All posts in “M&A”

Facebook buys Vidpresso’s team and tech to make video interactive

Zombie-like passive comsumption of static video is both unhealthy for viewers and undifferentiated for the tech giants that power it. That’s set Facebook on a mission to make video interactive, full of conversation with broadcasters and fellow viewers. It’s racing against Twitch, YouTube, Twitter, and Snapchat to become where people watch together and don’t feel like asocial slugs afterwards.

That’s why Facebook today told TechCrunch that it’s acquihired Vidpresso, buying its seven-person team and its technology but not the company itself. The 6-year old Utah startup works with TV broadcasters and content publishers to make their online videos more interactive with on-screen social media polling and comments, graphics, and live broadcasting integrated with Facebook, YouTube, Periscope, and more. The goal appears to be to equip independent social media creators with the same tools these traditional outlets use so they can make authentic but polished video for the Facebook platform.

Financial terms of the deal weren’t disclosed, but it wouldn’t have taken a huge price for the deal to be a success for the startup. Vidpresso had only raised a $120,00 in seed capital from Y Combinator in 2014 plus some angel funding. By 2016, it was telling hiring prospects that it was profitable, but also that “We will not be selling the company unless some insane whatsapp like thing happened. We’re building a forever biz, not a flip.” So either Vidpresso lowered its bar for an exit or Facebook made coming aboard worth its while.

For now, Vidpresso clients and partners like KTXL, Univision, BuzzFeed, Turner Sports, Nasdaq, TED, NBC, and others will continue to be able to continue to use its services. A Facebook spokesperson confirmed that customers will work with the Vidpresso team at Facebook, who are joining its offices in Menlo Park, London, and LA. That means Facebook is at least temporarily becoming a seller of enterprise video services. Whether it turns away old clients or stops integrating with competing video platforms like Twitch and YouTube remains to be seen.

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We’ve had a lot of false starts along the way . . . We finally landed on helping create high quality broadcasts back on social media, but we still haven’t realized the full vision yet. That’s why we’re joining Facebook” the Vidpresso team writes. “This gives us the best opportunity to accelerate our vision and offer a simple way for creators, publishers, and broadcasters to use social media in live video at a high quality level . . . By joining Facebook, we’ll be able to offer our tools to a much broader audience than just our A-list publishing partners. Eventually, it’ll allow us to put these tools in the hands of creators, so they can focus on their content, and have it look great, without spending lots of time or money to do so.”

Facebook already has some interactive video experiments out in the wild. It recently rolled out its Watch Party tool for letting Groups view and chat about videos together. It’s also trying new games like Lip Sync Live and a Talent Show feature where users submit videos of them singing. Facebook Live has also built tools to help publishers pull in social media content, let streamers earn tips, and for fans to subscribe to donating money to their favorite video makers like on Patreon.

But the last line of Vidpresso’s announcement above explains Facebook’s intentions here, and also why it didn’t just try to build the tools itself. It doesn’t just want established news publishers and TV studios making video for its platform. It wants semi-pro creators to be able to broadcast snazzy videos with graphics, comments, and polls that can aesthetically compete with ‘big content’ but that feel more natural.

Patreon buys Memberful but keeps it indie as patronage consolidates

Patreon is forming a patronage empire. Today it acquired white-labeled subscription membership platform Memberful, which lets creators sell exclusive access to content through their own site instead of a centralized platform like Patreon. Rather than being folded into a Patreon feature, Memberful will run as an independent brand maintaining its tiered pricing structure, though new sign-ups will get a rate closer to Patreon’s low 5 percent rake.

Deal terms weren’t disclosed, but Patreon is clearly finding that rolling up competitors and complements in the patronage space a worthy use of its $60 million raise at a $450 million valuation late last year that brought it to $105 million in funding. In June, Patreon bought Kit to let creators bundle in merchandise with their perks for paying monthly subscribers. It also bought out competitor Subbable back in 2015.

By teaming up, Patreon and Memberful will be able to provide subscription patronage services for creators, whether they want their fan community to live on Patreon, or through Memberful on their own WordPress or website with integrations of Stripe and MailChimp. Patreon already has 2 million patrons paying an average of $12 each to a total of 100,000 creators, and it expects to pay out $300 million in 2018 alone. The acquisition could let Patreon move up market, recruiting comedians, illustrators, game developers, and vloggers that already have an established audience elsewhere.

