3 lessons from Roblox’s growth to gaming dominance

Our recently published EC-1 on Roblox recounts the origin story and growth prospects of the company. But there’s one more piece to the story: what Roblox’s impact will be on gaming and the broader startup industry, if the company manages to multiply its current 90 million users.

roblox maus 1

Sources: TechCrunch, VentureBeat, Roblox

We’ve distilled three key ideas out of the EC-1 — lessons that may apply not only to game developers and gaming entrepreneurs, but also to the broader startup industry.

Lesson 1: UGC is a missed opportunity in games

Roblox has shown that user-generated content (UGC) is a missed opportunity for much of the game industry. The company aspires, in a way, to be the YouTube of games. And it is succeeding, with 2 million experiences to date.

The game industry generally has two problems with UGC. One is the games themselves: AAA games today are too complex, and lack the flexibility and simplicity needed for robust UGC. Roblox shows that a simpler look and feel is a valid alternative to today’s super-sized, beautiful AAA games. (Minecraft proved much the same.)

The other problem is the greater complexity of making games than, say, videos or music. Roblox solved this problem by building its own game engine, which is designed solely to output Roblox-style experiences.

But increasingly, engines like Unity are capable of accomplishing similar feats: games are getting easier to build. It’s now possible that savvy entrepreneurs could build a platform like Roblox, without building an entire game engine.

Lesson 2: New opportunities in gaming are still coming

The game industry is infamously cyclical. New platforms emerge, become promising, then grow overcrowded and competitive. Usually, this cycle relates to hardware (the iPhone, virtual reality helmets, game consoles like the Nintendo Switch) or massive changes in consumer behavior (the emergence of Facebook, the early growth of the internet). But Roblox, a pure software play, shows that exceptions could exist.

It’s still early days. Roblox reported that it paid out $30 million to game developers in 2017, doubling to $60 million in 2018. Since Roblox keeps 65 percent of revenue from its games, that means it made around $230 million total in 2018. Its top 10 developers made about $2.5 million each. Seven of its games have also entered a “billion plays” club:

Adopt Me, a newer game, hit 440,000 concurrent users in June, a new record for the platform.

When a new platform appears, it’s usually found by amateur developers first. That’s certainly the case with Roblox: its successes are being created almost exclusively by first-time game developers in their teens and twenties. At some point, professional developers are likely to conclude they can do at least as well. The current market is particularly exciting because many games are fairly simple and lightweight — recent breakout hits like Camping 2 and Weight Lifting Simulator 3 are significantly smaller than comparable games on other platforms.

For entrepreneurs interested in creating new platforms or portals Roblox’s success as a combined game engine and self-contained platform also shows that opportunities still exist — if you have the patience to wait for them to mature.

Lesson 3: Patience can create amazing growth cycles

It took Roblox 15 years to grow to its current point. But most of that growth is recent: as seen in the chart above, Roblox experienced 10x growth in about 3 years, from 9 million users in February 2016 to 90 million in April 2019.

So what went into the decade or so during which Roblox was a much smaller platform? As we tell it in the origin story: a great deal of work, and very little paid acquisition.

In its early years, Roblox did buy users, to seed a user base while it worked on an impossibly large vision that included a game engine, platform, social features, a creator community, and its own games. But after a few years, it stopped buying users.

All of its growth since has been organic. That’s from two main sources: word of mouth, and YouTube users who watch one of the many Roblox streamers. Of course, any company can try to do the same. But Roblox had the patience to build a unique product — one which took years of work to even reach partial completion.

The key to it all was long-term adherence to a long-term goal: the creation of a new category, which it calls “human coexperience”. Today, Roblox still can’t be called part of a new category; it’s a game platform. But with more years of work, it may eventually get there.

For more on the Roblox story, see Part 1: The Origin Story, and Part 2: The Business Plan.

UK Facebook users now have a tool to report scam ads

Facebook has launched a tool for UK users to report ads they suspect of being scams.

The feature can be accessed by clicking the three dots in the top right corner of each ad on Facebook, then selecting ‘Report ad’, then ‘Misleading or scam ad’ and finally: ‘Send a detailed scam report’.

So if you want to think of it as a reporting ‘button’ it’s a button that actually requires four presses to function as intended…

Flow of reporting mock up.png.rendition.992.992

Once a scam ad report has been filed, the feature will alert a dedicated internal ops team at Facebook that is tasked with handling reports — so will be reviewing reports and removing violating ads.

The new consumer safety feature follows a defamation lawsuit filed in April last year by consumer advice personality, Martin Lewis, who had become exasperated by the volume of scam ads misappropriating his image on social media to try to trick users into parting with their savings.

