Customer experience and digital transformation are two terms we’ve been hearing about for years, but have often remained nebulous in many organizations — something to aspire to perhaps, but not take completely seriously. Yet the pandemic has been a forcing event for both concepts, thrusting the ideas front and center.
Suddenly startups that help with either of these concepts are seeing rising demand, even in a year with an overall difficult economic climate. If you are fortunate enough to be helping companies digitize a process or improve how customers interact with companies, you may be seeing increased interest from customers and potential acquirers (and this was true even before this year). A case in point is Twilio acquiring Segment for $3.2 billion recently to help build data-fueled applications to interact with customers.
Even though building a positive customer experience has never been completely about digital, at a time where it’s difficult to interact with customers in person, the digital side of it has taken new urgency. As COVID-19 took hold this year, businesses, large and small, suddenly realized the only way to connect to their customers was digitally. At that point, digital transformation became customer experience’s buddy when other ways of contacting one another have been severely limited.
Just about every startup founder I talk to these days, along with bigger, more established companies, talk about how the pandemic has pushed companies to digitally transform much faster than they would have without COVID.
Brent Leary, founder at CRM Essentials, says that the pandemic has certainly expedited the need to bring these two big ideas together and created opportunities as that happens. “The coronavirus, as terrible as it has been in so many ways to so many people, has created opportunities for companies to build direct-to-consumer (D2C) digital pipelines that can make them stronger companies despite the current hardships,” Leary told TechCrunch.
The cloud plays a big role in the digital transformation process, and for the last decade, we have seen companies make a slow but steady shift to the cloud. When you have a situation like we’ve had with the coronavirus, it speeds everything up. As it turns out, being in the cloud helps you move faster because you don’t have to worry about all of the overhead of running a business critical application as the SaaS vendors take care of all that for you.
A new report released today by App Annie digs into how Gen Z consumers engage with their smartphones and mobile apps. According to data collected in Q3 2020, Gen Z users spend an average of 4.1+ hours per month in non-gaming apps, or 10% longer than older demographics. They also engage with apps more often, with 20% more sessions per user in non-gaming apps, at 120 sessions per month per app, compared with older groups.
This app engagement data is only a view into Gen Z trends, but is an incomplete analysis, as it only focuses on select markets, including the U.S., U.K., Brazil, France, Germany, Indonesia, Japan, Mexico, South Korea and Turkey. It also included only data collected from Android devices, which doesn’t provide as full a picture.
App Annie found that Gen Z is more likely to use games than older users, but they don’t access them as often or use them as long. Those ages 25 and older actually spent nearly 20% longer in their most-used games and accessed them 10% more frequently. Both demographics spent more total time gaming than using non-game apps, on a monthly basis.
Image Credits: App Annie
One breakout in the games category for Gen Z users, however, was the casual arcade game Among Us!, which just became the third-most played game worldwide, thanks to its team-based multiplayer features and the surge of Twitch streams. When Rep. Alexandria Ocasio-Cortez played the game on Twitch last night, it became one of the biggest-ever Twitch streams, peaking at 435,000 concurrent viewers.
Other popular Gen Z games include Match-3 games like Candy Crush Saga and Toon Blast, action games like PUBG Mobile and Free Fire, and casual simulation games like Minecraft Pocket Edition and Roblox.
Image Credits: App Annie
The report also examined what apps Gen Z users prefer across a range of non-game categories across both iOS and Android.
TikTok and Snapchat, in particular, stood out as the top over-indexed social and communication apps among Gen Z in nine out of the 10 markets analyzed for this report. This comes on the heels of Snap’s blowout earnings yesterday, where the social app topped analyst expectations and saw daily user growth climb 4% to 238 million.
Discord is also seeing strong growth, particularly in France, as mobile and remote gaming has become an epicenter of social interactions during the pandemic.
Image Credits: App Annie
Among entertainment apps, Twitch was the top over-indexed app in six out of the 10 markets for Gen Z users, though live streaming niconico was popular in Japan.
App Annie found that finance and shopping apps haven’t yet reached a broad Gen Z audience, but are demonstrating promising growth.
Image Credits: App Annie
Few finance apps over-index with Gen Z, though the demographic tends to interact with non-bank fintech apps like Venmo, Monzo and DANA. In South Korea, a top app was peer-to-peer payments app Toss, which also offers loans, insurance and credit.
Top Gen Z fashion apps, meanwhile, included Shein, ASOS, Shopee and Mercari.
Overall, active Gen Z users are rising faster across the markets analyzed, compared with older groups, with emerging markets like Indonesia and Brazil seeing the most growth.
Image Credits: App Annie
App Annie noted that Gen Z is becoming one of the most powerful consumer segments on mobile, as 98% own a smartphone and have a combined estimated spending power of $143 billion annually.
“Gen Z has never known a world without their smartphone. They see the world through this mobile first lens,” said Ted Krantz, CEO, App Annie, in a statement about the report’s findings.
The EU parliament has backed a call for tighter regulations on behavioral ads (aka microtargeting) in favor of less intrusive, contextual forms of advertising — urging Commission lawmakers to also assess further regulatory options, including looking at a phase-out leading to a full ban.
MEPs also want Internet users to be able to opt out of algorithmic content curation altogether.
The legislative initiative, introduced by the Legal Affairs committee, sets the parliament on a collision course with the business model of tech giants Facebook and Google.
Parliamentarians also backed a call for the Commission to look at options for setting up a European entity to monitor and impose fines to ensure compliance with rebooted digital rules — voicing support for a single, pan-EU Internet regulator to keep platforms in line.
The votes by the elected representatives of EU citizens are non-binding but send a clear signal to Commission lawmakers who are busy working on an update to existing ecommerce rules, via the forthcoming Digital Service Act (DSA) package — due to be introduced next month.
The DSA is intended to rework the regional rule book for digital services, including tackling controversial issues such as liability for user-generated content and online disinformation. And while only the Commission can propose laws, the DSA will need to gain the backing of the EU parliament (and the Council) if it is to go the legislative distance so the executive needs to take note of MEPs’ views.
The mass surveillance of Internet users for ad targeting — a space that’s dominated by Google and Facebook — looks set to be a major battleground as Commission lawmakers draw up the DSA package.
Last month Facebook’s policy VP Nick Clegg, a former MEP himself, urged regional lawmakers to look favorably on a business model he couched as “personalized advertising” — arguing that behavioral ad targeting allows small businesses to level the playing field with better resourced rivals.
However the legality of the model remains under legal attack on multiple fronts in the EU.
Scores of complaints have been lodged with EU data protection agencies over the mass exploitation of Internet users’ data by the adtech industry since the General Data Protection Regulation (GDPR) begun being applied — with complaints raising questions over the lawfulness of the processing and the standard of consent claimed.
Just last week, a preliminary report by Belgium’s data watchdog found that a flagship tool for gathering Internet users’ consent to ad tracking that’s operated by the IAB Europe fails to meet the required GDPR standard.
The use of Internet users’ personal data in the high velocity information exchange at the core of programmatic’s advertising’s real-time-bidding (RTB) process is also being probed by Ireland’s DPC, following a series of complaints. The UK’s ICO has warned for well over a year of systemic problems with RTB too.
