Companies

“The percentage of Top 40 music made with our platform blows my mind” says Splice co-founder Steve Martocci. He tells me about some bedroom music producers who were “working at Olive Garden until they put sounds on Splice.” Soon they quit their jobs since they were earning enough from artists downloading those sounds to use in their songs. That led them to collaborate with famous DJ Zedd, resulting in the Billboard #12 hit “Starving”.

Splice has attracted $47 million in funding to power this all-new music economy. That might be a shock considering Martocci estimates that 95% of digital instruments and sample packs are pirated since they’re often expensive with no try-before-you-buy option. Even Kanye West got caught stealing the trendy Serum digital synthesizer.

But Splice lets artists pay $7.99 per month to download up to 100 samples they can use royalty-free to create music. That’s cheaper than it costs to listen to music on Spotify. Splice then compensates artists based on how frequently their sounds are downloaded, and has already paid out over $7 million.

Splice Sounds is like an iTunes Store for samples

“We try to make more seats at the table in the music business” says Martocci, who previously founded messaging app GroupMe which sold to Skype for between $50 million and $80 million in 2011. “GroupMe was made to go to concerts with our friends. Music has always been my motivator, but code is my canvas. Artists come up to me and hug me because I’m changing the creative process.”

Splice co-founder Steve Martocci

But now he’s getting some big name assistance, attracted by Splice’s success in the stubborn musician community and its $35 million Series B from December. Splice has just hired former Facebook product manager Matt Pake as VP of product to lead core teams in New York, and former Secret co-founder Chrys Bader to build out a new squad in Los Angeles. [Disclosure: I knew both from before they moved out of the SF social scene]

Splice now has 100 staffers, mostly hobbyist musicians themselves, but “I don’t think I have one bay area employee” says Martocci. He wants his offices where the artists live. “Everyone has a genuine passion for music. It doesn’t feel like a tech company as much” says Bader. Martocci apparently takes feedback well, which is different because “I’ve had some pretty fucking hard people to work with in the past…” Bader notes, likely referring to disagreements with his co-founder at Secret. “I have zero tolerance for bullshit at this point in my life and there’s zero bullshit on this team.”

While the Sounds marketplace has blown up recently, pushing Splice to 1.5 million users, the startup has a grander vision for software to eat instruments. That means creating the same kind of tools that help programmers code apps, but for musicians to compose songs. Splice Studio integrates with composition software like GarageBand, Logic, and Ableton to offer cloud-synced version control.

This might sound nerdy, but it’s a lifesaver. Splice Studio automatically backs up the artist’s work-in-progress song after every single edit so they can always reverse changes and safely work with collaborators without having to nervously save manually and fret about keeping all the copies organized.

Splice saves every edit to a song-in-progress so you can experiment but always reverse changes

Since Splice’s staffers actually make music themselves rather than parachuting into a foreign space, they intimately understand the frustrations they’re trying to solve. Knowing income can be unpredictable, Splice lets musicians access plugins, software, and instruments on a rent-to-own basis where they can pause payment and resume later. That’s the kind of convenience that Bader says makes Splice “easier than piracy”, echoing Spotify director Sean Parker’s plan to beat bootleg MP3s with a simple streaming service. “I wanted to build something even Reddit couldn’t complain about”, Martocci laughs.

But where Splice goes next could addresses the biggest, most insidious barrier to creative output: writer’s block. Ask most modern musicians, and they’ll tell you about their giant folders of unfinished songs. Getting from a melody rattling around in you head to a few tracks laid out in your preferred composition software is the easy part. Polishing those parts, ditching the unnecessary ones, finding the rights sounds, and tieing it all together into something listenable can be agonizingly difficult.

Creative Companion is Splice’s solution. Currently being built by Bader’s LA team, it’s a songwriting assistant that can suggest a next step and surface samples that fit well with those you’re already using. Martocci explains how Splice uses “cool machine learning stuff” to recommend ‘Hey, you should add a bass line. You should add some mastering.”

Splice just hired Chrys Bader, previously the co-founder of Secret

The question for Splice will be how many music producers out there are willing to pay. “There’s an upper bound. This is not a consumer product” Bader admits. Citing internal research, he says there 30 million music producers in the world. Many might not even know about Splice, “but at $8 a month, that’s not really breaking the bank. You might pay $200 for a plugin or $700 for Ableton. That’s insane. Musicans can’t afford that. Yet a musician friend tells me all the time ‘I’m broke, I’m broke…but I live or die by Splice.’”

Splice’s heavy-duty funding from Union Square Ventures, True Ventures, and DFJ could also attract competition. It might awake the interest of big creative services corporations like Adobe, or more established music production tool companies like Native Instruments which just launched a direct competitor called Sounds.com. But Splice is digging in for a long fight, giving away Splice Studio to lure in users and commissioning exclusive sample packs from top creators. In that sense, Splice is almost like a record label.

