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Brand power vs. product power

David Friend
Contributor

David Friend is the CEO of cloud storage company Wasabi, and co-founder of cyber security company Carbonite, recently bought for $1.4 billion. Wasabi is his sixth startup.
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Most tech companies — particularly B2B companies — either don’t understand the power of a brand, or do a really poor job of creating one.

An informal survey of a dozen of my young CEO friends showed that, given the choice, 10 out of 12 — 83% — would rather spend an extra dollar on product development than brand-building. It is dangerous (or at least foolish) to assume that the ROI on product development is greater than the ROI on brand building.

As a serial entrepreneur and CEO, I have had to make this choice many times. In 2006, I co-founded PC backup company Carbonite . I left the company five years ago after taking it public and I no longer have any financial interest in it, which is why I can write about it now — it was just sold for $1.4 billion to OpenText. There were many other backup products on the market at that time and many more appeared over the first five years of the company’s life. I would argue that Carbonite was slicker than most of the others, but essentially every backup product accomplishes the same result.

Unlike Carbonite’s competitors, we focused on our brand. That meant raising more money than we would have if we were just investing in R&D. But, after five years of investing in our brand, we had eleven times the brand recognition of any other consumer backup company and we dominated the market.

Here’s why: a study by Kettlefire Creative showed that 59% of people prefer to buy brands that they have heard of. Since none of our competitors had widely recognized brands, we got most of that 59%. Of the remaining 41%, we fought it out on other criteria and won most of that as well. Put yourself in the shoes of a potential customer looking to back up their PC. What do you worry about? Well, before we even launched the company, we asked PC owners to choose the five most important attributes of their ideal backup company from a list of ten possible attributes, and we found the following:

1. Trustworthy: you won’t look at my files or allow anyone to see them (1127 votes)

2. Peace of mind: when I go to retrieve my backup, it will always be there (811 votes)

3. Reliable: it backs up everything and doesn’t stop (696 votes)

4. Helpful: if I lose my computer, I want to talk to a human who can help me (446 votes)

5. Easy: it should be simple and require little attention (444 votes)

The attributes that didn’t make the top five:

6. Fast: backups happen quickly

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Pandora launches interactive voice ads

Pandora has begun to test a new type of advertising format that allows listeners to respond to the ad by speaking aloud. In the new ads, listeners are prompted to say “yes” after the ad asks a question and a tone plays. The ads will then offer more information about the product or brand in question.

Debut advertisers testing the new format include Doritos, Ashley HomeStores, Unilever, Wendy’s, Turner Broadcasting, Comcast and Nestlé.

The ads begin by explaining what they are and how they’ll work. They then play a short and simple message followed by a question to which listeners are supposed to respond.

For example, the Wendy’s ad asks listeners if they’re hungry, and if they say “yes” the ad continues by offering a recommendation about what to eat. The DiGiorno’s pizza ad asks listeners to say “yes” to hear the punchline of a pizza-themed joke. The Ashley HomeStores ad engages listeners by offering tips on getting a better night’s sleep. And so on.

The new format capitalizes on Pandora’s underlying voice technology, which also powers the app’s smart voice assistant, Voice Mode, launched earlier this year. While Voice Mode lets Pandora users control their music hands-free, the voice ads aim to get users to engage with the advertiser’s content hands-free, as opposed to tapping on the screen or visiting a link to get more information.

The company believes these types of ads will be more meaningful as they force listeners to pay attention. For the brand advertisers, voice ads offer a way to more directly measure how many people an ad reached — something that’s not possible with traditional audio ads, which by their nature aren’t clickable.

Pandora announced its plans to test interactive voice ads back in April of this year, initially with San Francisco-based adtech company, Instreamatic. At the time, it said it would launch the new format into beta testing by Q4, as it now has.

The ad format arrives at a time when consumers have become more comfortable talking to digital voice assistants, like Siri, Alexa and Google Assistant. There’s also an increased expectation that services we interact with will support voice commands — like when we’re speaking to Fire TV or Apple TV to find something to watch or asking Pandora or Spotify to play our favorite music.

But consumers’ appetite for interactive voice advertisements is still largely untested. Even Amazon limited voice ads on its Alexa platform for fear of alienating users who would find them disruptive to the core experience. Spotify also ran a limited test of voice ads this year.

In Pandora’s case, users don’t have to play along. The company says if the user doesn’t respond within a couple of seconds or if they say no, the music resumes playback.