“I think membership is on the up and is going to grow for the next decade” says Patreon VP of Product Wyatt Jenkins. “Our strategy is to be an open, neutral platform” as opposed to a focusing on one type of content like YouTube with videos or Twitch with streaming where you’re locked into that platform’s tools. Memberful, launched in 2013, has bootstrapped the creation of its white-labeled tools without the need for venture funding.

Memberful gives creators full control over branding with no Patreon chrome. But it’s more expensive and also requires more work since creators have to manage their own site, customer service, and payment processing. Memberful takes a 10 percent cut with no monthly fee for its limited basic tier, or $25 per month plus 4.9 percent for the full-featured pro version, though it also offers enterprise pricing. That pricing will remain for existing users, but “new customers will see a transaction fee closer to Patreon’s”, which is a flat 5 percent a Patreon spokesperson tells me. Patreon does basically everything for a creator, but it also ropes them into the Patreon-branded ecosystem that promotes other content makers too.

Sometimes Patreon handling everything can be a problem, though. Last week it experienced a higher-than-normal volume of declines from banks of charges to patrons. That left some creators without their expected income, and required patrons to deal with the chore of calling their bank to tell them paying $1, $5, or $20 per month to their favorite creator wasn’t fraud. Patreon now tells me that “as of Friday, we let everyone know that we were back to normal decline rates, and were going to continue retrying the rest of the cards like we normally do.”

It makes sense for Patreon to race to consolidate the patronage industry as it’s being invaded by giant incumbents. Twitch, YouTube, and Facebook all offer their own versions of paid subscriptions to creators that get patrons extra perks like exclusive content or badges so they stick out in chat rooms full of fans. While those platforms are all focused on video streamers, they still pose a threat to Patreon that needs to maximize the number of successful creators it hosts in order to earn enough from its tiny cut of payments. Facebook especially could muscle in, since many creators already run their own Facebook Pages.

Asked about competition from those platforms, Jenkins said “I think there’s a strong chance it’s a tailwind. The concept of membership is pretty new. If those big companies are going to drop millions of dollars into marketing the concept of membership I think that’s great. He stressed the question of “Do you want to own your fan base? On YouTube, those aren;t your fans, they’re YouTube users. YouTube is incentivized to keep them watching videos so it can show ads.”

That might lead fans to unsubscribe from a creator as YouTube promotes other similar ones they could watch instead. “You don’t own the relationship.” Facebook Page admins have found that out the hard way as algorithm changes prioritizing friends over public figures, making it tough to reach the followers they spent years begging to like them. If Patreon can offer creators audience growth through discovery on its interconnected network without cannibalizing anyone’s member counts, its neutrality and focus could make it a leader in this new wing of the digital economy.

Facebook’s debacle, $100M rounds and Slack links up with Atlassian

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This was one hell of a week. Happily, we had our own Connie Loizos, Matthew Lynley, and Alex Wilhelm on hand, along with Initialized Capital’s Alexis Ohanian to pick over the mix.

First up we had zero choice but to talk about Facebook. The social company’s epic repricing in the middle of the week blotted out the news sun. It may keep us in the shade for another week, too. Facebook’s dive has implications for social startups and competing public companies alike. Like, say, Reddit.

Moving along, Crunchbase News recently dropped a report digging into the rise of $100 million and larger rounds. From a turning point in 2013 to today, megarounds have been on the rise. Why? When does it stop? Whose fault is it really? And is going public really that bad? We worked through each question, even tagging the structure of the stock market along the way. (Even more data here.)

From there we took a quick pivot to a company that is known for raising megarounds — Slack — and its new IRL BFF Atlassian. Yes, the Slack-Atlassian deal dropped right before we recorded. Our take is that the agreement makes sense, especially in light of a competitive landscape that keeps getting tougher for Slack.

That said, everyone agreed that Slack is one hell of a business.

And then we ran out of time. But, happily, we also worked in an advertisement for Melbourne and riffed one of Ohanian’s recent investments.

Thanks for comin’ round, and we’ll see you all in a week!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

Facebook acquires Redikix to enhance communications on Workplace by Facebook

Facebook had a rough day yesterday when its stock plunged after a poor earnings report. What better way to pick yourself up and dust yourself off than to buy a little something for yourself. Today the company announced it has acquired Redkix, a startup that provides tools to communicate more effectively by combining email with a more formal collaboration tool. The companies did not reveal the acquisition price.

