Month: June 2019

Spotify seems to have learned little from the Facebook developer platform’s scandals despite getting a huge boost from the social network in its early days. Spotify has been caught allowing record labels to grab tons of unnecessary user data and permissions to even control their accounts just so people can “pre-save” upcoming song releases.

An investigation by Billboard’s Micah Singleton found major label Sony’s app for pre-saving demanded access to users’ email address, what you’ve listened to and saved to your library, playlists you’ve made or subscribed to, artists you follow, and what you’re playing right now. It also asks to be able to take actions on your behalf including change who you follow, add or remove songs from your library, create/edit/follow playlists, and even control Spotify on your devices.

An example of Universal Music Group’s pre-save app that asks for unnecessary user data and access permissions

This means that by agreeing to use a pre-save feature, a record label could index you music tastes and determine your current mood for marketing purposes, subscribe you to all of their artists and playlists, force you to create playlists that include their artists or add them to your existing playlists, and delete or unfollow any music or artists represented by their competitors.

Since users often speed through platform app permission screens assuming they’re just asking for what’s required, many likely gave up valuable data about themselves and the ability to manipulate their accounts without fully understanding what was happening. Other major labels like Warner and Universal’s pre-save apps like this one similarly ask for 10 types of permission — most extraneous.

In reality, the only permission a pre-save app should need is to be able to add the song you wanted to pre-save to your library. Anything else is theoretically prohibited by Spotify’s developer policy section 5.2: “You will only request the data you need to operate your Spotify Developer Application.”

In a post-Cambridge Analytica world, platforms like Spotify should know better than to let developers run amok without proper oversight. That’s why I was so disappointed when Spotify refused to provide a statement, explanation, or even talk with me about the issue.

Offering a flexible developer platform has plenty of advantages for users. Apps for DJing with streaming music, discovering new bands, or synchronizing playback with friends could be built with rightful and transparent use of Spotify’s APIs. But for something as simple and common as volunteering to have a new song from your favorite band show up in your library on the day it’s released shouldn’t become a lure for an exploitative data grab.

That’s why Spotify should build its own in-house pre-save app that labels could all use to pre-promote their releases. Approved labels and their artists should be able to punch in their upcoming single’s Spotify URL and get a shareable link back that they can distribute through social media or wherever that only grants permission to pre-save that specific song, and that expires once that action is completed.

Spotify is widening its subscriber lead over Apple Music

Otherwise, Spotify risks losing all the goodwill its built up with listeners by being a music-first company compared to competitors like Apple and Google where music is a rounding error. Apple Music provides app developers with less data about users.

Just today Apple Music announced it has 60 million subscribers, lagging increasingly further behind Spotify which now has 100 million subscribers and 217 million total monthly users. Spotify already dominates cultural mind share for streaming, having used the playlists it controls to become a hit-maker and gain leverage over the labels for royalty negotiations. But turning a blind eye to shady developers just because they own the music it streams could make listeners question their loyalty and stray to Apple, which is notoriously serious about privacy.

If Spotify is unwilling to push back on data abuse by its record label partners, then it’s undeserving of users’ ears and subscription dollars.

When you live in Silicon Valley, it feels like nearly everyone works in tech and that entry into the industry is wide open. Of course, the reality is very different. Even as software eats the world, not everyone has the training or connections to land a high-paying job in either the traditional tech industry or with a company that’s actively embracing its digital future.

In fact, it would be challenging to interest an executive recruiter in someone who doesn’t have a tech background and didn’t go to college, yet a company called SV Academy is doing just that. In fact, according to cofounder and CEO Rahim Fazel, the nearly two-and-a-half-year-old, Bay Area company is currently helping 100 people every 30 days — or 1,200 per year — land jobs at companies like SurveyMonkey, Palo Alto Networks, and PayPal.