Earlier this year Lewis announced he was withdrawing his lawsuit after Facebook agreed to beef up its response to the problem by saying it would add the scam ad reporting feature — which is exclusive to the UK for now — and establish a local team to monitor ad trends for dubious activity.

Facebook also agreed to donate £3M worth of support in cash and Facebook ad credits to UK consumer advice charity, Citizens Advice, to fund the setting up of a Citizens Advice Scams Action (Casa) service — which has also launched today.

This service will provide specialist one-on-one help to those worried they’re being scammed or who have already lost money as a result of fake ads. It will also undertaken scam prevention work, including by raising awareness of online scams in the UK.

Writing in a blog post today on the money saving advice website he founded, Lewis confirms both the Facebook scam ad report tool and Casa have launched — the former some three months tardier than Facebook had suggested at their joint press conference in January.

As regards Casa, UK Internet users who think they have been, or are being, scammed online — either by ads or other methods — can now call the service on 0300 330 3003 for one-on-one help, or access http://www.citizensadvice.org.uk/scamsaction for more info or a web chat.

Face to face appointments will also be available in England, Wales and Scotland at local Citizens Advice bureaus. Lewis writes that the service is expected to help at least 20,000 people in the first year.

“These initiatives, which are available from today, are crucial, as scam ads can have devastating consequences,” he adds, noting that his own complaints to Facebook vis-a-vis scam ads bearing his image led to more than 1,000 ads being taken down.

“The adverts, placed by criminals, often use fake celebrity images or endorsements to dupe people into investing in fake ‘get rich quick’ schemes, buying diet pills and more.

“They can lead to many people being conned out of their cash – in the case below a man in his 80s lost almost £50,000 – and have a serious impact on people’s mental health and self-esteem.”

We’ve reached out to Facebook with questions, including whether it has plans to extend the scam ads reporting tool to other markets.

In a statement provided to Lewis, Steve Hatch, Facebook’s vice president for northern Europe, said: “Scam ads are an industry-wide problem caused by criminals and have no place on Facebook. Through our work with Martin Lewis, we’re taking a market leading position and our new reporting tool and dedicated team are important steps to stop the misuse of our platform.

“Prevention is also key. Our £3 million donation to Citizens Advice will not only help those who have been impacted by scammers, but raise awareness of how to avoid scams too. At a global level we’ve tripled the size of our safety and security team to 30,000 people and continue to invest heavily in removing bad content from our platform.”

Also commenting in a statement, Gillian Guy, chief executive of Citizens Advice, added: “We know online scams affect thousands of people every year. We’re pleased the agreement between Martin Lewis and Facebook meant we could set up this dedicated service to give more help to people who have fallen victim to online scams.

“This project means we can not only support people who have been targeted, but also raise awareness of what to look out for to help prevent online scams happening in the first place. Citizens Advice Scams Action will work alongside the free and impartial help we already offer to anyone who needs advice — whoever they are, whatever their problem.”

While celebrating the launch of Casa, Lewis’ blog post points out that the initial funding “won’t last for ever” — and he calls on other big online ad players to “follow Facebook’s lead, and put their hands in their pockets”.

At the press conference in January Lewis was especially critical of Google for being less responsive to the issue and for not having easy ways for users to report scam ads running on its networks.

We’ve reached out to Google for a response.

In another recent change to its ads platform, Facebook is also now providing users with more information about why they are seeing an ad — if they click through the menu to the option ‘why I am seeing this ad?’.

The company had been criticized for displaying only extremely general targeting criteria — making the feature appear more like a smokescreen than a genuine step towards ad targeting transparency. But last week Facebook said it was now showing “more detailed targeting, including the interests or categories that matched you with a specific ad”.

It also said it will be “clearer where that information came from (e.g. the website you may have visited or Page you may have liked)”. 

Facebook also announced updates to the Ad Preferences menu to provide its users with more information about businesses and third parties that upload lists containing their personal data, such as their email address or phone number, to Facebook to target them with ads — though limiting the data to a 90-day snapshot.

“This section aims to help you understand the third parties and businesses who have uploaded and shared lists with your information,” it wrote of the changes. “In this section, you’ll see the business that initially uploaded a list, along with any advertiser who used that list to serve you an ad within the last 90 days.”

Despite this, Facebook still does not let users deny advertiser uploads of their personal data to Facebook via Facebook itself.

In order to do that a Facebook user would have to contact each and every advertiser individually.

Snap turns to search giant Baidu to court Chinese advertisers

Two years have passed since Snap Inc first struck a deal with Baidu that authorized China’s largest search engine to be a reseller of Snapchat ads for companies in Greater China as well as Japan and South Korea, where Baidu runs a portfolio of mobile apps.

