lightspeed venture partners

Calm raises $27M to McConaughey you to sleep

Posted by | Apps, calm, Education, Entertainment, funding, Fundings & Exits, Health, lightspeed venture partners, meditation, Mobile, Recent Funding, sleep, sleep aid, Startups, TC | No Comments

Meditation app unicorn Calm wants you to doze off to the dulcet tones of actor Matthew McConaughey’s southern drawl or writer Stephen Fry’s English accent. Calm’s Sleep Stories feature that launched last year is a hit, with more than 150 million listens from its 2 million paid subscribers and 50 million downloads. While lots of people want to meditate, they need to sleep. The seven-year-old app has finally found its must-have feature that makes it a habit rather than an aspiration.

Keen to capitalize on solving the insomnia problems plaguing people around the world, Lightspeed tells TechCrunch it has just invested $27 million into a Series B extension round in Calm alongside some celebrity angels at a $1 billion valuation. The cash will help the $70 per year subscription app further expand from guided meditations into more self-help masterclasses, stretching routines, relaxing music, breathing exercises, stories for children and celebrity readings that lull you to sleep.

Calm App

The funding adds to Calm’s $88 million Series B led by TPG that was announced in February that was also at a $1 billion valuation, bringing the full B round to $115 million and Calm’s total funding to about $141 million. Lightspeed partner Nicole Quinn confirms the fund started talks with Calm around the same time as TPG, but took longer to finish due diligence, which is why the valuation didn’t grow despite Calm’s progress since February.

“Nicole and Lightspeed are valuable partners as we continue to double down on entertainment through our content,” Calm’s head of communications Alexia Marchetti tells me. The startup plans to announce more celebrity content tie-ins later this summer.

Broadening its appeal is critical for Calm amidst a crowded meditation app market that includes Headspace, Simple Habit and Insight Timer, plus newer entrants like Peloton’s mindfulness sessions and Journey’s live group classes. It’s become easy to find guided meditations online for free, so Calm needs to become a holistic mental wellness hub.

While it risks diluting its message by doing so much, Calm’s plethora of services could make it a gateway to more of your personal health spend, including therapy, meditation retreats and health merchandise from airy clothing to yoga mats. But subscription fees alone are powering a big business. Calm quadrupled revenue in 2018 to reach $150 million in ARR and hit profitability.

Calm is poised to keep up its rapid revenue growth. After the launch of Sleep Stories, “it was incredible to see the engagement spike up and also the retention,” says Quinn. Users can choose from having McConaughey describe the wonders of the cosmos, John McEnroe walk them through the rules of tennis, fairy tales like The Little Mermaid and more.

Quinn tells me “Sleep Stories is now a huge percentage of the business, and also the length of time people spend on the app has gone up dramatically.” She tells me that so many startups are “trying to invent a problem where there isn’t one.” But difficulty snoozing is so widespread and detrimental that users are eager to pay for an app instead of a sleeping pill. Having the Interstellar actor talk about the universe until I pass out sounds alright, alright, alright.

Alright Alright Alright

Powered by WPeMatico

Where top VCs are investing in media, entertainment & gaming

Posted by | Apple, BetaWorks, charles hudson, Electronic Arts, Entertainment, epic games, Eric Hippeau, esports, Facebook, fortnite, founders fund, funding, Fundings & Exits, Gaming, Google, GV, HQ Trivia, instagram, interactive media, lerer hippeau ventures, lightspeed venture partners, Luminary Media, matt hartman, Media, mg siegler, Netflix, new media, precursor ventures, Roblox, scooter braun, sequoia capital, Sports, Spotify, starbucks, Startups, sweet capital, TC, Twitch, Venture Capital, Video, Virtual reality | No Comments

Most of the strategy discussions and news coverage in the media and entertainment industry is concerned with the unfolding corporate mega-mergers and the political implications of social media platforms.

These are important conversations, but they’re largely a story of twentieth-century media (and broader society) finally responding to the dominance Web 2.0 companies have achieved.

To entrepreneurs and VCs, the more pressing focus is on what the next generation of companies to transform entertainment will look like. Like other sectors, the underlying force is advances in artificial intelligence and computing power.

In this context, that results in a merging of gaming and linear storytelling into new interactive media. To highlight the opportunities here, I asked nine top VCs to share where they are putting their money.

Here are the media investment theses of: Cyan Banister (Founders Fund), Alex Taussig (Lightspeed), Matt Hartman (betaworks), Stephanie Zhan (Sequoia), Jordan Fudge (Sinai), Christian Dorffer (Sweet Capital), Charles Hudson (Precursor), MG Siegler (GV), and Eric Hippeau (Lerer Hippeau).

