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Palo Alto-based ScaleIO is one of a new generation of startup storage providers that’s using intelligent software to help big companies streamline and converge their data storage operations at scale across thousands of servers. On a mission to re-imagine the very operations of enterprise data centers, the startup’s tech takes aim at the core business of storage giants like EMC and IBM. In fact, ScaleIO claims that its block storage technology offers 80 to 90 percent savings compared to the bigs.
Well, it appears that at least one of the bigs has been listening and wants the startup’s tech for its own. TechCrunch has learned today that EMC, one of the largest data storage providers in the world, has agreed to buy ScaleIO for $200 million to $300 million. The news was first reported by Avi Schneider at Israeli blog GeekTime, and as the deal is reportedly still in the final stages, according to our sources, neither EMC nor ScaleIO would offer official comment on the news when reached by TechCrunch.
While the terms of the reported deal are still unclear, if this range holds true, it’s a big win for both sides — and, following the likes of Waze, it’s another big exit for Israeli tech startups. In EMC’s case, the storage giant has been taking a turn toward a more AWS-style infrastructure, and the ScaleIO acquisition gives the company access to the startup’s “block storage,” an adaptable, multi-use data-storage technology that makes it easy to scale across thousands of servers.
In other words, ScaleIO’s software uses the hard disk on application servers to create high-performance, shared virtual storage array networks (SAN), which offer the easy scalability and elasticity of “block storage.”
With the cost of hosting coming down and the quality, speed and elasticity of cloud computing on the way up, small and medium-sized businesses have been moving to cloud hosting infrastructures (like, say AWS) at a breakneck pace. In turn, larger companies are increasingly consolidating their own clouds into massive data centers. These clusters continue to increase, resulting in all sorts of cost- and management-related headaches for the companies that manage these data centers.
That’s why EMC has been moving to a more AWS-style system and the reason why ScaleIO’s technology holds appeal for the storage provider. What’s more, with the consumerization of IT, and employees now using a wide range of consumer-friendly applications and tools at the office — not to mention bringing their own personal devices — along with the rise of the Internet of Things, infrastructure providers like EMC are going to have to be able create a bridge between connected devices and consumer and enterprise clouds, among others.
This means not only more big data and more servers, but a sort of industrial web. As data centers consolidate and startups turn to cloud hosting services, the bigs will have to adapt, offering the things clients have come to expect, such as database management, capacity planning and scalability, while maintaining uptime. Doing so in a smooth manner is becoming critical to the millions of applications, tools and businesses housed in these data centers.
For EMC, the ScaleIO acquisition follows its purchase of network storage system provider Isilon for $2.5 billion in 2010, and marks its second acquisition of an Israeli storage startup in the last 12 months. The company scooped up Flash storage pioneer ExtremeIO in May of 2012 for $430 million.
The move also represents a fairly early exit for ScaleIO, which just raised $12 million from Greylock and Norwest Venture Partners in December as part of its first round of financing. However, the startup was built by a veteran team that has designed and developed storage software apps for companies like IBM, NetApp and Xtremio, which, of course, was just acquired by EMC.
The challenge for ScaleIO, as Alex wrote in December, has been in scaling its business — one that’s largely controlled by resellers that have long-standing relationships with the big players. While ScaleIO CEO Boaz Palgi said at the time that he has had “no problem selling direct to customers,” scaling the business and selling direct will no longer be as much of a concern.
As part of its Q1 earnings in April, EMC announced that 50 percent of its storage revenue “now comes through indirect sales,” and at a $52 billion market cap and doing $22 billion in revenue, ScaleIO now has plenty of scale at which to test its mettle.
Overall, the ScaleIO acquisition represents the impact that cloud services are having on EMC. The company has faced its own challenges competing with AWS. Adding a software storage capability gives EMC a better capability to offer a service that can help it compete better with the cloud kings.
But, at the same time, it’s immensely important.
Stratasys makes expensive, industrial-quality 3D printers. They are the “big iron” of the 3D printing world. Items printed on Stratasys hardware are as solid as anything produced by, say, injection molding, and the resolution make them indispensable for engineers and designers. In short, Stratasys is making mainframes and Makerbot is making the Apple I. While I’m loath to claim that Bre Pettis is Woz (let alone Steve Jobs), he is a charismatic leader who makes 3D printing fun, something the folks at Stratasys probably could never do.
And, like Apple, Makerbot had to ramp up. By signing with Stratasys Makerbot will be able to maintain its breakneck speed and growth. The company recently opened a 50,000 square foot space in Brooklyn where it is assembling machines and it has office space in downtown Brooklyn overlooking the Brooklyn Bridge. They have made it big with very little investment – they recently closed a $10 million round and were nosing around for more before this news – and they suffered from some severe growing pains along the way, especially in employee satisfaction. This purchase gives the company some breathing room, at the very least.
Could Makerbot have made it without selling? Possibly, but it wouldn’t have been pretty. Home 3D printing is taking off. It’s not ubiquitous, to be sure, but it’s a method to turn bits into atoms that will become increasingly important in a post manufacturing world. Sadly, VCs are still suspicious of hardware startups (but that’s changing) and Makerbot could have gotten a few infusions of cash to help them glide to cruising altitude. Now they’re already there.