Meanwhile some of the oldest unresolved GDPR complaints pertain to so-called ‘forced consent’ by Facebook — given GDPR’s requirement that for consent to be lawful it must be freely given. Yet Facebook does not offer any opt-out from behavioral targeting; the ‘choice’ it offers is to use its service or not use it.
Google has also faced complaints over this issue. And last year France’s CNIL fined it $57M for not providing sufficiently clear info to Android users over how it was processing their data. But the key question of whether consent is required for ad targeting remains under investigation by Ireland’s DPC almost 2.5 years after the original GDPR complaint was filed — meaning the clock is ticking on a decision.
And still there’s more: Facebook’s processing of EU users’ personal data in the US also faces huge legal uncertainty because of the clash between fundamental EU privacy rights and US surveillance law.
A major ruling (aka Schrems II) by Europe’s top court this summer has made it clear EU data protection agencies have an obligation to step in and suspend transfers of personal data to third countries when there’s a risk the information is not adequately protected. This led to Ireland’s DPC sending Facebook a preliminary order to suspend EU data transfers.
Facebook has used the Irish courts to get a stay on that while it seeks a judiciary review of the regulator’s process — but the overarching legal uncertainty remains. (Not least because the complainant, angry that data continues to flow, has also been granted a judicial review of the DPC’s handling of his original complaint.)
There has also been an uptick in EU class actions targeting privacy rights, as the GDPR provides a framework that litigation funders feel they can profit off of.
All this legal activity focused on EU citizens’ privacy and data rights puts pressure on Commission lawmakers not to be seen to row back standards as they shape the DSA package — with the parliament now firing its own warning shot calling for tighter restrictions on intrusive adtech.
It’s not the first such call from MEPs, either. This summer the parliament urged the Commission to “ban platforms from displaying micro-targeted advertisements and to increase transparency for users”. And while they’ve now stepped away from calling for an immediate outright ban, yesterday’s votes were preceded by more detailed discussion — as parliamentarians sought to debate in earnest with the aim of influencing what ends up in the DSA package.
Ahead of the committee votes, online ad standards body, the IAB Europe, also sought to exert influence — putting out a statement urging EU lawmakers not to increase the regulatory load on online content and services.
“A facile and indiscriminate condemnation of ‘tracking’ ignores the fact that local, generalist press whose investigative reporting holds power to account in a democratic society, cannot be funded with contextual ads alone, since these publishers do not have the resources to invest in lifestyle and other features that lend themselves to contextual targeting,” it suggested.
“Instead of adding redundant or contradictory provisions to the current rules, IAB Europe urges EU policymakers and regulators to work with the industry and support existing legal compliance standards such as the IAB Europe Transparency & Consent Framework [TCF], that can even help regulators with enforcement. The DSA should rather tackle clear problems meriting attention in the online space,” it added in the statement last month.
However, as we reported last week, the IAB Europe’s TCF has been found not to comply with existing EU standards following an investigation by the Belgium DPA’s inspectorate service — suggesting the tool offers quite the opposite of ‘model’ GDPR compliance. (Although a final decision by the DPA is pending.)
The EU parliament’s Civil Liberties committee also put forward a non-legislative resolution yesterday, focused on fundamental rights — including support for privacy and data protection — that gained MEPs’ backing.
Its resolution asserted that microtargeting based on people’s vulnerabilities is problematic, as well as raising concerns over the tech’s role as a conduit in the spreading of hate speech and disinformation.
The committee got backing for a call for greater transparency on the monetisation policies of online platforms.
Other measures MEPs supported in the series of votes yesterday included a call to set up a binding ‘notice-and-action’ mechanism so Internet users can notify online intermediaries about potentially illegal online content or activities — with the possibility of redress via a national dispute settlement body.
While MEPs rejected the use of upload filters or any form of ex-ante content control for harmful or illegal content. — saying the final decision on whether content is legal or not should be taken by an independent judiciary, not by private undertakings.
They also backed dealing with harmful content, hate speech and disinformation via enhanced transparency obligations on platforms and by helping citizens acquire media and digital literacy so they’re better able to navigate such content.
A push by the parliament’s Internal Market Committee for a ‘Know Your Business Customer’ principle to be introduced — to combat the sale of illegal and unsafe products online — also gained MEPs’ backing, with parliamentarians supporting measures to make platforms and marketplaces do a better job of detecting and taking down false claims and tackling rogue traders.
Parliamentarians also supported the introduction of specific rules to prevent (not merely remedy) market failures caused by dominant platform players as a means of opening up markets to new entrants — signalling support for the Commission’s plan to introduce ex ante rules for ‘gatekeeper’ platforms.
The parliament also backed a legislative initiative recommending rules for AI — urging Commission lawmakers to present a new legal framework outlining the ethical principles and legal obligations to be followed when developing, deploying and using artificial intelligence, robotics and related technologies in the EU including for software, algorithms and data.
The Commission has made it clear it’s working on such a framework, setting out a white paper this year — with a full proposal expected in 2021.
MEPs backed a requirement that ‘high-risk’ AI technologies, such as those with self-learning capacities, be designed to allow for human oversight at any time — and called for a future-oriented civil liability framework that would make those operating such tech strictly liable for any resulting damage.
The parliament agreed such rules should apply to physical or virtual AI activity that harms or damages life, health, physical integrity, property, or causes significant immaterial harm if it results in “verifiable economic loss”.
For all of the investors preaching that augmented reality technology will likely be the successor to the modern smartphone, today, most venture capitalists are still quite wary to back AR plays.
The reasons are plentiful, but all tend to circle around the idea that it’s too early for software and too expensive to try to take on Apple or Facebook on the hardware front.
Meanwhile, few spaces were frothier in 2016 than virtual reality, but most VCs who gambled on VR following Facebook’s Oculus acquisition failed to strike it rich. In 2020, VR did not get the shelter-in-place usage bump many had hoped for largely due to supply chain issues at Facebook, but VCs hope their new cheaper device will spell good things for the startup ecosystem.
To get a better sense of how VCs are looking at augmented reality and virtual reality in 2020, I reached out to a handful of investors who are keeping a close watch on the industry:
Some investors who are bullish on AR have opted to focus on virtual reality for now, believing that there’s a good amount of crossover between AR and VR software, and that they can make safer bets on VR startups today that will be able to take advantage of AR hardware when it’s introduced.
“Besides Pokémon Go I don’t think we have seen the engagement numbers needed for AR,” Boost VC investor Brayton Williams tells TechCrunch. “We believe VR is still the largest long-term opportunity of the two. AR complements the real world, VR creates endless new worlds.”
Most of the investors I got in contact with were still fairly active in the AR/VR world, but many still disagreed whether the time was right for VR startups. For Jacob Mullins of Shasta Ventures, “It’s still early, but it’s no longer too early.” While Gigi Levy-Weiss of NFX says that the market is “sadly not happening yet,” Facebook’s Quest headsets have shown promise.
On the hardware side, the ghost of Magic Leap’s formerly hyped glory still looms large. Few investors are interested in making a hardware play in the AR/VR world, noting that startups don’t have the resources to compete with Facebook or Microsoft on a large-scale rollout. “Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation,” General Catalyst’s Niko Bonatsos tells us.
