Compelling virtual reality shipped to developers and consumers nearly two years ago. The first flagship headsets arrived from Oculus and HTC back in the spring of 2016, offering enough resolution, frame rate, field of view, latency mitigation and position-tracking to produce believable visual immersion.
But no one seems to know what to do with it. To date, no killer app has extended the promise of VR from a novelty to a sticky experience or utility that reaches beyond enthusiasts to resonate with the consumer center of mass.
This isn’t to say that great experiences don’t exist. Apps like Tilt Brush, Elite: Dangerous and Google Earth VR have earned rave reviews and plaudits from enthusiasts. But we have yet to see a household phenomenon like Halo or Lotus 1-2-3 — applications that single-handedly propelled their respective platforms to wide use. At CES 2018, one industry analyst referred to VR as “drawerware,” referring to the likelihood of headsets to be stuffed in a drawer after a few forays into jejune worlds.
In an attempt to shed some light on the case of the missing VR killer app, I want to offer a few thoughts on why VR matters to users, and what that implies for entrepreneurs and investors interested in building or funding the VR killer app.
Why VR matters: Presence
Why is virtual reality valuable? In a word, presence: Immersion is the heart of the incremental value of VR versus existing platforms. Most forms of expressive media provide a third-person perspective of an experience, or convey sufficient information to help a user imagine a first-person perspective on their own.
When done right (6DoF tracking, room-scale movement, sufficiently high-resolution/FOV/low latency, spatial audio), virtual reality helps a user feel like they are really there. Rather than convey an impression of an experience, VR manipulates our visual and auditory senses (and soon our tactile sense) to transmit experience itself.
Presence is valuable in two ways
The idea that VR is valuable because it generates presence is well understood. But why does presence matter? What need does being there fill for users?
The quality of presence has clear intrinsic value. With few exceptions, subjective immersion is the best way to fully grasp what a certain experience is like. Being at the mountaintop generates the maximum degree of sensory throughput, and is a better way to understand the truth of your relationship to that place than watching a video of the mountain, which is better than seeing a picture of the mountain.
The objective fact of being somewhere matters as much or more than the subjective feeling of being there.
But presence also can have instrumental value, where being there is valuable in an objective sense. Being present at a meeting with a potential business partner sends a positive signal separate from the fidelity of your experience. Actually visiting the mountaintop can impress your friends, mattering beyond the sensation of being there.
Put another way, and borrowing the language of philosophy, it seems like we value presence for its experiential worth — being for the sake of experience — as well as for its ontological worth, or being for the sake of being. Another way to describe the ontological value of presence is authenticity. The philosopher Robert Nozick suggested as much in his refutation of ethical hedonism, employing the notion of the “experience machine” to suggest we care about more than our feelings. What this all means is that for many kinds of experience, the objective fact of being somewhere matters as much or more than the subjective feeling of being there.
VR’s killer app will deliver both types of presence value
How does identifying the two ways that presence drives user value help us imagine the use case that a VR killer app might address?
First, it illuminates why many first-order VR applications may not be suited for adoption by a non-enthusiast audience. When examining some of the typical mass market use cases forwarded by VR aficionados — enterprise or personal telepresence, virtual tourism and travel, virtual attendance at sports and entertainment events, virtual social environments and rec rooms — it seems clear that authenticity matters a great deal to consumers of these experiences, meaning that simply porting them to VR may not be compelling beyond an initial sense of novelty.
I believe that the value of ontological presence is largely driven by social norms. As and when the quality of VR experience converges on metaphysically “real” experience, those norms will evolve. Perhaps our children will label us “substratist” for claiming that hanging out in VR is less satisfying than visiting in person. But with regards to the next generation or two of VR tech and applications, I’m not bullish on social VR experiences that merely replicate the ways we interact in real life. By generating experiential presence without authenticity, they seem to fall into an uncanny valley somewhere between interactive video chat and in-person interaction.
It’s tempting to believe, then, that the VR killer app will skirt the issue of authenticity by solving for problems where the subjective feeling of presence, and not the objective fact of it, matters most — for example, virtual training for a factory worker, touring new construction homes for sale or checking out a car in a virtual showroom. VR is already finding fruitful use in the enterprise and select consumer applications. But when considering potential killer applications, the problem is that arenas of experience where experiential presence matters but authenticity does not usually aren’t important or frequently accessed parts of our life.
Ultimately, I think the first VR blockbuster will deliver both the experiential and ontological value of presence. In other words, VR’s killer app will generate a powerful feeling of being there for a compelling experience, in a way that also feels completely authentic.
