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How we’re rebuilding the VC industry

The venture capital industry is less transparent today than at any time in recent memory.

For all the talk about expanding access and improving its sordid record on diversity, in reality, it has never been harder for founders to figure out who can even write a check to their startups in the first place.

When I first returned to TechCrunch after my second stint in venture capital, my first piece was entitled “The loss of first check investors.” While working in the venture capital industry, it was maddening to see — particularly at the pre-seed and seed stages — how few investors were really willing to go out on a limb and invest in founders before another VC had committed a check.

It’s only gotten worse in the past two years since that article, and the complexity comes from a number of different places. As our investigation showed more than a year ago, fewer and fewer venture rounds are being announced through SEC Form D filings.

There are almost no publicly accountable datasets left indicating who is writing checks in the venture industry and which companies are receiving those checks. While stealthiness is valid in the early days of a startup, the excuse wears thin after years.

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Players Ntwrk launches celebrity gaming channel backed by WME, Daylight and Stratton Sclavos

Emerging from the smoldering wreckage of Echo Fox and Vision Venture Partners, the investor Stratton Sclavos is rising again to launch a new esports-related venture — a gaming-focused digital network also backed by the WME talent agency and Daylight Holdings.

Tapping Daylight and WME’s roster of talent, Sclavos has created Players Ntwrk, a new gaming-focused production company that will look to compete with other upstarts angling to tap into esports and competitive gaming’s newly dominant place in the entertainment firmament.

Players Ntwrk will feature original programming, unscripted series, celebrity gameplay and live events tapping talent from music, traditional pro-sports and the esports gaming world.

Sclavos and the multifaceted talent manager and president of Daylight Holdings, Ben Curtis, dreamed up Players Ntwrk as a way to tie together disparate groups of athletes and entertainers around their shared love of gaming and entertainment. The network will initially leverage relationships with WME and Klutch Sports Group, the agency founded by LeBron James’ longtime manager, Rich Paul, to find talent for programming.

The network will launch on Tuesday at 5:00 pm Pacific for two hours of gameplay featuring the New Orleans Pelicans Guard/Forward Josh Hart and Sacramento Kings point guard De’Aaron Fox on the Players Ntwrk Twitch channel. Additional live streams will be broadcast Friday and Saturday, the company said.

Over the next 12 weeks the network will add live programming featuring all of its “First Squad” talent and experimenting with different gaming and unscripted formats. Ultimately, the network will produce between 12 and 15 hours of original programming per week by the end of the second quarter and will ramp up to 20 to 24 hours of programming per-week by the end of the year.

Initial programming is going to be devoted to charity fundraising, with proceeds going to designated charities based on direct audience donations, the company said.

Players Ntwrk’s First Squad talent roster includes:

  • Professional athletes: De’Aaron Fox (Sacramento Kings), Josh Hart (New Orleans Pelicans), Jarvis Landry (Cleveland Browns) and Alvin Kamara (New Orleans Saints)
  • Music and Entertainment: PARTYNEXTDOOR, Murda Beatz, producer Boi-1da, actor/former athlete Donovan Carter (Ballers)
  • Creators/Streamers: KatGunn, Sodapoppin, Cash, Jesser, Jericho, Octane, Sigils, Sonii and DenkOps

Players Ntwrk joins companies like Venn, which are angling to gain a slice of the roughly 37.5 million monthly viewers that are expected to watch live streams on Twitch by the end of 2020, according to research done by eMarketer.

“The number of viewers and subscribers consuming gaming entertainment across YouTube and Twitch tops other entertainment services such as Netflix, HBO, Spotify and ESPN combined,” said Sclavos, in a statement. “Entertainment spectacle is trumping hardcore gaming competition. That kind of engagement makes it clear; gaming entertainment is the next pop culture phenomena. PLAYERS NTWRK is the only platform embracing and executing this new reality by creating original content with the most influential people who also happen to be fans themselves.”

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Gaming company Scopely adds $200 million more to its M&A stockpile

Scopely, the mobile gaming publisher behind titles including Marvel Strike Force, Scrabble Go, Yahtzee with Buddies and Star Trek Fleet Command, has added another $200 million to its hoard of cash for mergers and acquisitions.

While some startups are fearing a cash crunch, other businesses seem to be preparing to go on a shopping spree. The economic slowdown has many businesses reconsidering their prospects, and it’s a good time for startups and established businesses with lots of cash to consider going on a shopping trip.

With $650 million in venture dollars raised so far, Scopely can certainly consider making some bids. The latest $200 million doubles the amount of money the company closed on for its Series D round. Investors included Advance (the privately held media and publishing company behind Conde Naste and a slew of local news [online and print] publications), and the consumer-focused investment firm, The Chernin Group.