Cyan Banister, Partner at Founders Fund

In 2018 I was obsessed with the idea of how you can bring AI and entertainment together. Having made early investments in Brud, A.I. Foundation, Artie and Fable, it became clear that the missing piece behind most AR experiences was a lack of memory.

Powered by WPeMatico

Mutiny at HQ Trivia fails to oust CEO

Posted by | Apps, Colin Kroll, founders fund, funding, HQ Trivia, Jeremy Liew, lightspeed venture partners, Mobile, Rus Yusupov, Scott Rogowsky, Social, Startups, TC, trivia, Video | No Comments

This week’s banishment of host Scott Rogowsky was merely a symptom of the ongoing struggle to decide who will lead HQ Trivia. According to multiple sources, over half of the startup’s staff signed an internal petition to depose CEO Rus Yusupov who they saw as mismanaging the company. But Yusupov then fired some core supporters of the mutiny, leading to a downward spiral of morale that mirrors HQ’s plummeting App Store rank.

TechCrunch spoke to multiple sources familiar with HQ Trivia’s internal troubles to piece together how the live video mobile game went from blockbuster to nearly bust. Two sources said HQ recently only had around $6 million in the bank but was burning over $1 million per month, meaning its runway could be dwindling. But its early investors are reluctant to hand Yusupov any more cash. “

Employees petitioned to remove HQ Trivia’s CEO Rus Yusupov

HQ reimagined gaming and mobile entertainment with the launch of its 12-question trivia game in August 2017 where players all competed live in twice-daily shows with anyone who got all the answers right split a cash jackpot. The games felt urgent since you could only participate at designated times, fun to play against friends or strangers, and winning carried a significance no single-player or non-stop online game could match.

When TechCrunch wrote the first coverage of HQ Trivia in October 2017, it had just 3500 concurrent players. But by January it had climbed to the #3 game and #6 overall app in the App Store, and grown to 2.38 million players by March. Quickly, copycats from China and Facebook entered the market. But they all lacked HQ’s secret weapon — its plucky host comedian Scott Rogowsky. Affectionately awarded nicknames like Quiz Daddy, Quiz Khalifa, Host Malone, and Trap Trebek from the “HQties” who played daily, he was the de facto face of the startup.

Yet HQ had some shaky foundations. Co-founder Colin Kroll, who’d also started Vine with Yusupov and sold it to Twitter, had been fired from Twitter after 18 months for being a bad manager, Recode reported. He’d also picked up a reputation of being creepy around female employees, as well as Vine stars, TechCrunch has learned. Rapid growth and an investigation by early HQ investor Jeremy Liew that found no egregious misconduct by Kroll paved the way for a $15 million investment. The round was led by Founders Fund’s Cyan Bannister, and it valued HQ at over $100 million.

Yusupov failed to translate that cash into sustained growth and product innovation. His public behavior had already raised flags. He yelled at a Daily Beast reporter after the outlet’s Taylor Lorenz interviewed Rogowsky without Yusupov’s approval, threatening to fire the host. “You’re putting Scott’s job in jeopardy. Is that what you want? . . .  Please read me your story word for word,” Yusupov said. When he learned Rogowsky had expressed his preference for salad restaurant chain Sweetgreen, Yusupov shouted “He cannot say that! We do not have a brand deal with Sweetgreen! Under no circumstances can he say that.” The next day, Yusupov falsely claimed he’d never threatened Rogowsky’s job.

With HQ’s bank account full, sources say Yusupov was extremely slow to make decisions, allowing HQ to stagnate. The novelty of playing trivia for money via phone has begun to wear off, and people increasingly ignored HQ’s push notifications to join its next game. But beyond bringing in some guest hosts and the option to buy a second chance after a wrong answer, HQ ceased to evolve. HQ fell to the #196 game on iOS and the #585 overall app as concurrent players waned.

That’s when things started to get a bit Game Of Thrones.

Pawns In A CEO War

Liew pushed for HQ to swap Kroll into the CEO spot in September 2018 while moving Yusupov to Chief Creative Officer, which was confirmed despite an HR complaint against Kroll for aggressive management. However, three sources tell TechCrunch that Yusupov pushed that HQ employee to file the complaint against Kroll. As the WSJ reported after Kroll’s death, that employee later left the startup because they felt that they’d been exploited. “There was definitely what felt like manipulation there, and that’s also why that employee resigned from the company.” one source said. Another source said that staffer “believed Rus used their unhappiness about work to use them as a pawn in his CEO war and not because Rus actually cared about resolving things.”

