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How Peloton made sweat addictive enough to IPO
It makes lazy people like me work out. That’s the genius of the Peloton bicycle. All you have to do is velcro on the shoes and you’re trapped. You’ve eliminated choice and you will exercise. Through a succession of savvy product design choice I’ll break down here, Peloton removes the friction to getting fit. It’s the leader in a movement I call “pushbutton health”. And this is why I think Peloton will be a big succes no matter what short-term investors do when it IPOs this week after raising $994 million in venture capital.
The bike
Basically, Peloton is a $2300 stationary bike with an iPad stuck to the front. The $40 per month subscription unlocks thousands of live and on-demand video cycling classes where instructors positively yell at you. When you think you’re tired already, they look into your eyes, tell you “you got this”, the soundtrack crescendos, you crank up the resistance, and you pedal harder at home. The resulting endorphin rush is addictive, and you find yourself persuading friends they need a Peloton too.
That viral loop which adds to its 500,000 subscribers is how Peloton plans to raise ~$1.16 billion going public this week at an ~$8 billion valuation. Its revenue doubled this year as it began to dominate the connected exercise equipment market, though losses quadrupled as it burned cash to become a household name. But after riding 110 of 150 days I’ve been home since buying its bike, I’m confident in the company. Whatever it invests now to build its lead will likely be paid back handsomely by its increasingly handsome customers who can’t bear to clip out. Here’s why.
Peloton classes are recorded in front of a live studio audience of riders
The Brilliance Of This Bike
The Shoes – Usually the activation energy to start a workout requires dragging yourself to the gym or suiting up to face the elements outside. That can be daunting enough that you rarely do. But once you slip into the Peloton bike shoes, you can hardly walk normally which means you can hardly procrastinate. You’re home so you don’t even need clothes. Just a few velcro straps and you’re over the hump and resigned to exercise.
The Clips – Home gym equipments reduces the barrier to entry but also the barrier to exit. You can tell yourself you’ll keep doing push-up sets or squats jumping rope, but you can stop any time. Yet after you’re clipped into the Peloton bike, you’re almost assured to keep pedaling until the instructor gives you that end-of-ride congratulations.
Just put the shoes on and you’ll exercise
The Schedule – You can get a sweat in just 10 or 20 minutes going hard on a Peloton. Combined with zero commute, that means you’ll practically always be able fit in a ride regardless of how busy you are. No more “I don’t have time to make it to the gym so I’ll just skip out”. When my calendar gets crunched or I dawdle a little before deciding to ride, classes as short as 5 minutes ensure there’s no weaseling out.
The Instructors – I wish I had these coaches to motivate me through sorting email. Peloton’s 20+ instructors range from hippie-dippie gurus to no-nonsense trainers that fit your personality type. You find yourself craving your favorite’s special brand of relentless positivity. I burn far more calories in a shorter time than exercising solo because they inspire me to push a little harder or they slow their countdown to add a couple all-out seconds to the end of a sprint. They’re even becoming celebrities, with bankers lining up for selfies during Peloton’s IPO road show. Sick of them? You can always Scenic Ride through video of some of the world’s prettiest bike paths.
Peloton instructors (from left): Alex Toussaint, Emma Lovewell, Ben Alldis, and Leane Hainsby
The Intimacy – You’re eye-to-eye with those instructors as they stare into the camera and out of the giant screen bolted to your handlebars. That generates intimacy despite them broadcasting to thousands. Even in person, a SoulCycle coach across the room can feel further away. You’re mostly guided by audio cues, but their gaze compels you to perform. Peloton almost feels like FaceTime, and that’s a sense of connection many long for more of these days.
The Pavlovian Response – Your brain quickly begins to associate the sounds of Peloton with the glowing feeling of finishing a workout. The rip of the velcro shoe straps, the click of clipping into the bike, but most of all the instructor catch-phrases. You get hooked on hear the bubbling British accent of “I’mmmm Leeaannne Haaaaainsby” as she introduces herself, Ben Alldis’ infectious “You got 5, you got 4…” countdowns, or Emma Lovewell reminding you to “Live, learn, love well”. That final ‘namaste’ followed by wiping down the bike and jumping in a cold shower forms a ritual you’re inclined to repeat.