“The FoxNext Games acquisition reinforced our commitment to M&A, and the opportunity to partner with Advance and TCG was a welcome addition to further support our strategy,” said Javier Ferreira, the co-chief executive officer of Scopely, in a statement.

Advance’s investment comes as the company experiments with various new media, entertainment and publishing formats of its own and looks to invest in more digital media companies, according to a statement.

Chernin, a longtime investor in Scopely (since the company’s earliest rounds), said that its investment in Scopely on the heels of closing a $700 million new investment fund was a no-brainer.

“As the traditional media industry continues to go through unprecedented change, we believe that Scopely has all the ingredients for tremendous success — exposure to games (the fastest-growing sector in media), a scalable and durable technology platform, a diversified set of well-known IP, an attractive economic profile, and a team hyper-focused on execution and long-term success,” said Jesse Jacobs, a co-founder and partner at The Chernin Group .

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Buy your tickets to the 3rd Annual TechCrunch Winter Party

We love parties almost as much as we love startups, but we go absolutely bonkers for a hot startup/party mashup. That’s why we’re returning to host our 3rd Annual TechCrunch Winter Party in San Francisco on Friday, February 7. Even better news, party-goers — additional (the second batch) coveted tickets to this wild winter romp are available now. Better get your tickets while you can.

Last year’s inaugural event was a huge success, as nearly 1,000 of Silicon Valley’s brightest minds came to relax, connect and celebrate the entrepreneurial spirit of the startup community — and cast a keen eye over some promising startups.

This year’s soiree takes place at Galvanize and features tasty libations, delicious hors d’oeuvres and engaging conversation. That sounds so very civilized, right? Well, don’t dry clean your stuffed shirt just yet, because we’ll have plenty of party games and activities, giveaways and fun surprises. And, of course, plenty of photo ops, baby!

Galvanize may be a multi-level venue, but the space is still limited — as are the tickets. We’re rolling them out in batches over the next few weeks, so keep checking back if you can’t snag a ticket.

Here are the pertinent Winter Party details:

When: Friday, February 7, 6:00 p.m. – 9:00 p.m.
Where: Galvanize, 44 Tehama St., San Francisco, CA 94105
Ticket price: $85 (buy them here)

Here’s another great idea. Why just mingle and schmooze when you can mingle, schmooze and demo your early-stage startup in front of hundreds of the Valley’s top star-makers? Buy a demo table for $1,500 (the price also includes four attendee tickets). Demo tables are limited, so act now before other founders snatch ’em up.

Of course, no TechCrunch party is complete without plenty of awesome prizes, including TC swag and tickets to Disrupt San Francisco 2020. Come on out for a great midwinter’s night of relaxed connection, fun and opportunity. Get your tickets to the 3rd Annual TechCrunch Winter Party at Galvanize today.

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Source: Nike has picked up Russell Wilson’s Tally/TraceMe in a rare acquisition

Nike has long been synonymous with premium sneakers and other sports gear, but now it seems that the company could be extending its brand into another area — digital media — thanks to the rumored acquisition of a Seattle-based startup.

TechCrunch has learned from a source that the multibillion-dollar sports giant has acquired TraceMe, which originally built an app to let fans engage with sports stars and other celebrities before later pivoting into a service called Tally, a platform aimed at sports teams, broadcasters and venues to help fans engage around sporting events.

TraceMe was originally founded by Russell Wilson, the champion quarterback of the Seattle Seahawks, who was the executive chairman of the startup. The company had raised at least $9 million from investors that included the Seattle-based Madrona Venture Group and Bezos Expeditions (Amazon CEO Jeff Bezos’ fund), as well as YouTube co-founder Chad Hurley and others, and it was last valued, in 2017, at $60 million.

Our source said the deal closed in recent weeks and that “it was a good outcome” for the company and investors. It involved both IP — the main interest, the source said, was in TraceMe’s tech rather than Tally’s — and the team.

Indeed, at least eight of them, including TraceMe’s CEO Jason LeeKeenan, an ex-Hulu executive, are now listing Nike as their place of employment. LeeKeenan describes his new role as the head of Nike Seattle. Others on the team now have taken roles that include software engineers, head of product and product designers.

No one at TraceMe and Nike that we contacted has responded to our requests for comment, but just a little while ago GeekWire (which likely had the same tip we did) published a post noting that it had a source that confirmed the deal.