Quality, accessibility and ecosystem maturity are probably the biggest practical barriers gating the VR killer app.
I believe that the experience in question will lack an analogue in the real world. In other words, the VR killer app won’t be a multiplayer simulation of New York City in the present day, or a virtual movie theater, or a virtual Giants Stadium where you can kick back in a box and watch the Super Bowl. The application that sells the mass market on virtual reality will be fully native to the platform, such that the only way to know what it is really like will be donning a headset and stepping inside.
An engaging VR experience that isn’t simulating something in the real world, but exists solely in its own right, can immerse a user in both senses of the word: After all, authenticity is implied when the virtual substrate is the only home for a certain experience. The real question is making the experience interesting or fun or cool enough that the feeling of presence is appealing, too.
If it sounds like I’m describing a video game, I think I am, too. But video games are a focal use case for every VR headset in production. What’s missing?
Quality, accessibility and ecosystem maturity are probably the biggest practical barriers gating the VR killer app. The current generation of flagship headsets are cumbersome and expensive to set up and run. Though deep price cuts across flagship wearables powered sales of more than a million VR headsets in Q3 2017, and both Oculus and HTC moved hundreds of thousands of high-end, PC-based units, individual install bases remain low enough to deter AAA studios.
Bootstrapping a two-sided ecosystem — in the case of VR, headsets/users and content, with more of the former increasing the incentive to invest in the latter and vice versa — is never easy. But better technology is on the way: HTC recently announced the Vive Pro, sporting improved resolution, spatial audio and a wireless adapter to do away with clunky wires. Google, Samsung, Lenovo and Oculus are working on standalone headsets that run without a PC or smartphone under the hood. Dozens of startups are developing peripherals and software to improve the VR experience, from haptics that mimic touch to pupil tracking that enables realistic eye contact.
Each new iteration of core VR hardware is a rising tide that makes any VR application more appealing to users on the margin. But killer apps often emerge on imperfect versions of the platforms they bring to life. The charting function of Lotus 1-2-3 strained the limits of the early graphics hardware on x86 PCs, but until 1-2-3, no one knew that programmatic generation of charts and graphs was even possible.
A killer app doesn’t need to be a perfect encapsulation of a new technology’s potential. All it needs to do is hint at the grand vision by providing a single, irresistible demonstration of value over the status quo.
In the case of VR, I’m not certain if that demonstration will occur on this generation of hardware or the next. But I believe it will be an experience that compares in intensity or joy or uniqueness to the best experiences we can access in reality. If you’re working on VR content or applications, consider this advice: Give us the ability to be present in a vision of the past, or a counterfactual world. Give us the feeling of life underwater or in space. Give us the sense of being present for an experience completely native to virtual reality, not merely an emulation of experiences we can already inhabit. Give us something real in its own right. That’s when the mass market will start to believe — and buy.
TechCrunch is heading to UCLA on October 18 and we’ve assembled some of the AR/VR industry’s most prescient founders, investors and executives to chat about the startups and trends driving virtual and augmented reality in 2018.
The world’s top tech companies have heavily invested in AR/VR and are persistent in broadcasting the technologies’ potential to blur the lines of how consumers interact with the digital world. Beyond the tech titans, it’s the small startups that are dialing into what’s missing in the ecosystem right now. Our agenda showcases some of the powerhouses in the space, but also plenty of smaller teams that are building and debunking fundamental technologies for virtual worlds.
We still have a few tricks up our sleeves and will be adding some new names to the agenda over the next month so keep your eyes open. In the meantime, check out these agenda highlights:
TechCrunch Sessions: AR/VRUCLA, Los Angeles // October 18See full agenda here
Kickstarting an IndustryYelena Rachitsky [Oculus] Oculus has pumped hundreds of millions of dollars into funding VR content, and while the headset market is still small, developers have built plenty of games and experiences. Facebook’s VR future rests on people finding new worlds that they want to step into, how will Oculus make this happen?.
The Social ExperimentAdam Arrigo [TheWaveVR], Sophia Dominguez [SVRF] and Gil Baron [Mindshow]If anything, the OculusVR acquisition in 2014 signaled that Facebook saw VR as a social final frontier. No one really knows what exactly those interactions looks like though, but there’s an awful lot that’s already been explored..
