Year: 2018

Emerging venture capital firms in smaller American cities from Indianapolis to Princeton, NJ are attracting increasingly larger funding as investors see opportunities for returns beyond the coastal confines of the nation’s largest cities and the innovation epicenter of Silicon Valley.

For the last four years, AOL co-founder Steve Case has been criss-crossing the country preaching a gospel of economic renewal for American cities driven by startup investment and technology-based entrepreneurialism. With Case those journeys culminated in the creation of a fund called Rise of the Rest — a $150 million vehicle raised by some of tech’s highest-profile names.

Investors like Amazon founder Jeff Bezos, Eric Schmidt, the chairman of Google’s parent company, Alphabet; Jim Bryer, the former head of the National Venture Capital Association and an early investor in Facebook; Kleiner Perkins Caufield & Byers partner John Doerr; and Facebook’s former President Sean Parker; came together with the family offices of some of America’s wealthiest people to back the fund.

As Schmidt told The Times, “There is a large selection of relatively undervalued businesses in the heartland between the coasts, some of which can scale quickly.”

Case and his partner JD Vance (the author of Hillbilly Elegy) are only two of the would-be pioneers that are bringing the venture investment model to the Midwest. In fact, it has been about four years since Mark Kvamme and Chris Olsen left the West Coast and Silicon Valley to launch Drive Capital — the venture capital firm they founded in Columbus, Ohio.

In that time the firm has managed to raise over half a billion dollars to invest in startups based primarily in the Midwest, and has spurred an investment revolution in areas of the country that are more synonymous with tractors than with technological innovation. 

But the Midwestern investment scene isn’t just defined by Valley transplants coming in. Some of the entrepreneurs behind the region’s home-grown success stories, like Indianapolis’ ExactTarget, have launched funds of their own to plant an entirely new crop of tech companies in the Midwest.

Homegrown Heroes

These are funds like High Alpha, which just closed its second $85 million fund, High Alpha Capital II, and raised another $16.5 million for a companion venture studio that ideates and incubates startups.

High Alpha doesn’t exclusively invest in the Midwest, but the bulk of its commitments are definitely falling outside of the typical geographies where most investors spend their time, according to High Alpha managing partner Scott Dorsey, the former chief executive of Salesforce’s Indianapolis-based ExactTarget business.

For its venture studio, the firms was able to bring back Emergence Capital, the San Francisco-based software as a service investor, and woo new investor Foundry Capital, a Boulder, Colo.-based firm co-founded by the legendary investor Brad Feld. Both Feld and Gordon Ritter, the founder of Emergence Capital will take seats on the High Alpha Studios board.

High Alpha investments have been made in Atlanta, Chicago, Des Moines, Minneapolis, Seattle and Toronto, says Dorsey. “You have a big economic advantage where these companies don’t have to raise nearly as much money,” Dorsey says, echoing the sentiment from Schmidt. “The neat thing also is they see that there’s not just one technology company in town and if it doesn’t work out you’re packing up and moving and seeing an actual ecosystem.”

Dorsey and the High Alpha team focus their investments on marketing and automation software — an area that can run the gamut from drone use in agricultural applications to a software service that monitors company spending on business software so that the procurement process can be more efficient.

While the venture arm is one way that the firm is seeding a new generation of technology companies across the Midwest and around the country, the venture studio is focused on building businesses in Indianapolis itself, Dorsey says.

Through the studio, Dorsey and his partners have plans to start eight to 10 new software as a service businesses, and High Alpha is tapping local talent to do it. For instance, Dorsey’s former colleague Scott McCorkle, who ran the marketing cloud business for Salesforce, is now working on a company that High Alpha is incubating. 

“We are always building that stable of entrepreneurs,” Dorsey says. 

Initiatives in states like Indiana are also helping to encourage a more entrepreneurial and tech focused mindset, according to Dorsey. Like other states, Indiana is now mandating computer science classes for every grade from K-12 in public schools. The state also has created a $250 million fund-of-funds to invest in venture funds that will commit capital to companies that will bring jobs to the state. Finally, Indiana has passed a law to forego collecting sales tax on software as a service companies that are developing and selling products and services in the state.

Look Homeward (Investment) Angel

State incentives aside, there are structural reasons for the moves in the Midwest. The companies require less capital to scale compared to companies on the coasts, thanks to rising real estate prices and the intense competition for talent. Indigenous venture investors are springing up thanks to earlier bets on technology companies coming from the region.

