Fable Studio founder Edward Saatchi on designing virtual beings

In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.

Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:

  • virtual influencers: fictional characters with real-world social media accounts who build and engage with a mass following of fans.
  • virtual companions: AIs oriented toward one-to-one relationships, much like the tech depicted in the films “Her” and “Ex Machina.” They are personalized enough to engage us in entertaining discussions and respond to our behavior (in the physical world or within games) like a human would.

Part 3 of 3: designing virtual companions

In this discussion, Fable CEO Edward Saatchi addresses the technical and artistic dynamics of virtual companions: AIs created to establish one-to-one relationships with consumers. After mobile, Saatchi says he believes such virtual beings will act as the next paradigm for human-computer interaction.

Shadows’ Dylan Flinn and Kombo’s Kevin Gould on the business of ‘virtual influencers’

In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.

Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:

  • virtual influencers: fictional characters with real-world social media accounts who build and engage with a mass following of fans.
  • virtual companions: AIs oriented toward one-to-one relationships, much like the tech depicted in the films “Her” and “Ex Machina.” They are personalized enough to engage us in entertaining discussions and respond to our behavior (in the physical world or within games) like a human would.

Part 2 of 3: the business of virtual influencers

Today’s discussion focuses on virtual influencers: fictional characters that build and engage followings of real people over social media. To explore the topic, I spoke with two experienced entrepreneurs:

  • Dylan Flinn is CEO of Shadows, an LA-based animation studio that’s building a roster of interactive characters for social media audiences. Dylan started his career in VC, funding companies such as Robinhood, Patreon and Bustle, and also spent two years as an agent at CAA.
  • Kevin Gould is CEO of Kombo Ventures, a talent management and brand incubation firm that has guided the careers of top influencers like Jake Paul and SSSniperWolf. He is the co-founder of three direct-to-consumer brands — Insert Name Here, Wakeheart and Glamnetic — and is an angel investor in companies like Clutter, Beautycon and DraftKings.

Compound’s Mike Dempsey on virtual influencers and AI characters

In films, TV shows and books — and even in video games where characters are designed to respond to user behavior — we don’t perceive characters as beings with whom we can establish two-way relationships. But that’s poised to change, at least in some use cases.

Interactive characters — fictional, virtual personas capable of personalized interactions — are defining new territory in entertainment. In my guide to the concept of “virtual beings,” I outlined two categories of these characters:

  • virtual influencers: fictional characters with real-world social media accounts who build and engage with a mass following of fans.
  • virtual companions: AIs oriented toward one-to-one relationships, much like the tech depicted in the films “Her” and “Ex Machina.” They are personalized enough to engage us in entertaining discussions and respond to our behavior (in the physical world or within games) like a human would.

Part 1 of 3: the investor perspective

In a series of three interviews, I’m exploring the startup opportunities in both of these spaces in greater depth. First, Michael Dempsey, a partner at VC firm Compound who has blogged extensively about digital characters, avatars and animation, offers his perspective as an investor hunting for startup opportunities within these spaces.

What to expect in digital media in 2020

As we start 2020, the media and entertainment sectors are in flux. New technologies are enabling new types of content, streaming platforms in multiple content categories are spending billions in their fight for market share and the interplay between social platforms and media is a central topic of global political debate (to put it lightly).

As TechCrunch’s media columnist, I spoke to hundreds of entrepreneurs and executives in North America and Europe last year about the shifts underway across everything from vertically-oriented video series to physics engines in games to music royalty payments. Looking toward the year ahead, here are some of the high-level changes I expect we will see in media in 2020, broken into seven categories: film & TV, gaming, visual & audio effects, social media, music, podcasts and publishing.

Film and TV

In film and television, the battle to compete with Netflix continues with more robust competition than last year. In the U.S., Disney is off to a momentous start with 10 million Disney+ subscribers upon its launch in November and some predicting it will hit 25 million by March (including those on free trials or receiving it for free via Disney’s partnership with Verizon). Bundled with its two other streaming properties, Hulu and ESPN+, Disney+ puts Disney alongside Amazon and Netflix as the Big Three.

Consumers will only pay for so many subscriptions, often one, two, or all of the Big Three (since Amazon Prime Video is included with the broader Prime membership) then a smaller service that best aligns with their personal taste and favorite show of the moment.