Even those that are still bullish on startups making hardware plays for more niche audiences acknowledge that life had gotten harder for ambitious founders in these spaces, “the spectacular flare-outs do make it harder for companies to raise large amounts with long product release horizons,” investor Tipatat Chennavasin notes.
Responses have been edited for length and clarity.
What are your general impressions on the health of the AR/VR market today?
We’re seeing some progress in VR and some of that is happening because of the Oculus ecosystem. They continue to improve the hardware and have a growing catalog of content. I think their onboarding and consumption experience is very consumer-friendly and that’s going to continue to help with adoption. On the consumer side, we’re seeing some companies across gaming, fitness and productivity that are earning and retaining their audiences at a respectable rate. That wasn’t happening even a year ago so it may be partially a COVID lift but habits are forming.
The VR bets of several years ago have largely struggled to pan out, if you were to make a startup investment in this space today what would you need to see?
Companies to watch are the ones that are creating cool experiences with mobile as the first entry point. Wave VR, Rec Room, VRChat are making it really easy for consumers to get a taste of VR with devices they already own. They’re not treating VR as just another gaming peripheral but as a way to create very cool, often celebrity-driven, content. These are the kinds of innovations that makes me optimistic about the VR category in general.
Most investors I chat with seem to be long-term bullish on AR, but are reticent to invest in an explicitly AR-focused startup today. What do you want to see before you make a play here?
In both AR/VR, a founder needs to be both super ambitious but patient. They’ll need to be flexible in thinking and open to pivoting a few times along the way. Product-market fit is always important but I want to see that they have a plan for customer retention. Fun to try is great, habit-forming is much better. Gaming continues to do pretty well as a category for VC dollars but it’d be interesting to see more founders look at making IRL sports experiences more immersive or figuring out how to enhance remote meeting experiences with VR to fix Zoom fatigue.
There have been a few spectacular flare-outs when it comes to AR/VR hardware investments, is there still a startup opportunity in AR/VR hardware?
Hardware is so capital intensive and this entire industry is dependent on the big players continuing to invest in hardware innovation. Facebook and Microsoft seem to be the main companies willing to spend here while others have backed away. If we expand our thinking for a minute, maybe the first real mainstream breakthrough AR/VR consumer experience isn’t visual. For VR, it might be the mobile experiences. For AR maybe AirPods or AirPod-like devices are the right entry point for consumers. They’re in millions of people’s ears already and who doesn’t want their own special-agent-like earpiece? That’s where founders might find some opportunity.
Dear Mr. Zuckerberg, Mr. Dorsey, Mr. Pichai and Mr. Spiegel: We need universal digital ad transparency now!
The negative social impacts of discriminatory ad targeting and delivery are well-known, as are the social costs of disinformation and exploitative ad content. The prevalence of these harms has been demonstrated repeatedly by our research. At the same time, the vast majority of digital advertisers are responsible actors who are only seeking to connect with their customers and grow their businesses.
Many advertising platforms acknowledge the seriousness of the problems with digital ads, but they have taken different approaches to confronting those problems. While we believe that platforms need to continue to strengthen their vetting procedures for advertisers and ads, it is clear that this is not a problem advertising platforms can solve by themselves, as they themselves acknowledge. The vetting being done by the platforms alone is not working; public transparency of all ads, including ad spend and targeting information, is needed so that advertisers can be held accountable when they mislead or manipulate users.
Our research has shown:
While it doesn’t take the place of strong policies and rigorous enforcement, we believe transparency of ad content, targeting and delivery can effectively mitigate many of the potential harms of digital ads. Many of the largest advertising platforms agree; Facebook, Google, Twitter and Snapchat all have some form of an ad archive. The problem is that many of these archives are incomplete, poorly implemented, hard to access by researchers and have very different formats and modes of access. We propose a new standard for universal ad disclosure that should be met by every platform that publishes digital ads. If all platforms commit to the universal ad transparency standard we propose, it will mean a level playing field for platforms and advertisers, data for researchers and a safer internet for everyone.
The public deserves full transparency of all digital advertising. We want to acknowledge that what we propose will be a major undertaking for platforms and advertisers. However, we believe that the social harms currently being borne by users everywhere vastly outweigh the burden universal ad transparency would place on ad platforms and advertisers. Users deserve real transparency about all ads they are bombarded with every day. We have created a detailed description of what data should be made transparent that you can find here.
We researchers stand ready to do our part. The time for universal ad transparency is now.
Jason Chuang, Mozilla
Kate Dommett, University of Sheffield
Laura Edelson, New York University
Erika Franklin Fowler, Wesleyan University
Michael Franz, Bowdoin College
Archon Fung, Harvard University
Sheila Krumholz, Center for Responsive Politics
Ben Lyons, University of Utah
Gregory Martin, Stanford University
Brendan Nyhan, Dartmouth College
Nate Persily, Stanford University
Travis Ridout, Washington State University
Kathleen Searles, Louisiana State University
Rebekah Tromble, George Washington University
Abby Wood, University of Southern California
Longevity, as far as startups are concerned, tends to be a moonshot-y space where technologies like biotech and AI are experimentally applied in a sort of modern day alchemical quest — and the great hope is to (somehow) ‘hack’ biology and substantially extend the human lifespan. Or even end death altogether.
Coming considerably closer to Earth is Spanish startup Hearts Radiant, which says it’s in the “longevity tech” business but is taking a far more grounded and practical approach to addressing ageing. In short it believes it’s nailed a formula for helping people live to a ripe old age.
And — here’s the key — to do so healthily.
So its moonshot isn’t to help people get to a biblical 150 or even 120. It’s about supporting seniors to live well, up to a ‘good innings’ like 95, while (hopefully) retaining their independence and vitality through the application of technology that creates a structured and engaging lifestyle routine which works to combat age-related conditions such as frailty and social isolation.
The startup is coming out of stealth today to disclose a first tranche of pre-seed funding and chat to TechCrunch about its dream of supporting seniors to live a more active, fulfilling and independent life.
The €450k pre-seed round, which is led by JME.vc with participation from Kfund, Seedcamp and NextVentures, will be used for research and continued development of its Rosita Longevity digital coach. The app has been in beta testing in a limited form since January — currently only for Android devices, given seniors tend to have their relatives’ hand-me-down smartphone hardware (but iOS is on the roadmap) — offering livestreamed and on-demand video classes like cardio flamenco and age-appropriate yoga for its target 60+ year-olds.
Rosita’s co-founders are husband and wife team, Juan Cartagena (CEO) and Clara Fernández (CCO), along with CTO David Gil. Their premise is that what humans really need, as they age, is guidance and motivation to stay as active as they can, for as long as they can — and that a digital platform is the best way to make personalized, ‘healthy habit’ forming therapy for seniors widely accessible.
“We believe that we have to be a habit engine,” says Cartagena, offering “health longevity” as another descriptor for the scope of what they’re aiming to achieve.
Fernández is drawing directly on her years of experience as CEO of Balneario de Cofrentes, a family business in Valencia, which she describes as a “longevity school” or camp for seniors — and which the website suggests is a combination of spa/hotel, physical therapy/rehabilitation and education center. There she’s been responsible for overseeing activity and education programs tailored to seniors, offering guided exercise and advice on things like disease avoidance and good nutrition.