The athletic footwear giant Nike is no stranger to the world of technology: it has been a longtime collaborator with the likes of Apple to develop apps for its devices and has been an early mover on the concept of bringing and integrating cutting-edge (yes, possibly gimmicky) tech into its footwear and other gear. And that’s before you consider Nike as an e-commerce force.

But while the dalliance between sports, tech and fashion is well established, this deal opens up a different frontier for the company. It’s very rare for Nike to make an acquisition, but it makes sense that if it were going to do some M&A, it would be in the area of digital media and picking up engineers to execute on a wider vision in that area.

The company is best known, of course, for its shoes and related sporty clothes, which it has for a long time created in co-branding with the biggest sports stars and has more recently started to extend to a wider circle of celebrities and hot brands in a spirit of sporty street style. These have included the likes of so-cool Supreme, Travis Scott and seemingly tentative forays into music culture.

Nike overshadows all other sports shoe brands in size, with its current market cap at nearly $117 billion, more than twice that of its closest competitor, Adidas . But Adidas has been stealing a march when it comes to partnerships with a wide network of celebrities (even if Drake prefers checks over stripes).

While it isn’t clear yet how and if Nike will be using the startup’s existing services, you could see how a deal like this could help Nike start to think about how it might leverage the collaborations and endorsements it already has in place into experiences beyond shoes, advertising and athletic performance. In this age of Instagram and influencers playing a massive role in shifting consumer sentiment (and dollars), this could give Nike a shot at building its own media platform, independent of these, on its own terms.

This is a bigger trend that we’re seeing across a lot of digital media. Consider how companies like Spotify have extended beyond simple music streaming, investing in building tools to help artists on its platform with marketing and expanding their brands: selling shoes means selling a concept, and that concept needs to have a foothold in a digital experience. 

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Peloton, WeWork, Vox, Bodega, Kapwing and oh boy are we tired

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

As with yesterday, Kate and Alex were both on-site at TechCrunch’s San Francisco headquarters to chat over the latest. Unlike yesterday, however, Equity brought along a guest: Sean Dempsey from Merus Capital. (Merus writes seed and Series A checks, with a focus on enterprise companies.)

And thus the three dove into the news. Early-stage first, to shake things up.

Early-stage

Kate wrote a story this week about a startup you might have forgotten about but who’s name probably rings a bell. Bodega! The company now goes by Stockwell, actually, and they’ve raised a whopping total of $45 million in VC funding. But what’s in a name after all? We debate.

Next we turned to an interesting company called Kapwing. What’s that you ask? “It’s a laymen’s Adobe Creative Suite built for what people actually do on the internet: make memes and remix media,” says TechCrunch’s Josh Constine. We’re intrigued.

Late-stage and beyond

This week Peloton priced and went public. The firm’s $29 per-share IPO price was top of its proposed range ($26 to $29). The public markets, however, decided that the unicorn had reached too high.

So, shares of the high-end exercise company dropped, wrapping the day down about 11%. A good IPO first day this was not, though the company did manage to raise more capital than it might have with more conservative pricing. (Peloton has a yucky multi-class share structure that we touched on as well; it seems that all the big companies these days are opposed to regular governance.)

Next we turned to the Vox-NYMag merger. It’s a bit out of our territory but it’s a digital media deal, so we were interested. After all, the two of us have spent our entire careers in digital media and we have a vested interest in these companies surviving.

WeWork (Redux)

We honestly tried to get all the WeWork out of our system yesterday. We wanted to include zero WeWork content on this episode. But WeWork keeps doing things, so here we are.

Keeping things as brief as we can, WeWork is going to divest some companies that it bought (more on what we thought it was up to, here) including its jet, and the firm is looking to take on more capital. Unsurprisingly.

All that and we’re done for this week. Chat you all at Disrupt!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify, Pocket Casts, Downcast and all the casts.

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Axios’ Dan Primack on ‘the most polarizing startup that exists’

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was a bit special. Instead of meeting up at the TechCrunch HQ to record the episode, Kate and Alex met up in muggy Boston at Drift’s office, where we linked up with Axios’s Dan Primack. And because we were feeling chatty, we went a bit long.

After checking in with Primack (he has a newsletter and a podcast), we first dealt with the latest from Tumblr. In short, Verizon Media is selling Tumblr to Automattic for a few dollars. How did Verizon wind up owning Tumblr? Ah. Well, Yahoo bought it. Later, after Verizon bought AOL, it bought Yahoo. Then it smushed them together and called it Oath. Then Verizon decided that it didn’t like that much and renamed the group Verizon Media. But Verizon doesn’t want to own media (besides TechCrunch, of course), so it sold Tumblr to Automattic, a venture-backed company best known for operating WordPress.