AT&T’s HBOMax launches in May with a $14.99/month price tag and is unlikely to break into the echelon of the Big Three, but could be a formidable second tier competitor. Alongside it will be Apple TV+. With a $4.99/month subscription, Apple’s service only includes a small number of original productions, an HBO strategy as HBO gets bundled into a larger library. CBS All Access, Showtime, and NBCUniversal’s upcoming (in April) Peacock fall in this camp as well.

Across Europe, regional media conglomerates will find success in expanding local SVOD and AVOD competitors to Netflix that launched last year — or are set to launch in the next few weeks — like BritBox in the UK, Joyn in Germany and Salto in France. Netflix’s growth in coming from outside the U.S. now so its priority is buying more international shows that will compel new demographics to subscribe.

The most interesting new development in 2020 though will be the April launch of Quibi, the $4.99/month service offering premium shows shot for mobile-first viewing that has already secured $1 billion in funding commitments and $150 million in advertising revenue. Quibi shows will be bite-size in length (less than 15 minutes) and vertically-oriented. The company has poured hundreds of millions of dollars into commissioning established names to create dozens of them. Steven Spielberg and Guillermo del Toro each have Quibi programs and NBC and CBS are creating news shows. The terms it is offering are enticing.

Quibi, which plans to release 125 pieces of content (i.e. episodes) per week and spend $470 million on marketing this year, is an all-or-nothing bet with little room to iterate if it doesn’t get it right the first time; it needs hit shows that break into mainstream pop culture to survive. Billionaire founders Jeffrey Katzenberg and Meg Whitman have set expectations sky-high for the launch; expect the press to slam it in April for failing to meet those expectations and for the platform to redeem itself as a few of its shows gain traction in the months that follow.

Meanwhile, live sports remains the last hope of broadcast TV networks as all other shows go to streaming. Consumers still value watching sports in real-time. Streaming services are coming for live sports too, however, and will make progress toward that goal in 2020. Three weeks ago, DAZN secured the rights to the 2021/22 season of Germany’s Champions League, beating out broadcaster Sky which has shown the matches for the last 20 years. Amazon and YouTube continue to explore bids for sports rights while Facebook and Twitter are stepping back from their efforts. YouTube’s “YouTube TV” and Disney’s “Hulu with Live TV” will cause more consumers to cancel cable TV subscriptions in 2020 and go streaming-only.

The winners in the film & TV sector right now are top production companies. The war for streaming video dominance driving several of the world’s wealthiest companies (and individuals) to pour tens of billions of dollars into content. Large corporations own the distribution platforms here; the only “startups” to enter with strength — DAZN and Quibi — have been launched by billionaires and started with billion-dollar spending commitments. The entrepreneurial opportunity is on the content creation side — with producers creating shows not with software developers creating platforms.


The gaming market is predicted to grow nearly 9% year-over-year from $152 billion globally in 2019 to $165 billion in 2020, according to research firm Newzoo, with more than two billion people playing games each year. Gaming is now widespread across all demographic groups. Casual mobile games are responsible for the largest portion of this (and 45% of industry revenue) but PC gaming continues to grow (+4% last year) and console gaming was the fastest growing category last year (+13%).

The big things to watch in gaming this year: cross-platform play, greater focus on social interaction in virtual worlds and the expansion of cloud gaming subscriptions.

Fortnite enticed consumers with the benefits of a cross-platform game that allows players to move between PC, mobile and console and it is setting expectations that other games do the same. Last October we saw the Call of Duty franchise come to mobile and reach a record 100 million downloads in its first week. This trend will continue and it will spread the free-to-play business model that is the norm in mobile games to many PC and console franchises in the process.

Gaming is moving to the social forefront. Many people are turning to massively multiplayer online games (MMOs) like Fortnite and PUBG to socialize, with gameplay as a secondary interest. Games are virtual worlds where players socialize, build things, and own assets much like in the real world. That results in an increasingly fluid interplay between socializing in games and in physical life, much as socializing in the virtual realms of social apps like Instagram or Twitter is now viewed as part of “real world” life.

Expect VCs to bet big on the thesis that “games are the new social networks” in 2020. Large investment firms that a year ago wrote off the category of gaming as “content bets” not fit for VC are now actively hunting for deals.

