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Startup cynicism and Substack, or Clubhouse, or Miami, or …

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If you build it, they will come, but they sure as hell are going to complain about everything until they do.

There were millions of bets made in the tech industry last year. Some of those bets involved actual venture capital dollars. Others involved individual decisions on where to live: do you bet on the future of San Francisco or do you want to partake in the growth of some other startup hub? Are you going to launch this new feature in your product or improve one of your existing ones? Do you switch jobs or stay and double down?

Yet, for all those bets, just three seem to have achieved a collective and hysterical frenzy in the industry as we close out this year: a bet on the future of media, a bet on the future of (audio) media, and a bet on the future of one of America’s greatest cities.

Substack, Clubhouse, and Miami as a major tech hub are compelling bets. They are early bets, in the sense that most of the work to actually realize each of their dreams remains to be done. All three are bets of optimism: Substack believes it can rebuild journalism. Clubhouse believes it can reinvent radio with the right interactivity and build a unique social platform. And Miami is a bet that you can take a top global city without a massive startup ecosystem and agglomerate the talent necessary to compete with San Francisco, New York and Boston.

Yet, that optimism is not broadly endorsed by the tech commentariat, who see threats, failures, and barriers from every angle.

I wish I could say it’s just the ennui of an industry in flux given the pandemic and constant cavalcade of chaos and bad news that’s hit us this year. That cynicism, though, has gotten deeper and more entrenched over the past few years even before coronavirus was a trending topic, even as more startups than ever are getting funding (and at better valuations!), even as more startups than ever are exiting, and those exits are collectively larger than ever as we saw earlier this month.

Insecurity is the fabric that runs through most of these bleak analyses. That’s particularly prominent with Substack, which sits at the nexus of insecurity in tech and insecurity in media. The criticism from tech folks seems to basically boil down to “it’s just an email service!” Its simplicity is threatening, since it seems to intimate that anyone could have built a Substack, really anytime in the last decade.

Indeed, they could. Substack is simple in its original product conception, which is a DNA it happens to share with a lot of other successful consumer startups. It is (or perhaps better to say now, was) just email. It’s Stripe + a CMS editor + an email delivery service. A janky version could be written in a day by most competent engineers. And yet. No one else built Substack, and that’s where the insecurity starts in the startup world.

From the media perspective, it’s of course been brutal the last few years in newsrooms and across publishing, so understandably, the level of cynicism in the press is already high (and journalists aren’t exactly optimistic types to begin with). Yet, most of the criticism here basically boils down to “why hasn’t Substack completely stopped the bloodletting of my industry in the short few years it’s been around?”

Maybe they will, but give the folks some god damn time to build. The fact that a young startup is even considered to have the potential to completely rebuild an industry is precisely what makes Substack (and other adjacent startups in its space) such a compelling bet. Substack, today, cannot re-employ tens of thousands of laid-off journalists, or fix the inequality in news coverage or industry demographics, or end the plight of “fake news.” But what about a decade from now if they keep growing on this trajectory and stay focused on building?

The cynicism of immediate perfection is one of the strange dynamics of startups in 2020. There is this expectation that a startup, with one or a few founders and a couple of employees, is somehow going to build a perfect product on day one that mitigates any potential problem even before it becomes one. Maybe these startups are just getting popularized too early, and the people who understand early product are getting subsumed by the wider masses who don’t understand the evolution of products?

This pattern is obvious in the case of Clubhouse, the drama aspects we have mostly managed to avoid at TechCrunch. It’s a new social platform, with new social dynamics. No one understands what it’s going to become in the next few years. Not Paul Davison (who might, even so, have a dream of where he wants to take it), not Clubhouse’s investors, and certainly not its users. This past week, Clubhouse hosted a live Lion King musical event with thousands of participants. Who had that on their bingo board?

