All posts in “Startups”

Patreon ups its revenue cut, but grandfathers in old creators

Patreon couldn’t survive charging all creators just a 5 percent rake on the monthly subscriptions they earn from fans while building commerce tools like CRMs and merchandise to try to stay ahead of Twitch, YouTube and Google. But it also didn’t want to screw all its loyal early creators.

So today, Patreon is overhauling its pricing. Any creator can still get a 5 percent rate, but just for a Lite version without bonus tools or different fan tiers. All of Patreon’s extra features will now be in the Pro plan, with an 8 percent rate, but with existing creators grandfathered in at 5 percent. And the new Premium enterprise plan for 12 percent (9 percent for existing creators) will offer full-service merchandise sales, multi-user team accounts and dedicated customer support.

If you want the lower grandfathered rates, you’ll need to join Patreon in the next few weeks before the new rates go into effect in early May.

“With this change, Patreon is a long-term independent company that doesn’t need anyone else. That’s the move we’re making here,” says Patreon’s SVP of Product, Wyatt Jenkins. More sustainable pricing means creators won’t have to fear Patreon selling out in desperation to someone like Facebook that might neglect or exploit them.

Instead, Patreon CEO Jack Conte tells me he wants to balance powerful features with right-sized pricing for different creator types to become the platform-agnostic home for subscription patronage when tech giants are each trying to build their own. “To have a different membership for each distribution platform, that’s not going to work. You need a single place for the bottom of your distribution funnel,” Conte explains.

Balancing rates and resources

Patreon now has 3 million fans paying 100,000 creators more than half a billion dollars per year, and it will cross $1 billion in payouts in 2019 after six years in business. But Patreon was starving on its 5 percent rate, which some venture capitalists tell me is why they passed on its funding rounds totaling $105 million led by Thrive Capital and Index. Now it might make enough to keep the lights on, retain ownership and maybe even earn a profit one day.

Jenkins tells me Patreon spent a year talking to more than 1,000 creators to figure out how to re-price its offering. “People don’t like change. But I think in terms of change, we’re going to be able to invest in the different products in different ways. We can put a lot of horsepower into membership,” he explains. The company didn’t want to screw up like when it changed its payment processing rates a year ago, leading to creator backlash and some exodus. “We unilaterally did something that impacted creators’ patrons. That was the real landmine we stepped on.”

Patreon’s new rates

What Patreon discovered was some creators, especially individuals and hobbyists, didn’t care for bells and whistles. They wanted cheap and easy recurring payments so they can focus on their art, so Patreon made the 5 percent Lite plan that strips out the extra features but keeps the old rate.

More serious videographers, illustrators, comedians and pundits wanted to offer different price tiers for different levels of exclusive content. They need analytics, special offers, integrations with other productivity and commerce apps and priority customer support when things break. That’s what creators will get for 8 percent, unless they’re grandfathered in at 5 percent.

But Patreon also found there were whole media organizations with 50 employees built atop its patronage platform. They needed to be able to share accounts and get immediate support when necessary. Meanwhile, tons of creators see merchandise as a powerful way to lure in fans who want signed photos, stickers and other swag each month. “Eighty-five percent of our creators tell us we need merchandise. ‘We spend our days in the post office licking stamps. You can get great negotiation leverage since you have scale, so why aren’t you helping us with this?’ We can’t build that on 5 percent,” Jenkins tells me. They’ll all pay the 12 percent Premium plan price unless grandfathered in at 9 percent. Patreon will, in return, process, pack and ship all their merchandise.

Read a deep dive of Patreon on Extra Crunch

Patreon is also changing its payment processing fees to make sure it doesn’t overpenalize smaller contributions, like creators’ popular $1 per month tiers. Now all transactions over $3 incur a 2.9 percent plus $0.30 fee similar to Stripe’s industry standard, while microtransactions under $3 cost 5 percent plus $0.10. Existing creators get the old rates, and people paying via PayPal from outside the U.S. get hit with an extra 1 percent fee.

The battle for fan subscriptions

Surprisingly, one of Patreon’s most popular creators told me they actually felt bad about being grandfathered in at a lower price, because why should they get special treatment compared to other artists who just might not be as tech savvy. That said, they weren’t going to voluntarily pay a higher rate. “I guess I’m not surprised,” Conte responds. “I’ve found that creators are really humble and selfless, always thinking about other people. I can imagine them sayingWhat about these people? Why am I paying less than them?”