Reality ChecksNiko Bonatsos [General Catalyst], Catherine Ulrich [FirstMark Capital] and Jacob Mullins [Shasta Ventures]“[VR] is the frothiest space in the Valley right now. Nobody understands it but everyone wants in. Any idiot could walk into a f***ing room, utter the letters ‘V’ and ‘R’, and VCs would hurl bricks of cash at them.” – Erlich Bachmann. While this may have indeed been the case a couple years ago, investor cash has been a bit sparser in 2018. Where are the opportunities now?.
Staying Lean and MeanMaureen Fan [Baobab Studios] Baobab Studios has raised $31 million from top investors to create cinematic VR that excites audiences. While VR startups raised plenty of cash in 2016 and 2017, slow headset sales have caused startups to focus on building for a virtual future that might take a couple more years to reach..
Cloud 6Matt Miesnieks [6D.ai] and Bruce Wooden [6D.ai] AR is out there, but the experiences available today are still feeling pretty isolated. 6D.ai is building out cloud AR tech to link these experiences together on a digital layer of the real world..
Ditching Headsets for HologramsShawn Frayne [Looking Glass Factory], Brett Jones [Lightform] and Ashley Crowder [VNTANA]Augmented reality may be a powerful sight, but it requires participants to own expensive hardware. Is there a workaround? Startups are working to centralize the experience but it’s going to look a lot different..
Game TheoryNathan Burba [Survios] and James Iliff [Survios] While VR might not just be about gaming, it’s accurate to say that, in 2018, it mainly is. Survios has raised nearly $55M to show the potential of VR gaming, as the studio continue releasing new titles, can they keep their momentum going and will gaming continue to be the big opportunity?.
Early Days, Early BetsPeter Rojas [Betaworks] other speakers to be announced soonFewer AR/VR startups seem to be raising big seed rounds in 2018, but how have early-stage investors changed their approach to funding new talent in the space? How should founders get their attention?.
Building Inclusive WorldsCyan Banister [Founders Fund] other speakers to be announced soon If you had the chance to redesign society, where would you even start? As game developers continue designing massive online virtual worlds where we will spend more and more time, how should we look to correct issues we encounter and how can we build a better future?.
Augmenting the OfficeClorama Dorvilias [DebiasVR] and Derek Belch [STRIVR] and Morgan Mercer [Vantage Point]How can businesses learn from mistakes before making them? By training employees with VR, there’s the potential to more accurately simulate key scenarios and push people towards good choices..
Your Virtual SelfParham Aarabi [ModiFace] other speakers to be announced soonSmartphone AR is already in your pocket, but what can consumers actually use it for? While Snapchat face filters took us half-way there, new tech is making it easier for us to augment our faces with real world use cases while also getting closer to building out realistic avatars of our virtual selves.
Early Bird tickets are still on sale for one more week. Buy your early bird tickets today for just $99 and you’ll save $100 before prices go up. Student tickets are just $45. Book your tickets here..
YouTube has released its first quarterly Community Guidelines Enforcement Report and launched a Reporting Dashboard that lets users see the status of videos they’ve flagged for review. The inaugural report, which covers the last quarter of 2017, follows up on a promise YouTube made in December to give users more transparency into how it handles abuse and decides what videos will be removed.
“This regular update will help show the progress we’re making in removing violative content from our platform,” the company said in a post on its official blog. “By the end of the year, we plan to refine our reporting systems and add additional data, including data on comments, speed or removal and policy removal reasons.”
But the report is unlikely to quell complaints from people who believe YouTube’s rules are haphazardly applied in an effort to appease advertisers upset their commercials had played before videos with violent extremist content. The issue came to the forefront last year after a report by The Times, but many content creators say YouTube’s updated policies have made it very difficult to monetize on the platform, even though their videos don’t violate its rules.
YouTube, however, claims that its anti-abuse machine learning algorithm, which it relies on to monitor and handle potential violations at scale, is “paying off across high-risk, low-volume areas (like violent extremism) and in high-volume areas (like spam).”
Its report says that YouTube removed 8.2 million videos during the last quarter of 2017, most of which were spam or contained adult content. Of that number, 6.7 million were automatically flagged by its anti-abuse algorithms first.
Of the videos reported by a person, 1.1 million were flagged by a member of YouTube’s Trusted Flagger program, which includes individuals, government agencies and NGOs that have received training from the platform’s Trust & Safety and Public Policy teams.
YouTube’s report positions views a video received before being removed as a benchmark for the success of its anti-abuse measures. At the beginning of 2017, 8% of videos removed for violent extremist content were taken down before clocking 10 views. After YouTube started using its machine-learning algorithms in June 2017, however, it says that percentage increased to more than 50% (in a footnote, YouTube clarified that this data does not include videos that were automatically and flagged before they could be published and therefore received no views). From October to December, 75.9% of all automatically flagged videos on the platform were removed before they received any views.