U.S. land grant colleges, which may well be the most underappreciated heroes of American economic growth, are increasingly becoming startup hubs. With new companies emerging from Ann Arbor, Mich., Columbus, Ohio and Madison, Wis.

“At the end of the day. The world is flat and entrepreneurs are everywhere and with technology it’s possible to start a company anywhere,” says Deven Parekh, the managing director of the multi-billion dollar growth equity investment firm Insight Venture Partners. “The West Coast is not necessarily the optimal place to start a company. The cost structure is prohibitive and there’s lots of turnover.”

For some firms, the revelation of abounding opportunities in states where the wind goes sweeping through the plains isn’t all that new. Growth capital firms like Edison Partners, the Princeton, N.J.-based investor which just closed on its tenth fund with $300 million has long been an investor in far-flung geographies. Only a minority of the firm’s investments fall inside the North Atlantic corridor of Boston and New York, according to partner Chris Sugden.

“Two-thirds of our investments are outside of New York or Boston [and] we haven’t participated in the Valley,” Sugden says. “My fear of being a tourist is overpriced deals like overpriced restaurants with not good quality food.”

For the 30 years it has been in business, Edison has backed companies outside of the traditional investment lanes for tech investors. “These ecosystems have been in place for a long time. The challenge for them has always been scale,” Sugden says.

“What’s happening right now is an interesting theme,” he added. “People leaving the Valley and leaving New York to go back to the South and go back to the Southeast. There’s a little bit more excitement and energy in these off of coast towns.”

And exits are beginning to follow this exodus. ExactTarget planted a flag in Indianapolis’s tech ecosystem (and the recent public offering for PluralSight was another big win for the city), while Groupon did the same in Chicago. Now a new generation of entrepreneurs is getting its first taste of Valley returns. These are people like Bill Smith, whose Birmingham, Ala.-based grocery delivery business Shipt was acquired by Target for $550 million late last year.

For Sugden, the four critical components an emerging tech ecosystem need to take flight are an educational hub to produce talent, an urban center to capture it, capital to sustain it, and government and traditional industry support to accelerate it.

“I’ve seen first-hand the incredible entrepreneurs trying to build great businesses outside of Silicon Valley,” said Vance, in a statement announcing the Rise of the Rest fund last year. “They often possess all the ingredients for success, but struggle to find enough investment capital to break through and have a positive impact on their region.”

Creatures that live in the depths of the oceans are often extremely fragile, making their collection a difficult affair. A new polyhedral sample collection mechanism acts like an “underwater Pokéball,” allowing scientists to catch ’em all without destroying their soft, squishy bodies in the process.

The ball is technically a dodecahedron that closes softly around the creature in front of it. It’s not exactly revolutionary except in that it is extremely simple mechanically — at depths of thousands of feet, the importance of this can’t be overstated — and non-destructive.

Sampling is often done via a tube with moving caps on both ends into which the creature must be guided and trapped, or a vacuum tube that sucks it in, which as you can imagine is at best unpleasant for the target and at worst, lethal.

The rotary actuated dodecahedron, or RAD, has five 3D-printed “petals” with a complex-looking but mechanically simple framework that allows them to close up simultaneously from force applied at a single point near the rear panel.

“I was building microrobots by hand in graduate school, which was very painstaking and tedious work,” explained creator Zhi Ern Teoh, of Harvard’s Wyss Institute, “and I wondered if there was a way to fold a flat surface into a three-dimensional shape using a motor instead.”

The answer is yes, obviously, since he made it; the details are published in Science Robotics. Inspired by origami and papercraft, Teoh and his colleagues applied their design knowledge to creating not just a fold-up polyhedron (you can cut one out of any sheet of paper) but a mechanism that would perform that folding process in one smooth movement. The result is the network of hinged arms around the polyhedron tuned to push lightly and evenly and seal it up.

In testing, the RAD successfully captured some moon jellies in a pool, then at around 2,000 feet below the ocean surface was able to snag squid, octopus, and wild jellies and release them again with no harm done. They didn’t capture the octopus on camera, but apparently it was curious about the device.

Because of the RAD’s design, it would work just as well miles below the surface, the researchers said, though they haven’t had a chance to test that yet.

“The RAD sampler design is perfect for the difficult environment of the deep ocean because its controls are very simple, so there are fewer elements that can break,” Teoh said.