This week, the pair announced they have renewed the sales partnership without revealing how revenues are divided between the two and when the extended agreement expires.

Despite being blocked in China like most other western social media services, Snap has shown interest in China in various capacities, including a research and development center in Shenzhen for Spectacles. It’s also serving the country’s game developers, e-commerce merchants and other export-led advertisers who wish to capture the network’s 190 million daily active users around the world.

Facebook and Twitter are in the same overseas ad business in China. Facebook, with an “experience center” in Shenzhen for clients to learn how its ads work, counted China as its second-largest ad spender in 2018, according to Pivotal Research Group. Twitter also holds an annual summit in China for small and medium enterprises going global.

None of the western social giants can go it alone in China, which is why Snap chose Baidu to be its local partner to not only overcome regulatory restrictions on foreign entities but also tap the latter for language support, account management and an extensive advertiser network.

Baidu also intended to resell Facebook ads but did not manage to get a license, a former Facebook employee who wishes to remain anonymous told TechCrunch. Instead, Facebook works with Cheetah Mobile, PapayaMobile and seven other advertising representatives in China.

Through the deal, companies that purchase media through Baidu gain access to all forms of ad slots in Snap’s videos, real-time selfie effects, overlays and more. The return can be satisfying. Besides the opportunity to capture a predominantly young user base, advertisers are reaching a sticky group who, on average, opens Snapchat over 20 times and spends over 30 minutes on the app every day.

“With its young, vibrant user base, Snap’s advertising platform has been instrumental in driving growth for our game AFK Arena,” said Chris Zhang, vice president of Shanghai-based Lilith Games, in a statement.

“Our partnership with Snap Inc. provides Chinese companies new avenues to expand their businesses through Snapchat advertising,” said Sheng Hu, head of U.S. strategy and partnership at Baidu’s Global Business Unit that operates a range of overseas products such as Japanese keyboard app Simeji. “We look forward to connecting with marketing executives in China and beyond on behalf of Snap to discuss the benefits of these advertising solutions.”

What to expect from tomorrow’s antitrust hearing featuring big tech

Tomorrow, representatives from Facebook, Google, Amazon and Apple will testify before Congress in the second hearing organized as part of the House Judiciary Committee’s antitrust investigation into the world’s largest technology companies.

While the first hearing focused on the ways technology companies busted the traditional news business, this one promises to look at the “impact of market power of online platforms on innovation and entrepreneurship,” according to the committee.

Unlike the previous hearing, which featured representatives from media outlets and industry trade organizations attacking or defending the ways in which online advertising had gutted the news business, this latest outing led by Rhode Island Democratic Rep. David Cicilline will have actual tech company execs on hand to answer congressional queries.

One section of the testimony will feature Google’s economic policy head, Adam Cohen; Amazon’s associate general counsel, Nate Sutton; Facebook’s global head of policy, Matt Perault; and Kyle Andeer, Apple’s chief compliance officer.

Others expected to appear include Tim Wu, the Columbia Law professor who’s been an outspoken critic of technology consolidation and an advocate for more stringent antitrust oversight of tech companies, and Maureen Ohlhausen, a partner at Baker Botts and the former acting chairman of the Federal Trade Commission in charge of its antitrust actions.

Wu and his views sort of encapsulate much of the thinking from critics of these companies’ current dominance in the market.

“I would love, in fact, if a serious Facebook challenger took down Facebook, and I would stop calling for any antitrust action. It’s just when you become suspicious that the barriers have gotten strong enough that a company could survive, then maybe we need to have antitrust law loosened up, get things moving, and provide for the market cycle to take its place. Now eventually it will happen, but we can’t wait for 50 years,” Wu told the American Enterprise Institute in an interview earlier this year.

“It’s also possible that history would suggest that a company like Facebook, and perhaps Amazon, will soon try to get government on their side to defend themselves against competition. I don’t know what it will look like, but maybe Facebook agrees to some kind of privacy law, which for some reason is very hard for new entrants to adhere to. Amazon may try and instantiate itself as basically the national e-commerce monopolist, kind of like a Bell-regulated monopoly. That’s a next natural step, especially as a big star, to become less competitive. And so before that happens, I think we give the antitrust law its turn.”

Policy watchers can expect market criticisms of the big technology platforms to come from a few different angles (each company has different, slightly overlapping, issues that policymakers find worrisome).

For Alphabet, criticism stems primarily from the company’s dominance in online search and the ad networks it controls through its ownership of DoubleClick and AdMob (along with its ownership of YouTube’s wildly popular video platform). At Amazon, it’s the ways in which Jeff Bezos’e-commerce behemoth hoovers up sales information  and uses it to inform pricing and potentially anticompetitive practices that stymie the development of new e-commerce players by promoting its own brands and products.