Cyan of Founders Fund stepped down from HQ’s board after the decision to swap out Yusupov due to her firm’s reputation of keeping founders in control, Recode’s Kurt Wagner reported. Sources say that despite Kroll’s reputation, the staff believed in him. “Colin loved HQ and was dedicated to all the employees more than Rus. Rus cares about Rus. Colin cared about the content” a source tells me. 

Three sources say that in a desperate ploy to retain power and prevent Kroll’s rise, Yusupov suggested Rogowsky, a comedian with no tech or management experience, be made CEO of HQ Trivia. He even suggested the company film a reality show about Rogowsky taking over. That idea was quickly shot down as preposterous.

“It was a very personal desperation tactic not to have Colin be CEO. It was not a professionally thought-out idea” a source tells me, though another said it was always hard to tell if Yusupov’s crazy ideas were jokes. Both Yusupov and HQ Trivia declined to respond to multiple requests for comment, but we’ll update if we hear back.

HQ Trivia co-founder Colin Kroll passed away in December

Then tragedy struck in December. Kroll, then CEO, was found dead in his apartment from a drug overdose. Employees were distraught over what would happen next. “Colin’s plan was to ship fast, and get new things out there” a source says, noting that Kroll had pushed for the release of HQ’s first new game type HQ Words modeled after Wheel Of Fortune. “He wasn’t perfect but in the time he was in charge, the ship started to turn, but when Rus took over again it was like the 9 months where we did nothing.”

Coup d’éHQ

By February 2019, HQ’s staff was fed up. Two sources confirm that 20 of the roughly 35 employees signed a letter asking the board to remove Yusupov and establish a new CEO. With HQ’s download rate continuing to sink, they feared he’d run the startup into the ground. One source suggested Yusupov might rather have seen the whole startup come crashing down with the blame placed on the product than have it come to light that he played a large hand in the fall. The tone of the letter, which was never formally delivered but sources believe the board knew of, wasn’t accusatory but a plea for transparency about the company’s future and the staff’s job security.

At a hastily convened all-hands meeting in late February, HQ investor Liew told the company his fund Lightspeed would support a search for a new CEO to replace Yusupov, and provide that new CEO with funding for 18 more months of runway. Liew told the staff he would step down from the board once that CEO was found, but the search continues and so Liew remains on HQ’s board.

Mostly everyone was on Jeremy’s side as no one wanted to work under Rus. Jeremy wasn’t trying to screw him over the way Rus would screw other people over. He just wanted to do what was right, getting behind what everyone wanted” a source said of Liew. 

Instead, HQ’s board moved forward with instituting a new executive decision-making committee composed of Yusupov, HQ’s head of production Nick Gallo, and VP of engineering Ben Sheats. Yusupov would remain interim CEO, and he continued to cling to power and there’s been little transparency about the CEO replacement process. Until a new CEO is found, HQ must subsist on its existing funds. The staff is “always worried about running out of runway” and are given vague answers when they ask leadership about how much money is left.

On March 1st, the committee emerged from a meeting and fired three employees — two who had spearheaded the petition and been vocal about Yusupov’s failings.

One who wasn’t fired was Rogowsky, despite sources saying at one point he’d tried to organize the staff to go on strike. Other employees had been cautious about standing up to Yusupov. “Everyone was terrified of retaliation. Their fears have totally been validated” a source explains. Engineers and other staffers with strong employment prospects began to drain out of the company. Those left were just trying to hold onto their jobs. Without inspiring leadership or a strategy to reverse user shrinkage, recruiting replacements would prove difficult.

Yusupov remains on the board, along with Tinder CEO Elie Seidman who Yusupov appointed to his additional common seat. Liew retains his seat until the new CEO is found and given that seat. And Kroll’s seat appears to have gone to Lightspeed partner Merci Victoria Grace. Lightspeed and Cyan of Founders Fund declined to respond to requests for comment.

[Update: Seidman tells TechCrunch that the he sees the internal struggle for the CEO role as over now that Yusupov has accepted that a new CEO will be installed. That search is moving along, and the CEO chosen will report to the board but otherwise be given full autonomy to run the company as they choose. That includes having hiring and firing power over Yusupov. He did not dispute any other claims from this article. Seidman rightly believes HQ has contributed important ideas to the mobile gaming ecosystem, and now it’s the startup’s responsibility to turn those ideas into a steady business.]