Many will say that Makerbot sold out. Many will complain that the company lost open source roots. Many will claim that there are better printers out there. None of these claims are absolutely false, to be clear, but things are not as cut and dry as we like to think. Makerbot took something simple and made it amazing. They sold when they had to, especially considering issues with quality control and support, and I trust Pettis will bring the open source ethos to Stratasys headquarters and tell them it’s off limits. 3D printing isn’t new, just as computing wasn’t new when Apple hit the scene. Makerbot, like Apple, made it accessible.[image via MakerBot]
The reveal of the Xbox One didn’t go as Microsoft hoped. Gamers loved the system, but hated the absurd restrictions placed on the games. But Microsoft listened and just today reversed its stance on some of the more ridiculous policies. Good for them. Good for us.
I mean, the outcry was hard to ignore. The memes, the tweets, the visceral anger was everywhere. Even the talking heads on nationwide morning talk shows were debating the curious DRM restrictions.
Gone is the daily Internet check. Gone is the very limited region locking. Games can now be rented and traded and passed among friends just like always. Things are essentially back to normal, for better or worse.
This move was clearly to save face and eliminate potential digs Sony and Nintendo could (and would and already did) take at the Xbox One. The last thing Microsoft needs is Sony pointing out that the PS4 doesn’t require an always-on Internet connection like the Xbox One.
Microsoft didn’t have to reverse its stance. It could have taken the potshots and rolled out, touting the Xbox One’s features alongside the forward-thinking requirements.
After all, the company has historically been pretty good about not responding to consumer feedback in a timely manner. Just look at Windows 8. Or Windows Vista. Or Xbox Live. The company has a long history of doing whatever the hell it wants.
Even with the crazy restrictions, the average consumer would have probably purchased the Xbox One anyway. Gaming forums and Twitter represent just a small (if noisy) portion of the One’s target market. And with the One launching months from now, in the midst of the holiday season, the talk would have quieted down before it hit Walmart’s shelves.
The Xbox One still requires a Kinect to always be connected, and today’s reversal removes some of the more novel features like game sharing from the system. But at least Microsoft is listening and responding quickly. That’s new. Gamers wanted to love the Xbox One but Microsoft made it impossible. Now things have gotten slightly better.
[Image via Flickr/dalvenjah]
Attention gamers: you win. The folks at Redmond infuriated many when it revealed that the Xbox One would come with a long list of potential caveats — there was the automated 24 hour check-in to keep the console in playable condition, and the restrictions on who you could share disc-based games with, not to mention the fact that it would shipped region-locked.
Unsurprisingly, the gaming community lashed out in a big way, and Microsoft is finally doing something about it. According to a recent mea culpa from Microsoft Interactive Entertainment President Don Mattrick, the company has suddenly decided to drop all that nonsense due to an outpouring of (largely negative) feedback.
It’s generally welcome news considering just how off-base Microsoft seemed to be with its apparently overzealous approach to DRM, but the move doesn’t come without its drawbacks. The ability to store your entire game collection (even copies of games you physically bought) in the cloud? Gone. Kotaku also reports that this late-stage change means that the Xbox One will have to be patched by players as soon as they received them.
Still, considering just how viscerally gamers reacted toward Microsoft’s policies (the image macro above is pretty mild compared what others have said), it’s frankly hard to see how the company could’ve played this any other way. Rather than standing on its own numerous merits, the Xbox One was almost immediately bogged down in important questions about how it would handle seemingly mundane actions like passing game discs among friends. What was Microsoft going to do, push the Xbox One onto store shelves knowing that a non-insignificant chunk of the gaming populace hated the thing on principle? Some would argue that’s exactly what Microsoft should’ve done, but it’s likely Microsoft felt its hand was being forced.
Of course, it didn’t help that rival Sony adroitly seized that opportunity. All Sony had to do to endear itself to legions of eager gamers at E3 was to point out just how un-Microsoft it was by sticking to a more traditional (read: hands-off) approach to managing how people play games. Between dealing with gamer rage and the looming threat of a competitor that was eager to capitalize on the Xbox One’s shortcomings, Microsoft finally wound up doing what it should’ve done far earlier in the One development process — listening to the players.
Twitter today acquired Spindle, an app that uses mobile devices and social networks to make a smarter localized search engine. The Spindle team will move to San Francisco and shutter the Spindle app.
Using social networks, the time of day, and your location, Spindle would show you places you may want to visit, like restaurants or stores or other points of interest.
“We’ve spent the past two-and-a-half years building a product that helps you answer the question: “What’s happening nearby right now?” Every time we’ve experimented and looked beyond local discovery, we’ve been amazed by the breadth and quality of content shared on Twitter,” the company wrote in a blog post today. “By joining forces with Twitter, we can do so much more to help you find interesting, timely and useful information about what’s happening around you.”
Spindle comes from ex-Microsoft engineers and raised $2.3 million in funding before being acquired by Twitter. The company introduced version 2.0 in March, which featured interesting Google Now-esque push notifications based on user preferences.