Did we mention that it costs these job candidates nothing, that instead employers pay SV Academy between $12,000 to $15,00 per hire?  All the prospects really need to do is convince SV Academy that they have the grit required to take a 12-week, tuition-free training program that teaches human-centered skills that place these individuals in sales roles, as well as that they will embrace a year of ongoing training and mentorship for a year after graduating.

It sounds like a great deal, and it is, which is why SV Academy says it has more interest than it can handle. In fact, Fazel tells us that the company, which received 1,000  applications over eight months in its first year of operations, is now receiving 1,000 applications a week from people who’ve largely heard of the company through word of mouth.

Because it’s focused on finding candidates who it can stand behind and who won’t quit after their first year on the job, SV Academy is loath to scale up to accommodate that kind of demand. Still, a new round of funding should help widen the funnel a bit. Until recently, the company was backed by $2 million that it raised a couple of years ago from Bloomberg Beta, Rethink Education, Precursor Ventures, Uprising Ventures, 500 Startups and WTI.

The money was enough for SV Academy to achieve profitability and get to the point of putting employers on a waiting list. But with demand beginning to more seriously exceed its supply of candidates, SV Academy recently hit the market again, sharing exclusively that it has just closed on $9.5 million in Series A funding led by Owl Ventures with participation from Kapor Capital, Strada Education Network, and several earlier backer participating, namely Bloomberg, Rethink, and Uprising.

It isn’t the first time that Fazal has started a company that has taken off. In fact, he cofounded a company a decade ago that sold to Oracle, where he spent the next two and a half years. But SV Academy is even closer to his heart, given that he is exactly the kind of person who he wants to help with SV Academy — someone smart but lacking resources. Fazel himself grew up in government housing. He didn’t go to college. He knows firsthand that with determination and right amount of guidance and support, obstacles like not financial stability or a fancy degree can fall away.

Fazel also recognizes the importance of having the right cofounder, which he seems to have landed on with Joel Scott, who is also the company’s COO. A Stanford-trained lawyer, Scott was previously VP of operations at Hewlett Packard, and according to Fazel has trained upwards of 500 SaaS salespeople since college.

Indeed, Scott has played a major role in creating SV Academy’s curriculum, which is very focused on training people for SaaS jobs (for now) and that is entirely virtual, from the 12-week-training period, to the coaching that comes afterward. The unsurprising reason: it enables it to reach students in the U.S. wherever they may be, and whatever their experience might be. (Though some of the applicants who it accepts are college graduates, many are also “working full-time jobs, or they’re caretakers, and it’s impossible for them to drive into the city several times a week for classes,” he explains.)

It seems to be working, too. Fazel says that 100% of the individuals who complete the program are not only receiving median job offers of $79,000 plus benefits and, in many cases, equity, but 70% of them are also receiving promotions within their first year. Yes, the law of small numbers is a factor, but it’s also easy to understand investors’ enthusiasm for what they are seeing — including the cautious approach SV Academy is taking to expanding.

“Real transformation is difficult,” says Fazel. “You can’t create outcomes like this by throwing software at the problem.”

Above, left to right: Joel Scott and Rahim Fazel of SV Academy

There’s seemingly no end in sight for DoorDash’s compensation model where it subsidizes driver wages with customer tips. The mildly bright side, however, is that DoorDash is now providing more transparency after each completed delivery, DoorDash CEO Tony Xu wrote in a blog post today.

“With our current pay model, Dashers see a guaranteed minimum — including tips — prior to accepting a delivery,” Xu wrote. “The guaranteed minimum is based on the estimated time and effort required to complete the delivery. Providing this guarantee upfront means that Dashers are more likely to accept all kinds of deliveries because they know what their earnings will be even if the customer provides little or no tip.”

That means DoorDash’s base pay is sometimes just $1.

“Talking about transparency is good,” labor rights group Working Washington said in a statement to TechCrunch. “And admitting you pay $1/job is better than denying it. But $1 is still $1.”

In light of pay controversies at Instacart, DoorDash and Postmates, Working Washington formed the Pay Up Campaign, which unites thousands of workers across all those gig economy platforms.