“Over the last ten years we have developed a very comprehensive strategy on how to educate, how to create habits in the senior community so that they can increase their healthy lifespan,” she explains. “We have a specific methodology. We start with teaching seniors how to manage their current health situation and we progressively start educating them with lifestyle, prevention of the main diseases, and also education about the latest discoveries in the field of science.”
“I realized that the main way to expand this was taking it online,” she adds on the decision to package the program into a digital coaching app — “where a bigger percentage of the senior population could benefit”.
Lifestyle is a key part of the proposition. But they’re most comfortable with the badge of ‘longevity tech’.
“We are trying not to play in fitness for many reasons,” adds Cartagena. “It’s limited in scope. And we are trying to go beyond that — it’s just the starting point [for reducing frailty] and the issues related to that, including the final ‘disease’ which would be dependence.”
Since the premise underlying the Rosita app hinges on the proven health benefits of regular, moderate exercise as a means of combating a range of age-related conditions — such as muscle mass loss and reduced bone density leading to frailty (which in turn can lead to a fall, a broken hip, and a senior who’s suddenly dependent on personal care) — or, beyond that, as a general bolster for mental and brain health — they are squatting on established (rather than moonshotty) science.
Although they do still need to demonstrate that digitally delivered, personalized programs of lifestyle coaching — featuring familiar but still sometimes clunky technologies like AI and chatbots — can actually help reverse frailty (in the first instance) for seniors participating remotely, with no human physiotherapists on hand to help.
Screenshots of the digital coaching app (Image credit: Hearts Radiant/Rosita Longevity)
Hence some of the funding will go on researching how their bricks-and-mortar ‘longevity school’ program translates to a digital platform. And, more specifically, whether personalised digital coaching for 60+ year olds will yield tangible reductions in frailty (and thus gains in active years) in the same way that in-person group exercises have already been shown to. (One area that certainly merits close study is whether social human contact derived from a purely digital experience vs in-person group therapy makes a difference to treatment outcomes.)
It’s true that no smartphone in the world can transform a bog-standard bathroom into a full on luxury spa. But other elements of the Balneario’s program simply need digitizing and structuring to serve up similar benefits, is the thinking.
The sorts of digital activity programs they’re devising for the app are designed to be fun for seniors as well as beneficial and appropriate for a particular frailty level. Examples of classes currently offered include reduced mobility dance, burpee-free ‘cross fit’, and osteoarthritis-safe karate.
The onboarding process involves an assessment to determine a senior’s frailty level in order that users are offered content at an activity level that’s appropriate for their physical condition.
Cartagena notes they’re working with Dr. José Viña, a professor at the University of Valencia, who is renowned in the longevity field. “He has proven he can revert frailty in the earliest stages by applying a certain methodology to specific muscles with a treatment of exercise-fusion — with some lifestyle habits. Now what has not been proven is whether that is applicable to a remote environment where people do it on their own,” he adds. “And this what we are doing right now. This pre-seed round is basically to take that uncertainty, put that in front of a few thousand [app] users, take that research… and see if in the next 12 months we improve [their frailty level].”
The actual Balneario is closed at the moment, in this health-stricken year of the novel coronavirus, but the plan is to reopen in March 2021 — and then introduce the annual intake to Rosita — garnering ongoing feedback on whether or not it’s steering them toward health-supporting habits.
“It’s all about understanding the customer so well and that’s where the competitive advantage of this company really comes from,” argues Cartagena. “By having 15,000 seniors per year coming to the school, every year we understand the customer very well, their habits, what they do, what they don’t. They come every year so we can ask them what did you do last year?
“That will be for us the way to have a massive focus group — let’s say a sliding window of focus group that we can see for ten days using the product — and we can iterate much faster by seeing not people just through our analytics but people who are using the product in front of us. One hundred or 500 people a day in our resort. And I think that will be a fundamental way in which we can actually build something that people really need and use and care about.”
The current version of the app doesn’t yet include AI-powered personalized coaching. But that’s again where the pre-seed funding comes in. “The initial coach for education and frailty itineraries should be ready in three weeks (together with our iOS app),” says Cartagena. “This solves a pressing problem our users have today.
“The personalized coach (pathologies, followups, context, atomization of exercises, etc) has a lot of logic behind and testing this properly will take more time. We will release that intelligence slowly and we should feel ‘proud’ by Christmas. That will become our Habits Engine. Together with our geroscience research plan, those are the uncertainties to get right with our current funding.”
Targeting chronic pain is another key aim for the app, although he concedes there may be some types of pain they won’t be able to address. The co-founders add that the app is intended to supplement not replace traditional healthcare — pointing out it’s being designed to be more forward-looking; aka that prevention of age-related problems is exactly the strategy to live better for longer.
“Telehealth is more about managing a disease — we’re more about preventing,” adds Fernández. “We’re more about discovering what are the indicators and the tools to make sure that the senior population… understand what it happening to their body, what is going to happen over the next ten years and start to slowly develop those habits so that they can minimize, reduce the evolution, the natural ageing process.”
Cartagena notes they are also working with researchers on developing sensor hardware that could go alongside the app to enhance their ability to predict frailty — suggesting it will allow them to define a wider/more nuanced range of user categories (the first version of the app has three categories but he says they want to be able to offer nine).
Smartphone and sensor hardware combined with AI technology has, for some years now, been enabling a new generation of guided physical therapy apps that seek to offer an alternative to pharmaceutical-based management for chronic pain — such as Kaia Health and Hinge Health, to name two. And of course mindfulness/guided mediation has become a huge app business. While the broader concept of ‘digital health’ has, over the past half decade or so, seen CBT-style therapy programs packaged up to be put on tap in people’s pockets. So there’s nothing inherently strange or exotic about the idea of a longevity coach for seniors.
Albeit, getting the user experience right could well be the biggest challenge. Cartagena says the app’s tone is important — talking in terms of not wanting to be “patronizing” or make seniors feel like Rosita is giving them “homework” — so they really click with the virtual coach and stay engaged.
Fernández too emphasizes the goal is to sustain good habits. Ergo, this is a (gentle) marathon not a sprint.
If they can design a safe and engaging experience that seniors don’t find off-putting, tedious or confusing the potential to expand access to therapies, activities and information that can improve people’s quality of life looks huge. Frailty is also only the team’s first focus. As they develop the product and grow usage they want to be able to support their users to form healthy habits that could help stave off neurodegenerative conditions like dementia, for example. Combating loneliness and social isolation is another goal. So there’s a whole range of health plans they’re hoping Rosita will be able to deliver.
“What we’re doing right now is focused especially on frailty — we’re developing the personalized AI coach on top of that — and what we’re going to do is start adding the layers of all the different health plans that we’re going to be establishing off the longevity coach,” says Fernández. “Nutrition, cognitive stimulation, relaxation and breathing, and on top of that we will put all the prevention strategies — and all the classes that we’re preparing for longevity.
“One of the things that we have tested in the clinic that is very important is to educate the user. Not just on what they need to do today — but on what is happening to their ageing process, what is happening to their metabolism, what is happening to their musculoskeletal system. How and why your body is ageing is fundamental so you can make small decisions. By empowering users through education they can understand and relate to why this specific thing that you’re telling them today is useful in the long run.”