Pandora says the ads will begin running today for a small subset of listeners using its app.

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Unsplash is building an ad business around branded stock photos

Unsplash has built up a library of 1 million stock photographs, all available to use for free. Now it’s ready to start making money — and to help its photographers earn additional income in the process.

Don’t worry: The company isn’t about to start charging for its photos, which CEO Mikael Cho said risks “stalling creativity.”

Nor is it going to slap banner ads on every page of its website. Yes, it’s unveiling a digital advertising business, but Unsplash is taking a specific approach — working with companies to create branded photos, which will then appear on desirable searches.

Square, for example, could upload photos of the Square Register, which will then show up when Unsplash users search for “cash register” and other terms.

Brands working with Unsplash will get prominent placement in relevant searches, as well as their own brand channel, but Cho said the real impact only begins on the Unsplash website.

“This stuff doesn’t just live in a centralized place,” he told me. “More and more advertising platforms, it’s a walled garden. [With Unsplash], the purpose is to get it to spread: People use it in their presentations, it’ll end up on blog posts.”

With Square, for example, if someone’s writing an article about “the future of the cash register,” the Square Register suddenly becomes an obvious choice for the lead image.

“Square is known for its iconic ‘little white card reader,’ but our hardware has evolved into an ecosystem of products that helps business owners of all sizes,” said Square’s brand marketing manager Leann Livingston in a statement. “By featuring photography of Square hardware across restaurants, salons, and retail stores, we were able to expand our brand through organic imagery.”

Cho also said that in about half the campaigns so far, the brand is also commissioning Unsplash photographers to do the work. For example, Boxed Water commissioned photos of its product in some fun contexts.

“Through commissioning some of our favorite photographers, we’re setting a new norm of sustainability, allowing creatives everywhere to have access to images free from plastic bottles harming our planet,” said Boxed Water is Better CMO Rob Koenen in a statement.

Unsplash for Brands is currently invite-only. The company also says that research from Kantar Millward Brown has shown that its brand images can reach “mass scale” while outperforming TV and digital advertising benchmarks by up to five times.

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Soci raises $12M to help big brands manage local marketing

According to CEO Afif Khoury, we’re in the middle of “the third wave of social” — a shift back to local interactions. And Khoury’s startup Soci (pronounced soh-shee) has raised $12 million in Series C funding to help companies navigate that shift.

Soci works with customers like Ace Hardware and Sport Clips to help them manage the online presence of hundreds or thousands of stores. It allows marketers to post content and share assets across all those pages, respond to reviews and comments, manage ad campaigns and provide guidance around how to stay on-brand.

It sounds like most of these interactions are happening on Facebook. Khoury told me that Soci integrates with “40 different APIs where businesses are having conversations with their customers,” but he added, “Facebook was and continues to be the most prominent conversation center.”

Khoury and CTO Alo Sarv founded Soci back in 2012. Khoury said they spent the first two years building the product, and have subsequently raised around $30 million in total funding.

“What we weren’t building was a point solution,” he said. “What we were building was a massive platform … It took us 18 months to two years to really build it in the way we thought was going to be meaningful for the marketplace.”

Soci has also incorporated artificial intelligence to power chatbots that Khoury said “take that engagement happening on social and move it downstream to a call or a sale or something relevant to the local business.”

The new round was led by Vertical Venture Partners, with participation from Grayhawk Capital and Ankona Capital. Khoury said the money will allow Soci to continue developing its AI technology and to build out its sales and marketing team.

“Ours is a very consultative sale,” he said. “It’s a complicated world that you’re living in, and we really want to partner and have a local presence with our customers.”

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Uberflip acquires SnapApp for smarter content targeting

Uberflip is acquiring SnapApp, bringing together two startups that promise to help marketers use their content more effectively.

President and Chief Marketing Officer Randy Frisch argued that Uberflip focuses on content experience, not content marketing. In other words, it’s not selling productivity and workflow tools for marketers to write blog posts and create videos. Instead, it helps them present their existing content in a smarter and more personalized way.

For example, it worked with data warehousing company Snowflake to create content streams highlighting the topics most likely to grab the attention of different sales prospects, then embedded those content streams in Snowflake’s marketing emails.

“Content marketing has gotten a bad rap in some ways,” Frisch said, noting that there’s been “a lot of consolidation in that space in the last number of years,” so Uberflip has been working to distance itself from that term. (To that end, Frisch recently published a book with the colorful title “F#ck Content Marketing.”)

