Catalyst brothers find capital success with $2.4M from True

Over the past few years, the old language of “customer support” has been supplanted by the new language of “customer success.” In the old model, companies would essentially disappear following the conclusion of a sale, merely handling customer problems when they arose. Now, companies are actively reaching out to customers, engaging them with education and training and monitoring them with analytics to ensure they have the best time with the product as possible.

What’s changing is the nature of product and services today: subscription. Customers no longer just make a single buying decision about a product, but instead must actively commit to using the product, or else they churn.

New York-based Catalyst, founded by brothers Edward and Kevin Chiu, wants to rebuild customer success from the ground up with an integrated software platform. They have received some capital success of their own, securing $2.4 million in venture capital from Phil Black of True Ventures with participation from Ludlow Ventures and Compound.

New York has had something of an increase in founder mafias, as TechCrunch reported this weekend. Catalyst is no exception to this trend, with the Chiu brothers both working at DigitalOcean, one of New York’s many high-flying enterprise startups. Edward Chiu was director of customer success at the company for a number of years, but had a unique background in sales and also in coding before starting.

Kevin Chiu was head of inside sales at DigitalOcean . “I brought my brother on to do sales at DigitalOcean,” Edward Chiu explains. “We always knew that we wanted to start a company together, but wanted to see if we would kill each other.” The two worked together, and lo and behold, they didn’t kill each other.

Edward Chiu wanted to match the product experience of using DigitalOcean with the experience of using its internal customer success tools. Nothing on the market fit. “Given that DigitalOcean was a very technical product,” Chiu explained, “we decided to build our own tool.” Chiu thought of customer success at DigitalOcean as its own product, and his team built up the platform to improve its functionality and scalability. “We just used the tool and we loved it,” he said, so we “started to show this tool to a bunch of other customer success leaders I am connected with.”

Other customer success leaders said they wanted the platform, and “after the 20th person told me that,” he and his brother spun out of DigitalOcean to go on their own. Unlike enterprise startups in New York a couple of years ago that often struggled to find any investors, Catalyst found cash quickly. “Two weeks in we had more offers than we knew what to do with,” Chiu explained. The two said they had originally targeted a fundraise of $750,000, but ended up at $2.4 million.

Catalyst is a platform that integrates between a number of other major SaaS services such as Salesforce, Zendesk, Mixpanel and others to create a unified dashboard for data around customer success. From there, customer success managers have a set of automated tools to handle engagement, such as customer segmentation and email campaigns.

A major challenge in the customer success world is that these managers often don’t have the skills required to do advanced data analytics, so they often rely on their friends in engineering to run scripts or perform database lookups. The hope is that Catalyst’s feature set is powerful enough that these sorts of ad hoc tasks become a thing of the past. “Because we aggregate all this data, you can run queries,” Chiu explains.

Chiu says that Catalyst doesn’t just want to be a software platform, but rather a movement that pushes every company to think about how they can make their customers successful. “There are so many companies that are starting to understand that it is not something that you do once you raise a Series A, but something you do from day one,” Chiu said. “If you take care of your very first customer, they will constantly promote you and constantly promote your business.”

The company is based in Flatiron, and has eight employees.

Meet the quantum blockchain that works like a time machine

A new — and theoretical — system for blockchain-based data storage could ensure that hackers will not be able to crack cryptocurrencies once the quantum era starts. The idea, proposed by researchers at the Victoria University of Wellington in New Zealand, would secure cryptocurrency futures for decades using a blockchain technology that is like a time machine.

You can check out their findings here.

To understand what’s going on here we have to define some terms. A blockchain stores every transaction in a system on what amounts to an immutable record of events. The work necessary for maintaining and confirming this immutable record is what is commonly known as mining. But this technology — which the paper’s co-author Del Rajan claims will make up “10 percent of global GDP… by 2027” — will become insecure in an era of quantum computers.

Therefore the solution to store a blockchain in a quantum era requires a quantum blockchain using a series of entangled photons. Further, Spectrum writes: “Essentially, current records in a quantum blockchain are not merely linked to a record of the past, but rather a record in the past, one that does not exist anymore.”

Yeah, it’s weird.

From the paper intro:

Our method involves encoding the blockchain into a temporal GHZ (Greenberger–Horne–Zeilinger) state of photons that do not simultaneously coexist. It is shown that the entanglement in time, as opposed to an entanglement in space, provides the crucial quantum advantage. All the subcomponents of this system have already been shown to be experimentally realized. Perhaps more shockingly, our encoding procedure can be interpreted as non-classically influencing the past; hence this decentralized quantum blockchain can be viewed as a quantum networked time machine.

In short, the quantum blockchain is immutable because the photons that it contains do not exist at the current time but are still extant and readable. This means the entire blockchain is visible but cannot be “touched” and the only entry you would be able to try to tamper with is the most recent one. In fact, the researchers write, “In this spatial entanglement case, if an attacker tries to tamper with any photon, the full blockchain would be invalidated immediately.”

Is this possible? The researchers note that the technology already exists.