Are there problems with Substack and Clubhouse? For sure. But as early companies, they have the obligation to explore the terrain of what they are building, find the key features that compel users to these platforms, and ultimately find their growth formula. There will be problems — trust and safety chief among them, particularly given the nature of user-contributed content. No startup has ever been founded, however, that didn’t uncover problems along its journey. The key question we must ask is whether these companies have the leadership to fix them as they continue building. My sense — and hypothetical bet — is yes.

Talking about leadership, that leads us to Francis Suarez, the mayor of Miami, whose single tweet offering to help has sparked the most absurd kerfuffle of San Francisco lovers and vitriolic pessimists the world over right now.

Keith Rabois and a few other VCs and founders are trailblazing a trail from San Francisco to Miami, linking up with the local industry to try to build something new and better than what existed before. It’s a bet on a place — an optimistic one — that the power of startups and tech can migrate outside of its central hubs.

What’s strange is that the cynicism around Miami here seems even less warranted than it did a decade ago. While San Francisco and distantly New York and Boston remain the clear hubs of tech startups in the U.S., cities like Salt Lake, Seattle, Portland, Chicago, Austin, Denver, Philadelphia and more have started to score some serious points. Is it really so hard to believe that Miami, a metro region of 5.5 million and one of the largest regional economies in the United States, might actually succeed as well? Maybe it literally just required a few major VCs to show up to catalyze the revolution.

Nothing got built by cynicism. “You can’t do it!” has never created a company, except perhaps to trigger a founder to start something in revolt at the fusillade of negativity.

It takes time though to build. It takes time to take an early product and grow it. It takes time to build a startup ecosystem and expand it into something self-sustaining. Perhaps most importantly, it takes extraordinary effort and hard work, and not just from singular individuals but a whole team and community of people to succeed. The future is malleable — and bets do pay off. So we all need to stop asking what’s the problem and pointing out flaws, and perhaps ask, what future are we building toward? What’s the bet I’m willing to back?

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Wattpad, the storytelling platform, is selling to South Korea’s Naver for $600 million

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Wattpad, the 14-year-old, Toronto-based, venture-backed storytelling platform with reach into a number of verticals, is being acquired by Naver, the South Korean conglomerate, in a $600 million cash-and-stock deal.

Naver plans to incorporate at least part of the business into another of its holdings, the 16-year-old publishing portal Webtoon, which Naver launched in 2004, brought to the U.S., and that features thousands of comic strips created by its users. It also has a huge audience. According to Naver, Webtoons was averaging more than 67 million monthly users as of last August.

On its face, the deal appears to make sense. According to Korea’s Pulse News, some of  Korea’s webtoons are finding a broader audience and crossing over into film. (Below is a trailer for one popular series called “The Secret of Angel.”)

Similarly, Wattpad, which originally launched as an e-reading app, has evolved into a hugely popular platform where users publish their original work and more than 90 million people visit monthly to read them.  (According to a story published last week in the Verge, Wattpad has published more than a billion stories over the years,  and it claims its users spend a collective 22 billion minutes per month reading these.)

Like Webtoon, Wattpad has been more focused on streaming media, given the many platforms now needing fresh content, from Netflix to Apple to farther flung outfits, like GoJek’s GoPlay, launched by the Indonesian ride-hailing giant in 2019. (In addition to Wattpad Studios, Wattpad also launched a book publishing division in 2019.)

CEO Jun Koo Kim of Webtoon said in a release about the new tie-up that it represents a “big step towards us becoming a leading global multimedia entertainment company.”

Meanwhile, CEO Seong-Sook Han of Naver — whose properties include the popular Tokyo-based messaging app Line — said in press release that Wattpad co-founders Allen Lau and Ivan Yuen will continue to lead the company they have built post-acquisition.

As for whether the acquisition is a win for Wattpad’s investors, it appears to be a moderate one. (It’s hard to discern much without knowing the terms under which each outfit invested.)

Wattpaid had raised $117.8 million from investors in Asia, the United States, and Canada over the years and closed its most recent round with $51 million from Tencent Holdings, BDC, Globe Telecom’s Kickstart Ventures, Peterson Group, Canso, and Raine Ventures.