Losing Face

Tensions at HQ and a desire to diversify his prospects led Rogowsky to pick up a side gig hosting baseball talk show ChangeUp on the DAZN network, TMZ reported this week. He’d hoped to continue hosting HQ during its big weekend contests. But tensions with Yusupov and the CEO’s desire for the host to remain exclusively at HQ led negotiations to sour causing Rogowsky to leave the startup entirely. TechCrunch was first to report that he’s been replaced by former HQ guest host Matt Richards, who Yusupov bluntly told me Friday had polled higher than Rogowsky in a SurveyMonkey survey of HQ’s top players.

In tweets, Rogowsky revealed that that “Sadly, it won’t be possible for me to continue hosting HQ concurrently as I had hoped” noting, “I wasn’t given the courtesy of a farewell show.” Finding a way to preserve Rogowsky’s ties to HQ likely would have been best for the startup.  TechCrunch had raised the concern a year ago that unless Rogowsky was properly locked in with an adequate equity vesting schedule at HQ, he could leave. Or worse, he could be poached by Facebook, Snapchat, or YouTube to host an HQ competitor.

“Rus is a visionary but not a good leader. He is extremely manipulative in an unproductive way. He’s a dude who just cares a lot about his reputation” a source noted. “A lot of the negative sentiment amongst staff is the belief that he cares more about his reputation than the company itself.”

HQ’s next attempt to revive growth appears to be HQ Editor’s Picks, is described as “a new live show on your phone where our host shows funny viral videos and you decide on who gets paid.” Finally it seems willing to embrace the potential of interactive live video entertainment outside of trivia and puzzles. HQ Editor’s Picks will face an uphill battle, since HQ dropped out of the top 1500 iOS apps last month, according to App Annie. Sensor Tower estimates that HQ saw just 8 percent as many downloads in March 2019 as March 2018.

After the loss of its spirit animal Rogowsky, the employees’ chosen leader Kroll, the supervision of veteran investor Cyan, and its product momentum, tough questions are what remain for HQ Trivia. The company’s struggles have paralyzed its progress towards finding a new viral mechanic or game format that attracts users. While HQ Words is fun, it’s too similar to its trivia competition to change the startup’s trajectory. And all of the in-fighting could scare off any talent hoping to turn HQ around. Unfortunately, securing an extra life for the game will take a more than a $3.99 in-app purchase.

Powered by WPeMatico

The Epic Games Store is now live

Posted by | Android, epic games, first person shooters, fortnite, Gaming, Google, Google Play Store, Kleiner Perkins, lightspeed venture partners, unreal engine, Unreal Tournament | No Comments

It’s a busy week for Epic Games . Fresh from pushing out a major season 7 update for Fortnite, so the gaming giant has taken the wraps off its own games store.

First announced earlier this week, the Epic Games Store is targeted squarely at Steam — the giant in the digital game commerce space — and it quietly went live today.

Right now there’s a small cluster of games available, including Hades, a new title from Supergiant Games that is in “early access” for $19.99, and Epic’s own Fortnite and Unreal Tournament, both of which are free. But Epic is saying that’s there’s a lot more to come. In particular, the store will offer a free game every two weeks, starting with Subnautica from December 14-17 and Super Meat Boy from December 28 until January 10.

What is most interesting about the store is the revenue split, which is just 12 percent. That has set off a change at Valve, the firm behind Steam, as we reported earlier this week:

While Valve will continue to take an App Store-like 30 percent from sales of game makers with less than 10 million in revenue, that figure drops to 25 percent until they hit 50 million revenue, from which point the slice drops to 20 percent.

All in all, the store is very early-stage, but you can imagine that Epic is working to add more flesh to the bones. It makes absolute sense that the company is aiming to capitalize on the phenomenal success of Fortnite — which was estimated to be grossing as much as $2 million per day in the summer — by building a destination for gamers. Indeed, a big clue came from its decision to bypass the Google Play Store and offer its Android app directly from its website — that’s a move that is estimated to cost Google around $50 million in lost earnings in 2018.

“As a developer ourselves, we have always wanted a platform with great economics that connects us directly with our players,” Epic Games CEO Tim Sweeney told TechCrunch in an emailed statement sent earlier this week. “Thanks to the success of Fortnite, we now have this and are ready to share it with other developers.”

The Epic Games Store is part of a wider vision that prompted a range of investors to pump $1.25 billion into the company in October. That round has participation from the likes of KKR, Kleiner Perkins and Lightspeed Venture Partners and it is said to value the Epic Games business — which also includes Unreal Engine for game development — at more than $15 billion.

Epic is the only gaming firm to go after Valve this year. Discord introduced a game store in August — just months earlier, Valve appeared to go after Discord with the rollout of its own gamer chat system.

So everyone is going after everyone, but Epic’s big advantage continues to be Fortnite.

Powered by WPeMatico