Eye-contact with the instructors creates an intimate bond
The Soundtrack – Popular songs are more than just a pump-up accompaniment to Peloton classes. Your pedaling pace is often pegged to the tempo, with sprints starting when the beat drops. As your legs tire, you feel obliged to maintain your speed so you don’t fall behind the drums. You can even search classes by music genre and preview each’s playlist. Peloton has paid out $50 million in royalties for its music, and faces $300 million-plus in lawsuits for copyright infringement. But having the best tunes to bike to might end up worth the penalty since it helped Peloton race ahead in a lucrative market.
The Bike As Decor – Most home exercise equipment ends up in a closet or as a clothing rack. By designing its bicycles for beauty, Peloton coerces you to place them conspicuously in your home. You might have seen the hysterical Twitter thread parodying this practice, but it’s funny because it’s true. You’re a lot more likely to ride it if it’s central to your home (ours is between our bed and the doors to the veranda), and you’ll be embarassed if visitors ask about it and you haven’t hopped on recently.
“A good place for your Peloton bike is between your kitchen and your living room facing the cactus garden so you always remember virtual spin class” –ClueHeywood on Twitter
The Network Effect – Many of these smart product design moves could be copied by competitors. But by amassing a community of 1.4 million members to date, Peloton benefits from social features and economies of scale. You can ride together with pals over video chat, send each other digital high fives, or race and compare achievements. Each friend that joins Peloton is one more reason not to sign up for a competitor. The whole concept virtual personal training is being legitimized. And the cost of producing more classes gets spread wider as membership grows.
The Shared Accounts – Peloton has even built in a way to feel noble about your sanctimonious prosyletizing about how it “jumpstarted your metabolism”. Each $39 on-bike subscription allows unlimited accounts on up to three devices, so you can hook up some friends if you convince them to buy the big-budget gadget.
High-five fellow riders as you virtuall pass them
The Growth Hacks – Peloton streaks are for adults what Snapchat streaks are to kids: a clever way to reward consistent usage. But beyond the achievement badges displayed on your profile, you’ll get in-ride leaderboards full of people to proudly pass, progress bars to fill by pedaling, and kilojoule output high scores to beat. Peloton makes exercise a game you want to win.
The Shoutouts – Yet Peloton’s most explicit levering of our psychology comes from the in-class name-drop shoutouts instructors give. Whether mentioning the screen names of a few participants at the start of a session or congratulating users hitting their 50th, 200th, or 500th ride, the recognition pushes people to join the dozen live-streamed classes each day that add urgency to the on-demand catalog. Proof it works? People strategize to ensure their 100th ride is a long live class to maximize the chance of a shout-out.
A free cult shirt after your 100th ride
The ‘Transcendence’ – Peloton minimizes the isolation from working out at home. In fact, its whole product enables people to feel ‘glamorous’ and ‘manifested’ yet nonchalant in ways going to a sweaty gym or using a personal trainer can’t. It’s like being able to buy a little piece of the smug satisfaction and in-group affiliation of going to Burning Man. That’s why the company even sends you a free “Century Club” t-shirt when you hit your 100th ride. You’re meant to feel cool sharing that you “Peloton”, using the startup’s name as a verb.
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Conspicuous Self-Actualization
Still, Peloton has plenty left to optimize. There’s room to expand use of its camera to offer premium one-on-one coaching, head-to-head racing, group video chat with friends, and augmented reality filters to make people feel comfortable on screen and take shareable selfies. A wider range of intense but short classes could appeal to overworked professionals who picked Peloton precisely because they don’t have an hour for the gym.
Novelty could come from celebrity guest instructors, or themed classes for pre-gaming for a night out, fans of a particular artist, or songs about a certain topic. And it should definitely have some iconic sounds like an om or singing bowl chime that play before each class to center you and after to release you.
Most excitingly, the Peloton screen has the potential to be a platform for exercise-controlled gaming and apps. Whether pedaling to escape zombies chasing you or piece together a puzzle, maintaining an output level to keep your cross-hairs locked on an enemy plane as you dogfight, or making a garden bloom by growing each flower during a different interval, Peloton could evolve riding to be much more interactive. Apps could offer training simulators for different sports focused on sprints for basketball or marathons for soccer. Or just put Netflix on it! By opening up to outside developers, Peloton could build a moat of extra experiences competitors can’t match.