The Spindle team also said they will be relocating from Boston to San Francisco to join the Twitter team, and will be “sunsetting the Spindle service today to focus on these new and exciting opportunities.”
It’s not immediately clear what the Spindle team will be working on, but we obviously expect them to keep answering the question, “What’s happening nearby right now?” Combined with Twitter’s resources and social graph, the team could produce a product to rival Foursquare or Facebook’s local search.
Terms of the deal were not disclosed. I reached out to Twitter for comment, who mostly pointed to Spindle’s blog post but also offered this tweet:
— Twitter Comms (@twittercomms) June 19, 2013
Stratasys Acquiring MakerBot In $403M Deal, Combined Company Will Likely Dominate 3D Printing Industry
Today Stratasys announced that it has acquired MakerBot, as we reported, in a stock deal worth $403 million based on the current share value of Stratasys. The combination of the companies brings together a leader in 3D industrial printing and manufacturing, with the emerging leader in desktop 3D printing, which the companies said in a press release should help drive “faster adoption of 3D printing” across all categories.
MakerBot will continue to operate as a separate company from Stratasys as part of the deal, which is reportedly stock-for-stock transaction. It’ll be a subsidiary of Stratasys, but will serve the consumer and desktop market segment while Stratasys continues to focus on its existing industry placement.
MakerBot was founded in 2009, and has since sold over 22,000 3D printers, with its most recent model making up 11,000 of those sales coming from the Replicator 2, which it launched back in September 2012. That means traction is on the upswing in a big way, something which no doubt helped pave the way for the deal.
As for Stratasys, its name might be less familiar for regular TechCrunch readers, though it may ring a bell from when we accurately reported that acquisition talks between the two companies were ongoing earlier this month. But in terms of the history of 3D printing it’s operating in much more established space. It facilitates the printing of prototypes, concepts, components, parts and more on an industrial scale and for commercial applications. The publicly traded company merged with Object Ltd in 2012 to form one large entity, and is headquartered in both Minneapolis and Rehovot, Israel.
Stratasys has demonstrated it’s going to be aggressive about owning the 3D printing space, and the MakerBot buy is the consumer-focused piece in that puzzle. For MakerBot, it gives the startup access to Stratasys’ wealth of industry experience, as well as probably better access to new tech coming down the pipeline, a greater pool of engineering talent and more resources to put behind marketing and distribution.
MakerBot has been pretty consistent in terms of updating its hardware and software since the startup got off the ground four years ago, and released updated firmware and design software just last week to improve the quality of its printed products. The company has some competition from other, newer startups like Form Labs, whose Form 1 3D printer John recently tested out, but MakerBot already had a head start on the younger company, and Stratasys should be able to juice its growth even further.
Microsoft and Nokia have gotten pretty cosy over the past few years, and at the time of the announcement of the Finnish company’s decision to use Windows Phone OS to power its smartphones, many speculated it was the first overture for a coming acquisition. And that is apparently where things were headed, according to the Wall Street Journal, but the proposed deal has since fallen apart.
The WSJ says talks were taking place as soon as this month, but that they’ve collapsed to the point where they aren’t likely to get revived again, meaning a Microkia or Nokrosoft isn’t likely to happen anytime soon. Talks up until that point had been very advanced, the report says, but eventually broke down because of financial difficulties faced by both MS and Nokia.
Microsoft ended the courtship, per the report. Nokia has been struggling, and the Windows Phone plan hasn’t done much to shore up its continued losses. Nokia missed analyst expectations last quarter, and posted an operating loss, though a much lower one than it reported during the year ago period. Its device sales were down both sequentially and year over year, however.
Essentially, Microsoft and Nokia were able to have an extended dating period, and Microsoft had plenty of time to see that opting for marriage wasn’t likely to turn around the fortunes of either party. In fact, neither the fact that a merger was being considered, nor the fact that it fell through, should come as any big surprise to anyone who has been watching the progress of Nokia over the past few years, and of Windows Phone as a mobile platform.
What’s left now is to see where Microsoft goes next with smartphones, and whether it opts to try to jump start things with its own project, Surface-style, or seeks out someone else like Nokia who might be able to do a better job of lighting a fire under its mobile OS.
The Dart Editor now also features smarter code completion that is, for example, camel case aware, deletes unused optional parameters automatically after template editing is done and includes a number of other enhancements.
You can find the full release notes here.
In spite of the recent layoffs, Zynga is still picking up talent in strategic areas like social casino gaming.
The company bought a roughly 40-person team called Spooky Cool Labs full of real-money gaming talent. Based in Chicago, the Spooky Cool Labs team is made up of social and real money gaming veterans from companies such as Aristocrat, and slot machine makers like IGT (International Game Technology) and WMS Gaming. The company’s founder, Joe Kaminkow, was ranked as one of the 10 most influential people in the history of slots by Strictly Slots Magazine.
But from Spooky Cool’s website, the company looks like it had been working on non-casino titles like a Wizard of Oz city-building social game. Zynga says that access to this Wizard of Oz brand is part of the deal.