“I want to see a world with more transcendent musical highs” where “you have more music that’s ready for moment” Martocci opines. “If we build something that makes musicians lives better, that makes our lives better because a lot of us are musicians, what else is there in life?” Bader explains.

Computers democratized music-making, leading to a flood of amateurs sharing their content with the world. But all good democratizations necessitate layers of curation to sort through all the output, which social networks have become, and tools to let the most talented artists create what’s worth everyone’s attention.

Martocci concludes “Software is a great instrument. One-third of the world tries to make music at some point. They’re not going to pick up guitars and recorders any more.” Whatever app they choose, Splice wants to keep them in the creative flow.

from TechCrunch

Coinbase, the prominent cryptocurrency exchange, has announced its most significant piece of M&A to date after it agreed to buy Earn.com, the U.S. startup that uses the blockchain for its paid-email service, in a deal worth more than $120 million. In addition, Coinbase has appointed Earn.com co-founder and CEO Balaji Srinivasan as its first CTO, while the rest of the team will transition over, too.

The deal doesn’t come as a complete surprise as Coindesk reported last month that Coinbase and Earn.com were in talks over a deal.

This is Coinbase’s fifth acquisition to date — its most recent was a deal to buy Cipher Browser last week — and its largest outlay so far. Neither party is saying exactly how much Coinbase is paying, but Srinivasan told TechCrunch in an interview that the deal represents a positive return on investment for those who backed Earn.com, which was formerly known as 21. The company had raised more than $120 million from investors, according to Crunchbase data, which gives some idea of the total deal package.

All of Coinbase’s previous acquisitions have centered around talent; for example, last week’s Cipher deal saw highly rated developer Peter Kim join the Coinbase ranks. That seems to be a major motivator for landing Earn.com, despite a high price and a product that both Srinivasan and Coinbase CEO Brian Armstrong intend to “double down” on post-acquisition.

A Stanford graduate who holds a BS, MS and PhD in Electrical Engineering and an MS in Chemical Engineering, Srinivasan is highly prized in Silicon Valley. He sits on the board at power investor firm Andreessen Horowitz and is known for being an early evangelist of cryptocurrencies and blockchain technology. (He once told me that he tipped Uber drivers in bitcoin in its early days, going so far as to set up Coinbase wallets for them while in their back of their car as they took him to his destination.)

It’s not a secret that Coinbase has struggled to fill its vacancies with talent, and that has extended to the CTO role. Bringing in a name as big as Srinivasan is a major coup for the company and, with the startup said to be paying some of its talent more than $1 million per year in salary, it doesn’t make you wonder how big a factor landing Srinivasan is in making this deal happen.

More importantly for Andreessen Horowitz, Qualcomm Ventures, Khosla Ventures and other backers of Earn.com, this deal with Coinbase — which includes cash, stock and crypto — represents a turnaround in fortunes for the startup.

Founded as secretive bitcoin mining operation ’21E6′ in 2013, the company quickly raised over $100 million but struggled as the price of bitcoin fell and expensive operational costs weighed it down.

Srinivasan was an initial co-founder but he stepped back from daily operations to take a full-time role with Andreessen Horowitz as the startup got going. He returned to the fold as CEO role in 2015 when, he explained, the company had less than a year in runway having wracked up large capital commitments that it couldn’t pay back, even with millions of dollars of mining profit each month.

Alongside CFO Lily Liu, Srinivasan refocused the company to offer a service that rewards users financially for answering emails and completing tasks. Today, he said, the company — which was renamed to Earn.com last year — is profitable with revenue at an eight-digital annual rate run with “hundreds of thousands” of users.

“With Coinbase’s user base and distribution muscle, I think it could hit $100 million in ARR in a few months,” Srinivasan told TechCrunch. “I’m proud of the fact that we turned what could have been a disaster into a successful product and I’m excited about the road ahead.”

(Srinivasan wrote more about “the turnaround” of Earn.com on his blog here.)

Coinbase CEO Brian Armstrong onstage at TechCrunch DIsrupt San Francesco in 2014

It is fairly easy to dismiss Earn.com as Silicon Valley hyperbole — the fact that Mark Andreesen will answer your email in return for a $100 donation to Black Girls Code may be neat but it is not game-changer — but the company’s product gets interesting when you consider it at scale.

Srinivasan explained how the ability to reach hundreds of domain experts with questions — for example AI engineers about their next career move, or expectations for how the industry matures — starts to become a powerful tool, particularly when the surveyor pays based on results. That’s a very different proposal to existing intelligence services, and it has found success among some tech industry verticals.