On this point, there are several startups (like Klang Games, Darewise Entertainment, Singularity 6 and Clockwork Labs) that raised millions in VC funding to create open world games that will launch (in beta at least) in 2020. These are virtual worlds where all players exist in the same instance of the world rather than being capped at 100 or so players per instance. Their visions center of digital realms where people will contribute to in-game economies, create friendships and ultimately earn income just like their “real-world” lives. Think next-gen Second Life. Expect them to take time to seed their worlds with early adopters in 2020 before any of them gain mainstream traction in 2021.

Few are as excited about social interaction in games as Facebook, it seems. Eager to own critical turf in the next paradigm shift of social media, Facebook will accelerate its gaming push this year. In late 2019, it acquired Madrid-based PlayGiga — which was working on cloud gaming and 5G technology — and the studio behind the hit VR game Beat Saber. It also secured exclusive rights to the VR versions of popular games like Ubisoft’s “Assassin’s Creed” and “Splinter Cell” for Oculus. Horizon, its virtual world for social interaction within VR, is expected to launch this year as well.

Facebook is betting on AR/VR as the paradigm shift in consumer computing that will replace mobile; it is pouring billions into its efforts to own the hardware and infrastructure pieces which are several years of R&D away from primetime. In the meantime, the consumer shift to social interaction in virtual worlds is occurring in established formats — mobile, PC, and console — so it will work to build the bridge for consumers from that to the future.

Lastly, cloud gaming was one of last year’s biggest headlines with the launch of Google Stadia and you should expect it to be again this year. By moving games to cloud hosting, consumers can play the highest quality games from lower quality devices, greatly expanding the market of potential players. By bundling many such games into a subscription offering, Google and others hope to entice consumers to try many more games.

As TechCrunch’s Lucas Matney argued, however, cloud gaming is likely a feature for existing subscription gaming platforms — namely Playstation Now and Xbox Game Pass — more so than the basis for a new platform to differentiate. The minor latency inherent in playing a cloud-hosted game makes it unattractive to hardcore gamers (who would rather download the game). Next to Sony and Microsoft’s offerings, Stadia’s limited game selection fails to stand out. The competition will only heat up this year with the entry of Amazon. Google needs to launch the Stadia integration with YouTube and the Share State feature that it promoted in its Stadia announcement to really drive consumer interest.

Visual and audio effects

2019 was podcasting’s breakout year

2019 was a breakout year for the podcast industry with major shifts in industry dynamics. 

In my October 2018 post “What’s next for podcasting?” I argued that Hollywood’s surging interest in podcasts would bring greater investment in high-production quality shows and gradually realign the podcast industry around paid subscriptions and exclusive deals. 

That’s still the direction the industry is heading but it’s not happening overnight and it may look a little different than I initially expected. Here’s a review of the state of podcasting as we conclude 2019.

Corporates vs. entrepreneurs

It is clear that the major music streaming platforms will dominate podcast distribution as well. The crowded landscape of startup podcast streaming apps will fade into 3-5 top platforms, much the same as music streaming consolidated. The top music streaming platforms have the user base and resources to promote podcasts to mass audiences, and Spotify has shown people are fine with both music and spoken audio in the same app. As with songs and videos, the consumer experience with podcasts is defined by the content so minor feature differences between the apps distributing the content are not going to pull consumers away from the audio apps they already use. 

This makes podcasting a tough market for VC investment; the incumbents are capturing the big tech platform opportunities and likely to own most of the advertising, infrastructure, and analytics tools as well through a mix of internal product development and acquisitions. The best position for entrepreneurs to be in podcasting is either a bootstrapped startup whose tool set can get acquired for tens of millions of dollars or a production company creating popular content in this boom.

Spotify’s breakout performance

The most important player in the industry is now Spotify, even though Apple’s Podcasts app remains the largest by global and US market share. In just three years, Spotify went from not being a destination for podcasts to being the first or second most used podcast service across dozens of countries and most US states. 2019 was its breakout year.

Spotify redesigned its app to give podcasts nearly equal footing as songs and it bought two of the leading podcast production companies (Gimlet, Parcast) and one of the most popular production tools (Anchor), positioning it at the heart of the podcast ecosystem and fueling investment interest in the sector more broadly.