“One of the most successful strategies that we have built is creating this whole course on longevity which is what is happening to your body — what science knows today about the field of longevity,” she adds. “And how you can minimize those symptoms. And those things we’re translating completely into the [app].”
Cartagena also points to the risk of a COVID-19 ‘4th wave’ of deaths that could result from seniors becoming more frail than they otherwise would after being forced into a more sedentary existence as a result of lockdown measures and concerns about their risk of exposure to the coronavirus.
Or, in other words, sitting at home on the sofa might help seniors stay free of virus but if abrupt inactivity risks their vitality that too could cut short a healthy lifespan. So tools to help older people stay active are looking more important than ever. And to that end he says the app will remain free throughout the pandemic — envisaging that could stretch into 2022.
The plan for the business model is b2c, likely focused on selling premium content — such as connecting users directly with a therapist to chat through their progress. In the meanwhile they’re relying on VC to get their digital “motivation engine” to market.
Right now they have 5,000 “pre-registrations” for the app and 1,000 seniors actively testing the product (all aged 60 to 80, in Spain). They’ve also just pushed out an update, moving the software out of the ‘early access’ phase — as they progress toward launching their “personalized AI coach for longevity.”
And while Rosita’s coaching is currently only available in Spanish — with the team having recorded “hundreds” of videos so far for different levels and chronic pathologies — the aim is to scale up in Europe (and perhaps beyond), starting with the U.K. market. Which makes English the next natural language for them to build out content.
Year after year, a lack of transparency in how ad traffic is sourced, sold and measured is cited by advertisers as a source of frustration and a barrier to entry in working with various providers. But despite progress on the protection and privacy of data through laws like GDPR and COPPA, the overall picture regarding ad-marketing transparency has changed very little.
In part, this is due to the staggering complexity of how programmatic and other advertising technologies work. With automated processes managing billions of impressions every day, there is no universal solution to making things more simple and clear. So the struggle for the industry is not necessarily a lack of intent around transparency, but rather how to deliver it.
Frustratingly, evidence shows that the way data is collected and used by some industry players has played a large part in reducing people’s trust in online advertising. This is not a problem that was created overnight. There is a long history and growing sense of consumer frustration with the way their data is being used, analyzed and monetized and a similar frustration by advertisers with the transparency and legitimacy of ad clicks for which they are asked to pay.
There are continuing efforts by organizations like the IAB and TAG to create policies for better transparency such as ads.txt. But without hard and fast laws, the responsibility lies with individual companies.
One relatively simple yet largely spurned practice that would engender transparency and trust for the benefit of all parties (brands, consumers and ad/marketing providers) would be for the industry to come together and have all parties open their SDKs.
Open-source software is code that anyone is free to use, analyze, alter and improve.
Auditing the code and adjusting the SDKs functionality based on individual needs is a common practice — and so too are audits by security companies or interested parties who are rightly on the lookout for app fraud. By showing exactly how the code within the SDK has been written, it is the best way to reassure developers and partners that there are no hidden functions or unwanted features.
Everyone using open-source SDKs can learn exactly how it works, and because it is under an open-source license, anyone can suggest modifications and improvements in the code.
The main risk from opening up an SDK code is that third parties will look for ways to exploit it and insert their own malicious code, or else look at potential vulnerabilities to access back-end services and data. However, providers should be on the lookout and be able to fix the potential vulnerabilities as they arise.
As for the rewards, open-sourcing engenders trust and transparency, which should certainly translate into customer loyalty and consumer confidence. After all, we are all operating in a market where advertisers and developers can choose who they want to work with — and on what terms.
Selfishly but practically speaking, opening SDKs can also help companies in our industry protect themselves from others’ baseless claims that are simply intended to promote their products. With open standards, there are no unsubstantiated, false accusations intended for publicity. The proof is out there for everyone to see.
All of these companies have decided to use an open-source approach because they recognize the importance of transparency and trust, especially when you are placing the safety and reputation of your brand in the hands of an algorithm. However, the majority of SDKs remain closed.
Relying on forward-thinking companies to set their own transparency levels will only take our industry so far. It’s time for stronger action around trust and data transparency. In the same way that GDPR and COPPA have required companies to address privacy and, ultimately, to have forced a change that was needed, open-sourcing our SDKs will take the ad-marketing space to new heights and drive new levels of trust and deployment with our clients, competitors, legislators and consumers.
The industry-wide challenge of transparency won’t be solved any time soon, but the positive news is that there is movement in the right direction, with steps that some companies are already taking and others can easily take. By implementing measures to ensure brand-safe placements and helping limit ad fraud; improving relationships between brands, agencies, and programmatic partners; and bringing clarity to consumer data use; confidence in the advertising industry will improve and opportunities will subsequently grow.
That’s why we are calling on all ad/marketing companies to take this step forward with us — for the benefit of our consumers, brands, providers and industry at large — to embrace open-source SDKs as the way to engender trust, transparency and industry transformation. In doing so, we will all be rewarded with consumers who are more trusting of brands and brand advertising, and subsequently, brands who trust us and seek opportunities to implement more sophisticated solutions and grow their business.
There are plenty of reasons to doubt that the House Judiciary Committee’s antitrust report will mark a turning point in the digital economy. In the end, it lacked true bipartisan support. Yet we can still marvel at the extent of left-right agreement over its central finding: The big tech companies wield troublingly great power over American society.
The bigger worry is whether the solutions on the table cut to the heart of the problem. One wonders whether empowered antitrust agencies can solve the problem before them — and whether they can keep the public behind them. For the proposition that many Facebooks would be better than one simply doesn’t resonate.
There are good reasons why not. Despite all their harms, we know that whatever benefits these platforms provide are largely a result of their titanic scale. We are as uneasy with the platforms’ exercises of their vast power over suppliers and users, as we are with their forbearance; yet it is precisely because of their enormous scale that we use their services. So if regulators broke up the networks, consumers would simply flock toward whatever platforms had the most scale, pushing the industry toward reconsolidation.
Does this mean that the platforms do not have too much power, that they are not harming society? No. It simply means they are infrastructure. In other words, we don’t need these technology platforms to be more fragmented, we need them to belong to us. We need democratic, rather than strictly market processes, to determine how they wield their power.
When you notice that an institution is infrastructure, the usual reaction is to suggest nationalization or regulation. But today, we have good reasons to suspect our political system is not up to this task. Even if an ideal government could competently tackle a problem as complex as managing the 21st century’s digital infrastructure, ours probably cannot.
This appears to leave us in a lose-lose situation and explains the current mood of resignation. But there is another option that we seem to have forgotten about. Labor organization has long afforded control to a broad array of otherwise-powerless stakeholders over the operation of powerful business enterprises. Why is this not on the table?
A growing army of academics, technologists, and commentators are warming to the proposition that “data is labor.” In short, this is the idea that the vast data streams we all produce through our contact with the digital world are a legitimate sort of work-product — over which we ought to have much more meaningful rights than the laws now afford. Collective bargaining plays a central role in this picture. Because the reason that the markets are now failing (to the benefit of the Silicon Valley giants) is that we are all trying to negotiate only for ourselves, when in fact the very nature of data is that it always touches and implicates the interests of many people.
This may seem like a complicated or intractable problem, but leading thinkers are already working on legal and technical solutions.