During that same period, 9.3 million videos were flagged by people, with nearly 95% coming from YouTube users and the rest from its Trusted Flagger program and government agencies or NGOs. People can select a reason when they flag a video. Most were flagged for sexual content (30.1%) or spam (26.4%).
Last year, YouTube said it wanted to increase the number of people “working to address violative content” to 10,000 across Google by the end of 2018. Now it says it has almost reached that goal and also hired more full-time anti-abuse experts and expanded their regional teams. It also claims that the addition of machine-learning algorithms enables more people to review videos.
In its report, YouTube gave more information about how those algorithms work.
“With respect to the automated systems that detect extremist content, our teams have manually reviewed over two million videos to provide large volumes of training examples, which improve the machine learning flagging technology,” it said, adding that it has started applying that technology to other content violations as well.
FINALLY. @YouTube‘s new transparency report breaks out content flags by category. @ACLU_NorCal has long called for this necessary information. Your move, @Facebook. https://t.co/O0lsjHXwj7
— Jake Snow (@snowjake) April 23, 2018
YouTube’s report may not ameliorate the concerns of content creators who saw their revenue drop during what they refer to as the “Adpocalpyse” or help them figure out how to monetize successfully again. On the other hand, it is a victory for people, including free speech activists, who have called for social media platforms to be more transparent about how they handle flagged content and policy violations, and may put more pressure on Facebook and Twitter.
Dialpad announced a $50 million Series D investment today, giving the company plenty of capital to keep expanding its business communications platform.
The round was led by Iconiq Capital with help from existing investors Andreessen Horowitz, Amasia, Scale Ventures, Section 32 and Work-Bench. With today’s round, the company has now raised $120 million.
As technology like artificial intelligence and internet of things advances, it’s giving the company an opportunity to expand its platform. Dialpad products include UberConference conferencing software and VoiceAI for voice transcription applications.
The company is competing in a crowded market that includes giants like Google and Cisco and a host of smaller companies like GoToMeeting (owned by LogMeIn), Zoom and BlueJeans. All of these companies are working to provide cloud-based meeting and communications services.
Increasingly, that involves artificial intelligence like natural language processing (NLP) to provide on the fly transcription services. While none of these services is perfect yet, they are growing increasingly accurate.
VoiceAI was launched shortly after Dialpad acquired TalkIQ in May to take this idea a step further by applying sentiment analysis and analytics to voice transcripts. The company plans to use the cash infusion to continue investing in artificial intelligence on the Dialpad platform.
Post call transcript generated by VoiceAI. Screenshot: Dialpad
CEO Craig Walker certainly sees the potential of artificial intelligence for the company moving forward. “Smart CIOs know AI isn’t just another trendy tech tool, it’s the future of work. By arming sales and support teams, and frankly everybody in the organization, with VoiceAI’s real-time artificial intelligence and insights, businesses can dramatically improve customer satisfaction and ultimately their bottom line,” Walker said in a statement.
Dialpad is also working with voice-driven devices like the Amazon Alexa and it announced Alexa integration with Dialpad in April. This allows Alexa users to make calls by saying something like, “Alexa, call Liz Green with Dialpad” and the Echo will make the phone call on your behalf using Dialpad software.
According to the company website, it has over 50,000 customers including WeWork, Stitch Fix, Uber and Reddit. The company says it has added over 10,000 new customers since its last funding round in September, 2017.
Intel is feeling increasing pressure from AMD and Qualcomm and the competition will get even more intense if reports that Apple is working on its own chips to replace Intel processors in Macs are true. In an interview with Engadget last week before Computex, Intel’s client computing head Gregory Bryant said that Intel would reveal an even more powerful chip than last year’s showstopper, the 18-core, 36-thread Intel i9-7980XE.
As it turns out, Intel’s Computex keynote today in Taipei, Taiwan focused more on previewing future launches, but Bryant did reveal that later this year, the company will unveil a single-socket processor with a whooping 28-cores that will run at 5 GHz. In comparison, AMD’s Threadripper processor, one of Intel’s closest competitors, has 16-cores and 32 threads.
Bryant said the new chip will debut in the fourth quarter of this year but did not reveal pricing details (for reference, the Intel i9-7980XE is currently priced at $1,999, so it’s reasonable to assume the new chip will cost at least that).