For Facebook, it’s the dominance of the company’s social media platforms (including Instagram and the messaging service WhatsApp) that are a cause for concern — as is its unwillingness to open its social graph for other startups. The company also elicits howls from consumer advocates for its abysmal ability to protect user privacy and data.

Finally, Apple’s control over the entire ecosystem it pitches to consumers — and the pricing policies it enforces that some critics have called extortive are cause for concern among the political class.

These competitive concerns also play out against the outsized ambitions that these technology companies have in other areas. Facebook is trying to make an end run around the existing global financial system through the launch of its Libra cryptocurrency; Alphabet, Amazon and Facebook all have designs to dominate the development of artificial intelligence in open markets; and then there’s the work these companies are conducting in areas as diverse as healthcare, mobility technologies and even space travel and high-speed networking.

With so many interests in so many areas and core businesses generating so much money, it’s easy to conflate a broader unease with these companies’ ambitions and the core anti-competitive arguments that are worthy of discussion.

For this hearing — and indeed the Congressional investigation to be successful — the focus should be less on the global ambitions of these technology companies and more on the practices they’ve enacted to stifle competition.

Facebook snags former Vine GM to run product for its new experimental app division, NPE Team

Is Facebook preparing to launch a serious competitor to TikTok? If so, the company just picked up some key talent to make that happen. Last week, Facebook announced plans for a new division, called the NPE Team, which will build experimental consumer-focused apps where it will try different ideas and features, then see how people react. Now, Facebook has picked up former Vine GM Jason Toff to join the NPE team as a Product Management Director.

Toff’s experience also includes time spent at Google, most notably as a Product Lead for YouTube before exiting to Vine in 2014. At the short-form video app maker, Toff worked as Head of Product for a year, then became Vine’s General Manager.

Vine, of course, was later snatched up by Twitter — and there, Toff moved up to Director of Product Management before boomeranging back to Google, where his initial focus was on AR and VR projects.

Most recently, Toff worked as a Partner at Google’s Area 120, Google’s in-house incubator where employees work on experimental projects.

That’s not all that different from what Facebook appears to have in store with its own NPE Team ambitions. Similar to Area 120 or Microsoft Garage, for example, the NPE Team plans to deliver apps that will “change very rapidly” in response to consumer feedback. It will also be quick to close down experiments that aren’t useful to people in fairly short order.

That’s not how Facebook itself operates. Its more experimental apps have had longer runs, as the company used them to gain feedback to inform its larger projects. For example, its photo-sharing app Moments ran from 2015 through early 2019, and its TrueCaller-like app Hello for emerging markets ran for several years, despite fairly limited adoption.

Facebook has also tried and failed with a number of other offshoots over the past decade, like Facebook Paper, Notify, a Snapchat clone called Lifestage, and others, as well as those it picked up through acquisitions, then later shut down like tbh or Moves. It also previously ran an internal incubator of sorts called Facebook Creative Labs, which birthed now-failed projects like Slingshot, Riff, and Rooms.

Many of these efforts were fairly high-profile at launch, which made their eventual shut down more problematic for Facebook’s image. With NPE Team — as with Area 120 or Microsoft Garage — there’s a layer of separation between the test apps and the larger company. Many of the apps that the NPE Team puts out will bomb, and that’s the point — it wants to get the failures out of the way faster so others can find success.

While Toff can’t yet say what he’ll be working on at Facebook, there’s a lot of speculation that NPE Team will try to come up with some sort of answer to TikTok, the Beijing-based short-form video app that sucked up Musical.ly in 2018 and now is a Gen Z social networking hit with some 500 million-plus monthly users. Toff’s background with Vine could certainly be helpful if that were the case.

Facebook, of course, already tried to get a TikTok clone off the ground with Lasso, but the experiment didn’t take off and the app lead, Brady Voss, left Facebook soon after its launch. It

Toff says he’s hiring for NPE Team, including both UX designers and engineers.

‘The Operators’: Understanding your user – The art and science of UI/UX behind Facebook, Google, Mint, and Edmodo

Welcome to this transcribed edition of The Operators. TechCrunch is beginning to publish podcasts from industry experts, with transcriptions available for Extra Crunch members so you can read the conversation wherever you are.

The Operators highlights the experts building the products and companies that drive the tech industry. Speaking from experience at companies like Airbnb, Brex, Docsend, Edmodo, Facebook, Google, Lyft, Mint, Slack, Uber, WeWork, etc., these experts share insider tips on how to break into fields like design and enterprise sales. They also share best practices for entrepreneurs to hire and manage experts in fields outside their own.