If Patreon can power through the rate change without breaking momentum, it could have a bright future. It’s started a patronage trend, but leaked documents show Facebook plans to charge creators up to 30 percent like YouTube already does, and Twitch charges an astronomical 50 percent. But with far more restrictions on content and far more distrust accrued after years of forsaking creators and tense negotiations, Patreon’s neutral platform with the cheapest rate could remain the fan subscription leader at a time when ad revenue shares are proving inadequate to support turning one’s passion into their profession.

Patreon co-founder and CEO Jack Conte

When TechCrunch broke the news that Facebook planned to charge up to 30 percent, Conte said, “Honestly, it was relieving but really disappointing in some way. I think competition is good. I hope there are many membership products. I hope they’re successful and [give creators a choice]. Right now, it’s not a choice. Facebook’s product is not usable. The folks that have used Facebook’s product have turned it off. From a competitor standpoint, it confirmed my thought that Facebook doesn’t understand creators.”

That’s also why he hopes that one day the tech giants might just integrate Patreon rather than compete, and they could each get a cut of subscription revenue.

Looking forward, he says the toughest challenge for Patreon will be building three different products for three distinct types of creators without the infinite wallets of its rivals. “I think Patreon will be raising for a long time,” Conte says. That will fund Patreon’s plans for eventual international operations, where 40 percent of patrons and 75 percent of creators live. Right now Patreon is offered only in English and supports U.S. dollars. But if it can spin up local languages, currencies and payment processors, Patreon could be where creators around the world go to share with their biggest fans.

misterb&b hits the equity crowdfunding trail to expand into hotels

Homosexuality is illegal in a third of the counties on this planet; in eight countries it is punishable by death. In the febrile atmosphere of today’s politics, hate-crime incidents in the U.S. increased by 17 percent from 2016 to 2017, according to the FBI.

More than 20 of those incidents were crimes against an individual’s sexual orientation — the largest increase since 9/11. Similar hate-crime statistics have increased in the U.K. and several other western countries.

It’s strange and saddening to think that men, women and gender non-conforming people who “travel while gay” are now in a more dangerous — and potentially life-threatening — situation around the world, despite us being well into the 21st century.

The key to the situation is knowing whether the place you’re staying will be welcoming or not. There are many incidents where, at hotels, gay travelers have been rejected or forced to book separate rooms, and had to fall back on third-party, unverified, user-generated reviews.

Now, misterb&b, the short-term rental marketplace aimed at the gay community, has a simple solution. Customers can book an entire home or rent a private room at the home of a gay or gay-friendly host, with many located in gay-friendly neighborhoods. The startup competes with more home-spun sites like “Gay Home Stays,” however, misterb&b has already raised substantial amounts in VC.

The startup graduated from the 500 Startups accelerator and has raised US$13.5 million from institutional investors like Project A and Ventech, and from angels like Joel Simkhai (founder of Grindr, which sold for US$300 million). The marketplace now has 310,000 hosts in more than 135 countries, and claims to have 30 percent revenue growth YoY; with 60 percent of the business done organically by repeat customers.

Indeed, misterb&b has now raised more than half a million dollars inside a week via Wefunder to fund its expansion. This will allow guests, hosts and the public to invest in the company’s push to launch its services into the hotel sector.

Investors are buying into a lucrative market. The niche of global gay tourism is estimated to be a $100 billion market, while gay people travel twice as much as other travelers. Its fundraising may also benefit from the influx of new tech millionaires being created by the upcoming IPOs of Uber, Lyft, Postmates and Airbnb.

CEO and founder Matthieu Jost says he wants to “build equality into the sharing economy and give back to a community that’s been historically economically marginalized,” providing its community “with the power of part ownership of the company.”

The idea for starting misterb&b was first conceived in 2013 after he had a negative experience while traveling with his partner and didn’t feel welcome by his host. “Six years ago, my partner and I traveled to and booked a room in Barcelona through a third-party rental website,” he told me via email.

“Unfortunately, when we arrived there, we were faced with a host who was very much homophobic and asked me if we were seriously going to share a bedroom. This was a very sad thing to have to face. Straight, hetero folks never have to worry about something so humiliating as this while on a lovely vacation; they will never have to think about it or prepare for it.”

“When I returned home I felt dejected, but I felt I had do something to solve this horrific problem — yet common fear — that our community faces. I don’t want my community to be afraid of traveling anymore,” he said.