“They continue to subtract tips from worker pay,” the organization said in its statement. “And they continue to mislead customers about where their tips are going. When a customer tips more, DoorDash pays less — in other words, the customer is tipping the company.”

Despite what DoorDash said in its blog post about what workers want, the Pay Up campaign says it wants a minimum pay floor of $15 per hour plus expenses for time with an active job, tips, and a detailed breakdown of pay.

Slack’s recent direct listing marks a momentous 15-month stretch for freemium SaaS businesses. With Slack joining the public company ranks, six companies will have tapped the public markets since Dropbox’s IPO last March. This group of companies now has a collective market value of more than $50 billion.

When Zoom filed its public S-1, the tech industry fawned over the company’s financial profile. Here was a company growing revenue over 100% that had somehow managed to be cash flow positive. Conventional wisdom among many Silicon Valley investors has recently been that profits and rapid growth are mutually exclusive.

Uber and other high-growth tech companies aspire to be the next Amazon, foregoing profits into the foreseeable future to establish a dominant market position. This land grab mentality has held sway with most of the SaaS businesses that go to market with a traditional enterprise sales force. In contrast, the recent crop of public freemium businesses show they can actually make money while sustaining attractive growth rates.

Recent IPOs

How can this flavor of enterprise software business run so much more efficiently than their traditional enterprise brethren? The answer heavily lies in their approach to sales and marketing. Despite similar growth rates, traditional enterprise SaaS businesses spend an average of 10% more of their revenue on sales and marketing than their freemium comparables.

Freemium vs. enterprise: Different paths to sales success

A common criticism of freemium businesses is that their retention rates dramatically lag those of traditional enterprise software businesses. Customer relationships for freemium businesses usually begin online. An individual employee wants to use a product for her/his own productivity and simply charges a credit card to pay for a subscription. In contrast to larger-ticket enterprise relationships with multiple stakeholders that tend to renew at 90%+ annually, the retention profile of these individual users often resembles consumer subscription businesses — usually in the 60-80% range. When it comes time to renew the subscription a year later, the person may have changed jobs, changed credit cards or only used the product episodically.

It’s less well understood that many of these business models are evolving in real time as they leverage widespread individual adoption to establish broader enterprise customer relationships. When sales reps for freemium products call on enterprise buyers, they usually have hundreds, or even thousands, of their employees already using the product individually or in small teams.

Their products and brands are already widely known and loved, with power-users clamoring for broader internal support and acting as advocates in the sales process. This internal validation makes it much easier to convince an enterprise buyer that the product will deliver compelling value to end users. While some hands-on sales support is usually required to land a contract over $5,000, this job can be done by less-experienced and lower-cost sales reps. If you visit the offices of freemium businesses and ask to walk their sales floor, you’ll see a sea of millennials closing sizeable contracts over the phone.

Legacy enterprise players have historically successfully fended off competition from freemium businesses by accusing them of not being “enterprise-grade” technology. It can take years to build out robust security infrastructure, deep integration into other systems and administration and reporting capabilities, all of which are needed in the enterprise procurement process. This was a muscle that freemium businesses, whose product orientation was around end-user design rather than back-end infrastructure capabilities, needed to build. They also had to build sales motions to navigate the longer, complex sales cycles that come with six and seven-figure annual recurring revenue (ARR) deals.

However, the financial results of these public freemium companies show just how well this is now working, and there are many more private companies following their lead.

Freemium’s enterprise traction

Most public companies don’t report granular renewal rates for their larger enterprise relationships, but the unit economics of these businesses are incredibly compelling.

Lucid Software now has more than 3,000 enterprise customers, which generates more than 60% of the company’s revenue, up from just 350 and 15% when we invested in the company three years ago. The logo renewal rate for their 3,000+ enterprise customers is more than 95% and net revenue retention is more than 130% annually, because end user seat growth more than outstrips any customer losses.