There’s also no barrier to building a larger one, or a similar device that would work in space, he pointed out. As for current applications like sampling of ocean creatures, the setup could easily be enhanced with cameras and other tools or sensors.

“In the future, we can capture an animal, collect lots of data about it like its size, material properties, and even its genome, and then let it go,” said co-author David Gruber, from CUNY. “Almost like an underwater alien abduction.”

Creatures that live in the depths of the oceans are often extremely fragile, making their collection a difficult affair. A new polyhedral sample collection mechanism acts like an “underwater Pokéball,” allowing scientists to catch ’em all without destroying their soft, squishy bodies in the process.

The ball is technically a dodecahedron that closes softly around the creature in front of it. It’s not exactly revolutionary except in that it is extremely simple mechanically — at depths of thousands of feet, the importance of this can’t be overstated — and non-destructive.

Sampling is often done via a tube with moving caps on both ends into which the creature must be guided and trapped, or a vacuum tube that sucks it in, which as you can imagine is at best unpleasant for the target and at worst, lethal.

The rotary actuated dodecahedron, or RAD, has five 3D-printed “petals” with a complex-looking but mechanically simple framework that allows them to close up simultaneously from force applied at a single point near the rear panel.

“I was building microrobots by hand in graduate school, which was very painstaking and tedious work,” explained creator Zhi Ern Teoh, of Harvard’s Wyss Institute, “and I wondered if there was a way to fold a flat surface into a three-dimensional shape using a motor instead.”

The answer is yes, obviously, since he made it; the details are published in Science Robotics. Inspired by origami and papercraft, Teoh and his colleagues applied their design knowledge to creating not just a fold-up polyhedron (you can cut one out of any sheet of paper) but a mechanism that would perform that folding process in one smooth movement. The result is the network of hinged arms around the polyhedron tuned to push lightly and evenly and seal it up.

In testing, the RAD successfully captured some moon jellies in a pool, then at around 2,000 feet below the ocean surface was able to snag squid, octopus, and wild jellies and release them again with no harm done. They didn’t capture the octopus on camera, but apparently it was curious about the device.

Because of the RAD’s design, it would work just as well miles below the surface, the researchers said, though they haven’t had a chance to test that yet.

“The RAD sampler design is perfect for the difficult environment of the deep ocean because its controls are very simple, so there are fewer elements that can break,” Teoh said.

There’s also no barrier to building a larger one, or a similar device that would work in space, he pointed out. As for current applications like sampling of ocean creatures, the setup could easily be enhanced with cameras and other tools or sensors.

“In the future, we can capture an animal, collect lots of data about it like its size, material properties, and even its genome, and then let it go,” said co-author David Gruber, from CUNY. “Almost like an underwater alien abduction.”

An emergency alert goes out, trying to let you know about incoming bad news — a missile, a tsunami or something else terrifying. Your phone starts shouting… but it’s downstairs. A warning ticker pops on TVs, if you’re watching cable… but you’ve got your eyes glued to Netflix, or Hulu, or some other online streaming service.

Should these services, with their ever-increasing ownership of our screen time, be prepped to broadcast these warnings?

Senators in Hawaii and South Dakota think so, having just introduced a bill (the “Reliable Emergency Alert Distribution Improvement,” or READI, act) that would “explore” broadcasting alerts to “online streaming services, such as Netflix and Spotify,” amongst other changes to the Emergency Alert System.

“Hawaii? Wasn’t that the state that had a very public false alarm with its emergency alert system?”

Yep! But it seems that in investigating what went wrong, the state found plenty of long-lived shortcomings in the existing, aging alert system.

Some of the other things the bill touches on:

• Users on many phones can currently disable federal alerts; they want to get rid of that option
• Building a better system for reporting false alarms and figuring out what happened
• Updating the system to better prevent false alarms, and to better retract them when they do happen

The idea of sending emergency alerts to Netflix etc. seems a bit obvious at this point — hell, I was mulling over it right here on TechCrunch back in 2011, and it seemed a bit obvious even back then.

With that said, I still have the same hesitations I had at the time. After the recent false alarms and ensuing panic, it’s clear that any such system needs to be rock solid from a security standpoint — one missed bug or exploit and half the country is freaking out about non-existent incoming missiles when all they wanted to do was watch Orange Is the New Black. If it can be done right, though, it seems like a reasonable idea.