With the strengths and opportunities of its core product, Peloton is poised to absorb more of your fitness time and money. It’s already branching out with yoga, meditation, lifting, bootcamp, and jazzercise classes you can do standing next to your bike or without one on its $19 per month app. Its second gadget is a $4300 treadmill.
From there it could break into more of the “pushbutton health” business. I categorize these as wellness products and services that rely on convenience instead of your will power. Think delivery health food instead calorie-counting apps that are a chore. My pushbutton regimen includes Peloton, six salads per week dropped off in batches by Thistle, monthly packages of Nomiku vacuum-sealed meals that RFID scan into its sous vide machine, and a Future remote personal trainer who nags me by text message.
It’s easy to get hooked on the positivity
Peloton could easily dive into selling meal kits, personal training, or a wider range of workout clothes to compete with Lulu Lemon. If it’s the center of your fitness routine, the company could become a gateway to new health products it owns or partners with.
I’m bullish on Peloton because I’m betting people are going to stay busy, lazy, and competitive. It offers the effectiveness of a spin class but with scheduling flexibility. It removes every excuse for staying on the couch. And in an age of visual communication where many seek to share both the journey to and the destination of an Instagrammable body and the discipline to ge there, Peloton provides conspicuous self-actualization through consumerism. Plus, finishing a ride feels damn good.
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100 Thieves’ Nadeshot and Scooter Braun are coming to Disrupt
If you’re at all familiar with esports, chances are you’ve heard of 100 Thieves. The esports org, founded by Matthew “Nadeshot” Haag, has grown over the past couple years into an absolute powerhouse of esports and a household name for those who follow gaming.
Which is why we’re thrilled to have Nadeshot and 100 Thieves part owner Scooter Braun join us at Disrupt SF 2019.
Matthew Haag got his start as a pro gamer when esports were still in their infancy. He became one of the most decorated esports athletes in history, serving as Captain of the legendary Optic Gaming CoD team where he led the team to an X Games Gold Medal and a CoD World Championship.
In 2015, Nadeshot retired from competitive gaming and started some of the most-watched YouTube and Twitch channels in the gaming world. A year later, he founded his own esports org with 100 Thieves, which combines streaming content, competitive esports and apparel under a single brand name.
Scooter Braun is one of the biggest names in the entertainment industry, managing megastars like Justin Bieber and Arianna Grande. But Bruan is also the founder of SB Projects, which is a highly diversified media company that focuses on music management, film/TV, as well as Silent Labs, a tech incubator which holds investments in companies like Uber, Spotify, Songza, Casper, Waze, and Pinterest.
Braun is also at the helm of Ithica Holdings, which made waves this year with the acquisition of Big Machine Label Group (Taylor Swift’s former label). Ithica also owns Mythos Studios with Marvel Founding Chairman David Maisel, Atlas Publishing and has partnerships with various management companies.
In 2018, Drake and Scooter Braun became co-owners in 100 Thieves through a $25 million Series A investment.
At Disrupt SF, we’ll ask Braun and Nadeshot about the opportunities ahead in the esports industry, what it’s like to grow a brand and team from scratch, and how they see esports evolving over the next few years.
Nadeshot and Braun join an amazing list of speakers, including Joseph Gordon-Levitt, Will Smith and Ang Lee, Snap CEO Evan Spiegal, Zola CEO Shan Lyn Ma, and many more.
Disrupt runs October 2 to October 4 right in San Francisco. If you still need tickets, you can pick those up right here.
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How Kobalt is betting on music’s middle class and DIY stars
Streaming services have made music ubiquitous, driving more exploration by consumers who don’t have to pay for each song or album individually. Musicians are correspondingly able to find their own niche of fans scattered around the world.
(This is the third installment of our EC-1 series on Kobalt Music Group and changes in the music industry. Read Part I and Part II.)
As Spotify gained rapid adoption in his native Sweden in 2006, Kobalt’s founder & CEO Willard Ahdritz predicted music streaming and the rise of social media would increasingly undercut the gatekeeping power of the major label groups and realign the market to center more on a vast landscape of niche musicians than a handful of traditional superstars.
Both of these predictions have proven directionally true. The question is to what extent and how are industry players actually realigning as a result?
