Speaking onstage at the Code conference, Stewart Butterfield, CEO of work collaboration startup Slack which launched two years ago, fielded a question about his company being a prime acquisition target at a time when valuations are high. Slack’s most recent funding valued it at $2.8 billion.
“I’ve already been through an acquisition; that was great,” Butterfield said, referring to the Flickr acquisition by Yahoo. “I learned a lot.”
“That’s like when you put your hand on the stove and get burned, and then you say ‘I learned a lot,’” moderator Kara Swisher rejoined. “Yeah,” Butterfield said.
But then he got serious: “We’re doing well. We have $300 million in the bank and we’ve been growing 5 percent a week for 70 straight weeks. Ninety-eight percent of people who have ever paid for Slack are still paying for it. We’ll never have an opportunity like this again.”
When asked how many people had tried to pick up Slack (#pun), he said, “No one ever says I’d like to acquire you period. They say, ‘Hey let’s catch up,’ not ‘Here’s $50 billion.’”
Swisher, whose company just recently got acquired, then joked that Stewart should take the $50 billion offer, to which Butterfield implied that he wanted to stay independent. “I’m going to make more money than I need in any outcome at this point.” He did concede that a meatier valuation would mean a lot to employees who had joined the company a couple of days ago with smaller equity stakes.
Stewart then said he had entertained 8 or 10 offers from other companies. He did not name which ones, but I can take a completely uninformed guess: Microsoft, Salesforce, Oracle, Google, Facebook.
Stripe co-founder Patrick Collison, who sat on the panel with Houzz founder Adi Tatarko and Butterfield, brought up Salesforce’s rejection of a $55 billion offer from Microsoft. “I don’t think he should take a $50 billion offer,” Collison said. Silicon Valley is littered with anecdotes that support this point of view: Microsoft once offered Facebook $15 billion for an acquisition and, as Swisher brought up, Ted Leonsis once offered the founders of Google $1 million each for the company.
Butterfield, too, is very clearly playing the long game with Slack: “Five or ten years from now, I want people to talk about our employees like, ‘Ooh they worked at Slack.’”
Featured Image: David Paul Morris/Getty Images
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Apple has acquired Metaio, an augmented reality startup that launched way back in 2003 as an offshoot of a project at Volkswagen. The company’s site said it stopped taking new customers, and now a legal document shows Apple has bought it. The document confirms a transfer of shares of the startup to Apple on May 21st/22nd.
When asked by TechCrunch, Apple responded with its standard reply it gives as confirmation of acquistions, “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”
The company began showing signs that something was clearly amiss when it canceled its user conference in San Francisco earlier this month and later took down the company’s Twitter accounts. It also posted on its website a couple of days ago that it was ending purchase of products and subscriptions. Email tech support ends June 30th.
Our senior writer Josh Constine went to Metaio’s San Francisco office yesterday to investigate, and a nervous employee refused to speak with him and shut the door in his face.
A source told TechCrunch that clients who use Metaio are “flipping out” after seeing the shut down message on the website and not hearing a word from the company about what’s going on…until now.
The company is well established. Many impressive projects have been produced using its tools including this one of with Ferrari that gives a potential buyer an AR tour of the car (as though the actual car isn’t cool enough):
And this one for travelers in Berlin to see what the scene they are looking at would have looked like when the Berlin Wall was up. The program uses historical footage that you can see by pointing your smartphone or tablet at a particular place.
Metaio boasts a big community of developers with a 1000 customers and 150,000 users worldwide in 30 countries. All of them are wondering what’s up right now.
The acquisition could help Apple bolster its virtual reality and augmented reality efforts. Earlier this year, Apple patented a VR headset that works with iPhones. And yesterday, 9To5Mac’s Mark Gurman reported that Apple is working on an augmented reality feature for its Maps app that lets you point your phone at a street to see what business are around, or a restaurant’s exterior to see the menu or specials. Metaio’s technology could certainly aid with that.
Many, including Facebook’s Mark Zuckerberg, have called virtual reality the computing platform after mobile phones. Apple has found enormous success as a platform for desktop and mobile computing with OS X and iOS. Acquiring Metaio could help it power what comes next.