Intel also released a new limited edition chip, the Core i7-8086K, which runs at 5.0 Ghz (a new milestone for its chips), to mark the anniversary of the first x86 processor, and will give away 8,086 of them in a sweepstake.
Other teasers included Intel’s plans for eighth-generation Core processors nicknamed Whiskey Lake, which will be made using Intel’s 14-nanometer technology and are designed for lightweight laptops that have little room for batteries or cooling fans. Another chip series, called Amber Lake, will also be made on the 14-nanometer production process and be intended for the thinnest laptops and tablets.
Intel also showcased a new iteration of the Optane solid-state drive, the 905P, which will offer up to 1.5 TB in a smaller M.2 design.
In non-chip news, Intel announced it will work with Sprint on devices from its hardware partners, including Acer, ASUS, Dell, HP , Lenovo and Microsoft, to run on 5G networks. They are expected to launch next year.
The floodgates are definitely open for IPOs in the tech world right now, and the latest is coming out of Europe. Adyen, a company that powers payments for large and smaller e-commerce merchants and others, has said that it plans to publicly list on the Euronext Amsterdam exchange, keeping the company’s financial future close to where Adyen itself was founded and is based rather than taking it to the US markets as some other European unicorns, like Spotify, have opted to do.
The news comes in the wake of reports that it was planning to announce its plans this week.
Adyen’s offering prospectus does not detail how much it plans to raise, or what sort of valuation it’s likely to reach in a public listing. It confirmed will be selling up to 15 percent of its shares, valued at a valuation of between €6 billion and €9 billion ($7 billion – $11 billion) after the IPO. We have reached out to the company for further detail on that front.
For some context, Adyen last confirmed its valuation publicly back in 2015, when it raised funding from Iconiq, the investment firm that manages funds from Mark Zuckerberg’s family and other high-net-worth tech leaders, at a $2.3 billion valuation. In other words, it’s a big jump, reflecting the company’s growth over the last couple of years.
Adyen to date has raised $266 million in outside funding, with other investors including Index (its largest shareholder), Felicis, Temasek and General Atlantic.
Adyen said in the prospectus that its net revenues for the year that ended December 2017 were €218 million, up 38 percent on 2016, with total processed volumes of €108 billion in 2017 up from €66 billion in 2016, or 63 percent growth. It’s also profitable, with an EBITDA of €99 million, or a margin of 45.5 percent. Net income for Q1 was €24.1 million, up €10 million over the same period a year before.
Adyen has also clinched some key deals that point to continuing growth. Competing against the likes of Worldpay and PayPal, Adyen stole a march on the latter when it moved in to become the primary payments provider to eBay. After the former parent of PayPal spun out the company, it subsequently put the deal out for tender and Adyen clinched it. (PayPal will still remain an option, but will not be the main provider.)
“We feel that we are still in the early stages of a remarkable journey. Our focus remains on building new functionality and on helping our merchants grow,” Pieter van der Does, the CEO and co-founder of Adyen, said in a statement. “This offering provides us with the freedom to keep building the company, while offering our shareholders a path to liquidity. Adyen will remain a company that is driven by a long-term vision and strategy.”
Other key customers include Uber (itself still growing like a weed, despite its many setbacks and divestments), Netflix, Facebook, Spotify, Etsy, Vodafone, Sephora, Tory Burch, L’Oréal and booking.com — underscoring how the company’s own growth is mirroring the increasing ubiquity and acceptance of digital payments.
The other area to watch and note with Adyen is that it’s looking to extend beyond basic payment processing technology: the company picked up a banking license at the end of last year and plans to expand in settlement services that would have previously been provided by banks. This will also help it grow its margins and overall revenues.
It will also be worth watching to see what happens next: last week, just one week after another European payments company iZettle announced its own IPO plans, it got snapped up by PayPal. I can’t help but wonder if someone is waiting in the wings again, and also what sort of a role Adyen’s bullish move played in PayPal’s own deal to secure growth.
The Senate today voted 52-47 to disapprove the FCC’s recent order replacing 2015’s net neutrality rules, a pleasant surprise for internet advocates and consumers throughout the country. Although the disapproval will almost certainly not lead to the new rules being undone, it is a powerful statement of solidarity with a constituency activated against this deeply unpopular order.
To be clear, the FCC’s “Restoring Internet Freedom” is still set to take effect in June.
BREAKING: The Senate just voted to restore #NetNeutrality! We won.
To all of those who kept fighting and didn’t get discouraged: you did this. You raised your voices and we heard you. Thank you.
Now the fight continues. On to the House!