“We are reaching out to the most passionate people in the community: our hosts and our guests, as well as LGBTQ allies,” said Jost. “We want to provide the opportunity to financially benefit from our successes,” he added.

The crowdfunding is for a new selection of gay-friendly and gay-welcoming hotels that have been selected by the company’s editorial team for their quality, exclusive and verified reviews from LGBTQ travelers. The idea is that travelers will also be able to connect with each other to explore the city together — especially because there’s safety in numbers.

YC-backed Basement is a social network for close friends only

The past few years have been a bit of a dark age for budding social media startups. Facebook, Instagram, Twitter, Snap and messenger apps took up all the time of their users, leaving little room for yet another social media platform.

But the tide is shifting. Privacy scandals have shaken some users’ faith in giants like Facebook, Instagram and Twitter, and users have grown fatigued by the constant onslaught of #content.

Basement, a YC-backed startup, is looking to give users a new, simpler social network.

Basement allows users to only add up to 20 friends on the network. Co-founders Fernando Rojo and Jeremy Berman said they waited around for someone to build something like Basement after seeing their own friend groups migrate most of their communication to messenger apps from Facebook and other social networks.

On Basement, there are no filters or influencers. The hope is that users share with the people they actually want to share with.

It uses a feed-based system for sharing, letting users share content to their 20 friends. Users can also share to a smaller group of friends by tagging them, which limits the viewership to only mutual friends of those tagged.

Users who are friends can see one another’s comments on a mutual friend’s post. However, comments left by non-friends will always appear anonymous.

Alongside the main feed, Basement also has a meme feed, letting users choose from the internet’s top trending memes to share to their friend group.

Of course, Basement isn’t the first startup to try out the idea of a close-friends social network. Path was founded by Shawn Fanning, Dustin Mierau, and Dave Morin in 2010, giving users a photo-sharing and messaging platform that maxed out at 50 (and later 150) friends.

The network grew in the face of competition from Facebook, and at peak had around 50 million users. In fact, Path was raising money at a valuation of $500 million and turned down a $100 million offer from Google in its early months.

But it failed to retain talent, users and momentum. (A controversial privacy scandal in 2012 didn’t help.) In 2015, Path sold to Kakao for an undisclosed amount and was shut down for good just last year.

Rojo and Berman believe timing is more in their favor than it was with Path, but are also targeting a different audience. Whereas Path was aimed both at close friends and family, Basement wants to position itself squarely with young people who are already spending their time in meme-laden group chats.

“One of the challenges is that growth isn’t necessarily as inherently explosive in a micro-network as it would be with a broader social network,” said Rojo. “What’s exciting to us is that if anyone tries to spark up something similar to this, they’ll be one or two years behind. It’s harder to grow a micro-network, but once it’s bigger it’s much more robust because it’s the place where people turn when they want to connect with their close friends.”

What’s more: Basement promises to never run ads on the platform.

The company plans to mimic the WhatsApp business model, giving users their first year free and then charging an inexpensive subscription after that.

coParenter helps divorced parents settle disputes using A.I. and human mediation

A former judge and family law educator has teamed up with tech entrepreneurs to launch an app they hope will help divorced parents better manage their co-parenting disputes, communications, shared calendar, and other decisions within a single platform. The app, called coParenter, aims to be more comprehensive than its competitors, while also leveraging a combination of A.I. technology and on-demand human interaction to help co-parents navigate high-conflict situations.

The idea for coParenter emerged from co-founder Hon. Sherrill A. Ellsworth’s personal experience and entrepreneur Jonathan Verk, who had been through a divorce himself.

Ellsworth had been a presiding judge of the Superior Court in Riverside County, California for 20 years and a family law educator for ten. During this time, she saw firsthand how families were destroyed by today’s legal system.

“I witnessed countless families torn apart as they slogged through the family law system. I saw how families would battle over the simplest of disagreements like where their child will go to school, what doctor they should see and what their diet should be — all matters that belong at home, not in a courtroom,” she says.

Ellsworth also notes that 80 percent of the disagreements presented in the courtroom didn’t even require legal intervention – but most of the cases she presided over involved parents asking the judge to make the co-parenting decision.

As she came to the end of her career, she began to realize the legal system just wasn’t built for these sorts of situations.

She then met Jonathan Verk, previously EVP Strategic Partnerships at Shazam and now coParenter CEO. Verk had just divorced himself and had an idea about how technology could help make the co-parenting process easier. He already had on board his longtime friend and serial entrepreneur Eric Weiss, now COO, to help build the system. But he needed someone with legal expertise.