This week’s edition features Gülay Birand, UX Lead and Product Design Manager at Facebook, and Tim Rechin, Head of Design at Edmodo, the leading education technology company. Gülay and Tim share their experiences and explain design, UI/UX, how to build a career in these fields, and how entrepreneurs should think about them.

Gülay and Tim bring experience from other great companies including Google, Amazon, Mint, and SAP. Having seen and grown in their disciplines from a variety of companies and customer types, they share deep insight from across tech.

image1 2

Neil Devani and Tim Hsia created The Operators after seeing and hearing too many heady, philosophical podcasts about the future of the world and the tech industry, and not enough attention on the practical day-to-day work that makes it all happen.

Tim is the CEO & Founder of Media Mobilize, a media company and ad network, and a Venture Partner at Digital Garage. Tim is an early-stage investor in Workflow (acquired by Apple), Lime, FabFitFun, Oh My Green, Morning Brew, Girls Night In, The Hustle, Bright Cellars, and others.

Neil is an early-stage investor based in San Francisco with a focus on companies solving serious problems, including Andela, Clearbit, Recursion Pharmaceuticals, Vicarious Surgical, and Kudi.

If you’re interested in becoming a designer, doing UI/UX research, furthering your career in that field, or starting a company and don’t know when to hire or how to manage this discipline, you can’t miss this episode!

The show:

The Operators highlights the experts building the products and companies that drive the tech industry. Speaking from experience at companies like Airbnb, Brex, Docsend, Edmodo, Facebook, Google, Lyft, Mint, Slack, Uber, WeWork, etc., these experts share insider tips on how to break into fields like design and enterprise sales. They also share best practices for entrepreneurs to hire and manage experts in fields outside their own.

In this episode:

In Episode 3, we’re talking about design and UI/UX. Neil interviews Gülay Birand, UX Lead and Product Design Manager at Facebook, and Tim Rechin, Head of Design at Edmodo.

Neil Devani: Hello and welcome to The Operators, where we talk to the people building the companies of today and tomorrow. We publish every other Monday and you can find us online at Operators.co.

Today’s episode is very special, we are talking to two UI/UX experts who have designed and researched products that have been touched by billions of people. I’m your host, Neil Devani and we’re coming to you today from the Vault of Joi here at Digital Garage in downtown San Francisco.

Joining me is Tim Rechin, Head of Design at Edmodo, the leading classroom and education community with 100 million users globally. Also joining us is Gülay Birand, a UX lead and product design manager at Facebook.

Gülay works on the newsfeed product used by billions of people every day. Thank you for joining us, if you could tell us more about yourselves and your work it would be great to hear more.

Gülay Birand: Thank you, my name is Gülay Birand. I’m a product design manager at Facebook . I’ve been at Facebook for about three months. Prior to that I was at Google for about 8 years, and I led a horizontal team on Google Cloud Platform for about four years, leading growth and engagement, support, and product excellence initiatives.

Prior to that I did a bit of a tour to Google, so I worked on search, identity, a couple of other areas like mobile ads, and before that I was at T-Mobile where I was building mass market and franchise home experiences, mainly on Android. And prior to that I was at Amazon leading experiences for the very first Kindle, so that was a lot of fun.

Devani: And Tim tell us more about yourself and how you got here.

Tim Rechin: Yeah, so I’m currently at Edmodo, leading up design and that’s really across the entire platform that serves our teachers, students and parents in the US and globally. And before Edmodo, I was at Facebook, and I was on the Feed Ads team and responsible for the lead ads product that we launched that year. Before that I was at Mint, so doing personal finance and some of you may be using Mint.

Devani: I’m definitely using Mint, its great, I love it.

Rechin: And then before that SAP, Yahoo, eBay, and then Elance very early on which is now Upwork.

Devani: Very cool, all companies that I’ve used, products that I enjoy, thank you for helping create them.

Birand: Thank you.

Devani: So it’d be great if you could tell folks more about what you do every day. Who are the folks in your company that you are interacting with, what are your responsibilities, what does it mean to do the job that you do?

Rechin: That’s a good question, it’s a bit mixed. Just for some context, Edmodo is a company a little over 100 people and so our product teams are in the 6-7 product managers range. I lead a team of 3 designers. So my day to day is really getting to work and really trying to figure out what’s going on, so this year is a particularly busy year as we get ready for back to school.

And so we have a lot of concurrent projects going, so one of the things I like to do when I get in is level set, kind of see how my day is and I’ll go check in with the different teams. That’s part of the work I do, working with the different product teams and the strategy.

So like I said, we are working on lots of different projects, so it’s really just keeping everyone aligned and making sure that designers are delivering things on time, that any issues or gaps are being filled and we can go answer those questions that are coming from product managers and designers. In some cases too, there is a project that is about to be kicked off, so everything is not clean, phased, there are always these things that kind of pop up.