Featured Image: YouTube/MetaioAR
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Google Play Games, Google’s cloud-based platform for game developers, got a number of updates at the company’s annual I/O developer conference today that should make the life of game developers a little bit easier. Play Games, which launched at I/O two years ago, will now offer developers a far easier way to get data about a game’s player, making it easier for developers to update content in their apps without having to go through the usual app update process.
Earlier this year, Google launched the Player Analytics service for Play Games. Developers, after all, want to know how players are interacting with their games, what levels they may get stuck in, how engaged they are and other metrics that can help them figure out how to tweak their games and monetize them. To get that data, developers still had to implement analytics into their code.
With today’s update, Google will now automatically generate basic reports for developers that will tell them where players get stuck, what’s different between their highly engaged users, casual players and those who weren’t quite into the game, as well as other metrics. Developers won’t have to do anything to get started with this feature.
Once they have this data, however, developers will likely want to make changes to their games based on this information. The new live operations tools in Google Play Games, the company says, will “make games feel more alive and engaging, gameplay to respond to changing player needs, and more fun, personalized user experiences.”
Players today expect that their games will offer new levels and seasonal updates, or they will just go back to playing Angry Birds.
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Amazon wants parents to buy Kindles for their children and is today launching a discounted “Kindle for Kids Bundle” to encourage them to do so. This new package includes the combination of a Kindle e-reader, a durable cover, and an extended warranty on the device which protects against spills and drops. The Bundle is being sold for $99, which is a savings of $39.98 if all three items were purchased separately, notes Amazon.
The Kindle e-reader is designed for books, meaning it doesn’t support apps and games as with Kindle tablets. The device’s 4 GB of storage can hold thousands of books, and stays charged up to four weeks, based on half an hour of reading per day with wireless off. Parents can buy Kindle books from Amazon, which today offers over 250,000 titles, or they can borrow e-books from their public library to use with the device.
The ad-free Kindle also supports “Kindle FreeTime,” which is Amazon’s included system for measuring reading progress, tracking accomplishments and earning achievement badges for reaching various milestones. For those with other Kindle devices, like Amazon’s Fire tablets, parents can also use FreeTime’s controls to ensure that kids are reading first before they’re able to play games elsewhere. This is an option under FreeTime’s parent settings, which let parents restrict screen time and the time kids are allowed to interact with non-educational content, among other things.
Also thanks to FreeTime, kids won’t have access to websites or social media, or be able to make purchases from the Kindle store. Instead, parents can choose specific books for their kids to read on their device.
Clearly timed in conjunction with the end of school, Amazon is targeting those parents who want to better enforce their kids’ summer reading plans. Alongside the launch, Amazon is also featuring a number of editorially curated summer reading lists based on ages, as well as lists of classics, popular books and more.
The e-reader covers that are shipping with the Kids Bundle are a new product, Amazon also notes. They’re lightweight, come in five colors (black, dark blue, green, red, purple) and are designed to guard against scratches and short drops.
The Bundle also includes a 2-year warranty with accident protection from SquareTrade, a prior Amazon partner. This warranty would normally be $19.99 if bought separately.
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Got a hot idea for a new product? You’re not alone. However, hard data on exactly how many products are introduced each year is surprisingly sparse. So far, the best source I’ve found is Mintel’s Global New Product Database.
According to the firm, over 20,000 new products from 50 countries are added each month. Product categories include beauty and personal care, household and home, automotive, clothing, and consumer electronics, among others. It gets complicated though, because other categories that would more typically be defined as services than products – like travel, financial services, and telecommunications – are also included.
But say for a moment the number is accurate. That means 240,000 new products are introduced every year. It has also been estimated that one out of every 1,500 ideas actually becomes a product. If also true, then something like 360 million products are ideated yearly.
Thank God for such a low percentage. What if every idea became a product? It’s estimated that Amazon already has over 320 million products available on its website. Imagine that number doubling in the next year. You’d need one hell of an algorithm just to find anything at all.
