco — decided to pool their collective expertise from BMW, McKinsey and Uber and launch Kyte to create a new kind of car rental experience without taking on the costly business of owning and maintaining large fleets.

Kyte built a fleet-logistics platform that lets consumers rent vehicles through their app or website. The vehicles, which are located in hubs throughout a city center, are delivered by gig economy workers right to the renters’ home. Kyte also handles the pickup and refuels the vehicle for no extra charge.

“We still believe people own cars because they want it outside their door, so we thought why don’t we put it right there,” Schoenack said in a recent interview.

Kyte partners with car rental firms and other companies that manage fleets, allowing the startup to focus on consumers and the tech.

The startup, which launched in late 2018 and operates in Boston, Los Angeles and San Francisco, has caught the attention of capital of investors. The startup said Tuesday it has raised $9 million in funding from DN Capital and Amplo VC. Numerous individual investors from the mobility industry also participated, including former Uber executives Ed Baker, Jörg Heilig, Josh Mohrer and William Barnes, as well as Lime co-founder Toby Sun and Kayak and Travelocity co-founder Terry Jones.

The funds are already being put to work to help drive Kyte’s expansion into markets, starting with Washington, D.C.

Image Credits: Kyte

Kyte’s founders wouldn’t disclose their revenue, except to say it’s generating a “solid six-figure” amount of revenue monthly. Schoenack added that Kyte’s monthly revenue has grown 400% since March as more consumers have turned to cars during the COVID-19 pandemic.

“Even before COVID was on the horizon, it was clear that we needed to change the way we interact with cars,” Schoenack said. Consumers have been more willing to try alternatives like Kyte to travel as COVID-19 has turned many off from air travel.

Despite this fast growth, Schoenack said more than half of Kyte’s bookings come from recurring users.

Kyte has also found its clients — which Schoenack would only describe as the biggest rental car companies in the country — are willing and enthusiastic participants since it helps get vehicles in the hands of customers. Rental car companies were hit hard by COVID-19 since the bulk of operations are at airports. These companies were left with millions of dollars of depreciating assets that weren’t generating any revenue.

DN Capital’s co-founder and managing director Steve Schlenker believes that Kyte will be a core building block to the future of mobility.

“The pandemic has accelerated the transformation of cities and consumer behavior with respect to transportation,” Schlenker said. “Kyte’s unique operations layer facilitates this transformation while providing a level of service and convenience that other solutions fail to meet.”

News: Divvy raises $165M as the spend management space stays red-hot

January 5, 2021
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Today Divvy, a Utah-based startup that focuses on corporate spend management, announced that it has closed a $165 million round at a $1.6 billion valuation. The company said that the new capital was raised from Hanaco, Schonfeld, PayPal Ventures and Whale Rock, along with a cadre of prior investors. The new investment is not Divvy’s

The new investment is not Divvy’s first megaround of private capital. The well-known startup raised $200 million in April of 2019. TechCrunch reported at the time that that round valued Divvy at around $700 million, making today’s deal a more than 2x increase in valuation for the company.

Divvy exists amongst the current generation of Utah-based tech upstarts that are keeping the state’s tech scene in the broader startup conversation. Podium fits in the same cohort, for example, while Qualtrics feels like it’s from the preceding peer group.

Utah’s Divvy raises $200M to eliminate expense reports

Divvy’s market, the corporate spend management space — broadly, corporate cards and software that helps firms manage and limit expenses — is incredibly active today as businesses look to modernize their financial infrastructure. The new capital for Divvy comes after multiple other competitors recently announced fresh funds itself, for example. Let’s take a look at who Divvy is taking on with its new round.

Competition

A few weeks back Ramp, another corporate-cards-and-software startup, announced a $30 million raise and that it had reached $100 million in spend through its service in its first 18 months of business. At the same time Divvy shared with TechCrunch that it had seen 120% customer growth and over 100% growth in platform spend in 2020, compared to 2019. At the time, Brex, which also competes in the corporate spend space, declined to share metrics.