Lately, Earn.com has branched out into token-based incentives for tasks, and it launched a platform that allows companies preparing to hold an ICO to airdrop tokens to Earn.com users in exchange for answers, opinions and other feedback.

Writing in a blog post for Coinbase — which interestingly focuses heavily on Srinivasan’s arrival at the company — CEO Armstrong called Earn.com “arguably one of the earliest practical blockchain applications to achieve meaningful scale.”

It’ll be interesting to see what Coinbase does with it, particularly around product integrations.

Perhaps of more significance is what Srinivasan does in his new role.

Acknowledging what many perceive as Coinbase’s conservative approach to cryptocurrencies — it offers users the chance to buy only four — Srinivasan said a large part of his role is to look at emerging technologies.

“There’s a lot of amazing stuff happening,” he told TechCrunch. “Atomic swaps, sharding, plasma, proof of stake, etc, and a big part of my job will be to take all of that stuff, and rank it based on whether we can use it to create new products for our users.”

Another part, he mentioned, will be evangelizing the concept of blockchain itself beyond just the cryptocurrencies as investments. So you can expect him to pop up at events and generally have a wider presence in the media as Coinbase looks to cement its position as a blockchain and crypto leader.

Srinivasan will also continue to be involved with Andreessen Horowitz, and at Coinbase he’ll be part of the company’s recently announced investment arm, Coinbase Ventures.

“Every once in a while, a company comes along that is the start button for a technology,” Srinivasan said, citing companies like Microsoft (Windows) and Facebook and their roles in igniting the next phases of technology development.

“If you control and build that onboarding process, then you can build everything else downstream. If you do it right, then Coinbase goes from the place people build cryptocurrency to the place where blockchain technology is built.”

Coinbase is certainly trying to move in that direction with the fund — which follows the wider trend of crypto companies getting into investment — while the recent hiring of former LinkedIn M&A head Emilie Choi has advanced the M&A piece with three deals announced in 2018 alone.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

from TechCrunch

Mixcloud, the London startup that offers an audio streaming platform designed for long-form content, has closed its first-ever funding round, TechCrunch has learned. According to a regulatory filing and since confirmed by co-founder Nico Perez, the ten-year old company has raised approximately $11.5 million led by WndrCo, the media and technology holding company based in Los Angeles and San Francisco.

As part of the investment, WndrCo partners Ann Daly (former president of DreamWorks Animation) and Anthony Saleh (an investor and artist manager of hiphop stars Nas and Future) have joined the Mixcloud board. The injection of capital will be used to scale the service globally and for product development, says the company.

This will include doubling down on the U.S., hence Mixcloud’s new backers, and growing the company’s 22-person team, both in London and New York (where Perez is now based). On the product side, I understand the plan is to “diversify the platform,” which would appear to point to a recent licensing deal with Warner and new paid Mixcloud consumer offerings, making the company less reliant on display advertising and other types of brand sponsorship alone.

That Mixcloud has raised a decent sized funding round isn’t surprising in itself. The music streaming site, which originally wanted to be something akin to ‘YouTube for long-form audio’ has carved out a decent following as a place to house archived radio shows and DJ mixes, and counts more than 1 million “curators” uploading content to the platform. However, aside from a couple of U.K. government grants in its formative years, the fact that the company hasn’t taken any outside funding since being founded in 2008 is no-less than remarkable. As is, perhaps, its survival. The history of consumer-facing music startups is littered with companies that raise significant venture capital, before ultimately crashing and burning or being litigated out of existence.

“We are fairly rare, if not unique,” Perez tells me, in his understated way. “We quit our jobs and incorporated the company in 2008 and then the next two years was the challenge of starting any new company, around building the team, trying to raise funding, and in our case doing these innovate types of [music] licenses. And, being straight up honest with you, we couldn’t fundraise. We couldn’t find anybody to put in money. It was a very different time back then”.

To put that period in context, the term ‘Silicon Roundabout,’ used to describe the emerging tech cluster in East London where Mixcloud would eventually relocate, only entered the public domain in July 2008. And although Spotify was founded the same year, it remained very much under the radar. Meanwhile, the spectacular rise and fall of Napster over the previous decade was still fresh in the memories of investors.

“There had been several major collapses — Napster being the largest but also other services like imeem — that had grown and ultimately failed. Investors were very, very wary of the space, or maybe we were just not very good at pitching. Either way we didn’t manage to raise in the early days… For better or worse, we had to figure out how to survive by ourselves”.

This saw Mixcloud initially set up home in a warehouse in an industrial estate near Wembley, a much less fashionable part of London, in a bid to keep costs low. The team also took on “small jobs on the side,” ploughing any surplus money they earned into keeping the service alive. Aside from bootstrapping and those early government grants, the key to survival was growing Mixcloud’s users at roughly the same speed as advertising revenue, alongside pioneering new content licenses and fingerprinting technology to ensure rights-holders were paid.