That’s how coParenter was born.

The app, also built by CTO Niels Hansen, today exists alongside a whole host of other tools built for different aspects of the coparenting process.

That includes those apps designed to document communication like OurFamilyWizard, Talking Parents, AppClose, and Divvito Messenger; those for sharing calendars, like Custody Connection, Custody X Exchange, Alimentor; and even those that offer a combination of features like WeParent, 2houses, SmartCoparent, and Fayr, among others.

But the team at coParenter argues that their app covers all aspects of coparenting, including communication, documentation, calendar and schedule sharing, location-based tools for pickup and dropoff logging, expense tracking and reimbursements, schedule change requests, tools for making decisions on day-to-day parenting choices like haircuts, diet, allowance, use of media, etc., and more.

Notably, coParenter also offers a “solo mode” – meaning you can use the app even if the other co-parent refuses to do the same. This is a key feature that many rival apps lack.

However, the biggest differentiator is how coParenter puts a mediator of sorts in your pocket.

The app begins by using A.I., machine learning, and sentiment analysis technology to keep conversations civil. The tech will jump in to flag curse words, inflammatory phrases and offense names to keep a heated conversation from escalating – much like a human mediator would do when trying to calm two warring parties.

When conversations take a bad turn, the app will pop up a warning message that asks the parent if they’re sure they want to use that term, allowing them time to pause and think. (If only social media platforms had built features like this!)

When parents need more assistance, they can opt to use the app instead of turning to lawyers.

The company offers on-demand access to professionals as both monthly ($12.99/mo – 20 credits, or enough for 2 mediations) or yearly ($119.99/year – 240 credits) subscriptions. Both parents can subscribe for $199.99/year, each receiving 240 credits.

“Comparatively, an average hour with a lawyer costs between $250 and upwards of $200, just to file a single motion,” Ellsworth says.

These professionals are not mediators, but are licensed in their respective fields – typically family law attorneys, therapists, social workers, or other retired bench officers with strong conflict resolution backgrounds. Ellsworth oversees the professionals to ensure they have the proper guidance.

All communication between the parent and the professional is considered confidential and not subject to admission as evidence, as the goal is to stay out of the courts. However, all the history and documentation elsewhere in the app can be used in court, if the parents do end up there.

The app has been in beta for nearly a year, and officially launched this January. To date, coParenter claims it’s already helped to resolve over 4,000 disputes and over 2,000 co-parents have used it for scheduling. 81 percent of the disputing parents resolved all their issues in the app, without needed a professional mediator or legal professional, the company says.

CoParenter is available on both iOS and Android.

This robot can park your car for you

French startup Stanley Robotics showed off its self-driving parking robot at Lyon-Saint-Exupéry airport today. While I couldn’t be there in person, the service is going live by the end of March 2019. And here’s what it looks like.

[embedded content]

The startup has been working on a robot called Stan. These giant robots can literally pick up your car at the entrance of a gigantic parking lot and then park it for you. You might think that parking isn’t that hard, but it makes a lot of sense when you think about airport parking lots.

Those parking lots have become one of the most lucrative businesses for airport companies. But many airports don’t have a ton of space. They keep adding new terminals and it is becoming increasingly complicated to build more parking lots.

That’s why Stanley Robotics can turn existing parking lots into automated parking areas. It’s more efficient as you don’t need space to circulate between all parking spaces. According to the startup, you can create 50 percent more spaces in the same surface area.

If you’re traveling for a few months, Stan robots can put your car in a corner and park a few cars in front of your car. Stan robots will make your car accessible shortly before you land. This way, it’s transparent for the end user.

At Vinci’s Lyon airport, there will be 500 parking spaces dedicated to Stanley Robotics. Four robots will work day in, day out to move cars around the parking lot. But Vinci and Stanley Robotics already plan to expand this system to up to 6,000 spaces in total.

According to the airport website, booking a parking space for a week on the normal P5 parking lot costs €50.40. It costs €52.20 if you want a space on P5+, the parking lot managed by Stanley Robotics.

Self-driving cars are not there yet because the road is so unpredictable. But Stanley Robotics has removed all the unpredictable elements. You can’t walk on the parking lot. You just interact with a garage at the gate of the parking. After the door is closed, the startup controls the environment from start to finish.

Now, let’s see if Vinci Airports plans to expand its partnership with Stanley Robotics to other airports around the world.