So in some sense, the scale of the tech giants may indeed not be such a bad thing — the problem, instead, is the power that scale gives them. But what if Facebook had to do business with large coalitions representing ordinary peoples’ data interests — presumably paying large sums, or admitting these representatives into its governance — in order to get the right to exploit its users’ data? That would put power back where it belongs, without undermining the inherent benefits of large platforms. It just might be a future we can believe in.
So what is the way forward? The answer to this question is enabling collective bargaining through data unions. Data unions would become the necessary counterpart to big tech’s information acquiring transitions. By requiring the big tech companies to deal with data unions authorized to negotiate on behalf of their memberships, both of the problems that have allowed these giant tech companies to amass the power to corrupt society are solved.
Labor unions did not gain true traction until the passage of the National Labor Relations Act of 1935. Perhaps, rather than burning our political capital on breaking up the tech giants through a slow and potentially Sisyphean process, we should focus on creating a 21st century version of this groundbreaking legislation — legislation to protect the data rights of all citizens and provide a responsible legal framework for data unions to represent public interests from the bottom up.
Shenzhen, known for its maker community and manufacturing resources, is taking the lead in trialing China’s digital yuan.
Last week, the city issued 10 million yuan worth of digital currency to 50,000 randomly selected residents. The government doled out the money through mobile “red envelopes,” a tool designed to digitize the custom of gifting money in red packets and first popularized by WeChat’s e-wallet.
The digital yuan is not to be mistaken as a form of cryptocurrency. Rather, it is issued and managed by the central bank, serving as the statutory, digital version of China’s physical currency and giving Beijing a better grasp of its currency circulation. It’s meant to supplement, not replace, third-party payments apps like WeChat Pay and Alipay in a country where cash is dying out.
For example, the central government may in the future issue subsidies to local offices by sending digital yuan, which can help tackle issues like corruption.
Shenzhen is one of the four Chinese cities to begin internal testing of the digital yuan, announced a government notice in August without going into the specifics. The latest distribution to consumers is seen as the country’s first large-scale, public test of the centrally issued virtual currency.
Nearly 2 million individuals in Shenzhen signed up for the lottery, according to a post from the local government. Winners could redeem the 200 yuan red envelope within the official digital yuan app and spend the virtual money at over 3,000 retail outlets in the city.
As its next step, Shenzhen will launch a (vaguely defined) “fintech innovation platform” through its official digital currency institute, said a new central government document detailing the city’s five-year development measures, including attracting more foreign investment in cutting-edge technologies. The city will also play a key role in furthering the digital yuan’s research and development, application and international collaboration.
In April, the city’s digital currency vehicle launched a wave of recruiting for technical positions like mobile app architects and Android developers.
Shenzhen was established in 1980 as China’s first special economic zones and is now home to tech behemoths like Tencent, Huawei and DJI and innovation hubs like HAX and Trouble Maker. President Xi Jinping is scheduled to visit the city this week to commemorate the city’s 40th anniversary.
While the central bank provides logic and infrastructure undergirding the digital yuan, there’s much room for commercial banks and private firms to innovate on the application level. Both ride-hailing platform Didi and JD’s fintech arm have recently unveiled steps to help accelerate the digital yuan’s real-life implementation.
Podcast advertising growth is inhibited by three major factors:
Because of these limiting factors, it’s currently more of an art than a science to piece disparate data from multiple sources, firms, agencies and advertisers, into a somewhat conclusive argument to brands as to why they should invest in podcast advertising.
There were several resources that released updates based on what they saw in terms of consumption when COVID-19 hit. Hosting platforms, publishers and third-party tracking platforms all put out their best guesses as to what was happening. Advertisers’ own podcast listening habits had been upended due to lockdowns; they wanted to know how broader changes in listening habits were affecting their campaigns. Were downloads going up, down or staying the same? What was happening with sports podcasts, without sports?
Read part 1 of this article, Podcast advertising has a business intelligence gap, on TechCrunch.
At Right Side Up, we receive and analyze all of the available research from major publishers (Stitcher, aCast), to major platforms (Megaphone) and third-party research firms (Podtrac, IAB, Edison Research). However, no single entity encompasses the entire space or provides the kind of interactive, off-the-shelf customizable SaaS product we’d prefer, and that digitally native marketers expect. Plus, there isn’t anything published in real-time; most sources publish once or twice annually.
So what did we do? We reached out to trusted publishers and partners to gather data around shifting consumption due to COVID-19 ourselves, and determined that, though there was a drop in downloads in the short term, it was neither as precipitous nor as enduring as some had feared. This was confirmed by some early reports available, but how were we to evidence our own piecewise sample with another? Moreover, how could you invest 6-7 figures of marketing dollars if you didn’t have the firsthand intelligence we gathered and our subject matter experts on deck to make constant adjustments to your approach?
We were able to piece together trends we’re seeing that point to increased download activity in recent months that surpass February/March heights. We’ve determined that the industry is back on track for growth with a less steep, but still growing, listenership trajectory. But even though more recent reports have been published, a longitudinal, objective resource has not yet emerged to show a majority of the industry’s journey through one of the most disruptive media environments in recent history.
There is a need for a new or existing entity to create cohesive data points; a third party that collects and reports listening across all major hosts and distribution points, or “podcatchers,” as they’re colloquially called. As a small example: Wouldn’t it be nice to objectively track seasonal listening of news/talk programming and schedule media planning and flighting around that? Or to know what the demographics of that audience look like compared to other verticals?
What percentage increase in efficiency and/or volume would you gain from your marketing efforts in the channel? Would that delta be profitable against paying a nominal or ongoing licensing or research fee for most brands?
These challenges aren’t just affecting advertisers. David Cohn, VP of Sales at Megaphone, agrees that “full transparency from the listening platforms would make our jobs easier, along with everyone else’s in the industry. We’d love to know how much of an episode is listened to, whether an ad is skipped, etc. Along the same lines, having a central source for [audience] measurement would be ideal — similar to what Nielsen has been for TV.” This would also enable us to understand cross-show ad frequency, another black box for advertisers and the industry at large.
There are sizable, meaningful gaps in the knowledge collection and publication of podcast listening and engagement statistics. Coupled with still-developing advertising technology because of the distributed nature of the medium, this causes uncertainty in user consumption and ad exposure and impact. There is also a lot of misinformation and misconception about the challenges marketers face in these channels.
All of this compounds to delay ad revenue growth for creators, publishers and networks by inhibiting new and scaling advertising investment, resulting in lost opportunity among all parties invested in the channel. There’s a viable opportunity for a collective of industry professionals to collaborate on a solution for unified, free reporting, or a new business venture that collects and publishes more comprehensive data that ultimately promotes growth for podcast advertising.
Podcasts have always had challenges when it comes to the analytics behind distribution, consumption and conversion. For an industry projected to exceed $1 billion in ad spend in 2021, it’s impressive that it’s built on RSS: A stable, but decades-old technology that literally means really simple syndication. Native to the technology is a one-way data flow, which democratizes the medium from a publishing perspective and makes it easy for creators to share content, but difficult for advertisers trying to measure performance and figure out where to invest ad dollars. This is compounded by a fractured creator, server and distribution/endpoint environment unique to the medium.