That Divvy was able to raise so much capital given its recent growth rates is not surprising. But that so many companies in its sector are managing similarly strong-to-line expansion stands out. After covering the Ramp round in December and noting Divvy’s metrics at the same time, both Airbase (more here) and Teampay (more here) reached out with numbers of their own.

Teampay reiterated its October-era metrics: that it has seen its annual recurring revenue (ARR) grow by 320% and its total spend grow by 800% since its then year-ago Series A. Airbase noted what it described as 250% growth in ARR — up by 2.5x, in other words — and 700% growth in payment volume (annualized).

Divvy, Teampay and Airbase are therefore growing like all heck, though in slightly different fashions. Divvy and Ramp offer their corporate spend products and software for free, taking a slice of payment volume through interchange revenues. Teampay and Airbase generate incomes from interchange as well, but also charge for their software. This gives them both spend and software revenues.

Teampay adds $5M to its Series A at higher valuation after growing ARR 320% growth since the round

Which brings us back to Divvy’s news from today. I normally avoid quoting from releases, but in today’s case a paragraph is worth sharing:

The valuation of $1.6 billion and the addition of key investors validates Divvy’s ambition to modernize financial processes by combining credit, vendor, and spend management into a single platform. With this round of funding, Divvy plans to invest heavily in product development and engineering in order to accelerate their future roadmap.

Divvy is going to invest heavily in product? That makes sense. But to give away its software forever just seems odd. Some of its competitors are charging for theirs! Why not Divvy as well?

We’ll see, but what is clear today is that the capital that has gone into startups in Divvy’s cohort was put into a niche that has shown huge demand. So, expect to hear more from this product area in 2021.

News: Chronosphere nabs $43M Series B to expand cloud native monitoring tool

January 5, 2021
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Chronosphere, the scalable cloud native monitoring tool launched in 2019 by two former Uber engineers, announced a $43.4 million Series B today. The company also announced that their service was generally available starting today. Greylock, Lux Capital and venture capitalist Lee Fixel, all of whom participated in the startup’s $11 million Series A in 2019,

Greylock, Lux Capital and venture capitalist Lee Fixel, all of whom participated in the startup’s $11 million Series A in 2019, led the round with participation from new investor General Atlantic. The company has raised $54.4 million.

The two founders, CEO Martin Mao and CTO Rob Skillington, created the open-source M3 monitoring project while they were working at Uber, and left in 2019 to launch Chronosphere, a startup based on that project. As Mao told me at the time of the A round, the company wanted to simplify the management of running the open source project:

M3 itself is a fairly complex piece of technology to run. It is solving a fairly complex problem at large scale, and running it actually requires a decent amount of investment to run at large scale, so the first thing we’re doing is taking care of that management,

He said that the company spent most of last year iterating the product and working with beta customers, adding that they certainly benefited from building the commercial service on top of the open-source project.

“I think we’re lucky that we have the foundation already from the open-source project, but we really wanted to focus a lot on building a product on top of that technology and really have this product be differentiated, so that was most of the focus of 2020 for us,” he said.

IBM is acquiring APM startup Instana as it continues to expand hybrid cloud vision

Mao points out that he and Skillington weren’t looking for this new round of funding as they still had money left from the A round, but the company’s previous investors approached them and they decided to strike to add additional money to the balance sheet, which would help grow the company, attract employees and help reassure customers they had plenty of capital to continue building the product and the company.

As the company has developed over the last year, it has been adding employees at a rapid clip, growing from 13 at the time of the A round in 2019 to 50 today with plans to double that by the end of next year. Mao says the founders have been thinking about how to build a diverse company from its early days.

“So [ … ] beginning last year we were making sure we were hiring the right leaders, and the right recruiting team who also care about diversity, then following that we made company-wide goals and targets for both gender and ethnic diversity, and then [we have been] holding ourselves accountable on these particular goals and tracking against them,” Mao said.