For Spotify, podcasts are a rapidly growing new category of content that’s still small enough that they as a $28 billion company could make a play to dominate. The company is battling to differentiate itself from Apple Music and other music streaming competitors who all have the same libraries of songs, and it’s battling to improve its gross margins. Since 70% of all money earned from music on Spotify must be shared with music rights holders, expansion beyond music can improve the company’s profitability. Its CEO Daniel Ek envisions over 20% of listening on Spotify to be non-music audio content within a few years. 

Most importantly for the industry, Spotify is expanding the overall pie and pushing more podcasts into mainstream pop culture by promoting shows to demographics of music listeners who weren’t meaningfully engaged with podcasts before. The company is proactively recommending specific podcasts to users it predicts will like them and made a point to include podcasts in its popular year-end summaries of users’ listening habits.

Justine Moore and Olivia Moore at VC firm CRV summarized the diversification of podcast listening in their TechCrunch op-ed in August:

“As podcasting grows, the listener base is diversifying. Edison Research looked into data on “rookie” listeners (listening for six months or less) and “veteran” listeners (listening for 3+ years), and found significant demographic differences. Only 37% of veterans are female, compared to 53% of rookies. While the plurality of veterans (43%) are age 35-54, 54% of rookies are age 12-34. Rookies are also 1.6x more likely to say they most often listen to podcasts on Spotify, Pandora or SoundCloud  (43% versus 27% of veterans).”

It will be surprising if Spotify doesn’t make multiple podcasting-related acquisitions in 2020. It may buy more studios to bolster its in-house production team and its library of in-demand content that could eventually be made exclusive to the platform, but the primary acquisition targets are likely to be on the technology side. Tech solutions it may want are a programmatic advertising network for podcast ads, natural language processing tools that make podcast audio more easily searchable, and a flexible solution for media companies with subscriber-only podcasts to still have those podcasts available on Spotify. Fellow Stockholm-based company Acast seems like a natural, though still bold, potential target here.

How income share agreements will spark the rise of career accelerators

The income share agreement (ISA), a financing model where students pay for an education program with a certain percent of their income for several years after graduating, has been one of 2019’s new buzzwords among VCs and entrepreneurs in Silicon Valley. While still a nascent market that faces regulatory uncertainty in the US and abroad, ISAs are a mainstay of learn-to-code bootcamps and are being piloted at dozens of universities. This financing model is receiving attention because it directly aligns education programs with students’ career outcomes — something that could transform parts of higher education.

ISAs will transform the labor market even further though. In the next few years, use of ISAs will likely go beyond formal education programs to create a new category of career accelerators that are more like scaled talent agencies for businesspeople. Across industries and seniority levels, we will see ambitious professionals choose to pay a small percentage of their future income to partner companies that promise to accelerate their career’s rise. 

Those companies will provide ongoing hard and soft skills trainings, job scouting, guidance on picking the career track and geographic location with the most promise, prep for compensation negotiations, personal branding guidance, and other tactical support like key people to meet and which conferences or private gatherings are most important to target.

This movement will start with graduates of ISA-financed education programs but will quickly expand to other professionals. As career accelerators prove effective at enhancing participants’ career prospects, peers of those participants will fear that they are less competitive in the job market without having the advantage of a career accelerator helping them as well.

Outsourcing career guidance

The average annual operating budget for career services departments across US colleges is merely $90,000. For universities, there’s almost no support for job placement upon graduation despite the claims of universities in their marketing materials. And there’s definitely no support provided during the years after graduation.

The promise of ISAs is to incentivize higher education programs to design their curriculum with their students’ future financial success in mind. Most of the ISA initiatives active right now are either used as a replacement for private student loans at accredited universities or as the financing solution for non-accredited vocational programs (a.k.a. “bootcamps”) that don’t qualify for federal student aid. Their focus remains on curriculum though — it’s a wholly different activity to focus on guiding graduates in their careers for years afterward.

Top VCs in Paris share their investment interests

Since the election of president Emmanuel Macron in 2017, Paris has experienced a surge of momentum as a startup hub. Investor interest had been building for years, but Macron’s government has aggressively focused on adopting more business-friendly regulations and heavily courted the startup and VC community. In September, he announced a €5 billion initiative to bring more late-stage VC capital into the market.