Risk as a Critical Filter
In many ways we have supply chain costs to thank for such a low product launch ratio. Mass manufacturing is an expensive proposition. Even a relatively simple product, one without complex electronics or assembly, can have significant upfront development costs. Then you have to commit to the quantities it takes to justify production. Then there’s packaging, shipping, inventory and all the other incidentals. It’s an expensive gamble. You need scale.
Then, even if you’re capable and committed to making a product, you’ve got to find a way to sell it. You can either go direct or wholesale. Each option has its own set of costs. To go direct, you’ve got to build a channel, and that takes marketing. Go wholesale and you’ve got selling expense and the costs of supporting your distributors.
Inventor or Entrepreneur?
In general, inventors want to focus on product creation. They’re masters at identifying problems and creating products that solve them. Assuming they’ve solved the right problem their products can be successful. But their tolerance of, and ability to conquer risk is a big part of what separates them from entrepreneurs.
Entrepreneurs are focused on execution. They have the determination not just to create a product, but to create a business around it and get it to the finish line. There’s lots of debate about which is the best way to build a better mousetrap.
Inventors can mitigate risk by licensing their idea to someone else. But they’ll also get a relatively small percentage of the pie. Five to 15 percent of profit is typical. If a product sells for $30, profit is 30 percent, and the royalty is 10 percent, the inventor would earn 90 cents on each sale.
Entrepreneurs prefer to tackle risk head-on. Some bootstrap, but if you’re making a tangible product (versus writing software or offering a service), you’ll more likely need funding. Getting investment requires that you solve the big chicken-and-egg dilemma. It’s hard to get investment without revenue and even harder to get revenue without investment.
The Demand Side of the Curve
It’s estimated that somewhere between 1-5 percent of products that launch actually become successful. There is a very real risk that people won’t want what you’ve gambled your intellect, integrity, sweat, and money to create. If you sell your product directly and it sucks, people just won’t buy it. While going wholesale could potentially expose your product to a lot larger audience, you’ve got a much longer tail.
At retail, merchandising teams are standing at the gates. A big part of their job is separating solid from suck. Making it into their “solid” category is no guarantee of success. If the product doesn’t appeal to consumers, it still won’t sell.
Even if a retailer likes your product, chances are good they won’t buy it directly from you. It’s difficult to become a “tier one” vendor. There is significant energy involved in onboarding new suppliers. They have to be set up in the system, a buyer must be assigned, and a bunch of other hoops must be jumped.
Much more often, entrepreneurs with new products are relegated to a distributor who has their own set of opinions and motivations.
Whether you’re working directly with a retailer or through a middleman, they command a significant portion of the profit. Take the route of an entrepreneur and you’re gambling, with all the incremental risk, that you can beat what a licensing deal might offer.
But new tools have surfaced that can help entrepreneurs solve the puzzle.
Online marketplaces like eBay and Amazon sell goods from multiple suppliers. But unlike a typical vendor-retailer relationship, they don’t buy the product and mark it up. They just make it available to a very large audience and take a percentage of each sale. They can afford a smaller cut because they bypass much of the supply-chain risk.
Because it all happens online, their onboarding cost is lower and they can offer many more products. Their algorithms separate the wheat from the chaff. As a result, marketplaces flatten the barrier to entry but don’t necessarily reduce the risk for an entrepreneur.
Crowdfunding platforms like Kickstarter and Indiegogo have created another new distribution channel. They allow inventors to test demand for their product, effectively pre-selling the product. If the project is successful, they are obligated to build and ship their product. If not, they get to fail fast, inexpensively.
“Crowdfunding can dramatically de-risk the launch of a new product,” says Christopher Hawker, the CEO of Trident Design, LLC, “because it allows the creator to get market validation much sooner in the development process, when the product is still in prototype phase, before major investments are made in tooling, production and inventory.”
Trident Design is probably best known for helping Ryan Grepper design his invention, the Coolest Cooler, which was one of the most successful crowdfunding products of all time, generating over $13 million in backing.
Trident’s newest product, the Couchlet is a simple USB hub that squeezes between sofa cushions to put outlets in a convenient location for charging mobile devices. It’s currently being crowdfunded on Indiegogo, and according to Chris, “Trident was able to conceive the product, create a 3D printed prototype and build a campaign within three weeks.” One week after launching, they had 2,500 backers and over $50,000 in contributions, giving them both the market validation and capital they needed to proceed.