“Slowly, over the next few years, it started to get traction amongst users and listeners. Then we started to make a little bit of money from Google Adsense and a few different brand partnerships. And then it took a good five or six years until we could support a small team, and we never raised investment along the way”.

That journey instilled a culture at Mixcloud of “being lean and not splashing out huge amounts of money on launch parties”. This not only ensured the lights could be kept on, but in recent years and somewhat ironically, the same financial discipline and non-reliance on venture capital started to attract the attention of investors. As did the latent potential for Mixcloud to go international.

“The next step for us — and actually part of the fund-raise — is how do we move from bringing this very U.K.-centric streaming platform to being a global player,” adds Perez. “We looked at the wider marketplace and the time we’re in right now… and we kinda felt like if we really wanna go for it then we’re gonna need some firepower behind us. So that’s why we did the deal”.

from TechCrunch

More devices are coming onto the Internet every single day, and that’s especially true within organizations that have a fleet of devices with access to sensitive data — which means there are even more holes for potential security breaches.

That’s the goal of Kolide. The aim is to ensure that companies have access to tools that give them the ability to get a thorough analysis of every bit of data they have — and where they have it. The Kolide Cloud, its initial major rollout for Mac and Linux devices, turns an entire fleet of apps and devices into what’s basically a table that anyone can query to get an up-to-date look at what’s happening within their business. Kolide looks to provide a robust set of tools that help analyze that data. By doing that, companies may have a better shot at detecting security breaches that might come from even mundane miscalculations or employees being careless about the security of that data. The company said today it has raised $8 million in new venture financing in a round led by Matrix Partners.

“It’s not just an independent event,” Kolide CEO Jason Meller said. “The way I think about it, if you look at any organization, there’s a pathway to a massive security incident, and the pathway is rather innocuous. Let’s say I’m a developer that works at one of these organizations and I need to fix a bug, and pull the production database. Now I have a laptop with this data on this, and I did this and didn’t realize my disk wasn’t encrypted. I went from these innocuous activities to something existentially concerning which could have been prevented if you knew which devices weren’t encrypted and had customer data. A lot of organizations are focused on these very rare events, but the reality is the risk that they face is mishandling of customer data or sensitive information and not thinking about the basics.”

Kolide is built on top of Osquery, a toolkit that allows organizations to essentially view all their devices or operations as if it were a single database. That means that companies can query all of these incidents or any changes in the way employees use data or the way that data is structured. You could run a simple select query for, say, apps and see what is installed where. It allows for a level of granularity that could help drill down into those little innocuous incidents Meller talks about, but all that still needs some simpler approach or interface for larger companies that are frantically trying to handle edge cases but may be overlooking the basics.

Like other companies looking to build a business on top of open source technology, the company looks to offer ways to calibrate those tools for a company’s niche needs that they necessarily don’t actively cover. The argument here is that by basing the company and tools on open source software, they’ll be able to lean on that community to rapidly adapt to a changing environment when it comes to security, and that will allow them to be more agile and have a better sales pitch to larger companies.

There’s going to be a lot of competition in terms of application monitoring and management, especially as companies adopt more and more devices in order to handle their operations. That opens up more and more holes for potential breaches, and in the end, Kolide hopes to create a more granular bird’s-eye view of what’s happening rather than just creating a flagging system without actually explaining what’s happening. There are some startups attacking device management tools, like Fleetsmith does for Apple devices (which raised $7.7 million), and to be sure provisioning and management is one part of the equation. But Kolide hopes to provide a strong toolkit that eventually creates a powerful monitoring system for organizations as they get bigger and bigger.

“We believe data collection is an absolute commodity,” Meller said. “That’s a fundamentally different approach, they believe the actual collection tools are proprietary. We feel this is a solved problem. Our goal isn’t to take info and regurgitate it in a fancy user interface. We believe we should be paid based on the insights and help manage their fleet better. We can tell the whole industry is swinging this way due to the traction OSQuery had. It’s not a new trend, it’s really the end point as a result of companies that have suffered from this black box situation.”

from TechCrunch

Online coursework is exploding across all kinds of verticals and fields of expertise — but those courses inevitably end up on platforms like Udemy, and for Ankur Nagpal, that’s really not a way to build a true business.

That’s why Nagpal started Teachable, a platform for experts that want to create a business around their coursework that helps them build an entire online education suite beyond just platforms like Coursera or Udemy. Niche expertise can be way too valuable for just a simple marketplace like Coursera, Nagpal says, and experts in those areas — even seminars on mindfulness or Feng Shui — should be able to make more than just a few thousand dollars a year off that coursework. Nagpal said the company has raised an additional $4 million in equity from existing investors Accomplice Ventures and AngelList co-founder Naval Ravikant.