To get a sense of where France’s investor community sees startup opportunities, I surveyed 10 leading VCs who focus on the Paris ecosystem and asked them to share some of their current interests:

  • Nicolas Debock (Idinvest)
  • Marie Brayer (Serena Capital)
  • Yacine Ghalim (Heartcore Capital)
  • Romain Lavault (Partech Partners)
  • Pia d’Iribarne (Stride VC)
  • Alain Caffi (Ventech)
  • Philippe Botteri (Accel)
  • Alice Zagury (TheFamily)
  • Jean de La Rochebrochard (Kima Ventures)
  • Benoit Wirz (Brighteye Ventures)

Here are their responses:

Nicolas Debock (Idinvest)

Privacy is a trend I am really excited about. After the years of deployment of the web through different platforms (browser, mobile, TV, objects…) where personal data was just gathered and used in a ruthless way, I believe end users and companies are getting more conscious of the value (and not only the financial value) of their data.

This is creating the emergence of different tools around personal data management: from personal data platform, synthetic data to anonymization tool and encryption there is a wide range of new kind of businesses that could emerge. I believe that the future always emerge from tension between two trends. The web has been all around transparency and data deluge it is maybe time for the opposite trends to build its momentum.

Marie Brayer (Serena Capital)

We’re still big on deeptech startups because we are deeply convinced that France is a great place to start them (not unlike Israel) and there are still huge fields like healthcare, infrastructure and fashion where you can develop relevant and persistent value.

We are more and more focused on positive investing, which is much more than a buzzword: the current generation of entrepreneurs (and returning entrepreneurs as well!) want to dedicate their time to a worthy cause with social and societal impact. At Serena, we already invested in several companies with strong missions such as Lifen for instance (mission: reduce medical errors), Inato (decrease R&D cost of new medicine) or Accenta (reduce carbon footprint), and can see first hand the appeal they have towards tier one talent.

A new strong focus for us is also the gaming and entertainment industry, which will take a larger share of our lives thanks to all the existing solutions already optimizing our work time and our daily mobility.

Where LA’s top consumer VCs are looking to invest

From a fundraising perspective, Los Angeles has become just the southern-most part of the Bay Area. Top-tier VCs from SF visit LA regularly, and entrepreneurs raise from investors upstate and downstate in one process. Anecdotally, as an LA resident of 4 years, there’s been a palpable uptick of entrepreneurs from the Bay Area who move down here after exiting to found their next company.

Los Angeles is a hub for a wide range of startups, but it has two major groupings: consumer-facing startups that tap into Hollywood’s marketing culture, and the deep-tech ecosystem created by the city’s role as a hub for aerospace, defense and R&D.

To track how the ecosystem for software and digital media startups here is evolving, I asked a few of the top consumer VCs based there to share some of the trends they are most excited about investing in right now:

  • Kevin Zhang, partner at Upfront Ventures
  • Mike Palank, partner at MaC Venture Capital
  • Effie Epstein, partner at Sound Ventures
  • Brett Brewer, partner at CrossCut Ventures
  • Courtney Reum, partner at M13
  • Ron Rofe, partner at Rainfall Ventures
  • Ryan Hoover, partner at The Weekend Fund
  • Dustin Rosen, partner at Wonder Ventures
  • Zach White, principal at Sinai Ventures

The key takeaway is perhaps the diversity of their responses: investors here are going deep into trends across the spectrum of consumer spending. Consumer health and transportation are mentioned, as they were in my surveys of VCs in London and in New York, but this group repeatedly predicts a new wave of interactive, social media startups (albeit with different perspectives on what it looks like).

Kevin Zhang, partner at Upfront Ventures

I’m a strong believer it’s the best time to be a game developer now. Every 10 years or so distribution shakes up, now giants like MSFT, Google, Sony, Epic, etc. are rushing in to shift gamers to subscriptions and cloud gaming, which means big exclusive content library building with lots of “non-dilutive” capital for developers. Games themselves are becoming bigger, cross-platform, cheaper to build and more accessible than ever thanks to advancement in game engine and networking tech. Related: there’s a new generation of mobile entertainment brewing at the intersection of short-form video, live, audience participation and social play; it’s marrying what’s worked with UGC and live video with in-app-purchases and retention tactics of casual games to create more accessible and bite-sized entertainment destinations.