— Ed Markey (@SenMarkey) May 16, 2018
Senate Joint Resolution 52 officially disapproves the rule under the Congressional Review Act, which allows Congress to undo recently created rules by federal agencies. It will have to pass in the House as well and then be signed by the president for the old rules to be restored (that or a two-thirds majority, which is equally unlikely).
On the other hand, forcing everyone in Congress to officially weigh in will potentially make this an issue in the upcoming midterms.
“‘Do you support net neutrality?’ Every candidate in America is going to be asked that question,” said Senator Ed Markey (D-MA) at a press conference after the vote.
Senator Brian Schatz (D-HI) related that a Republican colleague of his told him that their office had received more than 6,000 calls from people expressing support for net neutrality and the FCC’s original rules, and 10 opposed.
“People who use the internet all the time realize what this is about. Millions of calls, we don’t get that on every issue. People intuitively get this,” said Senator Chuck Schumer (D-NY) at the press conference.
Commission Impossible: How and why the FCC created net neutrality
Until yesterday Senate Democrats, who brought the resolution, had 50 supporters, including one Republican, more than enough to force the issue to be voted on, but not enough to actually pass.
Two more Republicans, Alaska’s Lisa Murowski and Louisiana’s John Kennedy joined Maine’s Susan Collins (the first to cross the aisle) to vote aye on the measure, making the final tally 52-47. (The missing vote belongs to Sen. McCain, who is absent while fighting cancer.)
“We salute them for their courage,” said Senate minority leader Nancy Pelosi at the press conference.
FCC Commissioner Jessica Rosenworcel commended the Senate’s action.
“Today the United States Senate took a big step to fix the serious mess the FCC made when it rolled back net neutrality late last year,” she said in a statement. “Today’s vote is a sign that the fight for internet freedom is far from over. I’ll keep raising a ruckus to support net neutrality and I hope others will too.”
Chairman Ajit Pai, however, was less congratulatory in his own statement.
“It’s disappointing that Senate Democrats forced this resolution through by a narrow margin,” he said, “But ultimately, I’m confident that their effort to reinstate heavy-handed government regulation of the Internet will fail.”
Both he and Commissioner Carr cited a “three-Pinnochio” fact-check of Democratic claims regarding net neutrality that’s a good guide to avoiding the hysteria occasionally encountered in this debate but provides precious little support for Restoring Internet Freedom, which is itself plagued by technical misunderstandings.
The FCC’s case against net neutrality rests on a deliberate misrepresentation of how the internet works
Representative Mike Doyle, who has been working on the corresponding effort in the House, said he is taking the next step tomorrow morning.
With the Majority Leadership in the House opposed to this bill, the only way to bring it before the full House for a vote is through a discharge petition. Under the rules of the House, a bill must be brought to the House Floor for a vote if a majority of Representatives sign a discharge petition demanding it. I’m filing a discharge petition to force a vote on the legislation to save Net Neutrality, and we just need to get a majority of Representatives to sign it. I’m sure that every Member of the House will want to know where their constituents stand on this issue.
As everyone notes above, the fight continues. Be sure to contact your member of Congress.
When we think about designing our dream home, we don’t think of having a thousand roommates in the same room with no doors or walls. Yet in today’s workplace where we spend most of our day, the purveyors of corporate office design insist that tearing down walls and bringing more people closer together in the same physical space will help foster better collaboration while dissolving the friction of traditional hierarchy and office politics.
But what happens when there is no office at all?
This is the reality for Jason Fried, Founder and CEO of Basecamp, and Matt Mullenweg, Founder and CEO of Automattic (makers of WordPress), who both run teams that are 100% distributed across six continents and many time zones. Fried and Mullenweg are the founding fathers of a movement that has inspired at least a dozen other companies to follow suit, including Zapier, Github, and Buffer. Both have either written a book, or have had a book written about them on the topic.
For all of the discussions about how to hire, fire, coordinate, motivate, and retain remote teams though, what is strangely missing is a discussion about how office politics changes when there is no office at all. To that end, I wanted to seek out the experience of these companies and ask: does remote work propagate, mitigate, or change the experience of office politics? What tactics are startups using to combat office politics, and are any of them effective?
“Can we take a step back here?”
Office politics is best described by a simple example. There is a project, with its goals, metrics, and timeline, and then there’s who gets to decide how it’s run, who gets to work on it, and who gets credit for it. The process for deciding this is a messy human one. While we all want to believe that these decisions are merit-based, data-driven, and objective, we all know the reality is very different. As a flood of research shows, they come with the baggage of human bias in perceptions, heuristics, and privilege.