That last deal, announced in 2018, assigned the company a post-money valuation of $398 million according to Pitchbook.

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Reflections on the first all-virtual CES

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I’ve spent more time than I care to mention over the last several years wondering aloud about the value of in-person trade shows. There’s something seemingly antiquated in the idea of jamming a bunch of people in a room, walking from booth to booth. Sure, they’ve fulfilled an important need in the past, but aren’t they just a relic in this hyperconnected world?

I’ve always assumed that if trade shows were to go extinct, it would be a gradual process — a slow fade into cultural irrelevance, like bookstores and record stores (both things I miss dearly). Technology has, for many intents and purposes, dramatically reduced their relative value to our society.

While it’s undoubtedly true that Spotify and the Kindle Store are lacking in much of the appeal and all of the charm of their real-world counterparts, we’re happy to sacrifice all that and more at the alter of convenience.

A rampaging pandemic has effectively given us a year without in-person trade shows. That means, among other things, we’ve had a much more immediate control variable in this question about trade shows. Last year’s CES managed to get in just under the wire. The next major consumer electronics show — Mobile World Congress — was eventually canceled after much hand-wringing.

The CTA (the governing body behind CES) appeared to have been planning a scaled-back in-person version of the show this year, following a similar move by the team behind the Berlin-based IFA over the summer. By July, however, it was clear that such a plan was untenable. To put it bluntly, the United States didn’t have its shit together when it comes to keeping this virus in check (I’d be remiss if I didn’t acknowledge that we just hit 400,000 deaths on the day I’m writing this).

CES 2021 was far from the first tech show to go all virtual over this past year. The size and scope of the event, on the other hand, are relatively unique here. Per the CTA, the 2020 show drew north of 170,000 attendees. The majority of the tech events I’ve attended virtually in the past year have been put on by a single company. CES is obviously a different beast entirely.

The CTA’s (nee CEA) role in the industry certainly afforded it a fair bit of goodwill up front. The show, after all, dates back to the late-60s. It has ebbed and flowed over the years (taking hits from external forces like the 2008 financial crisis), but it has remained a constant. Those of us who’ve been doing this for a while tend to face the show with equal parts anticipation and dread. But the companies always come out.

Per the CTA’s numbers, nearly 2,000 companies launched products at the 2021 event. The figure pales in comparison to the 4,419 companies exhibiting last year, but that’s to be expected. In addition to the uncertain nature of the event, it’s been a remarkably crappy year for plenty of companies. I certainly had my questions and doubts going in — chief among them was the value of an event like this for a startup? Without an in-person element, wasn’t this just yet another chance to get lost in the noise?

I heard similar feedback from startups on the side, though ultimately nearly 700 chose to exhibit at the show. I know because I ended up going through all of them for the purposes of our coverage. It brought back a kind of visceral memory of the year I challenged myself to walk every square inch of the show, and ended up being challenging for entirely different reasons.

Ultimately, this was the element I missed the most. For me, CES’s biggest appeal has been the element of discovery. Eureka Park, the jam-packed startup portion of the show at the Sands Expo, is easily the best part. The vast majority of exhibitors are not for us, but I still get a charge stumbling on something new and innovative I’ve not seen before. The blogger instinct that lives dormant inside kicks in and I can’t wait to get back in front of my laptop to tell the world.

There was no Eureka Park this year — not even a virtual version. There’s just no good way to approximate a show floor online — at least none that I’m aware of. A couple of existing contacts offered to send me stuff in the mail to look out. Sensel, for instance, has a new version of its trackpad (which it announced today will be integrated into Lenovo’s latest ThinkPad). But for obvious reasons, it’s just not possible to get all 700 startups to send review units to my one-bedroom in Queens.