Execution Is Vital
For all its benefits, problems can occur with crowdfunding. First, you end up with a lot of accidental entrepreneurs. They’re inventors who are now faced with having to execute quickly and at scale. That not only means actually manufacturing the product, but also managing all the ancillary stuff like packaging, documentation, shipping and fulfillment. As a result, many successfully funded projects hit roadblocks that create dissatisfaction.
The other problem is that crowdfunding doesn’t provide a very good filter for “suck.” The creators of most crowdfunded hardware products have no more than plans and a prototype. Little testing is done prior to the campaign. As a result, you get products that don’t live up to their promise.
Consider the Ouya video game console. One of the top campaigns on Kickstarter, it raised over $8.5 million from more than 60,000 backers. It promised inexpensive, Android-powered console gaming. Not only did Ouya deal with the execution issues outlined above, but also significant problems with product quality.
First they aggravated a large portion of their base when units started hitting retail shelves before crowdfunding backers received their purchases. Then there were issues with sticky buttons on the console’s controllers. Unforeseen costs started piling up. The company secured more than $25 million in venture funding, but it still wasn’t enough. Ouya is now available for sale.
Which Is Better?
Both sides have their pitfalls. Inventors have to design their products, secure IP protection, and build a working prototype before someone will license it. Then it’s a crap shoot. They hope and pray a licensor will make their product a success.
Entrepreneurs must do all the same upfront legwork, but then figure out their own production and distribution strategies. They take the incremental risk because they believe they can deliver a better outcome.
Even though e-commerce marketplaces and crowdfunding have the potential to level the playing field, they come with their own set of uncertainties. But now, another new technology is coming into play that can help both inventors and entrepreneurs.
Digital Manufacturing Blurs the Line
With 3D printing, products can be manufactured on demand, which really flattens the barrier to entry. An individual can have an idea, design a product and make it available for sale, quickly and inexpensively. Their designs can be offered as digital files, or as physical products. Consumers who own 3D printers can download the files to make products themselves. Consumers who can’t or don’t want to print themselves can go online and have products made and shipped to their home, office, or a local store.
Retailers like Amazon, Walmart, Sears, Staples, Lowe’s and others are rapidly adopting the technology. For them, the benefits are becoming clear. Customers get what they want, where they want and when they want, while almost all of the supply chain cost is eliminated, or at least postponed until after the sale is made.
For idea people, 3D printing creates all kinds of new opportunities. Inventors can license their products and make them available online – either as a digital download or as a physical product. They can also quickly iterate their inventions or build entire lines of products, for different uses, available in many sizes and colors. If they happen to own 3D printing equipment, they can even choose if and when they want to be the manufacturer. If the product is successful they can switch to mass production.
Most importantly, they can make all of these decisions on a product-by-product basis, sometimes being the inventor, sometimes the entrepreneur, and sometimes operating in the space between.
Article source: http://feedproxy.google.com/~r/Techcrunch/~3/e7pZVwp6LIc/
The company behind the Path social networking app might be looking for a new name. That’s because Dave Morin and crew have sold their social networking app of the same name to Korean messaging heavyweight Daum Kakao.
Path was founded five years ago by former Facebook exec Morin, who sought to create a more intimate place for users to share with the people closest to them. The result was an app that provided a mobile-first social sharing experience, but also limited the number of contacts people could share with.
After a period of early adoption in tech-heavy markets like San Francisco, the app struggled to find widespread usage among consumers in the U.S. That said, Path became very popular in some Asian markets — most notably Indonesia, where most of its current active users are today.
Selling to a messaging company with strong ties to Asian markets makes total sense, but it also calls into question what the remaining folks at Path will do next.
Morin had previously signaled that the company would pursue a multi-app studio strategy, where it would build what it saw as interesting social apps and hope that one finds product market fit. That strategy led to the GIF creation app Kong, which is the company’s first attempt into new apps that don’t use the Path name.
We’ve reached out to Path for more information and will be updating this post when we hear back!
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