At Spectrum Equity, we’re watching with interest as these early freemium leaders emerge as successful public companies and the broader industry better understands how these business models work. Since leading SurveyMonkey’s first financing more than 10 years ago, Spectrum has invested in Lucid Software, Bitly, Litmus and Prezi, which are all charting a similar course from freemium online through to the enterprise. A number of Spectrum’s content businesses, such as Lynda.com, Teachers Pay Teachers, Headspace, DataCamp, Offensive Security and Digital Marketing Institute, have also successfully built hybrid individual and enterprise distribution strategies.

We believe companies that create the most compelling end-user experiences will win over the long term, and this trend of the consumerization of enterprise technology has only just begun.

(Note from Spectrum Equity: The specific companies identified above may not represent all of Spectrum’s investments, and no assumptions should be made that any investments identified were or will be profitable. View the complete list of our portfolio companies.)

Today’s major Apple news may be the departure of its design guru Jony Ive, but the even as the company stomachs the executive loss, their software plows ahead. Today, in an interview with French news site Numerama, Apple honcho Eddy Cue revealed that the number of Apple Music subscribers has now climbed to 60 million.

The company seems to give updates every time it surpasses another additional 10 million subscribers, we last heard that they had crossed the 50 million mark back in April.

Now, the company’s music service is well past the halfway market in its mission to surpass Spotify which currently has 100 million subscribers.

Hans Zimmer, the film score composer behind dozens of Hollywood movies including The Lion King and Inception, is shaping what the next generation of BMW electric vehicles sound like.

Zimmer and Renzo Vitale, an acoustic engineer and sound designer at the BMW Group, recently composed the sound for the BMW Vision M NEXT, the concept that had its world debut June 25.

BMW’s project with Zimmer ties into its new “BMW IconicSounds Electric” sound brand.

“We want to get BMW IconicSounds Electric in position for customers who value emotional sound. With BMW IconicSounds Electric they will be able to experience the joy of driving with all their senses”, Jens Thiemer, senior vice president of the BMW brand, said in a statement.

The pair composed the drive sounds and sound signs for the BMW Vision M NEXT together in Zimmer’s studios in London and Los Angeles. Watch the video below and listen for the wooshing sound that is produced as the vehicle accelerates. Sadly, it’s not the soundtrack of Inception playing on repeat.

The M NEXT will not be in your local BMW dealership any time soon. It’s a concept that should show where the automaker is headed in terms of tech and design.

But customers can expect the next generation of electric vehicles to come with special acoustics meant to mimic the feeling a driver might get when they’re behind an M5 or other BMW with an internal combustion engine.

The idea isn’t to make an electric car sound like an ICE vehicle. Instead, the sound is meant to match the power and speed of the electric vehicle.

It turns out that BMW has been working on artificially generated sound since at least 2009. Engineers wanted to increase awareness of the traditional quiet electric vehicles, which at the time include the MINI E test fleet.

Since the launch of the BMW i3, customers have been able to choose acoustic pedestrian protection as optional equipment. Legislation has required automakers to adopt acoustic pedestrian protection, a feature being rolled out as standard in all plug-in hybrids and all-electric vehicles from BMW. The aim in the development was to fulfill the warning function without disturbing pedestrians.

PepsiCo is planning to replace its plastic bottles of Aquafina with aluminum cans at locations around the U.S.

The move is part of a broader initiative from the company to reduce its plastic use as a consumer backlash against plastic use grows across the country. Microplastics, found in both air and water, block up the guts of animals and insects and can potentially have incredibly harmful consequences on ocean ecosystems.

The move could be calamitous for startups like Liquid Death, the direct to consumer retail startup pitching canned “tallboys” of water with a metal message and a veneer of environmental responsibility.

Aluminum is nearly 100% recyclable and has a better overall environmental footprint as a packaging material than plastic, according to some advocates.

For now, Pepsi’s canned water will only be available at food vendors who stock its products, but the company is considering a broader transition to aluminum cans across its supply chain.

The company also announced that its LIFEWTR brand would only be sold in 100% recycled polyethylene terephthalate and its bubly product will no longer be packaged in plastic.