What musicians need in addition to the administrative collection of their royalties (explained in Part II) is a menu of creative services they can tap for support. Kobalt’s AWAL and Kobalt Music Publishing divisions provide such services to recording artists and songwriters, respectively, and do so on purely a services basis (getting paid a commission but not taking ownership of copyrights like traditional labels and publishers do).
Niche middle class vs. Global superstars
Image via Getty Images / rolfo eclaire
The whole music industry is growing substantially due to streaming music’s mainstream penetration in wealthier countries and increased penetration in emerging markets.
As the overall pie is growing, the non-superstar segment of the market is indeed growing faster than the superstar segment, taking over a larger portion of industry royalties.
According to data from BuzzAngle, the top 500 songs in the US in 2018 accounted for 10% of on-demand audio streams — a dramatic decline in market share compared to 2017 when the top 500 songs accounted for 14% of streams. Stepping back, the top 50,000 songs made up 73.2% of all US streams in 2017 but that declined to 70.5% in 2018.
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Walt Disney Studios partners with Microsoft Azure on cloud innovation lab
Seems like everything is going to the cloud these days, so why should movie making be left out? Today, Walt Disney Studios announced a five-year partnership with Microsoft around an innovation lab to find ways to shift content production to the Azure cloud.
The project involves the Walt Disney StudioLAB, an innovation work space where Disney personnel can experiment with moving different workflows to the cloud. The movie production software company, Avid is also involved.
The hope is that by working together, the three parties can come up with creative, cloud-based workflows that can accelerate the innovation cycle at the prestigious movie maker. Every big company is looking for ways to innovate, regardless of their core business, and Disney is no different.
As movie making involves ever greater amounts of computing resources, the cloud is a perfect model for it, allowing them to scale up and down resources as needed, whether rendering scenes or adding special effects. As Disney’s CTO Jamie Voris sees it, this could make these processes more efficient, which could help lower cost and time to production.
“Through this innovation partnership with Microsoft, we’re able to streamline many of our processes so our talented filmmakers can focus on what they do best,” Voris said in a statement. It’s the same kind of cloud value proposition that many large organizations are seeking. They want to speed time to market, while letting technology handle some of the more mundane tasks.
The partnership builds on an existing one that Microsoft already had with Avid, where the two companies have been working together to build cloud-based workflows for the film industry using Avid software solutions on Azure. Disney will add its unique requirements to the mix, and over the five years of the partnership, hopes to streamline some of its workflows in a more modern cloud context.
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RYOT co-founder Bryn Mooser launches a new documentary studio called XTR
Bryn Mooser, co-founder of virtual and augmented reality studio RYOT, said he’s “hanging up my VR and AR hats to really focus on more, shall we say, traditional nonfiction storytelling.”
Back in 2016, Mooser sold RYOT to The Huffington Post and AOL (TechCrunch’s parent company, now known as Verizon Media), and he left RYOT at the end of last year. Today he’s announcing XTR, a production company focused on documentary films and nonfiction series.
The company’s name comes from the 16 millimeter camera that Mooser said was part of a “first wave” of tools making documentary filmmaking more accessible. With XTR, Mooser said he wants to continue that process.
“Technology is front-and-center of this revolution that’s happening,” he told me. “What’s happening in documentary films right now is a direct result of cameras getting cheaper,” making it easier for anyone to create a “beautiful, professional film.”
At the same time, he noted that documentary distribution was previously limited to art-house cinemas, HBO and “one row at your local Blockbuster.” Now, social media and streaming services like Netflix and Hulu have opened up new distribution channels that are bringing documentaries to broader audiences.
XTR studio
XTR will be based out of LA’s Echo Park neighborhood, in a warehouse that will serve as office, post-production facility and event space. And rather than operating like a traditional production company, Mooser said he wants XTR to take “more of a tech startup approach.”
He explained, “We have a vision to really scale it out: How do we work with a lot of new directors? How do we work with all the platforms? How do we think about audiences globally?”
That approach also involves outside capital. XTR said it has already raised an undisclosed amount of funding from former AOL CEO Tim Armstrong, Airbnb co-founder Joe Gebbia, Franklin McLarty, Christina and David Arquette, Josh Kushner, Lyn and Norman Lear, Bryan Baum, Mark McLarty and Zem and James Joaquin.