The team will stay in Chicago and work with Zynga’s San Francisco-based social casino gaming team. In another interesting twist to this deal, Kaminkow will apparently also still lead game design at Aristocrat Leisure Limited, an Australian company that’s one of the biggest slots makers in the world. He told VentureBeat back in March that he had taken a job as a senior vice president of game development at Aristocrat Leisure. Spooky Cool also had backing from the Hearst Corporation, but they didn’t disclose the amount of funding.
As Zynga grapples with how to approach mobile platforms, it has relied on one of its old standbys: Zynga Poker. At the same time, the company has made steps toward exploring how to incorporate real money into its betting games.
The company made its first real-money games live in the U.K. in April, just after the first-quarter closed. But it has yet to bring these real-money efforts to the Facebook platform or mobile in that market. In December, the company also applied for a “preliminary finding of suitability” from the Nevada Gaming Control Board, starting a process that could take more than a year.
Cortica, a startup developing technology for analyzing in-image content, is announcing that it has raised $6.4 million in Series B funding.
The round was led by previous investors Horizons Ventures (the firm which manages investments for Hong Kong business magnate Li Ka-shing), with participation from Russian firm Mail.ru Group and other angel investors. Cortica has now raised a total of $18 million.
Founded by neuroscientists Yehoshua (Josh) Zeevi and Karina Odinaev, as well as engineer Igal Raichelgauz (the company’s CEO), Cortica says its Image2Text technology processes images based on patterns and identifies the images’ core concepts. It also says that it delivers zero false positives — in other words, it might not identify every concept associated with an image, but it will never incorrectly identify one of them.
When I spoke to Cortica last year, it was focused on using the technology for in-image advertising — if you have an accurate sense of the content of an image, you can place ads that are a good match. Advertising is still one of the use cases, Raichelgauz said, as is e-commerce, but the biggest use among the company’s initial commercial partners is visual search. The technology is now deployed across hundreds of millions of images, he added.
“The goal now is to distribute Cortica technology across multiple partners, whether those are leading publishers, leading manufacturers of devices, and so on,” Raichelgauz said.
Wired Senior Editor Michael Copeland is joining venture firm Andreessen Horowitz. We’ve confirmed with the VC firm that Copeland will be leading Andreessen’s new ‘content strategy.’
Prior to joining Wired, Copeland was a Senior Writer at Fortune and was previously also a Senior Writer at Business 2.0 covering the VC world. Additionally, he held editorial positions at Red Herring, the Venture Capital Journal, the Washington Post and was a reporter for the Oakland Tribune, Orange County Register, and Philadelphia Inquirer.
It’s unclear what A16Z’s content strategy is yet, and we’re told that details are still being ironed out. Additionally, Copeland will be part of the marketing team.
Clearly this is part of A16Z’s strategy of being full-service VC agency that provides more than just a check. The firm has staffed up in recruiting, marketing, financial services, business development and more. Last year, A16Z brought on former Twitter employee Elizabeth Weil as a partner on the Market Development team, as well as Wildfire-exec Tom Rikert to help lead the deal and research team on enterprise deals. The firm is staffing up with the best talent from every area of the startup and technology world.
There are a lot of directions A16Z could go with a content strategy, including creating more its own content (all of the investment partners currently blog), and also helping create content for portfolio startups.
Also worth noting, fellow VC firm Sequoia recently brought on WSJ alum Ben Worthen to lead its content efforts.
Twitter added new features to Tweetdeck today that makes it easier to arrange and consume various feeds.
Column headers now have “grab handles” in the top-left corner so they can quickly and easily be rearranged. If you are looking at fewer than four feeds, the selected column will now snap its left edge to the sidebar; if four or more columns are visible, the selected column will still be in the center of the screen, like before.
Finally, when you click a column icon twice, it will scroll to the top and reveal any Tweets you may have missed, a similar function to Twitter for Mac.
Tweetdeck, which Twitter acquired for $40 million in 2011, is a web, mobile, and desktop client for sorting and reading many customized Twitter feeds in a short amount of time. Twitter seems to be working hard to keep their core “power users” loyal to digesting most of their media through the service; the company redesigned Tweetdeck two weeks ago and added some “often requested features.”
Today’s updates are available now for web and Chrome, and the company says updates for Mac and Windows will “follow soon.”
This week on Founder Stories, I sat down with Airbnb co-founder Nate Blecharczyk. One of the things that strikes me as original to Airbnb’s founding team is that, unlike most startups I can think of, two of the co-founders are designers, and Blecharczyk, who’s a co-founder and CTO, is an engineer.
“It’s pretty unusual, and I actually attribute a lot of our success to that combination,” says Blecharczyk. “We see things very differently because of our backgrounds and we’ve discovered that’s an asset. Sometimes it takes a little longer to reconcile our perspectives, but we find that if we take the time to do that we can come up with a superior solution. One that takes into account both points of view.”