“In the past, if you wanted to teach courses, you could either put it in the marketplace or have it on your own website — with your brand and domain name and full control of everything — but there’s no easy way to do it,” Nagpal said. “It’s the difference between listing a physical good on Amazon and having your own storefront. While you could make a few thousand dollars on Udemy, you couldn’t build a sustainable business selling courses for $10 to $15.”

That fundraise, however, comes with a whopping $134 million valuation in the end as the company expects to be profitable by the end of Q4 this year. Teachable has around 10 million students across 125,000 courses, with 12,000 paying customers on the platform. Nagpal says it is aiming for a business that will generate more than $200 million in sales this year, which might not be so far off given the speed at which it has ramped up from just $5 million in 2015 to around $90 million in 2017.

In Teachable’s earliest days, instructors focused on marketing or programming, which is where a lot of online coursework got its start when the value of knowledge skills like Ruby or Python skyrocketed. But since then, Teachable has grown into a platform where users with niche skill sets can create robust coursework, and if they already have content ready to go like videos, can get their domain up and running in just a few hours. Teachable has a multi-tier pricing structure ranging from taking small transaction fees to a paid subscription of nearly $299 a month in order to manage its online domains, which is designed to appeal to a wide variety of potential instructors looking to get their start.

“If you look at our top 10 or 20 instructors, there’s virtually no pattern of verticals that are successful,” Nagpal said. “[The popular courses are based on] professional skills, or learning to play a musical instrument, or fly a drone, or even financial empowerment. There’s almost an anti-pattern.”

And again, these aren’t supposed to be courses that get wrapped up into a $49 per-month subscription. Courses in highly specific verticals — like something like Feng shui — can cost up to a hundred dollars or more. But the idea is that these seminars have so much value that students who are looking to dive deep into them are willing to go beyond the cost of just a Udemy in order to get the most valuable content. Teachable aims to make it easy to port the kind of content instructors might post on one of those marketplaces to quickly get them up and running with their own independent online course.

That free plan with a transaction fee is ultimately what at least piques the interest of potential instructors, and Teachable also hosts workshops to try to get them more excited about the opportunity — and then get them to start paying as they look to attract more and more students and need a more robust toolkit, like advanced reporting. or priority product support. The company doesn’t really focus on paid marketing because Nagpal says it’s “not very good at it,” as it primarily leans on word of mouth and affiliates.

“Courses on marketplaces are effectively commoditized,” he said. “I would buy the top-rated courses, but the first course is as valuable as the second or third. On our platform, if people are buying the Ruby on Rails course, it’s probably because they’ve followed an expert on that for a year. What I’m buying is not commoditized, I have a relationship with that person. Their content is much more valuable. All the sales are generated through an instructor.”

Nagpal said he got his start building a bunch of, well, bad Facebook apps like personality quizzes and really simple flash games in the early days of the Facebook Platform. Getting such an early glimpse at that behavior on the Facebook Platform is pretty controversial today with the massive privacy scandal Facebook faces after Cambridge Analytica, a political research firm, ended up with personal data of up to 87 million people through a simple app on the Facebook Platform. Nagpal, however, said what now seems like a treasure trove of data was at the time not really all that useful for that business.

“We got some of that data, but to us it was junk and we never stored it,” he said. “It just seemed like noise.”

The biggest challenge for Teachable, Nagpal says, is making sure instructors actually want to remain instructors. The free tier might attract them to getting started, but instructors might just get burnt out from being instructors in general — whether that’s on Teachable or a marketplace like Udemy. The real competition, he says, are platforms like YouTube and other time sinks for content creators. To keep them on board, Teachable hopes to expand to other verticals of content like coaching and services. That, too, might keep it ahead of marketplaces like Coursera and eventually woo instructors with the opportunity to build an entire online business on Teachable.

“Every month we have 50 people getting more [than the top paid instructor on a platform like Skillshare],” he said. “The sustainability of the business is very different. It’s really hard to make a living selling $10 courses. On our platform, the average price point is closer to $100, which in turn gets reinvested to create actually good content. We’re finding most of the instructors don’t just sell courses, and they have multiple income streams. We’re trying to see if we can get our checkout product powering all that. That creates network lock-in.”

from TechCrunch

Online coursework is exploding across all kinds of verticals and fields of expertise — but those courses inevitably end up on platforms like Udemy, and for Ankur Nagpal, that’s really not a way to build a true business.