Redkix burst out of the gate two years ago with a $17 million seed round, a hefty seed amount by any measure. What prompted this kind of investment was a tool that combined a collaboration tool like Slack or Workplace by Facebook with email. People could collaborate in Redkix itself, or if you weren’t a registered user, you could still participate by email, providing a more seamless way to work together.

Alan Lepofsky, who covers enterprise collaboration at Constellation Research, sees this tool as providing a key missing link. “Redkix is a great solution for bridging the worlds between traditional email messaging and more modern conversational messaging. Not all enterprises are ready to simply switch from one to the other, and Redkix allows for users to work in whichever method they want, seamlessly communicating with the other,” Lepofsky told TechCrunch.

As is often the case with these kinds of acquisitions, the company bought the technology  itself along with the team that created it. This means that the Redikix team including the CEO and CTO will join Facebook and they will very likely be shutting down the application after the acquisition is finalized.

After yesterday’s earning’s debacle, Facebook could be looking for ways to enhance its revenue in areas beyond the core Facebook platform. The enterprise collaboration tool does offer a possible way to do that in the future, and if they can find a way to incorporate email into it, it could make it a more attractive and broader offering.

Facebook is competing with Slack, the darling of this space and others like Microsoft, Cisco and Google around communications and collaboration. When it launched in 2015, it was trying to take that core Facebook product and put it in a business context, something Slack had been doing since the beginning.

To succeed in business, Facebook had to think differently than as a consumer tool, driven by advertising revenue and had to convince large organizations that they understood their requirements. Today, Facebook claims 30,000 organizations are using the tool and over time they have built in integrations to other key enterprise products and keep enhancing it.

Perhaps with today’s acquisition, they can offer a more flexible way to interact with platform and could increase those numbers over time.

Okta nabs ScaleFT to build out ‘Zero Trust’ security framework

Okta, the cloud identity management company, announced today it has purchased a startup called ScaleFT to bring the Zero Trust concept to the Okta platform. Terms of the deal were not disclosed.

While Zero Trust isn’t exactly new to a cloud identity management company like Okta, acquiring ScaleFT gives them a solid cloud-based Zero Trust foundation on which to continue to develop the concept internally.

“To help our customers increase security while also meeting the demands of the modern workforce, we’re acquiring ScaleFT to further our contextual access management vision — and ensure the right people get access to the right resources for the shortest amount of time,” Okta co-founder and COO Frederic Kerrest said in a statement.

Zero Trust is a security framework that acknowledges work no longer happens behind the friendly confines of a firewall. In the old days before mobile and cloud, you could be pretty certain that anyone on your corporate network had the authority to be there, but as we have moved into a mobile world, it’s no longer a simple matter to defend a perimeter when there is effectively no such thing. Zero Trust means what it says: you can’t trust anyone on your systems and have to provide an appropriate security posture.

The idea was pioneered by Google’s “BeyondCorp” principals and the founders of ScaleFT are adherents to this idea. According to Okta, “ScaleFT developed a cloud-native Zero Trust access management solution that makes it easier to secure access to company resources without the need for a traditional VPN.”

Okta wants to incorporate the ScaleFT team and, well, scale their solution for large enterprise customers interested in developing this concept, according to a company blog post by Kerrest.

“Together, we’ll work to bring Zero Trust to the enterprise by providing organizations with a framework to protect sensitive data, without compromising on experience. Okta and ScaleFT will deliver next-generation continuous authentication capabilities to secure server access — from cloud to ground,” Kerrest wrote in the blog post.

ScaleFT CEO and co-founder Jason Luce will manage the transition between the two companies, while CTO and co-founder Paul Querna will lead strategy and execution of Okta’s Zero Trust architecture. CSO Marc Rogers will take on the role of Okta’s Executive Director, Cybersecurity Strategy.

The acquisition allows the Okta to move beyond purely managing identity into broader cyber security, at least conceptually. Certainly Roger’s new role suggests the company could have other ideas to expand further into general cyber security beyond Zero Trust.

ScaleFT was founded in 2015 and has raised $2.8 million over two seed rounds, according to Crunchbase data.