The company has been spread out from the beginning, even before COVID, with offices in Seattle, New York and Lithuania, and that has helped in terms of having a broader base to recruit from. Mao wants to remain mostly remote whenever it’s possible to return to the office, but maintain hubs on each coast where employees can meet and see each other in person.

With the product generally available today, the company will look to expand its customer base, and with the open-source project to drive interest, they have a proven way to attract new customers to the commercial product.

Chronosphere launches with $11M Series A to build scalable, cloud-native monitoring tool

News: Tile to launch to launch a new tracker powered by ultra wideband technology, add AR finding to app

January 5, 2021
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Tile is preparing to introduce a new product this year that will serve as a rival to Apple’s long-awaited AirTags and other lost item trackers coming to the market, including those from Samsung, TechCrunch has learned. While previous Tile trackers have leveraged Bluetooth to help users locate lost items — like a misplaced set of keys, for example — Tile’s new product will take advantage of UWB (ultra wideband) technology to find the missing items. It will also use augmented reality to help guide users to the lost item’s location via the Tile mobile app.

Ultra wideband technology is available on newer iPhone 11 and iPhone 12 models and select Android-powered devices, including more recent devices from Samsung.

Like Bluetooth and Wi-Fi, UWB is a short-range, wireless communication protocol, but one that operates at very high frequencies. It can be used to capture spatial and directional data, which is where it comes in handy to lost item finders, like Tile’s trackers.

Apple last year began to give third-party developers access to its U1 chip, which uses UWB technology to make the iPhone spatially aware, via its “NearbyInteraction” framework. Some Android devices also ship with the technology. It’s unclear to what extent Tile is using the new frameworks with its forthcoming product, and the company is likely under NDA with regard to its work with Apple specifically, per earlier reports.

Based on Tile’s internal concept art for the device (shown below), Tile’s UWB model will look similar to its other small trackers, like the Tile Mate and Tile Pro. It will also have a square shape, center button, and flat back to support being mounted using an adhesive. And like other Tile dongles, it can be attached to a keychain.

Image Credits: Tile concept art

Typically, Tile dongles would be attached to things like keys, remote controls, handbags, duffels, luggage, or other small carry items, or stuck to larger devices like personal electronics or bikes. However, lost items could only be located by way of Bluetooth, when nearby, or via Tile’s “community find” network when further away. The latter leveraged the Tile app installed on its users’ phones to help locate any Tile tracker set to a lost mode, then ping the item’s owner when the item was found. This has allowed Tile users in the past to locate lost items like those left on an airplane by mistake, for example.

The new Tile tracker, on the other hand, will use UWB to make the finding process easier than before.

Because UWB offers spatial awareness capabilities, it will be able to locate missing items inside or outside, even when you can’t hear the tracker’s ring. This could help when the missing item is buried under something — like a sofa cushion — or inside something like a dresser drawer, for example. It can also help to find items more easily in a larger space, like a house with multiple floors.

The Tile app, meanwhile, will allow users to launch to an AR-enabled camera view that will help to guide them to the item’s location using overlays, like directional arrows and an AR view of the item’s location.

Image Credits: Tile internal concept art

Per sources familiar with Tile’s plans, we understand Tile expects to release the new tracker later this year with support for both iOS and Android devices. Pricing is unknown. Tile will still sell its popular Bluetooth-enabled devices, of course, as a good portion of the market does not yet own a UWB-enabled smartphone at this time — the technology is only found in newer devices.

Though Tile has historically led the market in comparison with other third-party lost item trackers, the company is due to face increased competition in 2021 as new trackers arrive from top smartphone brands, like Samsung and Apple.

At the 2020 Samsung Galaxy Unpacked virtual event, Samsung discussed its plans to integrate UWB into a new SmartThings Find application. This week, its upcoming Samsung Galaxy SmartTag tracker was spotted in images provided to the certification authority NCC. The device very much looks like a Tile tracker, with its square-ish shape and keychain hole, for instance.

Meanwhile, according to a new research note from analyst Ming-Chi Kuo, Apple will reveal its own Tile competitor, AirTags this year. Apple has already all but confirmed AirTag’s existence, as it even accidentally published references to its lost item tracker in an official support video at one point. Leaked images of the AirTags also began to circulate this week, adding fuel to these reports of a “soon-ish” AirTags launch.