As for SnapApp, I wrote about the company’s interactive content tools back in 2015, but Uberflip CEO Yoav Schwartz told me that the product has changed dramatically in the last 18 months — it now offers “a better, smarter way to understand a visitor” by “peppering them with questions” as they’re browsing a marketer’s website.

So Schwartz sees this acquisition — Uberflip’s first — as a way to help the company improve its personalized content recommendations.

“We’re going to let SnapApp continue to run as is,” he added. “We’re not going to attempt to integrate on day one. We’re going to allow time to understand how those two technologies can work together.”

Frisch and Schwartz said that 10 to 15 SnapApp team members will be joining Uberflip, bringing the total headcount to around 150. And SnapApp’s current headquarters will become the Boston office of Toronto-based Uberflip.

The financial terms of the acquisition were not disclosed. SnapApp previously raised $22 million in funding, while Uberflip has raised $36 million.

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SocialRank sells biz to Trufan, pivots to a mobile LinkedIn

What do you do when your startup idea doesn’t prove big enough? Run it as a scrawny but profitable lifestyle business? Or sell it to a competitor and take another swing at the fences? Social audience analytics startup SocialRank chose the latter and is going for glory.

Today, SocialRank announced it’s sold its business, brand, assets, and customers to influencer marketing campaign composer and distributor Trufan which will run it as a standalone product. But SocialRank’s team isn’t joining up. Instead, the full six-person staff is sticking together to work on a mobile-first professional social network called Upstream aiming to nip at LinkedIn.

SocialRank co-founder and CEO Alex Taub

Started in 2014 amidst a flurry of marketing analytics tools, SocialRank had raised $2.1 million from Rainfall Ventures and others before hitting profitability in 2017. But as the business plateaued, the team saw potential to use data science about people’s identity to get them better jobs.

“A few months ago we decided to start building a new product (what has become Upstream). And when we came to the conclusion to go all-in on Upstream, we knew we couldn’t run two businesses at the same time” SocialRank co-founder and CEO Alex Taub tells me. “We decided then to run a bit of a process. We ended up with a few offers but ultimately felt like Trufan was the best one to continue the business into the future.”

The move lets SocialRank avoid stranding its existing customers like the NFL, Netflix, and Samsung that rely on its audience segmentation software. Instead, they’ll continue to be supported by Trufan where Taub and fellow co-founder Michael Schonfeld will become advisors.

“While we built a sustainable business, we essentially knew that if we wanted to go real big, we would need to go to the drawing board” Taub explains.

SocialRank

Two-year-old Trufan has raised $1.8 million Canadian from Round13 Capital, local Toronto startup Clearbanc’s founders, and several NBA players. Trufan helps brands like Western Union and Kay Jewellers design marketing initiatives that engage their customer communities through social media. It’s raising an extra $400,000 USD in venture debt from Round13 to finance the acquisition, which should make Trufan cash-flow positive by the end of the year.

Why isn’t the SocialRank team going along for the ride? Taub said LinkedIn was leaving too much opportunity on the table. While it’s good for putting resumes online and searching for people, “All the social stuff are sort of bolt-ons that came after Facebook and Twitter arrived. People forget but LinkedIn is the oldest active social network out there”, Taub tells me, meaning it’s a bit outdated.

Trufan’s team

Rather than attack head-on, the newly forged Upstream plans to pick the Microsoft-owned professional network apart with better approaches to certain features. “I love the idea of ‘the unbundling of LinkedIn’, ala what’s been happening with Craigslist for the past few years” says Taub. “The first foundational piece we are building is a social professional network around giving and getting help. We’ll also be focused on the unbundling of the groups aspect of LinkedIn.”

Taub concludes that entrepreneurs can shackle themselves to impossible goals if they take too much venture capital for the wrong business. As we’ve seen with SoftBank, investors demand huge returns that can require pursuing risky and unsustainable expansion strategies.

“We realized that SocialRank had potential to be a few hundred million dollar in revenue business but venture growth wasn’t exactly the model for it” Taub says. “You need the potential of billions in revenue and a steep growth curve.” A professional network for the smartphone age has that kind of addressable market. And the team might feel better getting out of bed each day knowing they’re unlocking career paths for people instead of just getting them to click ads.