An emergency alert goes out, trying to let you know about incoming bad news — a missile, a tsunami or something else terrifying. Your phone starts shouting… but it’s downstairs. A warning ticker pops on TVs, if you’re watching cable… but you’ve got your eyes glued to Netflix, or Hulu, or some other online streaming service.

Should these services, with their ever-increasing ownership of our screen time, be prepped to broadcast these warnings?

Senators in Hawaii and South Dakota think so, having just introduced a bill (the “Reliable Emergency Alert Distribution Improvement,” or READI, act) that would “explore” broadcasting alerts to “online streaming services, such as Netflix and Spotify,” amongst other changes to the Emergency Alert System.

“Hawaii? Wasn’t that the state that had a very public false alarm with its emergency alert system?”

Yep! But it seems that in investigating what went wrong, the state found plenty of long-lived shortcomings in the existing, aging alert system.

Some of the other things the bill touches on:

• Users on many phones can currently disable federal alerts; they want to get rid of that option
• Building a better system for reporting false alarms and figuring out what happened
• Updating the system to better prevent false alarms, and to better retract them when they do happen

The idea of sending emergency alerts to Netflix etc. seems a bit obvious at this point — hell, I was mulling over it right here on TechCrunch back in 2011, and it seemed a bit obvious even back then.

With that said, I still have the same hesitations I had at the time. After the recent false alarms and ensuing panic, it’s clear that any such system needs to be rock solid from a security standpoint — one missed bug or exploit and half the country is freaking out about non-existent incoming missiles when all they wanted to do was watch Orange Is the New Black. If it can be done right, though, it seems like a reasonable idea.

Next time you’re grabbing a new charging cord on Amazon, you might be tempted to grab a new Hyundai as well. Hyundai announced today a partnership with Amazon to create a digital showroom to allow customers to compare pricing and reviews, book a test drive and find a dealer in their area to purchase the car (no, you can’t order them directly from Amazon — yet.)

“The car industry is changing, and customer demands and expectations around a frictionless, efficient and transparent experience are key drivers,” Dean Evans, Hyundai Motor America CMO, said in a statement.

The digital showroom will be incorporated into Amazon’s Vehicle section, which Amazon launched in 2016 for customers to browse automobile makes and models, from Tesla cars to vehicles from Toyota. But, while some of these vehicle profiles are lacking in detailed pictures or model information, Hyundai has created a more robust experience.

On its own unique landing page, Hyundai highlights the brand’s features, such as its compatibility with Alexa and its Shopper Assurance program, and creates a selection of Hyundai vehicles for you based on your preferences and buying habits. From there, you can select a model you’d like to look at and explore it in typical Amazon style — flipping between different product pictures, colors and customer reviews.

After you’re happy with your selection, you can either schedule a test-drive — where you have the option for the car to pick you up in your driveway — or go directly to a dealer near you to sign the paperwork.

With the average industry price of $36,270 for a new car in 2018, according to Kelly Blue Book, maybe it’s a good thing there’s no Dash button for these vehicles just yet.

Next time you’re grabbing a new charging cord on Amazon, you might be tempted to grab a new Hyundai as well. Hyundai announced today a partnership with Amazon to create a digital showroom to allow customers to compare pricing and reviews, book a test drive and find a dealer in their area to purchase the car (no, you can’t order them directly from Amazon — yet.)

“The car industry is changing, and customer demands and expectations around a frictionless, efficient and transparent experience are key drivers,” Dean Evans, Hyundai Motor America CMO, said in a statement.

The digital showroom will be incorporated into Amazon’s Vehicle section, which Amazon launched in 2016 for customers to browse automobile makes and models, from Tesla cars to vehicles from Toyota. But, while some of these vehicle profiles are lacking in detailed pictures or model information, Hyundai has created a more robust experience.

On its own unique landing page, Hyundai highlights the brand’s features, such as its compatibility with Alexa and its Shopper Assurance program, and creates a selection of Hyundai vehicles for you based on your preferences and buying habits. From there, you can select a model you’d like to look at and explore it in typical Amazon style — flipping between different product pictures, colors and customer reviews.

After you’re happy with your selection, you can either schedule a test-drive — where you have the option for the car to pick you up in your driveway — or go directly to a dealer near you to sign the paperwork.

With the average industry price of $36,270 for a new car in 2018, according to Kelly Blue Book, maybe it’s a good thing there’s no Dash button for these vehicles just yet.