That’s a lot, I know. What matters is that Yahoo bought Tumblr for more than $1 billion. Verizon sold it for around $3 million. Now, Automattic has a few hundred new employees and a shot at juicing its user base before it goes public.

After that, we lamented that the WeWork S-1 had yet to appear. This was a tragedy, frankly. We had expected to spend half the show riffing on WeWork’s financials, alas…

So we turned to some normal material, like Ramp’s recent $7 million raise to take on Brex, and, SmartNews’s recent round, which gave it an eye-popping $1.1 billion valuation.

We ran a bit long because we were having fun, fitting in some conversation surrounding the notes from the SEC regarding the now-dead and then-fraudulent Rothenberg Ventures. More on that here if you want to get angry.

And finally, Vision Fund 2. It’s been a big source of interest for everyone on the show, and we expect whatever the second-act Vision Fund winds up becoming to be a big damn deal. The fund will invest in more than just consumer marketplaces; in fact, it’s eyeing more AI businesses and even biotech. That should be interesting.

All that and we have a lot more good stuff coming. Thanks for listening to the show, and we’ll be right back.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

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The secret of content marketing: avoid high bounce rates

Julian Shapiro
Contributor

Julian Shapiro is the founder of BellCurve.com, a growth marketing agency that trains you to become a marketing professional. He also writes at Julian.com.

Advice on content marketing always talks about getting people to your blog.

But, what about once they’re there — how do you get them to then buy from you?

That’s the conversion half of content marketing, and that’s what I’ll cover: converting your readers into paying customers.

First, they read. Then, they buy.

When visitors arrive on your blog, three things should happen:

  1. First, they must start reading — instead of bouncing.
  2. Next, keep should keep reading until at least halfway through.
  3. Finally, they should be enticed to read more or convert: sign up, subscribe, purchase, etc.

Demand Curve’s data shows that when readers complete this full chain of events — as opposed to skipping step #2 — they’re more likely to ultimately buy from you.

Why? People trust your brand more after they’ve consumed your content and deemed you to be high quality and authoritative.

We’ve optimized tens of millions of blog impressions, and we have three novel insights to share in this post. Each will hopefully help compel readers to stick around and buy.

Let’s conquer high bounce rates — the bane of content marketers.

Entice visitors to start reading

First, some obvious advice: Getting visitors to read begins with having a strong intro.

A good intro buys goodwill with readers so they keep reading — and tolerate your boring parts.

There are three components to a good intro:

  1. Have a hook. Read about hooks here.
  2. Skip self-evident fluff. Read about succinctness here.
  3. Tease your subtopics to reassure visitors they landed in the right place.

The web’s biggest blogs include tables of contents at the top of their posts to reassure readers. It not only benefits SEO, it also improves read-through rates.

GettyImages 913560720

Image via Getty Images / z_wei

Keep them reading once they’ve started

Once visitors begin reading, you have three tactics to retain them:

  1. Drop-off optimization.
  2. A/B testing.
  3. Exit rate analysis.

This is how we’ll improve our read-through and conversion rates.

Drop-off optimization

Sometimes, when I write a post on Julian.com, I find few people actually finish reading it. They get halfway through then bounce.

I discover this by looking at my scroll-depth maps using Hotjar.com. These show me how far down a page an average reader gets. Then I pair that data with the average time spent on the page, which I get from Google Analytics.

Whenever I notice poor read completion rates, I spend ten minutes optimizing my content:

  1. I refer to the heatmaps to see which sections caused people to stop reading.
  2. Then I rewrite those offending sections to be more enticing.

This routinely achieves 1.5-2x boosts in read-through rates, which can lead to a similar boost in conversion.

You see, I never just publish a blog post then move on.

I treat my posts the same way I treat every other marketing asset: I measure and iterate.

For some reason, even professional content marketers publish their posts then simply move on. That’s crazy. Not spending 10 minutes optimizing can be the difference between people devouring your post or not being able to get halfway through.

Specifically, here’s the process for rewriting a post’s drop-off points to get readers to continue reading.

How to perform drop-off optimization

Screenshot 2019 08 06 20.34.53

Image via Julian Shapiro / Julian.com

First, record a scroll heatmap of your blog post. Any heatmap tool will do. I use Hotjar.com.

Next, whenever you see, say, 80% of readers getting midway into your post but only a fraction then make it to the end, you know you have a problem in the back half of your post: it’s verbose, uninsightful, or off-topic.