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Ex-Facebook CPO Chris Cox now advises on climate & campaign tech

Chris Cox’s motivational speeches were at the heart of Facebook’s new employee orientation. But after 14 years at the social network, the chief product officer left in March amidst an executive shake-up and Facebook’s new plan to prioritize privacy by moving to encrypt its messaging apps. No details on his next projects were revealed.

Now the 37-year-old leader will be putting his inspirational demeanor and keen strategy sense to work to protect the environment and improve the government. Today at Wired25 conference, Cox finally shared more about his work advising political technology developer for progressives Acronym, and climate change-tracking satellite startup Planet Labs. He also explained more about the circumstances of his departure from the social network’s C-suite.

SAN FRANCISCO, CALIFORNIA – NOVEMBER 08: Chris Cox speaks onstage at the WIRED25 Summit 2019 – Day 1 at Commonwealth Club on November 08, 2019 in San Francisco, California. (Photo by Phillip Faraone/Getty Images for WIRED)

Leaving Facebook

On how he felt leaving Facebook, Cox said, “part of the reason I was okay leaving was that after 2016 I’d spent a couple years building out a bunch of the teams that I felt were most important to sort of take the lessons that we learned through some of 2016 and start to put in place institutions that can help the company, be more responsible and be a better communicator on some of the key issues.”

LIVE: Chris Cox, Former Chief Product Officer, Facebook, in conversation with WIRED’s Lauren Goode

LIVE: We’re live with Chris Cox, former Chief Product Officer, Facebook, from our #WIRED25 summit in conversation with WIRED senior writer Lauren Goode.

Posted by WIRED on Friday, November 8, 2019

As for what specifically drove him to leave, Cox explained that, “It wasn’t something where I felt I wanted to spend another 13 years on social media. Mark and I saw things a little bit differently . . . I think we are still investigating as an industry, how do you balance protecting the privacy of people’s information and continuing to keep people safe,” Cox said.

On whether moving toward encryption was part of that, he said he thinks encryption is “great: and that “It offers an enormous amount of protection,” but noted “it certainly makes some of those things more complicated” on the privacy versus safety balance. He complemented Facebook’s efforts to build ways of catching bad actors even if they’re shielded by encryption. That includes digital literacy initiatives in Brazil and India ahead of elections, and offering forwarding systems for sending questionable information to fact checkers. “I think there are pros and cons with these systems and I’m not a hard-liner on any one of them,” Cox said, and noted that what Facebook is building is “resonant with what people want.”

Cox was asked about the major debate about whether Facebook should allow political advertising. “We think political advertising can be good and helpful. It often favors up and comers versus incumbents.” Still, on fact-checking, he said, “I’m a big fan,” even though Facebook isn’t applying that to political ads. He did note that “I think the company should investigate and is investigating micro targeting . . . if there’s hundreds of variants being run of the creative then it’s tricky to get your arms around what’s being said.” He also advocated for more context in the user interface distinguishing political ads. 

Chris Cox speaks at Wired25

Cox’s next projects

Since leaving Facebook, Cox has joined the advisory board of a group called Acronym, which is helping to build out the campaign and messaging technology stack for progressive candidates. “This is an area where my perception is that the progressives have been behind on the ability to develop and use as a team infrastructure that helps you have a good voter file, how to develop messaging — just basic politics in 2019.”

Wired’s Lauren Goode asked if he was aligning himself with progressives, taking a political stance, and whether he could do that while still at Facebook. “Absolutely not,” Cox responded.And why is that I think when you’re in a very senior role at a platform, you have a duty to be much more neutral in your politics.”

He then came out with a bold statement enabled by his independence. “I think Trump should not be our president. The other thing I care a lot about right now is climate change and he’s not going to help us there.”

That led to Cox discussing that he’s also been working to advise San Francisco startup Planet Labs, which is using satellite imagery to track climate change. “The vision was to build these small, about shoebox-size satellites with solar panel panel wings and have a fleet of them in space, which is real-time imaging the Earth.”

With that data, Cox explained you can track wildfires, deforestation, coal power plants, methane gas and more. Then, “You can start to contribute to having a health system, where you are basically imaging the Earth every hour, and then you’re creating some public data set with tools that plug into decision makers, banks, insurance companies, policymakers, investors, journalists, students…”

Asked about big tech’s responsibility for addressing climate change, Cox said “I think at the very least it’s making a commitment to being carbon-negative.”