Nate continues by explaining how Airbnb has been able to bring the collaborative culture of the founding team to the rest of the company. He and I also discuss being selective about hiring, building cross-functional product teams centered around projects rather than roles within in the company, and transitioning responsibility to Facebook’s Mike Curtis who recently joined as Airbnb’s vice president of Engineering. Watch the full interview above to learn more.
Editor’s Note: Michael Abbott is a general partner at Kleiner Perkins Caufield & Byers, previously Twitter’s VP of Engineering, and a founder himself. Mike also writes a blog called uncapitalized. You can follow him on Twitter @mabb0tt.
It feels like startups are taking more and more steps to make the website creation process as easy as possible. There are companies like Weebly, which offer drag-and-drop interfaces for building websites. There’s Barley, which doesn’t require any layout work at all. And now there’s Pagevamp, which allows you to turn a Facebook Page into a website.
The company was founded by Atulya Pandey, Fred Wang and Vincent Sanchez-Gomez, three University of Pennsylvania students (now graduates) who ran a small WordPress design agency while they were in college. What they discovered, Sanchez-Gomez said, is that the process is still too complicated for many people. Facebook Pages, on the other hand, are easy to create, but they’re not particularly customizable.
“I think there are people, like my mom or my grandma, where if you said, ‘Hey, just make a WordPress site,’ they wouldn’t know what to do,” he said. “For them to make a Facebook Page is much more in the realm of possibility. And with Pagevamp, if they can do that, then they can make a website.”
I tried it out myself this morning, where I pointed Pagevamp at the TechCrunch Facebook Page and within a few seconds I had a not-terrible-looking website. (You can see a screenshot of the website, along with Pagevamp’s admin controls, below.) I could do some basic editing like choosing from different designs, but really, typing in the Facebook URL was all the effort required.
Pagevamp launched its public beta at the end of March, and Sanchez-Gomez said users from more than 80 countries have created more than 7,000 sites. You can see sample Pagevamp-created websites for an Indian nonprofit, a musician, and a restaurant. Sanchez-Gomez said it can be used by both individuals and businesses, though it needs to start from a Facebook Page, not a personal account.
Today the company is announcing that it has backing from the Dorm Room Fund, First Round Capital’s student-run investment arm, which means that it has access to the fund’s mentorship and network, as well as $20,000 in funding.
Like I said, the initial websites created by Pagevamp are pretty simple, but the company plans to expand its functionality through add-ons. Right now, there are two — an add-on for managing website menus and another for adding custom pages. There are more in the pipeline, Sanchez-Gomez said, and ultimately he wants to turn Pagevamp into a platform for add-ons from third-party developers. (In fact, there’s already a developer sign-up page.)
Creating a Pagevamp site is free, but you have to pay a subscription fee if you want to publish on a non-Pagevamp domain and if you want access to the add-ons.
It sure doesn’t seem like many people have bought Lytro’s crazy light-field camera (the one that lets you focus your photos after you take them) — but if you’re one of those who did: go plug that thing in. Lytro has just released a firmware update that enables the camera’s dormant Wi-Fi chip, along with an iOS app that lets you wirelessly access and share your photos.
Oh, and it makes super trippy animated GIFs!
Check out the demo we shot with Lytro’s Director Of Photography, Eric Cheng:
(I’ll go ahead and forgive Eric for pronouncing “GIF” with a hard G there at the end. We all know it’s pronounced like “jiff,” despite what Alexia might say.)
Even if you own a Lytro, there’s a pretty good chance you didn’t know there was a Wi-Fi chip inside. Surprise! The company hadn’t really mentioned it much until now, as it previously served no purpose. When the FCC’s teardown of the Lytro revealed the chip shortly before the device’s release a year-and-a-half ago, the company responded to inquiries about it with “Connectivity is important to us, and we’re working on it.”
The Lytro Mobile app’s main purpose is to serve as an on-the-go interface for uploading, tweaking, and sharing photos from a Lytro camera without having to hook it up to a computer. All of your photos are pulled into the application over the air, where they can be geotagged, refocused and perspective-shifted on a screen that’s a good bit more finger-friendly than the relatively tiny one found on the Lytro itself. New photos will show up in the app as you shoot them, with a transfer time of around 5 or 6 seconds. You can also peruse photos shared among the Lytro community.
The company also confirmed to us that an Android app is on the way, though they declined to pin down a date for it. A Wi-Fi-enabled syncing app for the Mac or PC, meanwhile, doesn’t seem to be on their roadmap.
Plus, as mentioned, you can make totally crazy looking GIFs. Check out these total dreamboat (*cough*) examples of my big dumb head recording the above video. On the left is the parallax shifting effect; on the right is the foreground/background refocusing effect (And in the center of each is my busted-ass iPhone cable):
Once you’re on the new firmware, connecting your Lytro to your iPhone is pretty dang simple: you swipe up on the Lytro’s screen to bring up the taskbar, and hit the little Wi-Fi icon to turn your Lytro into a hotspot. You connect your iPhone to the Lytro’s Wi-Fi signal, launch the app, and you’re set.
You can find the free Lytro Mobile app for iOS here.
Zynga cast a long shadow when its stock tanked by about 75 percent in the first year after going public. But that apparently isn’t scaring off other contenders in the gaming industry from an IPO.