So I will find myself in meetings in talking about strategy to figure out how to kick off those projects or what our go-to-market is for back to school.

As FTC cracks down, data ethics is now a strategic business weapon

Five billion dollars. That’s the apparent size of Facebook’s latest fine for violating data privacy. 

While many believe the sum is simply a slap on the wrist for a behemoth like Facebook, it’s still the largest amount the Federal Trade Commission has ever levied on a technology company. 

Facebook is clearly still reeling from Cambridge Analytica, after which trust in the company dropped 51%, searches for “delete Facebook” reached 5-year highs, and Facebook’s stock dropped 20%.

While incumbents like Facebook are struggling with their data, startups in highly-regulated, “Third Wave” industries can take advantage by using a data strategy one would least expect: ethics. Beyond complying with regulations, startups that embrace ethics look out for their customers’ best interests, cultivate long-term trust — and avoid billion dollar fines. 

To weave ethics into the very fabric of their business strategies and tech systems, startups should adopt “agile” data governance systems. Often combining law and technology, these systems will become a key weapon of data-centric Third Wave startups to beat incumbents in their field. 

Established, highly-regulated incumbents often use slow and unsystematic data compliance workflows, operated manually by armies of lawyers and technology personnel. Agile data governance systems, in contrast, simplify both these workflows and the use of cutting-edge privacy tools, allowing resource-poor startups both to protect their customers better and to improve their services.

In fact, 47% of customers are willing to switch to startups that protect their sensitive data better. Yet 80% of customers highly value more convenience and better service. 

By using agile data governance, startups can balance protection and improvement. Ultimately, they gain a strategic advantage by obtaining more data, cultivating more loyalty, and being more resilient to inevitable data mishaps. 

Agile data governance helps startups obtain more data — and create more value. 

With agile data governance, startups can address their critical weakness: data scarcity. Customers share more data with startups that make data collection a feature, not a burdensome part of the user experience. Agile data governance systems simplify compliance with this data practice. 

Take Ally Bank, which the Ponemon Institute rated as one of the most privacy-protecting banks. In 2017, Ally’s deposits base grew 16%, while those of incumbents declined 4%.

One key principle to its ethical data strategy: minimizing data collection and use. Ally’s customers obtain services through a personalized website, rarely filling out long surveys. When data is requested, it’s done in small doses on the site — and always results in immediate value, such as viewing transactions. 

This is on purpose. Ally’s Chief Marketing Officer publicly calls the industry-mantra of “more data” dangerous to brands and consumers alike.

A critical tool to minimize data use is to use advanced data privacy tools like differential privacy. A favorite of organizations like Apple, differential privacy limits your data analysts’ access to summaries of data, such as averages. And by injecting noise into those summaries, differential privacy creates provable guarantees of privacy and prevents scenarios where malicious parties can reverse-engineer sensitive data. But because differential privacy uses summaries, instead of completely masking the data, companies can still draw meaning from it and improve their services. 

With tools like differential privacy, organizations move beyond governance patterns where data analysts either gain unrestricted access to sensitive data (think: Uber’s controversial “god view”) or face multiple barriers to data access. Instead, startups can use differential privacy to share and pool data safely, helping them overcome data scarcity. The most agile data governance systems allow startups to use differential privacy without code and the large engineering teams that only incumbents can afford.

Ultimately, better data means better predictions — and happier customers.

Agile data governance cultivates customer loyalty

According to Deloitte, 80% of consumers are more loyal to companies they believe protect their data. Yet far fewer leaders at established, incumbent companies — the respondents of the same survey — believed this to be true. Customers care more about their data than the leaders at incumbent companies think. 

This knowledge gap is an opportunity for startups. 

Furthermore, big enterprise companies — themselves customers of many startups — say data compliance risks prevent them from working with startups. And rightly so. Over 80% of data incidents are actually caused by errors from insiders, like third party vendors who mishandle sensitive data by sharing it with inappropriate parties. Yet over 68% of companies do not have good systems to prevent these types of errors. In fact, Facebook’s Cambridge Analytica firestorm — and resulting $5 billion fine — was sparked by third party inappropriately sharing personal data with a political consulting firm without user consent. 

As a result, many companies — both startups and incumbents — are holding a ticking time bomb of customer attrition. 

Agile data governance defuses these risks by simplifying the ethical data practices of understanding, controlling, and monitoring data at all times. With such practices, startups can prevent and correct the mishandling of sensitive data quickly.