Because podcasts lag other media channels in business intelligence, it’s still an underinvested channel relative to its ability to reach consumers and impact purchasing behavior.
For creators, podcasting has begun to normalize distribution analytics through a rising consolidation of hosts like Art19, Megaphone, Simplecast and influence from the IAB. For advertisers, though, consumption and conversion analytics still lag far behind. For the high-growth tech companies we work with, and as performance marketers ourselves, measuring the return on investment of our ad spend is paramount.
Because podcasts lag other media channels in business intelligence, it’s still an underinvested channel relative to its ability to reach consumers and impact purchasing behavior. This was evidenced when COVID-19 hit this year, as advertisers that were highly invested or highly interested in investing in podcast advertising asked a very basic question: “Is COVID-19, and its associated lifestyle shifts, affecting podcast listening? If so, how?”
We reached out to trusted partners to ask them for insights specific to their shows.
Nick Southwell-Keely, U.S. director of Sales & Brand Partnerships at Acast, said: “We’re seeing our highest listens ever even amid the pandemic. Across our portfolio, which includes more than 10,000 podcasts, our highest listening days in Acast history have occurred in [July].” Most partners provided similar anecdotes, but without centralized data, there was no one, singular firm to go to for an answer, nor one report to read that would cover 100% of the space. Almost more importantly, there is no third-party perspective to validate any of the anecdotal information shared with us.
Publishers, agencies and firms all scrambled to answer the question. Even still, months later, we don’t have a substantial and unifying update on exactly what, if anything, happened, or if it’s still happening, channel-wide. Rather, we’re still checking in across a wide swath of partners to identify and capitalize on microtrends. Contrast this to native digital channels like paid search and paid social, and connected, yet formerly “traditional” media (e.g., TV, CTV/OTT) that provide consolidated reports that marketers use to make decisions about their media investments.
The lasting murkiness surrounding podcast media behavior during COVID-19 is just one recent case study on the challenges of a decentralized (or nonexistent) universal research vendor/firm, and how it can affect advertisers’ bottom lines. A more common illustration of this would be an advertiser pulling out of ads, for fear of underdelivery on a flat rate unit, missing out on incremental growth because they were worried about not being able to get download reporting and getting what they paid for. It’s these kinds of basic shortcomings that the ad industry needs to account for before we can hit and exceed the ad revenue heights projected for podcasting.
Advertisers may pull out of campaigns for fear of under-delivery, missing out on incremental growth because they were worried about not getting what they paid for.
If there’s a silver lining to the uncertainty in podcast advertising metrics and intelligence, it’s that supersavvy growth marketers have embraced the nascent medium and allowed it to do what it does best: personalized endorsements that drive conversions. While increased data will increase demand and corresponding ad premiums, for now, podcast advertising “veterans” are enjoying the relatively low profile of the space.
As Ariana Martin, senior manager, Offline Growth Marketing at Babbel notes, “On the other hand, podcast marketing, through host read ads, has something personal to it, which might change over time and across different podcasts. Because of this personal element, I am not sure if podcast marketing can ever be transformed into a pure data game. Once you get past the understanding that there is limited data in podcasting, it is actually very freeing as long as you’re seeing a certain baseline of good results, [such as] sales attributed to podcast [advertising] via [survey based methodology], for example.”
So how do we grow from the industry feeling like a secret game-changing channel for a select few brands, to widespread adoption across categories and industries?
Below, we’ve laid out the challenges of nonuniversal data within the podcast space, and how that hurts advertisers, publishers, third-party research/tracking organizations, and broadly speaking, the podcast ecosystem. We’ve also outlined the steps we’re taking to make incremental solutions, and our vision for the industry moving forward.
In search of a rationale to how such a buzzworthy growth channel lags behind more established media types’ advertising revenue, many articles will point to “listener” or “download” numbers not being normalized. As far as we can tell at Right Side Up, where we power most of the scaled programs run by direct advertisers, making us a top three DR buying force in the industry, the majority of publishers have adopted the IAB Podcast Measurement Technical Guidelines Version 2.0.
This widespread adoption solved the “apples to apples” problem as it pertained to different networks/shows valuing a variable, nonstandard “download” as an underlying component to their CPM calculations. Previous to this widespread adoption, it simply wasn’t known whether a “download” from publisher X was equal to a “download” from publisher Y, making it difficult to aim for a particular CPM as a forecasting tool for performance marketing success.
However, the IAB 2.0 guidelines don’t completely solve the unique-user identification problem, as Dave Zohrob, CEO of Chartable points out. “Having some sort of anonymized user identifier to better calculate audience size would be fantastic — the IAB guidelines offer a good approximation given the data we have but [it] would be great to actually know how many listeners are behind each IP/user-agent combo.”
A second area of business intelligence gaps that many articles point to as a cause of inhibited growth is a lack of “proof of delivery.” Ad impressions are unverifiable, and the channel doesn’t have post logs, so for podcast advertisers the analogous evidence of spots running is access to “airchecks,” or audio clippings of the podcast ads themselves.
Legacy podcast advertisers remember when a full-time team of entry-level staffers would hassle networks via phone or email for airchecks, sometimes not receiving verification that the spot had run until a week or more after the fact. This delay in the ability to accurately report spend hampered fast-moving performance marketers and gave the illusion of podcasts being a slow, stiff, immovable media type.
Systematic aircheck collection has been a huge advent and allowed for an increase in confidence in the space — not only for spend verification, but also for creative compliance and optimization. Interestingly, this feature has come up almost as a byproduct of other development, as the companies who offer these services actually have different core business focuses: Magellan AI, our preferred partner, is primarily a competitive intelligence platform, but pivoted to also offer airchecking services after realizing what a pain point it was for advertisers; Veritone, an AI company that’s tied this service to its ad agency, Veritone One; and Podsights, a pixel-based attribution modeling solution.
Last, competitive intelligence and media research continue to be a challenge. Magellan AI and Podsights offer a variety of fee and free tiers and methods of reporting to show a subset of the industry’s activity. You can search a show, advertiser or category, and get a less-than-whole, but still directionally useful, picture of relevant podcast advertising activity. While not perfect, there are sufficient resources to at least see the tip of the industry iceberg as a consideration point to your business decision to enter podcasts or not.
As Sean Creeley, founder of Podsights, aptly points out: “We give all Podsights research data, analysis, posts, etc. away for free because we want to help grow the space. If [a brand], as a DIY advertiser, desired to enter podcasting, it’s a downright daunting task. Research at least lets them understand what similar companies in their space are doing.”
There is also a nontech tool that publishers would find valuable. When we asked Shira Atkins, co-founder of Wonder Media Network, how she approaches research in the space, she had a not-at-all-surprising, but very refreshing response: “To be totally honest, the ‘research’ I do is texting and calling the 3-5 really smart sales people I know and love in the space. The folks who were doing radio sales when I was still in high school, and the podcast people who recognize the messiness of it all, but have been successful at scaling campaigns that work for both the publisher and the advertiser. I wish there was a true tracker of cross-industry inventory — how much is sold versus unsold. The way I track the space writ large is by listening to a sample set of shows from top publishers to get a sense for how they’re selling and what their ads are like.”