Over the past two weeks, I had heard from several sources in the industry that King — the maker of mega-hit Candy Crush Saga — had changed its internal thinking around an IPO. The astounding success of Candy Crush blew through all of the company’s 2013 financial targets in a single month, the company’s CEO Riccardo Zacconi told me back in March at the Game Developers Conference back in San Francisco. Candy Crush has done so well on virtual currency transactions that they’ve even stopped doing advertising.
Then The Wall Street Journal reported this week that the company had hired J.P. Morgan Chase & Co., Credit Suisse Group AG, and Bank of America Corp. to handle an IPO. It definitely isn’t the first time they’ve thought seriously about this. In early 2012, the company had restructured for a possible IPO, hunted for a Silicon Valley-based board member, and put its financial reporting more in line with generally accepted accounting principles. But they pulled back.
Publicly, the company hasn’t changed its tune about keeping its options open. King’s chief marketing officer Alex Dale told me a few days ago before the Journal story ran: “There are no current plans for that. What we did do is organize the company in such a way that were we to decide to do that, we were set up to do it. We would keep the option open, if you like.” The company says it has nothing extra to add today.
Still, honestly I’m a bit surprised. As I wrote last week, I’m skeptical that the venture model works for many (but not all) gaming companies.
And I’m even more skeptical that public investors, ruled by “animal spirits,” are equipped to value gaming companies. They’ll bid up a stock when there’s a hit: just look at Gung-Ho’s ridiculous 6,700 percent one-year return to a $14.6 billion market cap because of Puzzle & Dragons. Then they’ll oversell on misses. (See Zynga.)
Companies that have hits on generally don’t need the cash. The success of comparable companies like Finland’s Supercell on iOS would suggest that King is probably pulling in around $2 to 3 million per day from its Match-3 game. That would exclude revenue from other platforms like Facebook and King’s destination site.
The founders also don’t need a financial exit. The $43 million round the company took back in 2005 from Index Ventures and Apax Partners was also at least partially secondary, meaning they took cash off the table.
Zacconi told me back in March that that decision gave him the flexibility and comfort to run the company for the long-run, even through some near-death times in 2009 when one of their biggest partners Yahoo! made decisions that cut their traffic by almost half. From that, they staged an impressive recovery, grabbing second-place on the Facebook platform behind Zynga in terms of active users and a regular spot at the top of the grossing lists on iOS and Android.
Zacconi said in a March interview, “When we started the company, we put in our own money because it was difficult to find capital. I gave up everything. I gave up my flat. I lived in a place with a friend of mine, and put everything in storage.” He then added, jokingly, “I wouldn’t buy a Ferrari, because it would get stolen and it would be a pain in the ass.”
So a King IPO would probably be to have capital for acquisitions, to reward employees who joined later, provide a return to investors and to have a feather in the cap as a public company after a decade-long journey.
From an investor perspective, there are a couple ways in which King is very different from Zynga:
They have twice as long a track record.
An advisor to another very promising gaming IPO candidate told me yesterday that you have to have a history of revenue peaks and troughs in a hits-driven business like gaming to be a public company. You need to have a compelling story so that investors continue to believe in you through the inevitable misses as well as the hits.
Zynga went to market on its first peak, but King has a decade-long track record of both hits and tough times. Plus, it’s been profitable since 2005.
King also isn’t a company that happened to show up at an opportune time on an emerging platform and blitzkrieg their way to success.
In fact, they showed up late to the party pretty much every time. They didn’t make a serious move onto Facebook until 2011, and they didn’t make a serious push onto iOS until late last year. They came to platforms that seemed saturated and still managed to do well in a calculated way by bringing IP that was already proven on their destination site.
They’re focused, because they only do arcade games.
On the Facebook platform, Zynga would identify an existing, successful game genre, fast-follow and iterate on it, and then use the might of its distribution power to crowd out competitors. (Less euphemistically, some rivals called this copying.) But for several years, it worked.
However, on iOS and Android where Zynga doesn’t have the same market share it did on Facebook, it means that the company is all over the place. They’ve had games for the “running” category, for the “zombie” category and for the “card battle” category, and so on.
King, on the other hand, has pretty much only ever done arcade games. They don’t have any desire to do other genres.
They try to “hit proof” their business in a completely different way than Zynga does.
Even King probably earns most of its revenue from mobile platforms, the other pieces of the business — especially the destination site at King.com — are very strategically important.
Before King transitioned to Facebook and mobile gaming, the company amassed a small, but dedicated audience of “hardcore casual” gamers, or people who play arcade games for five to six hours a day, on a destination site at King.com.
Even though this site has much less traffic, it’s like the perfect focus group. The company has launched hundreds of titles here over the years, and only the ones the perform and retain the best with this dedicated audience get a shot at moving to Facebook or iOS.
So King has a place outside of iOS and Android where they can literally throw spaghetti on a wall and see what sticks.
Zacconi isn’t as divisive or controversial as Zynga CEO Mark Pincus.