Your job is to find these drop-off points then rewrite the offending content using four techniques:

  • Brevity: Make the section more concise: Cut the filler and switch to a bullet list like the one you’re reading now. Or, delete the section altogether if it’s not interesting.
  • Inject insights: Perhaps your content is self-evident and boring. Rewrite it with novel and surprising thoughts.
  • Make headlines enticing: Make the next section’s headline more enticing. Perhaps readers bounce because they see that the next section’s title is boring or irrelevant. For example, instead of titling your next section “Wrapping up,” re-write it into something more eyebrow-raising like, “What you still don’t know.”
  • Cliffhangers: End sections with a statement like “Everything I just told you is true, but there’s a big exception.” Then withhold the exception until the next section. Keep them reading.

Once you’ve ironed out drop-off points, perhaps 35% of your readers finish the post instead of 15%. This reliably works, and it’s the highest-leverage way to achieve conversion improvements on your posts.

This is so self-evident yet no one does it for some reason.

And we’re only just starting. There’s another, more effective technique for optimizing your content: A/B testing paragraphs. Whereas drop-off optimization irons out the kinks in your article, A/B testing is how you take your read-through rates to a new tier.

Before we begin, follow along

As we explore the tactics below, you’re welcome to visit two blogs that incorporate these techniques:

If you need a primer on SEO before continuing, see my other TechCrunch article on the topic here and this orientation here.

A/B testing content

A/B testing is the process of creating a variation of existing content to see if it will increase conversion.

You want to A/B test the three highest-leverage components of every post:

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How even the best marketplace startups get paralyzed

Josh Breinlinger
Contributor

Josh is a Managing Director at Jackson Square Ventures, an early stage venture capital firm with $245 million under management, where he focuses his investments in early stage marketplaces.

Over the past 15 years, I’ve seen a pernicious disease infect a number of marketplace startups. I call it Marketplace Paralysis. The root cause of the disease is quite innocent and seemingly harmless. Smart people with good intentions fall victim to it all the time. It starts when a platform has sufficient scale — such that there is a good amount of data on things like performance, quality rankings, purchase rates, and fill ratios. What a platform implements as a result of that data, and how it’s received by their user base, is what can lead to marketplace paralysis.

In this post, I will detail what Marketplace Paralysis is and what startups can do to avoid it. Before I get into the nitty-gritty, here’s a snapshot of the lessons you’ll learn by reading this post:

  1. Segment and focus on high-value users
  2. Remember the silent majority
  3. Modify company goals to include quality components
  4. Empower small, autonomous teams

The easiest way to explain Marketplace Paralysis is with a hypothetical example. So allow me to introduce you to Labor Marketplace X (LMX).

Equipped with the aforementioned data, the well-intentioned product managers at LMX will think about policies or features to try and improve a KPI, like fill ratio or job success rate. They might craft a policy that would separate users into two tiers.

Tier 1 gets a shiny gold star next to their name, along with extra pay, bonuses, and preferred job access. Tier 2 gets standard pay and standard job access. They’ve done their homework and feel this will benefit the marketplace.

So, they build the feature. They launch it and make an announcement to their users. And then… a revolt!

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Facebook and YouTube’s moderation failure is an opportunity to deplatform the platforms

Facebook, YouTube, and Twitter have failed their task of monitoring and moderating the content that appears on their sites; what’s more, they failed to do so well before they knew it was a problem. But their incidental cultivation of fringe views is an opportunity to recast their role as the services they should be rather than the platforms they have tried so hard to become.

The struggles of these juggernauts should be a spur to innovation elsewhere: While the major platforms reap the bitter harvest of years of ignoring the issue, startups can pick up where they left off. There’s no better time to pass someone up as when they’re standing still.

Asymmetrical warfare: Is there a way forward?

At the heart of the content moderation issue is a simple cost imbalance that rewards aggression by bad actors while punishing the platforms themselves.

To begin with, there is the problem of defining bad actors in the first place. This is a cost that must be borne from the outset by the platform: With the exception of certain situations where they can punt (definitions of hate speech or groups for instance), they are responsible for setting the rules on their own turf.

That’s a reasonable enough expectation. But carrying it out is far from trivial; you can’t just say “here’s the line; don’t cross it or you’re out.” It is becoming increasingly clear that these platforms have put themselves in an uncomfortable lose-lose situation.

If they have simple rules, they spend all their time adjudicating borderline cases, exceptions, and misplaced outrage. If they have more granular ones, there is no upper limit on the complexity and they spend all their time defining it to fractal levels of detail.

Both solutions require constant attention and an enormous, highly-organized and informed moderation corps, working in every language and region. No company has shown any real intention to take this on — Facebook famously contracts the responsibility out to shabby operations that cut corners and produce mediocre results (at huge human and monetary cost); YouTube simply waits for disasters to happen and then quibbles unconvincingly.

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