That’s why Nagpal started Teachable, a platform for experts that want to create a business around their coursework that helps them build an entire online education suite beyond just platforms like Coursera or Udemy. Niche expertise can be way too valuable for just a simple marketplace like Coursera, Nagpal says, and experts in those areas — even seminars on mindfulness or Feng Shui — should be able to make more than just a few thousand dollars a year off that coursework. Nagpal said the company has raised an additional $4 million in equity from existing investors Accomplice Ventures and AngelList co-founder Naval Ravikant.

“In the past, if you wanted to teach courses, you could either put it in the marketplace or have it on your own website — with your brand and domain name and full control of everything — but there’s no easy way to do it,” Nagpal said. “It’s the difference between listing a physical good on Amazon and having your own storefront. While you could make a few thousand dollars on Udemy, you couldn’t build a sustainable business selling courses for $10 to $15.”

That fundraise, however, comes with a whopping $134 million valuation in the end as the company expects to be profitable by the end of Q4 this year. Teachable has around 10 million students across 125,000 courses, with 12,000 paying customers on the platform. Nagpal says it is aiming for a business that will generate more than $200 million in sales this year, which might not be so far off given the speed at which it has ramped up from just $5 million in 2015 to around $90 million in 2017.

In Teachable’s earliest days, instructors focused on marketing or programming, which is where a lot of online coursework got its start when the value of knowledge skills like Ruby or Python skyrocketed. But since then, Teachable has grown into a platform where users with niche skill sets can create robust coursework, and if they already have content ready to go like videos, can get their domain up and running in just a few hours. Teachable has a multi-tier pricing structure ranging from taking small transaction fees to a paid subscription of nearly $299 a month in order to manage its online domains, which is designed to appeal to a wide variety of potential instructors looking to get their start.

“If you look at our top 10 or 20 instructors, there’s virtually no pattern of verticals that are successful,” Nagpal said. “[The popular courses are based on] professional skills, or learning to play a musical instrument, or fly a drone, or even financial empowerment. There’s almost an anti-pattern.”

And again, these aren’t supposed to be courses that get wrapped up into a $49 per-month subscription. Courses in highly specific verticals — like something like Feng shui — can cost up to a hundred dollars or more. But the idea is that these seminars have so much value that students who are looking to dive deep into them are willing to go beyond the cost of just a Udemy in order to get the most valuable content. Teachable aims to make it easy to port the kind of content instructors might post on one of those marketplaces to quickly get them up and running with their own independent online course.

That free plan with a transaction fee is ultimately what at least piques the interest of potential instructors, and Teachable also hosts workshops to try to get them more excited about the opportunity — and then get them to start paying as they look to attract more and more students and need a more robust toolkit, like advanced reporting. or priority product support. The company doesn’t really focus on paid marketing because Nagpal says it’s “not very good at it,” as it primarily leans on word of mouth and affiliates.

“Courses on marketplaces are effectively commoditized,” he said. “I would buy the top-rated courses, but the first course is as valuable as the second or third. On our platform, if people are buying the Ruby on Rails course, it’s probably because they’ve followed an expert on that for a year. What I’m buying is not commoditized, I have a relationship with that person. Their content is much more valuable. All the sales are generated through an instructor.”

Nagpal said he got his start building a bunch of, well, bad Facebook apps like personality quizzes and really simple flash games in the early days of the Facebook Platform. Getting such an early glimpse at that behavior on the Facebook Platform is pretty controversial today with the massive privacy scandal Facebook faces after Cambridge Analytica, a political research firm, ended up with personal data of up to 87 million people through a simple app on the Facebook Platform. Nagpal, however, said what now seems like a treasure trove of data was at the time not really all that useful for that business.

“We got some of that data, but to us it was junk and we never stored it,” he said. “It just seemed like noise.”

The biggest challenge for Teachable, Nagpal says, is making sure instructors actually want to remain instructors. The free tier might attract them to getting started, but instructors might just get burnt out from being instructors in general — whether that’s on Teachable or a marketplace like Udemy. The real competition, he says, are platforms like YouTube and other time sinks for content creators. To keep them on board, Teachable hopes to expand to other verticals of content like coaching and services. That, too, might keep it ahead of marketplaces like Coursera and eventually woo instructors with the opportunity to build an entire online business on Teachable.

“Every month we have 50 people getting more [than the top paid instructor on a platform like Skillshare],” he said. “The sustainability of the business is very different. It’s really hard to make a living selling $10 courses. On our platform, the average price point is closer to $100, which in turn gets reinvested to create actually good content. We’re finding most of the instructors don’t just sell courses, and they have multiple income streams. We’re trying to see if we can get our checkout product powering all that. That creates network lock-in.”

from TechCrunch

Sword Health, a startup operating out of Portugal that has developed a digital physiotherapy solution to enable patients to be treated remotely in their own homes, has raised $4.6 million in seed funding. Backing the round is Green Innovations, Vesalius Biocapital III, and other unnamed investors in the U.S. and Europe.