“Our novel methodology encodes a blockchain into these temporally entangled states, which can then be integrated into a quantum network for further useful operations. We will also show that entanglement in time, as opposed to entanglement in space, plays the pivotal role for the quantum benefit over a classical blockchain,” the authors write. “As discussed below, all the subsystems of this design have already been shown to be experimentally realized. Furthermore, if such a quantum blockchain were to be constructed, we will show that it could be viewed as a quantum networked time machine.”

Don’t worry about having to update your Bitcoin wallet, though. This process is still theoretical and not at all available to mere mortals. That said, it’s nice to know someone is looking out for our quantum future, however weird it may be.

Kidbox raises $15.3 million for its personalized children’s clothing box

Kidbox, a clothing-in-a-box startup aimed at a slightly younger crowd than StitchFix, has raised $15.3 million in Series B funding to expand and scale its business.

The round was led by Canvas Ventures, and includes participation from existing investors Firstime Ventures and HDS Capital, as well as new strategic partners Fred Langhammer, former CEO of The Estée Lauder Companies Inc., and The Gindi Family, owners of Century 21 department stores.

To date, Kidbox has raised $28 million.

The company was founded in October, 2015, then shipped its first box of clothing out of beta testing during the back-to-school shopping season the next year.

Similar to StitchFix, Kidbox also curates a selection of around half a dozen pieces of clothing and other accessories (but not shoes), which are based on a child’s “style profile” filled out online by mom or dad. The profile asks for the child’s age, sizes and questions about the child’s clothing preferences — like what colors they like and don’t like, as well as other styles to avoid — like if you have a child who hates wearing dresses, for example, or one who has an aversion to the color orange.

“Those answers feed into a proprietary algorithm — we’re very data science and tech focused,” explains Kidbox CEO Miki Berardelli. “That algorithm hits up against our product catalog at any given moment, and presents to our human styling team the perfect box for — just as an example, a size 7 sporty boy. And from there, the styling team looks at the box that’s been served up, the customer’s history, if they’re a repeat customer, the customer’s geography and any notes [the customer] added to their account,” she says.

The box is then put together and shipped to the customer.

Berardelli previously worked at Ralph Lauren, Tory Burch and was president of Digital Commerce for Chico’s (Chico’s, White House Black Market and Soma). She joined Kidbox in September 2016 after meeting founder Haim Dabah while he was searching for Kidbox’s CEO.

“It resonated with me as a consumer, as an early adopter of all things digital, and as a multi-time operator of e-commerce businesses,” she says, of why she decided to join the startup.

Today, Kidbox’s boxes are sent out seasonally for spring, summer, back-to-school, fall and winter. However, unlike StitchFix, Kidbox isn’t a subscription service — you can skip boxes at any time, and you’re not charged a “styling fee” or any other add-on fees.

However, if you keep the full box, Kidbox donates a new outfit to a child in need through a partnership with Delivering Good, a nonprofit that allows customers to choose the charity to receive their clothing donation.

At launch, Kidbox carried around 30 kid’s brands. It’s since grown its assortment to more than 100 brands for kids ages newborn through 14, including well-known names like Adidas, DKNY, 7 for All Mankind, Puma, Jessica Simpson, Reebok, Diesel and others.

Kidbox launches its own private labels

With the next back-to-school box, Kidbox will insert its own brands into the mix. The company will be launching multiple private labels across all ages, and every box will get at least one own-label item. The brands will include everything from onesies for babies to graphic tees to denim to basics, and more. 

“We believe we’ve identified a void in the children’s apparel marketplace,” notes Berardelli. “The style sensibility of our exclusive brands will all have a unique personality, and a unique voice that’s akin to how our customers describe themselves. It’s all really based on customer feedback. Our customers tell us what they would love more of; and our merchandising team understands what they would like to be able to procure more of, in terms of rounding out our assortment,” she says.

On a personal note, a customer of both Kidbox and Rockets of Awesome, two of the leading kid box startups, what I appreciate about Kidbox is the affordable price point — the whole box is less than $100 — and its personal touches. Kidbox ships with crayons and a pencil-case for kids, and the box is designed for kids to color. It also includes a print edition of its editorial content, and sometimes there’s a small toy included, too.

Kidbox rival Rockets of Awesome is a little pricier, I’ve found, but has some unique pieces that make it worth checking out, as well.

With the new funding, Kidbox aims to further invest in its technology foundation, its data science teams, its own labels, its customer acquisition strategy and marketing.

The company doesn’t disclose how many customers it has or its revenues. Instead, it notes that the Kidbox “community” — which includes fluffy numbers like Facebook Page fans and people who signed up for emails — is over 1.2 million. So it’s hard to determine how many people are actually buying from Kidbox boxes.

Kidbox has potential in a market where brick-and-mortar retailers are closing their doors, and e-commerce apparel is on the upswing. But it — like others in the space — faces the looming threat posed by Amazon. The retailer has also just launched its clothing box service, Prime Wardrobe, which includes kids’ clothing.