A UWB-powered tracker could help allow Tile to maintain its position in the market. Tile, as of last year, had sold 26 million Tile devices, and was locating around 6 million items per day across 195 countries. Tile’s website now says its devices reach over 230 countries and territories. With this scale, Tile today leads the market. But Apple’s AirTags could have a first-party advantage with deep integrations into its “Find My” app — a concern that was brought up by Tile in last year’s antitrust hearings in reference to how Apple wields its platform and market power to overrun competitive businesses.

Tile is not speaking publicly about its plans for a UWB device at this time.

“While we can’t comment on our product roadmap, we’re constantly looking to improve our customer experience and solve the pain point of finding lost items,” a spokesperson for Tile told TechCrunch.

News: What’s going on with fintech venture capital investment?

January 5, 2021
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The aggregate fintech venture dataset shows an active sector with global demand from investors, but demand is not even.

Over the next few weeks, the venture capital industry will compile and release data concerning its Q4 2020 performance, capping a year that saw the world of private capital freeze, thaw and burn.

But we can get a peek at a critical part of the VC universe early, thanks to a preview of global fintech investment results from CB Insights. The dataset deals with worldwide investments into fintech companies from the start of October through December 12th.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Given that the last two weeks of the year are not famous for productivity, the dataset we have should prove representative for this critical slice of the venture capital market. (For our look at the third-quarter fintech VC market, head here.)

To be honest, I didn’t plan on writing up this data when I first dug into it; I was prepping for later releases, hoping to ground myself ahead of the full numbers. However, the collected results aligned with several themes that cropped up during 2020, making it a representative capstone of sorts concerning the year’s venture capital market. So it was too interesting to not unpack.

What happened to fintech venture capital investment in Q4 and 2020? Some startup stages and regions did well, but amidst the good news, one of the hotter domestic segments of startup land is not set to have a good global year. Let’s get into the numbers.

A final warning: although these results are missing a few weeks’ worth of inputs, we believe these numbers will prove more than directionally accurate when all results are tallied and released by the various organs of venture data tracking.

North America and Europe shine, Asia falls

Using numbers that include projections for the rest of 2020, it’s clear that the fintech venture capital world is not equally distributed. If you are reading this in the United States, for example, or the UK, you might be surprised to learn that CB Insights expects global fintech venture capital deal and dollar volume to fall in 2020. Surely not, with all the neobank and trading-platform deals we saw?

Yes, actually, because while fintech investment has risen in dollar terms in both North America and Europe, huge declines in Asia have overshadowed results in the other two regions. Here’s the clip of the preview chart:

Via CB Insights

News: 8 investors discuss social gaming’s biggest opportunities

January 5, 2021
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“The next social network needs to be a place to hang also when you don’t come for a game session.”

The gaming industry has had plenty of watershed moments in 2020 as consumer entertainment habits have shifted in response to the pandemic. One trend has been the crystallization of MMOs as social entertainment hubs that serve more needs for users than ever before.

Following my survey of gaming-focused investors on trends in the AR/VR world several months ago, I pinged a handful of investors to tap their thoughts on the shifting trends and opportunities in social gaming.

Hope Cochran, Madrona Venture Group
Daniel Li, Madrona Venture Group
Niko Bonatsos, General Catalyst
Ethan Kurzweil, Bessemer Venture Partners
Sakib Dadi, Bessemer Venture Partners
Jacob Mullins, Shasta Ventures
Alice Lloyd George, Rogue
Gigi Levy-Weiss, NFX

One thing that most investors expressed excitement around was the widening entertainment ambitions of social platforms, as concerts and movie screenings find homes on gaming platforms like Fortnite.

While evolving free-to-play mechanics continue to elevate the experience of single-player titles into something more living and breathing, platforms like Roblox have found areas for growth that seem more unique, developing into destinations for users to communicate and share.