Acronym and Planet Labs’ work intertwines, as Cox believes climate data proves the need for someone new in the Oval Office. While Cox didn’t discuss it onstage, Wired listed him as part of Shasta Group, which is Cox’s own vehicle for contributing to these projects. Still, he’s not ready to launch a full-fledged company of his own in politics and climate. “I’m still so young at this field that I don’t have enough confidence in my own mental model of the world.”

Cox concluded that by harnessing big company’s employees and having team leaders put more attention on climate change, “I do think tech can lead.” 

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Sinclair leads $10.3M investment in rideshare advertising startup Octopus

Octopus Interactive, a startup bringing an interactive TV and ad experience into Uber and Lyft rides, has raised a $10.3 million funding round led by Sinclair Digital Group.

Backseat TVs mixing show snippets and commercials have become a common part of the taxi experience in New York City and elsewhere. Octopus is offering something of a more interactive version of this concept to rideshare drivers, who can use it to keep their passengers entertained and also earn extra money.

Octopus says it provides drivers with tablets that combine games (which can include cash prizes, and can also be sponsored), ride information (like maps and weather) and advertising in a 13-minute loop. Even if the passenger doesn’t win anything, this could help keep them occupied during a long ride, which could lead to higher driver ratings. And if the passenger isn’t interested, they can just mute the screen.

The company says it’s deploying technology to make the advertising smarter, for example with geofences to target ads or increase their frequency in a certain neighborhood, and by offering real-time analytics to advertisers. It also monitors the seat to confirm that there’s actually a passenger sitting there when an ad plays.

After launching in 2018, Octopus says it’s now reaching more than 3 million people each month across 10,000 screens in markets like New York, Los Angeles, Chicago and Washington, D.C. By working with Sinclair Digital Group — an affiliate of TV giant Sinclair — the startup can bring content from local TV stations onto the platform.

“What we see here is an untapped medium with a truly captive audience that is buckled in and looking to engage,” said Sinclair Executive Chairman David Smith in a statement. “We invested in Octopus because the team has successfully created an innovative and differentiated branding opportunity that we can help scale further.”

MathCapital, an investment firm partnered with programmatic advertising company MediaMath, also participated in the funding.

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Amperity acquires Custora to improve its customer data platform

Amperity announced today that it’s acquiring another company in the customer data business, Custora.

Amperity co-founder and CEO Kabir Shahani told me that Custora’s technology complements what Amperity is already offering. To illustrate this point, he said that customer data tools fall into three big buckets: “The first is know your customer, the second is … use insights to make decisions, the third is … activate the data and use it to serve the customer.”

Amperity’s strength, Shahani said, is in that first bucket, while Custora’s is in the second. So with this acquisition (Amperity’s first), the existing Amperity technology will become the Amperity Customer 360, while Custora is rebranded as Amperity Insights.

The products can still be used separately, but Custora CEO Corey Pierson argued that they’re particularly powerful together.

“The stronger you actually know your customer, the stronger you have your customer 360 profile, the better those insights are,” Pierson said. “When we sit on top of Amperity, every insight we produce is more valuable to our customers.”

Shahani said Pierson and the rest of his team will be joining Seattle-based Amperity, with Custora’s New York office becoming the combined company’s East Coast headquarters.

The financial terms of the acquisition were not disclosed. According to Crunchbase, Custora previously raised a total of $20.3 million in funding.

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Seismic acquires Percolate to expand its marketing tools

Seismic is announcing that it’s acquiring Percolate in a deal that it says is combining “two essential pillars of the marketing technology stack.”

It sounds like the two companies aren’t direct competitors, but they offer related tools: Seismic helps companies create and manage the content they use in sales and marketing, while Percolate expanded from a social media publishing tool to a broader suite of software for managing the marketing process.

As part of the acquisition, Percolate CEO Randy Wootton is joining the Seismic team, where he will continue to lead Percolate, and where he will report to Seismic CEO Doug Winter. The combined company will have a headcount of more than 800 people.

“Both of our companies endeavor to foster better alignment between marketing and sales and improve the buyer/seller interaction, resulting in accelerated deals and pipeline for our customers,” Wootton said in a statement. “Combining with Seismic allows Percolate to provide even more capability to our customer base and more value to the marketing ecosystem.”

The financial terms of the acquisition were not disclosed. Percolate raised a total of $106.5 million from investors including GGV Capital, Sequoia Capital, Lightspeed, Slow Ventures, Lerer Hippeau and First Round Capital, according to Crunchbase.

Seismic, meanwhile, raised a $100 million investment at a $1 billion valuation last year.

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