Cognoa is a good example of a Third Wave healthcare startup adopting these three practices at a rapid pace. First, it understands where all of its sensitive health data lies by connecting all of its databases. Second, Cognoa can control all connected data sources at once from one point by using a single access-and-control layer, as opposed to relying on data silos. When this happens, employees and third parties can only access and share the sensitive data sources they’re supposed to. Finally, data queries are always monitored, allowing Cognoa to produce audit reports frequently and catch problems before they escalate out of control. 

With tools that simplify these three practices, even low-resourced startups can make sure sensitive data is tightly controlled at all times to prevent data incidents. Because key workflows are simplified, these same startups can maintain the speed of their data analytics by sharing data safely with the right parties. With better and safer data sharing across functions, startups can develop the insight necessary to cultivate a loyal fan base for the long-term.

Agile data governance can help startups survive inevitable data incidents

In 2018, Panera mistakenly shared 37 million customer records on its website and took 8 months to respond. Panera’s data incident is a taste of what’s to come: Gartner predicts that 50% of business ethics violations will stem from data incidents like these. In the era of “Big Data,” billion dollar incumbents without agile data governance will likely continue to violate data ethics. 

Given the inevitability of such incidents, startups that adopt agile data governance will likely be the most resilient companies of the future. 

Case in point: Harvard Business Review reports that the stock prices of companies without strong data governance practices drop 150% more than companies that do adopt strong practices. Despite this difference, only 10% of Fortune 500 companies actually employ the data transparency principle identified in the report. Practices include clearly disclosing data practices and giving users control over their privacy settings. 

Sure, data incidents are becoming more common. But that doesn’t mean startups don’t suffer from them. In fact, up to 60% of startups fold after a cyber attack. 

Startups can learn from WebMD, which Deloitte named as one standout in applying data transparency. With a readable privacy policy, customers know how data will be used, helping customers feel comfortable about sharing their data. More informed about the company’s practices, customers are surprised less by incidents. Surprises, BCG found, can reduce consumer spending by one-third. On a self-service platform on WebMD’s site, customers can control their privacy settings and how to share their data, further cultivating trust. 

Self-service tools like WebMD’s are part of agile data governance. These tools allow startups to simplify manual processes, like responding to customer requests to control their data. Instead, startups can focus on safely delivering value to their customers. 

Get ahead of the curve

For so long, the public seemed to care less about their data. 

That’s changing. Senior executives at major companies have been publicly interrogated for not taking data governance seriously. Some, like Facebook and Apple, are even claiming to lead with privacy. Ultimately, data privacy risks significantly rise in Third Wave industries where errors can alter access to key basic needs, such as healthcare, housing, and transportation.

While many incumbents have well-resourced legal and compliance departments, agile data governance goes beyond the “risk mitigation” missions of those functions. Agile governance means that time-consuming and error-prone workflows are streamlined so that companies serve their customers more quickly and safely.

Case in point: even after being advised by an army of lawyers, Zuckerberg’s 30,000-word Senate testimony about Cambridge Analytica included “ethics” only once, and it excluded “data governance” completely.

And even if companies do have legal departments, most don’t make their commitment to governance clear. Less than 15% of consumers say they know which companies protect their data the best. Startups can take advantage of this knowledge gap by adopting agile data governance and educate their customers about how to protect themselves in the risky world of the Third Wave.

Some incumbents may always be safe. But those in highly-regulated Third Wave industries, such as automotive, healthcare, and telecom should be worried; customers trust these incumbents the least. Startups that adopt agile data governance, however, will be trusted the most, and the time to act is now. 

Facebook reportedly gets a $5 billion slap on the wrist from the FTC

The U.S. Federal Trade Commission has reportedly agreed to end its latest probe into Facebook‘s privacy problems with a $5 billion payout.

According to The Wall Street Journal, the 3-2, party-line vote by FTC commissioners was carried by the Republican majority and will be moved to the Justice Department’s civil division to be finalized.

A $5 billion payout seems like a significant sum, but Facebook had already set aside $3 billion to cover the cost of the settlement and the company could likely make up the figure in less than a quarter of revenue (the company’s revenue for the last fiscal quarter was roughly $15 billion). Indeed, Facebook said in April that it expected to pay up to $5 billion to end the government’s probe.

The settlement will also include government restrictions on how Facebook treats user privacy, according to the Journal.

We have reached out to the FTC and Facebook for comment and will update this story when we hear back.

Ultimately, the partisan divide which held up the settlement broke down with Republican members of the commission overriding Democratic concerns for greater oversight of the social media giant.

Lawmakers have been calling consistently for greater regulatory oversight of Facebook — and even a legislative push to break up the company — since the revelation of the company’s mishandling of the private data of millions of Facebook users during the run up to the 2016 presidential election, which wound up being collected improperly by Cambridge Analytica.