“It’s where culture is created,” Madrona’s Daniel Li told TechCrunch.

Not all of the respondents shared the belief that a gaming platform like Fortnite would grow to become the next Facebook. General Catalyst’s Niko Bonatsos pointed to adjacent platforms like Discord or Twitch as the constants that would remain as consumers cycled through different platform ecosystems. Other pointed to the the still-disjointed experience switching between mobile and desktop experiences as a yet-to-be-solved stumbling block.

Building the metaverse and building a popular casual mobile game are two different things. Most investors I talked with emphasized how much the pace of scaling has accelerated across categories though with breakout hits rising faster than ever while disasters seem to grow evident just as quickly.

“I think that you look at Among Us, and Cyberpunk on the other side, anything can happen much faster and more extreme than it used to be just because of distribution,” Rogue VC’s Alice Lloyd George told TechCrunch.

Read below for the full answers; some responses have been edited for length and clarity.

Hope Cochran and Daniel Li, Madrona Venture Group

The idea that the next big social network will be an MMO seems to be a trendy take in the VC world, what are the roadblocks to this actually happening?

Daniel Li: Hope and I were trading some notes and part of our thesis is that gaming is the future of social and for Gen Z, gaming is replacing not just old games, but it’s replacing TV and Netflix. So instead of going to watch music videos on YouTube, you’re going to a concert in Roblox and that’s a social experience with your friend … instead of going to the mall, now you’re in Roblox. It’s where kids are hanging out and it’s where culture is created.

Hope Cochran: And in COVID, it’s the only place where they can hang out and I think the gaming industry has done a really fabulous job creating another social engagement that we need right now. I don’t want to focus too much on kids, but parents are becoming more accepting of their kids in the games because there is this social engagement and, for instance, I can see that my child is upstairs connecting with his four best friends. They log in together and they play. They normally might be out on a soccer field but they can’t right now so I think parents are becoming a little more comfortable saying, “Oh, he’s playing with his friends.”

Gaming has seemingly become a more “mainstream” area for investment, as someone who has been in the space a bit, what’s different about investing in the gaming sector?

HC: It’s very hard to find that balance between creative or understanding what might become a hit and a real business mind. So my experience has been that when you look into a gaming company as an investor, it’s actually more driven by math, stats and analytics, and then you have a core team who has the creative juices, so I try to look for that kind of dynamic.

So, who is developing what the users will love and who is analyzing it and how are they responding to what the users are loving. I do think there’s a point where a team develops a game and it’s mostly a creative process but then you have to kind of toggle to the analytics. It’s where the mathematicians meet the magicians and there needs to be a combination of that within every game.

What’s different about how popular games and MMOs are scaling these days? Have you seen any interesting growth hacks or strategies that seem promising?

DL: I think there are more and more of these cultural memes that just seem to come out of nowhere, like Among Us kind of just sat there for two years and streamers started picking it up and now it’s super popular. I’d say for nearly all of those, they’re going to be a social category of games, you don’t see a game like Cyberpunk come out of nowhere without any marketing dollars behind it.

So I do think one of those new channels is getting influencers to talk about your games, and typically I think for those it’s not actually the big influencers picking it up, it’s a whole bunch of small influencers all starting to play a game and have it start to build up steam that way. It’s more likely the Call of Duty’s that can hire the big streamers and pay them millions of bucks to play a new game, but I don’t think there’s a new to go-to-market for smaller studios around that.

How can MMOs, which feel like fundamentally active experiences, provide a better passive experience for users that may be more interested in the community than playing a first-person shooter or battle royale? How do games become more approachable to a wider audience?

DL: A lot of people are saying these single-player games aren’t really fun games anymore, they’re just like cinematic experiences. Like playing Cyberpunk for 60 hours versus binge-watching three TV series, it’s definitely a different experience. The thing that’s actually more interesting here is the virtual events that are happening inside these games. Thinking about what the next Twitch looks like, it’s probably some kind of experience where you’re inside the game doing something more passive.

Monthly Archives: January 2021