Office politics is the internal maneuvering and positioning to shape these biases and perceptions to achieve a goal or influence a decision. When incentives are aligned, these goals point in same direction as the company. When they don’t, dysfunction ensues.
Perhaps this sounds too Darwinian, but it is a natural and inevitable outcome of being part of any organization where humans make the decisions. There is your work, and then there’s the management of your coworker’s and boss’s perception of your work.
There is no section in your employee handbook that will tell you how to navigate office politics. These are the tacit, unofficial rules that aren’t documented. This could include reworking your wardrobe to match your boss’s style (if you don’t believe me, ask how many people at Facebook own a pair of Nike Frees). Or making time to go to weekly happy hour not because you want to, but because it’s what you were told you needed to do to get ahead.
One of my favorite memes about workplace culture is Sarah Cooper’s “10 Tricks to Appear Smart in Meetings,” which includes…
Encouraging everyone to “take a step back” and ask “what problem are we really trying to solve”
Nodding continuously while appearing to take notes
Stepping out to take an “important phone call”
Jumping out of your seat to draw a Venn diagram on the whiteboard
Sarah Cooper, The Cooper Review
These cues and signals used in physical workplaces to shape and influence perceptions do not map onto the remote workplace, which gives us a unique opportunity to study how office politics can be different through the lens of the officeless.
Friends without benefits
For employees, the analogy that coworkers are like family is true in one sense — they are the roommates that we never got to choose. Learning to work together is difficult enough, but the physical office layers on the additional challenge of learning to live together. Contrast this with remote workplaces, which Mullenweg of Automattic believes helps alleviate the “cohabitation annoyances” that come with sharing the same space, allowing employees to focus on how to best work with each other, versus how their neighbor “talks too loud on the phone, listens to bad music, or eats smelly food.”
Additionally, remote workplaces free us of the tyranny of the tacit expectations and norms that might not have anything to do with work itself. At an investment bank, everyone knows that analysts come in before the managing director does, and leave after they do. This signals that you’re working hard.
Basecamp’s Fried calls this the “presence prison,” the need to be constantly aware of where your coworkers are and what they are doing at all times, both physically and virtually. And he’s waging a crusade against it, even to the point of removing the green dot on Basecamp’s product. “As a general rule, nobody at Basecamp really knows where anyone else is at any given moment. Are they working? Dunno. Are they taking a break? Dunno. Are they at lunch? Dunno. Are they picking up their kid from school? Dunno. Don’t care.”
There is credible basis for this practice. A study of factory workers by Harvard Business School showed that workers were 10% to 15% more productive when managers weren’t watching. This increase was attributed to giving workers the space and freedom to experiment with different approaches before explaining to managers, versus the control group which tended to follow prescribed instructions under the leery watch of their managers.
Remote workplaces experience a similar phenomenon, but by coincidence. “Working hard” can’t be observed physically so it has to be explained, documented, measured, and shared across the company. Cultural norms are not left to chance, or steered by fear or pressure, which should give individuals the autonomy to focus on the work itself, versus how their work is perceived.
Lastly, while physical workplaces can be the source of meaningful friendships and community, recent research by the Wharton School of Business is just beginning to unravel the complexities behind workplace friendships, which can be fraught with tensions from obligations, reciprocity and allegiances. When conflicts arise, you need to choose between what’s best for the company, and what’s best for your relationship with that person or group. You’re not going to help Bob because your best friend Sally used to date him and he was a dick. Or you’re willing to do anything for Jim because he coaches your kid’s soccer team, and vouched for you to get that promotion.
In remote workplaces, you don’t share the same neighborhood, your kids don’t go to the same school, and you don’t have to worry about which coworkers to invite to dinner parties. Your physical/personal and work communities don’t overlap, which means you (and your company) unintentionally avoid many of the hazards of toxic workplace relationships.
On the other hand, these same relationships can be important to overall employee engagement and well-being. This is evidenced by one of the findings in Buffer’s 2018 State of Remote Work Report, which surveyed over 1900 remote workers around the world. It found that next to collaborating and communicating, loneliness was the biggest struggle for remote workers.
Graph by Buffer (State of Remote Work 2018)
So while you may be able to feel like your own boss and avoid playing office politics in your home office, ultimately being alone may be more challenging than putting on a pair of pants and going to work.
Feature, not a bug?
Physical offices can have workers butting heads with each other. Image by UpperCut Images via Getty Images.