The changes, which the company said will go into effect next year, will eliminate 8,000 metric tons of virgin plastic and roughly 11,000 metric tons of greenhouse gas emissions.

Pepsi has set a goal of using nothing but recyclable, compostable or biodegradable packaging by 2025, the company said.

“As one of the world’s leading food and beverage companies, we recognize the significant role PepsiCo can play in helping to change the way society makes, uses, and disposes of plastics,” said PepsiCo Chairman and CEO Ramon Laguarta, in a statement. “We are doing our part to address the issue head on by reducing, recycling and reinventing our packaging to make it more sustainable, and we won’t stop until we live in a world where plastics are renewed and reused.”

Facial recognition is a controversial enough topic without bringing in everyday policing and the body cameras many (but not enough) officers wear these days. But Axon, which makes many of those cameras, solicited advice on the topic from and independent research board, and in accordance with its findings has opted not to use facial recognition for the time being.

The company, formerly known as Taser, established its “AI and Policing Technology Ethics Board” last year, and the group of 11 experts from a variety of fields just issued their first report, largely focused (by their own initiative) on the threat of facial recognition.

The advice they give is unequivocal: don’t use it — now or perhaps ever.

More specifically, their findings are as follows:

• Facial recognition simply isn’t good enough right now for it to be used ethically.
• Don’t talk about “accuracy,” talk about specific false negatives and positives, since those are more revealing and relevant.
• Any facial recognition model that is used shouldn’t be overly customizable, or it will open up the possibility of abuse.
• Any application of facial recognition should only be initiated with the consent and input of those it will affect.
• Until there is strong evidence that these programs provide real benefits, there should be no discussion of use.
• Facial recognition technologies do not exist, nor will they be used, in a political or ethical vacuum, so consider the real world when developing or deploying them.

The full report may be read here; there’s quite a bit of housekeeping and internal business, but the relevant part starts on page 24. Each of the above bullet points gets a couple pages of explanation and examples.

Axon, for its part, writes that it is quite in agreement: “The first board report provides us with thoughtful and actionable recommendations regarding face recognition technology that we, as a company, agree with… Consistent with the board’s recommendation, Axon will not be commercializing face matching products on our body cameras at this time.”

Not that they won’t be looking into it. The idea, I suppose, is that the technology will never be good enough to provide the desired benefits if no one is advancing the science that underpins it. The report doesn’t object except to advise the company that it adhere to the evolving best practices of the AI research community to make sure its work is free from biases and systematic flaws.

One interesting point that isn’t always brought up is the difference between face recognition and face matching. Although the former is the colloquial catch-all term for what we think of as being potentially invasive, biased, and so on, in the terminology here it is different from the latter.

Face recognition is just finding a face in the picture — this can be used by a smartphone to focus its camera or apply an effect, for instance. Face matching is taking the features of the detected face and comparing it to a database in order to match it to one on file — that could be to unlock your phone using Face ID, but it could also be the FBI comparing everyone entering an airport to the most wanted list.

Axon uses face recognition and to a lesser extent face matching to process the many, many hours of video that police departments full of body cams produce. When that video is needed as evidence, faces other than the people directly involved may need to be blurred out, and you can’t do that unless you know where the faces are and which is which.

That particular form of the technology seems benign in its current form, and no doubt there are plenty of other applications that it would be hard to disagree with. But as facial recognition techniques grow more mainstream it will be good to have advisory boards like this one keeping the companies that use them honest.

NASA has just announced its next big interplanetary mission: Dragonfly, which will deliver a Mars Rover-sized flying vehicle to the surface of Titan, a moon of Saturn with tantalizing life-supporting qualities. The craft will fly from place to place, sampling the delicious organic surface materials and sending high-resolution pictures back to Earth.

Dragonfly will launch in 2026, taking eight years to reach Titan and land (if all goes well) in 2034. So there will be plenty more updates after this one!