The Galaxy Note 9 won’t be announced until August. You wouldn’t know it by reading the internet, however. Every nook and cranny of the upcoming phablet has been bared for the world, in a series of leaks over the past several weeks.

Sure, not all of them will pan out, but plenty have come from leakers with established track records, and enough of the details line up so as to paint a wholly believable portrait of the phone we’ll finally get an official look at early next month.

And then there’s this:

That’s a picture of Samsung CEO DJ Koh using what appears to be the Note 9 at a media event. The differences are subtle, but they’re there in the camera housing, which is among a few small visible changes to the upcoming device. Like, good on DJ Koh for using the company’s products, S Pen and all, but even by Samsung’s traditionally leaky standards, that’s a little silly.

Maybe Samsung doesn’t mind. Maybe it’s just happy to have everyone talking about the Note 9, while it’s hard at work on that folding phone we’ve heard so much about.

The above camera housing is in line with another recent post from perennial leaker, EVLeaks, which shows off a full front and back render of the upcoming handset:

There’s also an S Pen, with a yellow coat of paint that’s in line with the image the company sent out with the invite to the August event. The fingerprint sensor has been moved below the camera there, rather than next to it as it was on the Note 8. That was a clear mistake, and Samsung fixed it for the S9. Logic follows that they would do the same on the new Note.

That, in turn, appears to confirm this photo of an actual unit from Slashleaks, which bears an extremely effective “No photo allowed/Do not leak info” sticker. At least Samsung tried, I guess.

More (but not that much more, from the looks of it) will be revealed on August 9.

The Galaxy Note 9 won’t be announced until August. You wouldn’t know it by reading the internet, however. Every nook and cranny of the upcoming phablet has been bared for the world, in a series of leaks over the past several weeks.

Sure, not all of them will pan out, but plenty have come from leakers with established track records, and enough of the details line up so as to paint a wholly believable portrait of the phone we’ll finally get an official look at early next month.

And then there’s this:

That’s a picture of Samsung CEO DJ Koh using what appears to be the Note 9 at a media event. The differences are subtle, but they’re there in the camera housing, which is among a few small visible changes to the upcoming device. Like, good on DJ Koh for using the company’s products, S Pen and all, but even by Samsung’s traditionally leaky standards, that’s a little silly.

Maybe Samsung doesn’t mind. Maybe it’s just happy to have everyone talking about the Note 9, while it’s hard at work on that folding phone we’ve heard so much about.

The above camera housing is in line with another recent post from perennial leaker, EVLeaks, which shows off a full front and back render of the upcoming handset:

There’s also an S Pen, with a yellow coat of paint that’s in line with the image the company sent out with the invite to the August event. The fingerprint sensor has been moved below the camera there, rather than next to it as it was on the Note 8. That was a clear mistake, and Samsung fixed it for the S9. Logic follows that they would do the same on the new Note.

That, in turn, appears to confirm this photo of an actual unit from Slashleaks, which bears an extremely effective “No photo allowed/Do not leak info” sticker. At least Samsung tried, I guess.

More (but not that much more, from the looks of it) will be revealed on August 9.

There’s a special place in Hell for people who think it’s funny to rape a 7-year-old girl’s avatar in an online virtual world designed for children. Yes, that happened. Roblox, a hugely popular online game for kids, was hacked by an individual who subverted the game’s protection systems in order to have customized animations appear. This allowed two male avatars to gang rape a young girl’s avatar on a playground in one of the Roblox games.

The company has now issued an apology to the victim and its community, and says it has determined how the hacker was able to infiltrate its system so it can prevent future incidents.

The mother of the child, whose avatar was the victim of the in-game sexual assault, was nearby when the incident took place. She says her child showed her what was happening on the screen and she took the device away, fortunately shielding her daughter from seeing most of the activity. The mother then captured screenshots of the event in order to warn others.

She described the incident in a public Facebook post that read, in part:

At first, I couldn’t believe what I was seeing. My sweet and innocent daughter’s avatar was being VIOLENTLY GANG-RAPED ON A PLAYGROUND by two males. A female observer approached them and proceeded to jump on her body at the end of the act. Then the 3 characters ran away, leaving my daughter’s avatar laying on her face in the middle of the playground.