Specifically the FTC was examining whether the data breach violated a 2012 consent decree which saw Facebook committing to engage in better privacy protection of user data.

Facebook’s woes didn’t end with Cambridge Analytica . The company has since been on the receiving end of a number of exposes around the use and abuse of its customers’ information and comes as calls to break up the big tech companies have only grown louder.

The settlement could also be a way for the company to buy its way out of more strict oversight as it faces investigations into its potentially anti-competitive business practices and inquiries into its launch of a new cryptocurrency — Libra — which is being touted as an electronic currency for Facebook users largely divorced from governmental monetary policy.

Potential sanctions proposed by lawmakers for the FTC were reported to include the possibility of elevating privacy oversight to the company’s board of directors and potentially the deletion of tracking data; restricting certain information collection; limiting ad targeting and restricting the flow of user data among different Facebook business units.

Twitch continues to dominate live streaming with its second-biggest quarter to date

Twitch continues to lead rivals including, YouTube Live, Facebook Gaming and Microsoft’s Mixer, when it comes to live-streaming video. Despite experiencing its first decline in hours watched in Q2 2019, the Amazon-owned game-streaming site still had its second-biggest quarter to date, with more than 70% of the hours watched during the quarter.

According to a new report from StreamElements, Twitch viewers live-streamed a total of 2.72+ billion hours in Q2 — or 72.2% of all live hours watched — compared with 735.54 million hours on YouTube Live (19.5%), 197.76 million on Facebook Gaming (5.3%) and just 112.29 million hours (3%) on Mixer.

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Combined, the total hours watched across all four platforms was 3.77 billion in Q2.

While none of Twitch’s rivals are nearly catching up, YouTube Live did have a good month in May, breaking its own record with 284 million hours watched. Overall, YouTube Live’s hours watched improved in Q2 as a result, while Twitch saw a slight decline.

Facebook Gaming is also gaining steam. It’s now the third-biggest live-streaming platform, having passed Microsoft Mixer.

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Despite its traction, Twitch doesn’t have much of a long tail when it comes to stream viewership. That’s a problem it has faced for some time, as newcomers complained they spent years broadcasting to no one in hopes of gaining a fan base, with little success. Twitch has tried to remedy this problem with various educational efforts as well as product features like Raids and Squad Streams, for example.

However, the new report finds that the majority (almost 75%) of Twitch’s viewership still comes from people tuning in to the top 5,000 channels. Out of the 2.7 billion hours watched in Q2, these top 5,000 channels drove 2 billion of those hours watched.

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In addition, the average concurrent viewership (viewers watching at the same time) of the top 5,000 channels increased by 12% in Q2 2019, compared with Q1. The top 200 channels have the highest concurrent viewership with 10,590 people watching together, on average.

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Also in the quarter, viewership of top titles like Fortnite, League of Legends, Dota 2 and Counter-Strike: Global Offensive declined, while vlogging — aka “Just Chatting” — grew, along with other titles.

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Esports, meanwhile, still draws big numbers, but represents only a small slice of the overall pie.

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The full report, which takes a look at other trends, including which streamers are gaining and losing popularity, is available here.

When someone great is gone: How to address grief in the workplace with empathy

Birthday cakes, gift cards, free lunches, snacks, movie tickets, and other perks are generously bestowed on employees to celebrate life’s happy moments. This is an improvement from the industrial approach to management, but can we go deeper for our work-family members?

Life’s darker moments hold the greatest opportunity to exemplify a genuine and caring 21st-century workplace culture. One which fosters empathy and camaraderie. Employee turnover is highest when employees take leave, claim FMLA, or use PTO. According to Global Studies, 79% of employees report their reason for quitting was simply due to feeling unnoticed (lack of appreciation).

Appreciation for your employees is best demonstrated as an act of kindness in moments that really matter, like the loss of a family member. Acknowledging that someone great is gone, instead of ignoring the uncomfortable aspects of grief, is a valuable way to embed empathy into your workplace culture.

Recently, while working with a mid-sized (500+ employees) tech company, I asked what they were doing to support employees during the negative life moments. The HR Director replied, “um, nothing really”.

Once realizing how crappy that sounded, another executive countered her by saying he sent an employee a t-shirt and card after a miscarriage. I later learned that the employee he was referring to had been with the company for over 5 years, so it’s safe to assume that she had a couple of company swag t-shirts in her collection prior to getting one as a get well gift.

Even in the largest and most notable companies, where a variety of employee amenities and benefits are offered, the concept and practice of empathy is often neglected. Perhaps you haven’t come across such extreme examples of indifference in your workplace, but you may have participated in signing a generic condolences card or chipping in for some flowers.