Unlike other CEOs in the industry, who are sometimes more eccentric or aggressive, Zacconi comes off like a reserved consultant or a banker-type. He easily admits he’s not the creative genius inside the business, but he has hired well around him. King has talent that has come over from Playfish or Digital Chocolate through the years.
“We are humble, resilient and we’ve been developing casual games for 10 years,” he told me back in March when I asked him about King’s company culture.
They are actually multi-platform.
They are second to Zynga on Facebook in active users and currently maintain the two highest grossing titles on iOS and Android in the U.S. They are at 70 million players per day, which is about 35 percent more than Zynga reported in the first quarter of this year when it pulled in $263.6 million in revenue.
So they are literally at the top of the charts on three different platforms, although I also hear this has to do with aggressive spending to boost top-line revenue. Only a handful of purely digital gaming companies currently match this reach right now.
While Zynga does have some strong historical titles on mobile like Zynga Poker, its business is still overwhelmingly on Facebook and the company’s management is trying to course-correct.
But the downsides are pretty much the same for every game company, and I still don’t get an IPO right now.
All of the same structural issues with the gaming industry still exist. It feels like King should wait longer until they have a multi-year record on Android and iOS and a full portfolio of games there before aiming for an IPO. As we’ve seen with Zynga, even reach with hundreds of millions of users can erode quickly if a company doesn’t have the hits to keep it up.
As Benchmark Capital general partner Mitch Lasky tweeted earlier this week, “The biggest self-deception in game investing today is ascribing strategic value to hit games based on potential cross-marketing leverage.”
Given Candy Crush’s success, King will have a leg up as it cross-promotes its next big title Pet Rescue Saga. But King is testing the waters with public markets on only about a half-year of success on mobile platforms, which seems a bit early.
Perhaps the company thinks after 10 years, they’ve waited long enough and this window is as good as any other they’ll get.
Microsoft has long resisted this move, but starting June 26 — the date the Windows 8.1 preview will ship — it will finally launch its own security bounty program. The company will offer bounties up to $100,000 for “truly novel exploitation techniques” that expose security issues in Windows 8.1 Preview. It will also pay up to $11,000 for Internet Explorer 11 vulnerabilities and up to $50,000 for “defensive ideas that accompany a qualifying Mitigation Bypass submission.”
Microsoft says it made this shift to bounty programs “in order to learn about these issues earlier and to increase the win-win between Microsoft’s customers and the security researcher community.”
It’s worth noting that the IE 11 Preview program will only be open for 30 days after the launch of Windows 8.1 Preview. This makes sense, though. The IE 11 bounty, Microsoft says, is mostly meant to “fill a gap in the vulnerability marketplace to the benefit of researchers, Microsoft engineers and our customers.” Most existing bounty programs and white market vulnerability brokers like HP’s Tipping Point Zero Day Initiative and iDEFENSE’s Vulnerability Contributor Program also don’t offer bounties for beta software.
The company acknowledges that it isn’t exactly the first vendor to offer this kind of program, though Katie Moussouris, the senior security strategist lead, Microsoft Trustworthy Computing, argues that the company has long sponsored hacker conferences and awarded cash and prizes through other programs in the past. She also notes that Microsoft will likely announce a number of other ways to work with users and industry partners to discover security issues.
Here is a full description of the three programs:
- Mitigation Bypass Bounty – Microsoft will pay up to $100,000 USD for truly novel exploitation techniques against protections built into the latest version of our operating system (Windows 8.1 Preview). Learning about new exploitation techniques earlier helps Microsoft improve security by leaps, instead of one vulnerability at a time. This is an ongoing program and not tied to any event or contest.
- BlueHat Bonus for Defense – Microsoft will pay up to $50,000 USD for defensive ideas that accompany a qualifying Mitigation Bypass Bounty submission. Doing so highlights our continued support of defense and provides a way for the research community to help protect over a billion computer systems worldwide from vulnerabilities that may not have even been discovered.
- IE11 Preview Bug Bounty – Microsoft will pay up to $11,000 USD for critical vulnerabilities that affect IE 11 Preview on Windows 8.1 Preview. The entry period for this program will be the first 30 days of the IE 11 Preview period. Learning about critical vulnerabilities in IE as early as possible during the public preview will help Microsoft deliver the most secure version of IE to our customers.
Procrastination is a bitch. We get it.
That’s why the new deadline to apply to TechCrunch Disrupt Battlefield San Francisco, our preeminent startup competition, is this coming Monday, June 24.
In case you miss the thousands of posts we do about these things: Applications to the 2013 TechCrunch SF Disrupt Startup Battlefield are now open and will close at midnight on Monday. We want to break the all-time application record of 1043 from this past Spring in NY, so muster up the courage Tributes!
We review applications on a rolling basis, so it’s to your advantage to submit as soon as you can. Due to strong demand, we are unable to review applications more than once, so please don’t submit a draft application before you are ready. All submissions are confidential unless otherwise permitted by applicants on the application form.
More boilerplate notes: PowerPoint slides and video demos are optional but highly encouraged — Show don’t tell. We reserve the right not to review applications without video demos based on application volume.