While Mooser is officially unveiling the company today, he said it’s already developing eight documentaries (which will be announced later this year) with partners like Vice Studios, Futurism and Anonymous Content.
“There’s a real opportunity to have a new company in there, looking out for those new filmmakers, and [trying] to shift the power balance a little bit,” he said. “The way we do that is, we look for great talent and we empower them to do what they want to do … at every step of the way.”
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Loot boxes in games are gambling and should be banned for kids, say UK MPs
UK MPs have called for the government to regulate the games industry’s use of loot boxes under current gambling legislation — urging a blanket ban on the sale of loot boxes to players who are children.
Kids should instead be able to earn in-game credits to unlock look boxes, MPs have suggested in a recommendation that won’t be music to the games industry’s ears.
Loot boxes refer to virtual items in games that can be bought with real-world money and do not reveal their contents in advance. The MPs argue the mechanic should be considered games of chance played for money’s worth and regulated by the UK Gambling Act.
The Department for Digital, Culture, Media and Sport’s (DCMS) parliamentary committee makes the recommendations in a report published today following an enquiry into immersive and addictive technologies that saw it take evidence from a number of tech companies including Fortnite maker Epic Games; Facebook-owned Instagram; and Snapchap.
The committee said it found representatives from the games industry to be “wilfully obtuse” in answering questions about typical patterns of play — data the report emphasizes is necessary for proper understanding of how players are engaging with games — as well as calling out some games and social media company representatives for demonstrating “a lack of honesty and transparency”, leading it to question what the companies have to hide.
“The potential harms outlined in this report can be considered the direct result of the way in which the ‘attention economy’ is driven by the objective of maximising user engagement,” the committee writes in a summary of the report which it says explores “how data-rich immersive technologies are driven by business models that combine people’s data with design practices to have powerful psychological effects”.
As well as trying to pry information about of games companies, MPs also took evidence from gamers during the course of the enquiry.
In one instance the committee heard that a gamer spent up to £1,000 per year on loot box mechanics in Electronic Arts’s Fifa series.
A member of the public also reported that their adult son had built up debts of more than £50,000 through spending on microtransactions in online game RuneScape. The maker of that game, Jagex, told the committee that players “can potentially spend up to £1,000 a week or £5,000 a month”.
In addition to calling for gambling law to be applied to the industry’s lucrative loot box mechanic, the report calls on games makers to face up to responsibilities to protect players from potential harms, saying research into possible negative psychosocial harms has been hampered by the industry’s unwillingness to share play data.
“Data on how long people play games for is essential to understand what normal and healthy — and, conversely, abnormal and potentially unhealthy — engagement with gaming looks like. Games companies collect this information for their own marketing and design purposes; however, in evidence to us, representatives from the games industry were wilfully obtuse in answering our questions about typical patterns of play,” it writes.
“Although the vast majority of people who play games find it a positive experience, the minority who struggle to maintain control over how much they are playing experience serious consequences for them and their loved ones. At present, the games industry has not sufficiently accepted responsibility for either understanding or preventing this harm. Moreover, both policy-making and potential industry interventions are being hindered by a lack of robust evidence, which in part stems from companies’ unwillingness to share data about patterns of play.”
The report recommends the government require games makers share aggregated player data with researchers, with the committee calling for a new regulator to oversee a levy on the industry to fund independent academic research — including into ‘Gaming disorder‘, an addictive condition formally designated by the World Health Organization — and to ensure that “the relevant data is made available from the industry to enable it to be effective”.
“Social media platforms and online games makers are locked in a relentless battle to capture ever more of people’s attention, time and money. Their business models are built on this, but it’s time for them to be more responsible in dealing with the harms these technologies can cause for some users,” said DCMS committee chair, Damian Collins, in a statement.
“Loot boxes are particularly lucrative for games companies but come at a high cost, particularly for problem gamblers, while exposing children to potential harm. Buying a loot box is playing a game of chance and it is high time the gambling laws caught up. We challenge the Government to explain why loot boxes should be exempt from the Gambling Act.
“Gaming contributes to a global industry that generates billions in revenue. It is unacceptable that some companies with millions of users and children among them should be so ill-equipped to talk to us about the potential harm of their products. Gaming disorder based on excessive and addictive game play has been recognised by the World Health Organisation. It’s time for games companies to use the huge quantities of data they gather about their players, to do more to proactively identify vulnerable gamers.”