Mike Palank, partner at MaC Venture Capital

While it used to be that great content alone made for a compelling entertainment experience, as we move into the future it will be the blending of great content and amazing tech that will truly capture and retain people’s attention. We’ve seen those funny Youtube videos of babies swiping pictures in physical magazines showcasing their expectations that everything is interactive. I think in much the same way, expectations around filmed media (movies + TV) will trend towards the interactive. We are seeing some truly interesting experimentation around interactive right now from companies like Netflix, Unrd, Eko, CtrlMovie, Playdeo, Hovercast, Aether, Within, Twitch and others.

The winners of the streaming wars understand this and I believe will supplement their content slates with interesting technology to make the viewing experience unique and participatory (Quibi has already announced some examples of this). At MaC, we are looking for those innovative companies that are re-thinking how consumers experience filmed entertainment to make it more experiential, interactive and engaging.

Effie Epstein, partner at Sound Ventures

At Sound, we believe that investors have an enormous responsibility to help shape the future we all want to see. To that end, we’ve been seeing a lot of promising innovation emerge around financial inclusion and digital healthcare. For example, Divvy Homes is a company that is making home ownership a possibility for the millions of Americans who struggle to afford a down payment, and Affirm is giving consumers a fair alternative to credit cards in an age where Americans are more in debt than ever. Meanwhile, TruePill is making it easier and more affordable for end consumers to access medication by changing the way medicine gets delivered, and Alma is making mental healthcare easier for consumers as well as for practitioners.

Kenzie Academy is scaling up a coding program for ‘the heartland’

The crowded landscape of programs teaching non-technical people to become software developers has been a proving ground for a new model of education financing: income share agreements (ISAs). With an ISA, students avoid paying tuition upfront or taking out private loans, instead paying a percentage of their income for a time after graduation after they’re earning a minimum income.

The model aligns education providers with students’ career outcomes, and one startup is staking a claim to be the leader in the space; Kenzie Academy, a year-long program with a physical campus in Indianapolis — and a student body that’s 66 percent online — announced a partnership with Community Investment Management (CIM) earlier this week that provides $100 million in debt to cover the operating costs associated with students who defer payment through ISAs.

Kenzie co-founder and CEO Chok Ooi says that core to Kenzie’s mission is the goal that its graduates “can stay in the heartland and attract more jobs so that someone coming out of the Midwest no longer has to move to Silicon Valley or New York to have a successful career in tech.” This $100 million is one of the largest commitments yet to financing ISAs and Kenzie is using it to recruit a more diverse population of students who may not be able to afford tuition or qualify for student loans otherwise.

I interviewed Ooi to understand how Kenzie differentiates itself from competitors, how it has iterated its model to improve retention and job placement and how he expects the ISA market to evolve over the next couple years. Here’s the transcript of our conversation, edited for length and clarity:

Eric Peckham: The landscape of software developer training programs is crowded. Where did you see an opportunity to do something different, and how do you position Kenzie relative to others in the market?

Chok Ooi: My co-founder came from Galvanize, so we observed firsthand the proliferation of tech and coding boot camps. These are typically short-term, three-to-five month programs and they tend to do well serving people with college degrees. I would say that they are disrupting the masters’ program space. We saw a major gap in programs that serve a much larger demographic of people who are much earlier in their development. People who never went to college, or did a little bit of college and dropped out, or just never had a professional work experience. A three-month training is insufficient to get them to a point where they could land a technical job and be successful.

We saw an opportunity to bring high-quality tech education to the American heartland that is 12 months in length. For about two-thirds of our students, this is their first post-secondary credential training.

We are giving them not just the technical skills, but elements from a traditional four-year college as well, like critical thinking, problem-solving and communication skills.

Compared to those other bootcamps or training programs, is Kenzie targeting different job outcomes for its graduates?

We did a survey of our students that asked them to name the top five tech companies they desired to work for. None of the Silicon Valley companies made the list other than Salesforce. Indianapolis is the second largest Salesforce office outside of San Francisco. The rest of the companies our students named were companies like DMI and Zylo that people in Silicon Valley don’t hear about but are doing very well in the Midwest. Their friends work there. They’re a fabric of the community. If we really want to create job opportunities for the rest of America, we cannot adopt the Silicon Valley mindset.