Even though podcast advertising is no longer limited by download standardization, spend verification and competitive research, there are still hurdles that the channel has not yet overcome.
The conclusion to this article, These 3 factors are holding back podcast monetization, is available exclusively to Extra Crunch subscribers.
A group of Black Atlanta businessmen, politicians and entertainers — including former Atlanta Mayor Andrew Young, the entertainer Michael Render (better known as Killer Mike) and Bounce TV founder Ryan Glover — have launched a new digital bank focused on developing and promoting local communities and cultivating Black and Latinx entrepreneurs and small businesses.
Named Greenwood in an homage to the thriving Tulsa, Oklahoma, business community known as “Black Wall Street” that was destroyed by white rioters in 1921, the digital bank has several features designed to promote social causes and organizations for the Black and Latinx community.
For every sign-up to the bank, Greenwood will donate the equivalent of five free meals to an organization addressing food insecurity. And every time a customer uses a Greenwood debit card, the bank will make a donation to either the United Negro College Fund, Goodr (an organization that addresses food insecurity) or the National Association for the Advancement of Colored People.
In addition, each month the bank will provide a $10,000 grant to a Black or Latinx small business owner that uses the company’s financial services.
For Render, the decision to launch a new digital bank alongside Young and Glover was a way to link Atlanta’s well-established, centuries-old Black business community with the technologies that are redefining wealth and creating new opportunities in the twenty-first century. It was also a way to equip a new generation with financial tools that could empower them instead of undermine them.
“What I have learned about capitalism is that you’re either going to be a participant in it or a victim of it,” said Render. “The ultimate protest is focusing your dollar like a weapon.”
Young, who is also the U.S. ambassador to the United Nations, had seen the ways digital banking technologies were transforming the social order in countries like India — reducing the power of payday lenders and providing greater economic access — and wanted to bring those opportunities to communities in the U.S.
Atlanta is a perfect home for a new Black-owned digital bank. After riots in 1906 destroyed Atlanta’s own bustling Black business district in a prelude to the Greenwood Massacre 15 years later, the community rebuilt with banks like Citizen’s Trust (founded in 1921) and Carver (founded in 1946) serving the city’s Black community.
Rendon, a serial entrepreneur who owns a chain of barber shops called the SWAG Shop, some real estate and a restaurant along with the rapper T.I., said that he’s not just a founder of Greenwood, he’ll soon become a customer.
“Today, a dollar circulates for 20 days in the white community but only six hours in the Black community,” said Render in a statement. “Moreover, a Black person is twice as likely as a white person to be denied a mortgage. This lack of fairness in the financial system is why we created Greenwood.”
Greenwood will offer a physical debit card and savings and checking accounts to its customers — along with all of the digital features one would expect, including integrations with Apple, Samsung and Google Pay, the ability to make peer-to-peer payments, mobile checking deposits and free ATM usage at over 30,000 locations.
“It’s no secret that traditional banks have failed the Black and Latinx community,” said Glover, in a statement. “We needed to create a new financial platform that understands our history and our needs going forward, a banking platform built by us and for us, a platform that helps us build a stronger future for our communities. This is our time to take back control of our lives and our financial future. That is why we launched Greenwood, modern banking for the culture.”
To run the bank, the founding team hired Aparicio Giddins, who’s serving as the company’s president and chief technology officer. David Tapscott, a former executive with Combs Enterprises and Green Dot, is serving as the company’s chief marketing officer. Andrew “Bo” Young III, the managing partner of Andrew Young Investment Group, and Paul Judge, the co-founder of Pindrop and TechSquare Labs, both have seats on the company’s board of directors.
The timing for Greenwood’s launch is somewhat auspicious, coming as it does nearly a century after the launch of Citizen’s Trust and days after the chief executive of Wells Fargo, Charles Scharf, said really, really dumb things about diversity in the financial services industry.
Backing the company is a $3 million commitment from undisclosed angel investors. The bank is currently taking deposits and the hope, according to Rendon, is for it to start a new wave of entrepreneurial activity among young Black and Latinx community members and their allies.
“The work that we did in the civil rights movement wasn’t just about being able to sit at the counter. It was also about being able to own the restaurant,” said Ambassador Young. “We have the skills, talent and energy to compete anywhere in the world, but to grow the economy, it has to be based on the spirit of the universe and not the greed of the universe. Killer Mike, Ryan and I are launching Greenwood to continue this work of empowering Black and brown people to have economic opportunity.”
Most startup founders have a tough road to their first round of funding, but the founders of Digital Brain had it a bit tougher than most. The two young founders survived by entering and winning hackathons to pay their rent and put food on the table. One of the ideas they came up with at those hackathons was DigitalBrain, a layer that sits on top of customer service software like Zendesk to streamline tasks and ease the job of customer service agents.
They ended up in Y Combinator in the Summer 2020 class, and today the company announced a $3.4 million seed investment. This total includes $3 million raised this round, which closed in August, and previously unannounced investments of $250,000 in March from Unshackled Ventures and $150,000 from Y Combinator in May.
The round was led by Moxxie Ventures, with help from Caffeinated Capital, Unshackled Ventures, Shrug Capital, Weekend Fund, Underscore VC and Scribble Ventures, along with a slew of individual investors.
Company co-founder Kesava Kirupa Dinakaran says that after he and his partner Dmitry Dolgopolov met at a hackathon in May 2019, they moved into a community house in San Francisco full of startup founders. They kept hearing from their housemates about the issues their companies faced with customer service as they began scaling. Like any good entrepreneur, they decided to build something to solve that problem.
“DigitalBrain is an external layer that sits on top of existing help desk software to actually help the support agents get through their tickets twice as fast, and we’re doing that by automating a lot of internal workflows, and giving them all the context and information they need to respond to each ticket, making the experience of responding to these tickets significantly faster,” Dinakaran told TechCrunch.
What this means in practice is that customer service reps work in DigitalBrain to process their tickets, and as they come upon a problem such as canceling an order or reporting a bug, instead of traversing several systems to fix it, they choose the appropriate action in DigitalBrain, enter the required information and the problem is resolved for them automatically. In the case of a bug, it would file a Jira ticket with engineering. In the case of canceling an order, it would take all of the actions and update all of the records required by this request.
As Dinakaran points out, they aren’t typical Silicon Valley startup founders. They are 20-year-old immigrants from India and Russia, respectively, who came to the U.S. with coding skills and a dream of building a company. “We are both outsiders to Silicon Valley. We didn’t go to college. We don’t come from families of means. We wanted to come here and build our initial network from the ground up,” he said.
Eventually they met some folks through their housemates, who suggested that they apply to Y Combinator. “As we started to meet people that we met through our community house here, some of them were YC founders and they kept saying I think you guys will love the YC community, not just in terms of your ethos, but also just purely from a perspective of meeting new people and where you are,” he said.
He said while he and his co-founder have trouble wrapping their arms around a number like the amount they have in the bank now, considering it wasn’t that long ago that they were struggling to meet expenses every month, they recognize this money buys them an opportunity to help start building a more substantial company.
“What we’re trying to do is really accelerate the development and building of what we’re doing. And we think if we push the gas pedal with the resources we’ve gotten, we’ll be able to accelerate bringing on the next couple of customers, and start onboarding some of the larger companies we’re interested in,” he said.