The committee wants independent research to inform the development of a behavioural design code of practice for online services. “This should be developed within an adequate timeframe to inform the future online harms regulator’s work around ‘designed addiction’ and ‘excessive screen time’,” it writes, citing the government’s plan for a new Internet regulator for online harms.
MPs are also concerned about the lack of robust age verification to keep children off age-restricted platforms and games.
The report identifies inconsistencies in the games industry’s ‘age-ratings’ stemming from self-regulation around the distribution of games (such as online games not being subject to a legally enforceable age-rating system, meaning voluntary ratings are used instead).
“Games companies should not assume that the responsibility to enforce age-ratings applies exclusively to the main delivery platforms: All companies and platforms that are making games available online should uphold the highest standards of enforcing age-ratings,” the committee writes on that.
“Both games companies and the social media platforms need to establish effective age verification tools. They currently do not exist on any of the major platforms which rely on self-certification from children and adults,” Collins adds.
During the enquiry it emerged that the UK government is working with tech companies including Snap to try to devise a centralized system for age verification for online platforms.
A section of the report on Effective Age Verification cites testimony from deputy information commissioner Steve Wood raising concerns about any move towards “wide-spread age verification [by] collecting hard identifiers from people, like scans of passports”.
Wood instead pointed the committee towards technological alternatives, such as age estimation, which he said uses “algorithms running behind the scenes using different types of data linked to the self-declaration of the age to work out whether this person is the age they say they are when they are on the platform”.
Snapchat’s Will Scougal also told the committee that its platform is able to monitor user signals to ensure users are the appropriate age — by tracking behavior and activity; location; and connections between users to flag a user as potentially underage.
The report also makes a recommendation on deepfake content, with the committee saying that malicious creation and distribution of deepfake videos should be regarded as harmful content.
“The release of content like this could try to influence the outcome of elections and undermine people’s public reputation,” it warns. “Social media platforms should have clear policies in place for the removal of deepfakes. In the UK, the Government should include action against deepfakes as part of the duty of care social media companies should exercise in the interests of their users, as set out in the Online Harms White Paper.”
“Social media firms need to take action against known deepfake films, particularly when they have been designed to distort the appearance of people in an attempt to maliciously damage their public reputation, as was seen with the recent film of the Speaker of the US House of Representatives, Nancy Pelosi,” adds Collins.
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How Kobalt is simplifying the killer complexities of the music industry
Backed by over $200 million in VC funding, Kobalt is changing the way the music industry does business and putting more money into musicians’ pockets in the process.
In Part I of this series, I walked through the company’s founding story and its overall structure. There are two core theses that Kobalt bet on: 1) that the shift to digital music could transform the way royalties are tracked and paid, and 2) that music streaming will empower a growing middle class of DIY musicians who find success across countless niches.
This article focuses on the complex way royalties flow through the industry and how Kobalt is restructuring that process (while Part III will focus on music’s middle class). The music industry runs on copyright administration and royalty collections. If the system breaks — if people lose track of where songs are being played and who is owed how much in royalties — everything halts.
Kobalt is as much a compliance tech company as it is a music company: it has built a quasi “operating system” to more accurately and quickly handle this using software and a centralized approach to collections, upending a broken, inefficient system so everything can run more smoothly and predictably on top of it. The big question is whether it can maintain its initial lead in doing this, however.
The business of a song
Image via Getty Images / Mykyta Dolmatov
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Twenty and Mappen merge to help users hang out IRL
Today, social networks Twenty and Mappen are joining together in a merger under the Twenty brand.
From the beginning, Twenty’s goal has been to get young people off of their phones and out in the real world with their friends. Twenty connects users with their friend groups and lets them browse fun experiences, from concerts to sports games to movies, with an easy UI for coordinating a group and making it happen. In fact, Twenty has forged relationships with orgs like Live Nation, Endeavor, Roc Nation and Tao, which collectively produce 10,000+ events a year with an audience of more than 100 million fans.
Mappen, on the other hand, is a location-based social network that let users share what they were doing (and where they were doing it) with their friends. For example, users could give a status update using a Fortnite emoji tagged to their house, inviting friends to come over and play a few games.