The craft will parachute through Titan’s hazy atmosphere and land among its dune-filled equatorial region. It’s equipped with drills and probes to investigate the surface, and of course cameras to capture interesting features and the surrounding alien landscape, flying from place to place using a set of rotors like a drone’s.

We’ve observed Titan from above via the Cassini mission, and we’ve even touched down on its surface briefly with the Huygens probe — which for all we know is still sitting there. But this will be a much more in-depth look at this fascinating moon.

Titan is a weird place. With rivers, oceans, and abundant organic materials on the surface, it’s very like Earth in some ways — but you wouldn’t want to live there. The rivers are liquid methane, for one thing, and if you’re familiar with methane, you’ll know that means it’s really cold there.

Nevertheless, Titan is still an interesting analogue to early Earth.

“We know that Titan has rich organic material, very complex organic material on the surface; there’s energy in the form of sunlight; and we know there’s been water on the surface in the past. These ingredients, that we know are necessary for the development life as we know it are sitting on the surface on Titan,” said principal investigator Elizabeth Turtle. “They’ve been doing chemistry experiments, basically, for hundreds of millions of years, and Dragonfly is designed to go pick up the results of those experiments.”

Don’t expect a flourishing race of methane-dwelling microbes, though. It’s more like going back in time to pre-life Earth to see what conditions may have resulted in the earliest complex self-replicating molecules: the origin of the origin of life, if you will.

Principal investigator Elizabeth Turtle shows off a 1/4 scale model of the Dragonfly craft.

To do so Dragonfly, true to its name, will be flitting around the surface to collect data from many different locations. It may seem that something the size of a couch may have trouble lifting off, but as Turtle explained, it’s actually a lot easier to fly around Titan than to roll. With a far thicker atmosphere (mostly nitrogen, like ours) and a fraction of Earth’s gravity, it’ll be more like traveling through water than air.

That explains why its rotors are so small — for something that big on Earth, you’d need huge powerful rotors working full time. But even one of these little rotors can shift the craft if necessary (though they’ll want all eight for lift and redundancy).

We’ll learn more soon, no doubt. This is just the opening salvo from NASA on what will surely be years of further highlights, explanations, and updates on Dragonfly’s creation and launch.

“It’s remarkable to think of this rotorcraft flying miles and miles across the organic sand dunes of Saturn’s largest moon, exploring the processes that shape this extraordinary environment,” said NASA associate administrator for science Thomas Zurbuchen. “Titan is unlike any other place in the solar system, and Dragonfly is like no other mission.”

The man who won over decades of Apple fans with iconic and his pronunciation of “aluminum” is out at the company. Sir Jonathan Paul “Jony” Ive told The Financial Times today that he’s leaving the company after 27 years. 

Ive led a design team that created an army of consumer electronics’ most iconic devices, including the iPhone, iPod and various Mac products. The executive will begin transitioning away from the company at the end of 2019, launching a new project titled LoveFrom next year.

Apple confirmed the move in a press release, noting that it will remain a client of his new design firm.

“Jony is a singular figure in the design world and his role in Apple’s revival cannot be overstated, from 1998’s groundbreaking iMac to the iPhone and the unprecedented ambition of Apple Park, where recently he has been putting so much of his energy and care,” said Tim Cook said in the release. “Apple will continue to benefit from Jony’s talents by working directly with him on exclusive projects, and through the ongoing work of the brilliant and passionate design team he has built. After so many years working closely together, I’m happy that our relationship continues to evolve and I look forward to working with Jony long into the future.”

Ive echoed the sentiment in the interview, telling the site, “While I will not be an [Apple] employee, I will still be very involved — I hope for many, many years to come. This just seems like a natural and gentle time to make this change.”

No immediate replacement has been named for Ive, who joined the company full time in September 1992. Apple’s Chief Design Officer first made a name for himself at the company with the design of the PowerBook while still at the London-based design firm, Tangerine. In recent years, he had increasingly become one Apple’s most prominent faces, regularly appearing in design videos for the company.