Kenzie Academy co-Founder and CEO Chok Ooi.

Kenzie Academy co-founder and CEO Chok Ooi.

So how do you evaluate technical aptitude and critical thinking in the admissions process? What’s that process look like, and how has it evolved over the last couple of years? What have you learned in order to make that more effective?

Prior to founding Kenzie, I started a company nine years ago called AglityIO. The model for AgilityIO was similar to companies like Andela. We were trying to solve the talent crunch in the Bay Area by recruiting and training people with the raw talent in Vietnam. Today, that company works with Google, Uber, NerdWallet, Meetup.com and 150 other tech companies. So I’ve experience in developing processes to identify raw talent in this context.

As people are doing the online assessments, we collect data points of how long it takes for them to solve the problem, what their different decision points are and things like that. Then as they get enrolled in Kenzie, we continue to collect attendance data, grades, and then placement data and use that to look at success and failure cases. We constantly refine our assessment.

Are you seeing any particular pattern or cluster in the applications you’re receiving or the candidates you’re accepting in terms of prior field of employment or aspect of their background?

A look at the top trends exciting NYC’s consumer VCs

To learn more about the next wave of consumer startup investment outside Silicon Valley, I’m speaking to leading B2C-focused investors in various hubs about the trends they’re excited about right now. 

Recently, I shared the responses from several London-based investors; today, we spoke to eight of New York’s top consumer VCs:

  • Rebecca Kaden, Partner at Union Square Ventures
  • David Tisch, Founding Partner at BoxGroup
  • Anu Duggal, Founding Partner at Female Founders Fund
  • Craig Shapiro, Partner at Collaborative Fund
  • Jeremy Levine, Partner at Bessemer
  • Beth Ferreira, Partner at Firstmark Capital
  • Graham Brown, Partner at Lerer Hippeau Ventures
  • Eric Reiner, Partner at Sinai Ventures
  • Chris Paik, Partner at Pace Capital

Consumer health and banking startups were recurring areas of interest, and there’s a sense that apps and product brands which provide a deeper sense of community are an untapped opportunity.

Rebecca Kaden, Partner at Union Square Ventures

At USV, we are focused on opportunities that broaden access by leveraging technology to increase value and decrease cost in big buckets of consumer spend. In doing so, we are looking for ways to make products and services previously available to a select segment available to many more. In particular, we have been investing in areas of consumer health where the delivery mechanism not only makes the care more convenient but also more affordable and higher quality; products and platforms in financial services that change the traditional underlying model to drive financial health for a mass customer; and opportunities that create new access to education both for kids and lifelong learners. 

Within each of these segments, I’ve been very interested in how new communities are forming inside products–users that come for a specific offering are forming allegiance and increasing engagement by interacting with other users. I think that is a trend we will only see accelerate.

David Tisch, Founding Partner at BoxGroup

People are bored on their phones, not of their phones. I am most excited to meet founders working on consumer apps that bring happiness and fun to a mass consumer audience, as I continue to believe we are in the early days of mobile and the app store is not dead.

These apps may look like a game, they may be a game, or they may be a new feed, but TikTok, Twitch, HQ, Yolo and other Snap app kit apps, Tinder and others have shown consumers want new apps, the barrier for adoption and retention is  just very high. All apps and games have a half-life, creating something with a very long one is really hard, but the demand is sitting on the phone scrolling thorough feeds, waiting for some new fun. We are excited about apps that allow people to interact with others in different ways, in new worlds, using new hardware, or new interfaces.

Anu Duggal, Founding Partner at Female Founders Fund

With the rise of the sober curious movement, we invested in Kin Euphorics, offering consumers a sexy option to an alcoholic drink, creating a social experience around a non-alcoholic beverage that doesn’t exist in the market today. With beer sales decreasing five years in a row, brands like Heineken are offering alcohol-free alternatives catering to this growing audience.

With the decline of religion, we have seen the rise of what we call the “rise of the alternate community.” Consumers are looking for ways to connect online and offline based on specific interests. Examples of this in our portfolio include The Wonder, a membership model for familyhood, Peanut, a social network for modern motherhood, and Co-Star, an astrology app.