The company says it will use the new capital, which adds to an earlier ~$1.2 million grant from the European Commission, to accelerate the development of new digital therapies and drive global growth.

Using what it describes as a combination of “high-precision motion tracking sensors” and the latest advances in AI, the Sword Health solution aims to make the delivery of physiotherapy infinitely more scalable, in recognition that there is a worldwide shortage of physiotherapists. Its flagship product “Sword Phoenix” provides patients with interactive physical rehabilitation exercises from the comfort of their own home, supervised by remote physiotherapists.

“Twenty years ago my brother had a car accident. What I realised then (and this is still true now) is that there is a huge gap between the demand for physical therapy and our ability, as a developed society, to deliver that therapy,” Sword Health co-founder and CEO Virgílio Bento tells me.

“The problem is that the physical rehabilitation industry has not changed in the last 50 years. We’re still very much dependent on the one-to-one patient-therapist interaction, which is the gold standard, but it is not a scalable model and is actually very costly for both patients and healthcare providers”.

To remedy this, Bento and the Sword team began work on what he calls a “digital physical therapist” concept. The idea is that by using motion sensors attached to the appropriate places of a patient’s body, combined with an AI-driven user interface that can take that motion data and give instant feedback, some of what a physiotherapist does can be augmented by machines.

“With Sword Phoenix, clinical teams extend their therapeutic footprint to each patient’s home, scale their reach and are able to devote more time to delivering the human touch,” he says.

To date, Bento says Sword is working with insurance companies, national health services, health maintenance organisations and providers in the U.S., Canada, Australia, Norway, and the startup’s home country, Portugal.

“These customers are able to provide higher quality physical therapy services directly in the patient’s home and decrease operational costs at the same time – an accomplishment that is only possible in healthcare through enlightened use of data analysis and technology,” he adds.

In terms of competitors, Bento argues that the majority of health tech companies are focused on developing technologies that improve the one-to-one patient therapist interaction (e.g., Tyromotion, Hocoma). “This incremental improvement is not the solution because it does not result in a paradigm shift,” he says.

With that said, Bento does conceded that there are other startups trying to create a digital therapist. One I’ve covered in detail is Atomico-backed Hinge Health, which has developed a digital solution for musculoskeletal (MSK) disorders.

from TechCrunch

Zuroa’s founder and CEO Tien Tzuo had a vision of a subscription economy long before most people ever considered the notion. He knew that for companies to succeed with subscriptions, they needed a bookkeeping system that understood how they collected and reported money. The company went public yesterday, another clear sign post on the road to SaaS maturation.

Tzuo was an early employee at Salesforce and their first CMO. He worked there in the early days in the late 90s when Salesforce’s Marc Benioff famously rented an apartment to launch the company. Tzuo was at Salesforce 9 years, and it helped him understand the nature of subscription-based businesses like Salesforce.

“We created a great environment for building, marketing and delivering software. We rewrote the rules, the way it was built, marketed and sold,” Tzuo told me in an interview in 2016.

He saw a fundamental problem with traditional accounting methods, which were designed for selling a widget and declaring the revenue. A subscription was an entirely different model and it required a new way to track revenue and communicate with customers. Tzuo took the long view when he started his company in early 2007, leaving a secure job at a growing company like Salesforce.

He did it because he had the vision, long before anyone else, that SaaS companies would require a subscription bookkeeping system, but before long, so would other unrelated businesses.

Building a subscription system

As he put it in that 2016 interview, if you commit to pay me a $1 for 10 years, you know that $1 was coming in come hell or high water, that’s $10 I know I’m getting, but I can’t declare the money until I get. That recurring revenue still has value though because my investors know that I’m secure for 10 years, even though it’s not on the books yet. That’s where Zuora came in. It could account for that recurring revenue when nobody else could. What’s more, it could track the billing over time, and send out reminders, help the companies stay engaged with their customers.

Photo: Lukas Kurka/Getty Images

As Ray Wang, founder and principal analyst at Constellation Research put it, they pioneered the whole idea of a subscription economy, and not just for SaaS companies. Over the last several years, we’ve heard companies talking about selling services and SLAs (service/uptime agreements) instead of a one-time sale of an item, but not that long ago it wasn’t something a lot of companies were thinking about.

“They pioneered how companies can think about monetization,” Wang said. “So large companies like a GE could go from selling a wind turbine one time to selling a subscription to deliver a certain number of Kw/hr of green energy at peak hours from 1 to 5 pm with 98 percent uptime.” There wasn’t any way to do this before Zuora came along.