We look forward to reviewing your application. And may the odds be ever in your favor.
Facebook is announcing some changes to Page Insights, the analytics tool for monitoring the performance of your Facebook Pages. Product Marketing Manager Galyn Burke told me that this is the first time the Page Insights interface has been updated since October 2011.
Now, the specific changes may sound a little arcane to folks who don’t actually use Page Insights, but Burke said the update is, in large part, a response to something that Facebook has been hearing from Page owners: “Don’t just tell me how my Page is doing. Tell me how I can do better next time.” Ultimately, if the update works as expected, businesses will have a better sense of what is and isn’t working on their Pages, so they can create better, more engaging content — and perhaps spend more on advertising with Facebook in order to promote that content.
To make that happen, Facebook is consolidating some of its metrics while breaking out others. One of the changes involves the People Talking About This measurement, which combines things like people Liking a Page, commenting on a post, or checking in to the business featured on a Page. The problem, Burke said, is that People Talking About This “includes a lot of interesting individual components,” but “when you bake them together in this pie, it’s harder for Page owners to track them individually.” So instead of combining all of those elements into one metric, Facebook will separate them into their own measurements (pictured above).
On the other hand, Facebook will be keeping its aggregate measurement for Virality, but adding clicks to the measurement and renaming the Engagement Rate.
Facebook is also making it easier to see how well an individual post performed by creating a single scorecard (pictured below) aggregating all the positive (Likes, comments, shares, clicks) and negative (hiding a post, un-Liking a page, reporting as spam) interactions around it. Burke said that previously, if a Page owner wanted to see all that data, they had to look at different pieces under multiple tabs.
The final change that Facebook is announcing is the addition of a new report for People Engaged, which shows demographic and geographic data for not just the users who Liked your pages, but all the users who engaged with your content in some way. Burke said this is important because it helps businesses understand the audience that they’re already reaching on Facebook and therefore the other audience types that they might want to reach in the future.
Facebook has been testing the new Page Insights interface with a small group of businesses. It plans to expand that group today, but it’s still looking for feedback before it rolls the changes out to all Facebook Pages.
By the way, even though it took Facebook more than a year-and-a-half to update the Page Insights interface, Burke said, “It won’t be that long in between udpates and upgrades next time.”
You can read more details in Facebook’s blog post.
BitTorrent, the content distribution network that has been angling for a position as the platform of choice for the creative industries, is today taking one more step to show artists how they can use the service to engage with their fans and potentially spin some business in the process. The company is teaming up with Public Enemy, the iconic hip hop band, for a project in which the group will use the BitTorrent platform not only to market and distribute some of their latest music to the site’s 170 million monthly users, but also give those users a chance to then create their own track sampling Public Enemy’s music. The band will then pick the track they like best to produce it properly and subsequently distribute it.
Gary “G-Wiz” Rinaldo, manager to Public Enemy frontman Chuck D and himself a longtime record producer who has worked with Public Enemy, Aerosmith, Run-DMC and others, says that when the band was thinking about where to go online to promote the band and its latest track, “Get Up Stand Up”, BitTorrent was a natural choice because of the charging models and the fact that it’s the only platform that couples that with ways of consuming very large media files.
Pointedly, services like Spotify, while great for general consumers, are not always the best way in some music genres, like hip hop, which are big on borrowing and sampling from others. This poses a challenge in the digital world:
“Streaming is great but we believe in retaining files too,” he tells TechCrunch. “As more and more fans are herded into accessing media but never retaining it, it is important in many cases for fans to have access to the files they have gotten the right to download. [And] it is the best case scenario when doing a remix. Having an acapella is good, have the ability to access more of the music is great, the full multitrack is usually not an option, we wanted to make it an option for this remix.
The project — where getting a track produced and distributed is the top prize; others include equipment and PE merchandise — is the latest chapter in how BitTorrent is trying to use a couple of new products to build out the usefulness of their platform. The aim is to go beyond being — to borrow a phrase from the world of legacy media — a simple “dumb pipe.”
In this case it’s the BitTorrent Bundle — its term for multimedia content packages — and its social distribution service SoShare. The Bundle has been used by authors like Tim Ferriss, a number of music acts, as well as films. (One recent film bundle created with Cinedine generated 2.7 million downloads, BitTorrent says.) Arugably, Public Enemy is the most mainstream yet although the site is working with “all the major labels,” says Matt Mason, VP of marketing at BitTorrent. One sweetener is that the site claims a 30% conversion rate on its bundles — meaning that of all the people who visit the page with the goods, one-third will go through the actions — email address entering, typically, these days — to download further content.
Currently in alpha mode, when the Bundle launches more widely later this year the intention will be to offer users the ability to incorporate different charging models (or no models). Mason says that one feature down the road will also be to introduce an API so that users can embed the Bundles on sites outside of BitTorrent itself. It’s all a part of how, if iTunes, Amazon, Spotify and Walmart are the new mass-market music stores online, BitTorrent wants to be the “independent music shop,” known for how they allow for multiple options for paying for goods. “That’s the spirit we want to bring online.”