More than anything, the virtual event highlighted the technology limitations of an event at this scale. Press conferences are simple enough (though I found frustration in the various different platforms the CTA employed). More often than not, these felt like lengthy commercials for the exhibiting company. The in-person versions are, as well, of course, but we tend to be blinded by the spectacle. For my own purposes, there just wasn’t a lot that that couldn’t have been accomplished more efficiently with a press release.

The nature of news releases was far more nebulous this year. More companies seemingly took liberties by dumping their news well ahead of the show. Other companies offered their own sort of counter programming. One of the biggest advantages to these events when it comes to my own peace of mind is how they regulate the news flow. I know going into the year that there’s going to be one hair-pullingly difficult week at the beginning of the year where a ton of news is announced.

With CES less of a center of gravity this year, I anticipated seeing a less segmented news flow. I’ve commented to colleagues over the last couple of years that there’s “no more slow season” when it comes to hardware news, and this will likely only increase that sentiment. Obviously there’s upside in having things more evenly spread out, but I’ve got the feeling we’re moving toward something more akin to a series of small CES-like events throughout the year, and the thought makes my blood turn cold.

It’s been clear in recent years that companies would rather break out from the noise of CES in favor of their own events, following in Apple’s footsteps. Virtual events are a perfect opportunity to adopt that approach. Apple, meanwhile, moved from one event to a series of one smaller event every month toward the end of the year. When you’re not asking people to fly across the country or world to attend an event, the bar for what qualifies as news lowers considerably. Perhaps instead of having thousands of companies vying for our attention at one event, we’re moving toward a model in which there are instead thousands of events. The mind boggles.

I have some hyper-specific grievances about the CTA’s format, but I’ll save them for the post-event survey that I may or may not get around to filling out. I still found value in the virtual event. It was an excuse to talk to a bunch of startups I wasn’t familiar with. Ultimately, however, I think the event served as a testament to the fact that as much as we bemoan all of the headaches and head colds that come with an event like CES, there’s still a lot of value to be had in the in-person event.

There’s little doubt that the CTA and the rest of these sorts of organizations are champing at the bit to return to in-person events, even as a bumpy vaccine rollout leaves a big question mark around the expected timeline. There’s a very good chance that we’ll view 2020/2021 as the beginning of the end for the in-person trade show. But given the sorts of limitations we’ve seen in the past year, I’m not ready to declare them fully dead any time soon.

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Brave web browser adds native support for peer-to-peer IPFS protocol

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The decentralized tech community is aiming to find support for technologies that go beyond cryptocurrency support.

In a blog post, today the team at Brave announced that they have worked with Protocol Labs to integrate native support for the InterPlanetary File System (IPFS) inside their browser. The peer-to-peer file sharing standard launched in 2015 and has been gathering support among open-source advocates who laud the protocol’s ability to stop companies and government bodies from taking down content across the web, as well as the more functional performance improvements, offline file viewing capabilities and underlying reliability.

IPFS shares plenty of similarities with BitTorrent and allows files to be hosted by a multitude of users distributed across networks. With the update, Brave users will be able to access content from web addresses starting with ipfs:// and will be able to host an IPFS node themselves. The company says that adding support for IPFS will help improve “the overall resilience of the Internet.”

Brave is a likely home for the IPFS protocol given the company’s affinity for all things decentralized. The startup founded by Mozilla co-founder Brendan Eich says it now has 24 million monthly active users. Some of Brave’s most unique features have involved blockchain or peer-to-peer tech. In 2018, Brave announced a beta of Tor Tabs bringing the decentralized Onion protocol into the mix.

Last year, Opera announced that it was bringing limited support for IPFS to its Android application.

Decentralization tech is finding more mainstream interest as tech companies have slowly warmed up to the opportunities in cryptocurrency. Last week, TechCrunch looked into how Twitter was looking to help build out a decentralized network for social media platforms.

It’s unclear whether this is a technology that more mainstream browsers will opt to support natively, given the clear potential for abuse that exists in allowing users to work around file takedowns and the fact that is a pretty niche technology for the time being.

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