Jason Lemkin, founder at SaaStr, a firm that invests in SaaS startups, says Tzuo was a genuine visionary and helped create the underlying system for SaaS subscriptions to work. “The most interesting part of Zuora is that it is a “second” order SaaS play. It could only thrive once SaaS became mainstream, and could only scale on top of other recurring revenue businesses. Zuora started off as a niche player helping SaaS companies do billing, and it dramatically expanded and thrived as SaaS became … Software.”

Market catches up with idea

When he launched the company in 2007, perhaps he saw that extension of his idea out on the distant horizon. He certainly saw companies like Salesforce needing a service like the one he had decided to create. The early investors must have recognized that his vision was early and it would take a slow, steady climb on the way to exiting. It took 11 years and $242 million in venture capital before they saw the payoff. The revenue after 11 years was a reported $167 million. There is plenty of room to grow.

But yesterday the company had its initial public offering, and it was by any measure a huge success. According TechCrunch’s Katie Roof, “After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.” Today it was up a bit more as of this writing.

When you consider the Tzuo’s former company has become a $10 billion company, that companies like Box, Zendesk, Workday and Dropbox have all gone public, and others like DocuSign and Smartsheets are not far behind, it’s pretty clear that we are in a golden age of SaaS — and chances are it’s only going to get better.

from TechCrunch

While companies’ operations become increasingly fragmented into a wide variety of different spots — especially if they exist somewhere in a group of different cloud tools — making sure those operations are still healthy has become more and more critical.

And for companies whose lifeblood is directly keeping that software online longer, it’s even more important. Uptime maps directly to revenue, and that’s why Caleb Hailey — who previously worked on this as a consultancy — decided to start Sensu to try to piece together the monitoring operations into a single spot where a company can keep an eye on the health of their operations. The company said it has raised $10 million in a new financing round led by by Battery Ventures, with existing investor Foundry Group participating. Battery’s General Partner Dharmesh Thakker is joining the company’s board of directors.

“Big enterprises are hesitant to work on startups, they’re risk adverse, and it reduces the risk exposure to double down on an open source stack,” Hailey said. ” But this open source technology, it’s used in the largest institutions in the world, and we have found that by delivering cost savings in a competitive market we have already established a rapidly growing developer stream.”

While all those different tools may have their own way of monitoring the health of a system, Sensu tries to get all this into one place to make things a little easier than checking things one-by-one. The aim is to be more proactive and try to flag problems before they are even noticed by the people using Sensu, plugging directly into services like Slack or sending emails to flag potential issues before they end up becoming larger problems. Like others like Cloudera, Sensu builds its business around helping companies deploy this otherwise open source technology efficiently.

Sensu’s backstory starts as a consultancy for Hailey, which was focused on infrastructure and automation — especially as more and more companies moved to a hybrid cloud model that existed partially in some box somewhere on Azure or AWS. Starting off as an open source project is one way that he hopes to convince larger enterprises that might already be using similar tools to adopt a known entity rather than just giving some random startup the keys to maintaining their operations.

The monitoring space is still a competitive — and crowded — one. There are tools like AppDynamics or New Relic, but Hailey argues that Sensu can be competitive with those as they are very bundled while his startup helps companies piece together a more complete solution. For example, a company might need higher granularity in their reports, and Sensu aims to try to provide a robust toolkit for companies that have many disparate operations they need to keep online and running smoothly.

from TechCrunch

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14, the company closed at $20, valuing the company around $2 billion.

It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13.

Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.”

Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail.

It helps its 950 customers manage subscriptions, including billing and revenue recognition. Zuora touts that it has 15 of the Fortune 100 businesses as clients.

Zuora’s revenue for its fiscal 2018 year was $167.9 million. This was up from $113 million in 2017 and $92.2 million the year before. Losses remained constant in this timeframe, from $48.2 million in 2016 to $47.2 million in 2018.

“We have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” warned the requisite risk factors section of the filing.

It also acknowledged a competitive landscape. Oracle and SAP are amongst the companies offering software in the ERP (enterprise resource planning) category. It also competes with other startups like Chargebee.

The largest shareholders are Benchmark, which owned 11.1% prior to the IPO . Founder and CEO Tien Tzuo owned 10.2%. Others with a significant stake included Wellington Management, Shasta Ventures, Tenaya Capital and Redpoint.

The San Mateo, California-based company previously raised over $240 million, dating back to 2007.

Zuora listed on the New York Stock Exchange, under the ticker “ZUO.” Goldman Sachs and Morgan Stanley worked as lead underwriters on the deal. Fenwick & West and Wilson Sonsini served as counsel.

After a slow start to the year for tech IPOs, there has been a flurry of activity in recent weeks. Dropbox and Spotify were amongst the recent public debuts. We also have DocuSign, Pivotal and Smartsheet on the horizon.

from TechCrunch