Words cannot describe the shock, disgust, and guilt that I am feeling right now, but I’m trying to put those feelings aside so I can get this warning out to others as soon as possible. Thankfully, I was able to take screenshots of what I was witnessing so people will realize just how horrific this experience was. *screenshots in comments for those who can stomach it* Although I was immediately able to shield my daughter from seeing the entire interaction, I am shuddering to think of what kind of damage this image could have on her psyche, as well as any other child that could potentially be exposed to this.

Roblox has since issued a statement about the attack:

Roblox’s mission is to inspire imagination and it is our responsibility to provide a safe and civil platform for play. As safety is our top priority — we have robust systems in place to protect our platform and users. This includes automated technology to track and monitor all communication between our players as well as a large team of moderators who work around the clock to review all the content uploaded into a game and investigate any inappropriate activity. We provide parental controls to empower parents to create the most appropriate experience for their child, and we provide individual users with protective tools, such as the ability to block another player.

The incident involved one bad actor that was able to subvert our protective systems and exploit one instance of a game running on a single server. We have zero tolerance for this behavior and we took immediate action to identify how this individual created the offending action and put safeguards in place to prevent it from happening again. In addition, the offender was identified and permanently banned from the platform. Our work on safety is never-ending and we are committed to ensuring that one individual does not get in the way of the millions of children who come to Roblox to play, create, and imagine.

The timing of the incident is particularly notable for the kids’ gaming platform, which has more than 60 million monthly active users and is now raising up to $150 million to grow its business. The company has been flying under the radar for years, while quietly amassing a large audience of both players and developers who build its virtual worlds. Roblox recently stated that it expects to pay out its content creators $70 million in 2018, which is double that of last year. 

Roblox has a number of built-in controls to guard against bad behavior, including a content filter and a system that has moderators reviewing images, video and audio files before they’re uploaded to Roblox’s site. It also offers parental controls that let parents decide who can chat with their kids, or the ability to turn chat off. And parents can restrict kids under 13 from accessing anything but a curated list of age-appropriate games.

However, Roblox was also in the process of moving some of its older user-generated games to a newer system that’s more secure. The hacked game was one of several that could have been exploited in a similar way.

Since the incident, Roblox had its developers remove all the other potentially vulnerable games and ask their creators to move them over to the newer, more fortified system. Most have done so, and those who have not will not see their games allowed back online until that occurs. The games that are online now are not vulnerable to the exploit the hacker used.

The company responded quickly to take action, in terms of taking the game offline, banning the player and reaching out the mother — who has since agreed to help Roblox get the word out to others about the safeguards parents can use to protect kids in Roblox further.

But the incident raises questions as to whether kids should be playing these sorts of massive multiplayer games at such a young age at all.

Roblox, sadly, is not surprised that someone was interested in a hack like this.

YouTube is filled with videos of Roblox rape hacks and exploits, in fact. The company submits takedown requests to YouTube when videos like this are posted, but YouTube only takes action on a fraction of the requests. (YouTube has its own issues around content moderation.)

It’s long past time for there to be real-world ramifications for in-game assaults that can have lasting psychological consequences on victims, when those victims are children.

Roblox, for its part, is heavily involved in discussions about what can be done, but the issue is complex. COPPA laws prevent Roblox from collecting data on its users, including their personal information, because the law is meant to protect kids’ privacy. But the flip side of this is that Roblox has no way of tracking down hackers like this.

“I think that we’re not the only one pondering the challenges of this. I think every platform company out there is struggling with the same thing,” says Tami Bhaumik, head of marketing and community safety at Roblox.

“We’re members of the Family Online Safety Institute, which is over 30 companies who share best practices around digital citizenship and child safety and all of that,” she continues. “And this is a constant topic of conversation that we all have – in terms of how do we use technology, how do we use A.I. and machine learning? Do we work with the credit card companies to try to verify [users]? How do we get around not violating COPPA regulations?,” says Bhaumik.

“The problem is super complex, and I don’t think anyone involved has solved that yet,” she adds.

One solution could be forcing parents to sign up their kids and add a credit card, which would remain uncharged unless kids broke the rules.

That could dampen user growth to some extent — locking out the under-banked, those hesitant to use their credit cards online and those just generally distrustful of gaming companies and unwanted charges. It would mean kids couldn’t just download the app and play.

But Roblox has the momentum and scale now to lock things down. There’s enough demand for the game that it could create more of a barrier to entry if it chose to, in an effort to better protect users. After all, if players knew they’d be fined (or their parents would be), it would be less attractive to break the rules.