The two companies have been in talks, and collaborating, for the past nine months looking for ways to bring the experiences together. Where Twenty has relationships with experience providers, Mappen had the audience of young people looking to connect with each other.
The end result is an all-stock deal that unifies the user experience under the Twenty brand name.
Though the announcement of the merged app didn’t go down until today, the two apps have been combined for a while, and CEO Diesel Peltz says the new app has seen 33% month over month growth in new users. Hangouts have increased 50% from July to August. Peltz will lead the combined company as CEO.
For now, the new Twenty does not have a business model in place. However, the plan is to use the event partnerships to generate revenue as opposed to ads, which relies on eyeballs on screens.
“If the model is solely based on ads, you want the users to spend as much time on the platform as possible,” said Peltz. “We’re looking to create a different opportunity for people to access these experiences.”
Thus far, the combined Twenty has raised approximately $40 million from partners, including Accel, Maveron, 500 Startups and Sound Ventures, as well as Roc Nation, Live Nation and Endeavor.
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Drivetime nabs $11M from Makers Fund, Amazon and Google to build voice-based games for drivers
Fully autonomous cars may (or may not) be just around the corner, but in the meantime, a startup that’s building in-car apps to help human drivers pass the time when behind the wheel has raised a round of funding.
Drivetime — which makes voice-based trivia quizzes, games and interactive stories that people can play while driving — has raised $11 million in funding led by Makers Fund (a prolific investor in gaming startups), with participation from Amazon (via the Alexa Fund) and Google (via its Assistant investment program).
The startup today has eight “channels” on its platform consisting of games and stories that you can access either within a limited free-to-play tier or via a paid subscription ($9.99 a month or $99.99 a year). The plan is to use the funding to continue expanding that catalog, as well as investing in deeper integrations with its new big-name strategic investors, who themselves have longstanding and deep interests in bringing more voice services and content to the in-car experience.
Co-founder and CEO Niko Vuori told TechCrunch that his ultimate ambition is for Drivetime to become “the Sirius XM of interactive content” for cars, with hundreds of different channels of content.
In keeping with those plans, along with the funding, Drivetime is today announcing a key content deal.
It has teamed up with the long-running, popular game show Jeopardy to build a trivia channel for the platform, which lets drivers test their own skills and also play against other drivers and people they know. The Jeopardy channel will source content from the TV show’s trove of IP and come with another familiar detail: it will be narrated by Alex Trebek, with a new quiz getting published every weekday for premium users.
That social element of the Jeopardy game is not a coincidence. The San Francisco-based startup is founded by Zynga alums, with Vuori and his co-founders Justin Cooper and Cory Johnson also working together at another startup called Rocket Games since leaving the social games giant and exiting that to gaming giant Penn National for up to $170 million. That track record goes some way to explaining the strong list of investors in the new startup.
“Social and interactive formats are the next frontier in audio entertainment,” said Makers Fund founding partner Jay Chi, in a statement. “Niko, Justin Cooper and Cory Johnson, with a decade-long history of working together and a proven track record in building new platforms, is the best team to bring this idea to life.”
“Gaming and entertainment are among customers’ favorite use cases for Alexa, and we think those categories will only grow in popularity as Alexa is integrated into more vehicles,” said Paul Bernard, director of the Alexa Fund at Amazon, in a separate statement. “Drivetime stands out for its focus on voice-first games in the car, and we’re excited to work with them to broaden the Alexa Auto experience and help customers make the most of their time behind the wheel.”
In addition to the three investors in this latest round, prior to this Drivetime had raised about $4 million from backers that include Felicis Ventures, Fuel Capital, Webb Investment Network (Maynard Webb’s fund) and Access Ventures.
Vuori declined to say how many installs or active users the app has today — although from the looks of it on AppAnnie, it’s seeing decent if not blockbuster success on iOS and Android so far.
Instead, the company prefers to focus on another stat, its addressable market, which it says is 110 million drivers in North America alone.
Meanwhile, adding a Jeopardy channel is building on what has worked best so far. The most popular category at the moment is trivia, with Tunetime (a “name that tune” game) coming in second and storytelling a third.
Drivetime’s premise is an interesting one. Drivers are a captive audience, but one that has up to now had a relatively limited amount of entertainment created for it, focusing mainly on music and spoken word.