“Kidbox is at the head of a trend that sees a world in which every person will have their own personalized storefront for literally anything — be it kids clothing, furniture or weddings,” says Paul Hsiao, general partner at Canvas Ventures, about the firm’s investment. Hsiao has also led investments in Zola and eporta while at Canvas, and in Houzz while at NEA.

“Kidbox is growing at atypically high multiples. I think it is because of their deep connection with their customers — the kids, the parents and grandparents,” Hsiao continues. “The Kidbox team is also remarkable at logistics. Sounds boring, but e-commerce is fundamentally a logistics business,” he adds.

Kidbox is currently a team of 35 based in New York.

 

 

 

Spotify beefs up its free tier

Today at the Gramercy Theater in NYC, Spotify’s Chief R&D Officer Gustav Söderström announced a brand new free version of the Spotify mobile app.

By leveraging their investment in machine learning, Spotify’s new free tier recommends music to users on the fly. That said, the free tier has always limited users to shuffle. With the new version, users can listen on-demand to whatever song they want, as many times as they want, as long as those songs appear on one of the 15 personalized discovery playlists like Daily Mix, Discover Weekly, Release Radar or Today’s Top Hits.

In total, that’s around 750 tracks (>40 hours of music) that Spotify is serving up to users for on-demand listening.

Spotify will also make recommendations in the free mobile version based on existing user-made playlists, from the songs on those playlists to the name of the playlist itself. The company is calling this “assisted playlisting,” which essentially means that each time you search for a song to add to a playlist, Spotify will make recommendations similar to it as well.

Finally, Spotify has built in a low-data mode (called data saver) that cuts data consumption by up to 75 percent. In the past, Spotify didn’t allow offline listening for free, meaning that users were somewhat tethered to wifi if they needed to conserve data.

With the new data consumption system, which caches music ahead of time to stream via 3G, users can actually listen to much more music with wireless data. Alongside utilizing 3G, Spotify is also optimizing the streaming itself as well as the app (including imagery and other UI elements) to save data and power.

All that said, advertisements will still run on the free tier of Spotify. Which is part of the company’s strategy not only for funding a free tier but for converting users to premium.

In 2014, Spotify introduced its free tier to mobile, letting users listen to their playlists on shuffle with ads. It was a huge part of Spotify’s free-tier growth. In fact, today Spotify has 90 million users on the free tier. And many of those convert to paid users — the company now has 70 million paid subscribers.

“If you’re on a date listening to music, you’re not going to want an ad to come on,” said Spotify’s Global Head of Creator Services Troy Carter.

The company has focused heavily on mobile since 2014, especially where it concerns the premium mobile player.

Spotify is built upon three tiers: ubiquity, personalization and freemium. Söderström explained that Spotify thinks of itself as the broadcast radio of the 90s, where discovery of great music was supported by ads and drove people to the record stores.

Spotify’s free tier represents broadcast radio for Spotify, and is a critical piece of Spotify’s overall strategy as paid services like Apple Music continue to grow.

Flipboard launches a new tech section

With recent changes, Flipboard has been placing a big emphasis on allowing readers to go deep on their interests. Now it’s adding even more features around one particular interest, in the Technology section of the Flipboard website and app.

“We want to make Flipboard definitive for tech insiders and enthusiasts,” said CEO Mike McCue .

This positions Flipboard as more of a direct competitor to a tech news aggregator like Techmeme, but with more curation from partners and from readers themselves.

The most immediately noticeable change is what the company describes as a “newspaper-like, high-density layout.” Basically, it moves away from the image-heavy look that Flipboard is known for, towards a layout that places a bigger emphasis on headlines and text, designed for quick scanning.

While McCue said the new look is “really meant for the desktop,” Flipboard has also created a version for the mobile web, and the app will also vary between a high-density and low-density layout depending on the stories. (If it seems strange for Flipboard to be prioritizing its web experience, remember that the company has also been shifting its focus away from its own native article formats toward the mobile web.)

Flipboard tech desktop

Regardless of which layout you’re seeing, the section will also have new content. Some of it will be curated by Flipboard publishers, with The Verge creating roundups for Gadgets News and Artificial Intelligence, the Wirecutter offering Deals of the Week and the team here at TechCrunch curating our latest Features.

“Flipboard has really become more of an ecosystem,” McCue said. “Publishers and curators are curating stories around all sorts of different topics. We want to provide access to that ecosystem on any platform, with or without the app.”

Teams can also create their own magazines, which are basically private collections of stories. So if you’re at a startup and want all of your colleagues to be up-to-date on the latest headlines about your industry and competitors, you can curate a magazine that’s only visible to them.

Flipboard will also be asking experts and influencers for book recommendations, starting with Wired editor-in-chief Nick Thompson’s roundup of “Five Books I’ve Recently Read About the Future.”

And all of this will be rounded up in a daily email, which will include the latest tech headlines as well as selections from any team magazine to which you contribute. On Saturday, the newsletter will focus on those book recommendations, with links to buy the titles on Amazon.

McCue suggested that if all this new content is embraced by readers, we might see Flipboard start to pursue a similar strategy around other topics, with a focus on reaching professional readers. Next up: Advertising.