However, the rise of voice-based interfaces and interactivity using natural language — spurred by the rise of personal assistant apps and in-home hubs like Amazon’s Echo — have opened a new opportunity, developing interactive, voice-based content for drivers to engage with more proactively.
You might think that this sounds like a recipe for a car accident. Won’t a driver get too distracted trying to remember the fourth president of the United States, or who was known as the father of the Constitution? (Hint: It’s the same guy.)
Vuori claims it’s actually the reverse: Having an interactive game that requires the driver to speak out loud can focus him or her and keep the driver more alert.
“We are double-dipping in safety,” he said. “On the one hand, we embody the safety aspects of Alertness Maintaining Tasks (AMTs). But we also act as a preventative, meaning that while players engage with Drivetime, they are not engaging with anything else.”
While the content today may serve as a way of keeping drivers from doing things they shouldn’t be doing while in a car, there is another obvious opportunity that might come as drivers become less necessary and will need other things to occupy themselves.
Longer term, the Jeopardy deal could usher in other channels based on popular game shows. Sony Pictures Television Games, which owns the rights to it, also owns Wheel of Fortune and Who Wants to Be a Millionaire.
“We are thrilled to work with Sony Pictures Television Games to bring Jeopardy, the greatest game show on the planet, to an underserved audience that desperately needs interactive entertainment the most – the 110 million commuters in North America driving to and from work by themselves every day,” said Vuori said in a statement.
Interestingly, despite the growth of “skills” for Alexa or apps for Google Home and other home hubs, and the overall popularity of these as a way of interacting with apps and sourcing information, Vuori says that he hasn’t seen any competition emerge yet from other app developers to build voice-based entertainment for drivers in the way that Drivetime has.
That gives the company ample opportunity to continue picking up new users — and more deals with publishers and content companies looking for more mileage (sorry) for their legacy IP and new business.
“Drivetime is one of the early pioneers in creating safe, stimulating entertainment for drivers in the car,” Ilya Gelfenbeyn, founding lead of the Google Assistant Investments Program, noted in a statement. “More and more people are using their voice to stay productive on the road, asking the Google Assistant on Android and iOS phones to help send text messages, make calls and access entertainment hands free. We share Drivetime’s vision, and look forward to working with their team to make the daily commute more enjoyable.”
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Joseph Gordon-Levitt is coming to Disrupt SF 2019
Joseph Gordon-Levitt is perhaps best known for his acting across films like “10 Things I Hate About You,” “500 Days of Summer” and “Snowden.” But times weren’t always peachy for Gordon-Levitt as a creative. After leaving the movie business to go to college, he realized the limits of the industry on his potential as a creative. He decided he wanted to take his creativity into his own hands and launched a message board where he’d post films, songs, etc.
But what started as a side hobby has turned into a production company in its own right, using technology to allow dozens of people to collaborate on a creative project. And, more importantly, it gives each contributor fair credit for their work, paying out individual creatives based on how much of their work was featured in the final product.
Obviously, it goes without saying that we’re thrilled to have Joseph Gordon-Levitt join us at TechCrunch Disrupt SF in October.
Far too rarely do we see creatives supported by the platforms where they post their work. With the current media landscape, and the ever-growing dominance of social media, the relationship between platform and creative is strained at best. And more importantly, it incentivizes all the wrong things.
From an interview in VentureBeat:
If what you’re going for is posting on YouTube, or Instagram, or platforms that monetize through the ad model, where they’re really just going for sheer volume and have the ability to manipulate people through ads, virality is the measure of success. And I think this is exactly at the heart of what’s interesting to me about doing [HitRecord]. I think if that is your measure of success, you’re going to undermine a lot of what’s actually meaningful and joyful about creativity. And I’m actually concerned for the human race’s creative spirit, because so much of our collective creativity is now destined for these platforms that are monetized by this sort of attention economy model. And it twists one’s understanding of one’s own creativity, and what the value of being creative is.
At Disrupt SF, we’ll discuss the growth of the HitRecord platform, plans for that fresh $6.4 million in Series A funding and how founders can seize this moment to provide collaborative tools that align creatives with the platforms they’re using.
Disrupt SF runs October 2 to October 4 at the Moscone Center in the heart of San Francisco. Tickets are available here.
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