For organizations, the single biggest difference between remote and physical teams is the greater dependence on writing to establish the permanence and portability of organizational culture, norms and habits. Writing is different than speaking because it forces concision, deliberation, and structure, and this impacts how politics plays out in remote teams.
Writing changes the politics of meetings. Every Friday, Zapier employees send out a bulletin with: (1) things I said I’d do this week and their results, (2) other issues that came up, (3) things I’m doing next week. Everyone spends the first 10 minutes of the meeting in silence reading everyone’s updates.
Remote teams practice this context setting out of necessity, but it also provides positive auxiliary benefits of “hearing” from everyone around the table, and not letting meetings default to the loudest or most senior in the room. This practice can be adopted by companies with physical workplaces as well (in fact, Zapier CEO Wade Foster borrowed this from Amazon), but it takes discipline and leadership to change behavior, particularly when it is much easier for everyone to just show up like they’re used to.
Writing changes the politics of information sharing and transparency. At Basecamp, there are no all-hands or town hall meetings. All updates, decisions, and subsequent discussions are posted publicly to the entire company. For companies, this is pretty bold. It’s like having a Facebook wall with all your friends chiming in on your questionable decisions of the distant past that you can’t erase. But the beauty is that there is now a body of written decisions and discussions that serves as a rich and permanent artifact of institutional knowledge, accessible to anyone in the company. Documenting major decisions in writing depoliticizes access to information.
Remote workplaces are not without their challenges. Even though communication can be asynchronous through writing, leadership is not. Maintaining an apolitical culture (or any culture) requires a real-time feedback loop of not only what is said, but what is done, and how it’s done. Leaders lead by example in how they speak, act, and make decisions. This is much harder in a remote setting.
A designer from WordPress notes the interpersonal challenges of leading a remote team. “I can’t always see my teammates’ faces when I deliver instructions, feedback, or design criticism. I can’t always tell how they feel. It’s difficult to know if someone is having a bad day or a bad week.”
Zapier’s Foster is also well aware of these challenges in interpersonal dynamics. In fact, he has written a 200-page manifesto on how to run remote teams, where he has an entire section devoted to coaching teammates on how to meet each other for the first time. “Because we’re wired to look for threats in any new situation… try to limit phone or video calls to 15 minutes.” Or “listen without interrupting or sharing your own stories.” And to “ask short, open ended questions.” For anyone looking for a grade school refresher on how to make new friends, Wade Foster is the Dale Carnegie of the remote workforce.
To office, or not to office
What we learn from companies like Basecamp, Automattic, and Zapier is that closer proximity is not the antidote for office politics, and certainly not the quick fix for a healthy, productive culture.
Maintaining a healthy culture takes work, with deliberate processes and planning. Remote teams have to work harder to design and maintain these processes because they don’t have the luxury of assuming shared context through a physical workspace.
The result is a wealth of new ideas for a healthier, less political culture — being thoughtful about when to bring people together, and when to give people their time apart (ending the presence prison), or when to speak, and when to read and write (to democratize meetings). It seems that remote teams have largely succeeded in turning a bug into a feature. For any company still considering tearing down those office walls and doors, it’s time to pay attention to the lessons of the officeless.
Speaking at the Code Conference today, Stitch Fix CEO Katarina Lake did not express much concern over Amazon and its entrance into fashion with Prime Wardrobe. Lake says that while she does think about Amazon, that Amazon offers a “fundamentally different” value proposition.
With Amazon, Lake said, the value proposition is about having a “sea of choice.” With Stitch Fix, “in a lot of ways ours is almost the opposite,” she said.
Stitch Fix is an e-commerce company that aims to figure out your personal style and then send you a handful of items the company thinks you’ll like. As a side note, this product has worked horribly for me but quite well for some other people.
Stitch Fix went public last year and part of being public, Lake said, is having fiduciary duty to do what is best for the company and its shareholders. With that in mind, Lake said, “I can’t say never” on selling to Amazon, “but I think this is a company that has a lot of value in and of itself.”
To date, Stitch Fix has not “had any serious discussions around combining companies” with Amazon.
“Right now, we feel really confident on the path that we’re on,” Lake said.
SoftBank is best known in Japan as a mobile operator but the company, which is behind the near-$100 billion Vision Fund, is increasingly getting into other types of consumer services in its homeland.
The Japanese firm last month launched a parking app, it is in the midst of rolling out a taxi-hailing service in conjunction with China’s Didi Chuxing and now it is developing a mobile payment service, too.
Bloomberg reports that Softbank is working with India’s Paytm — a startup that counts long-time SoftBank ally Alibaba as its main investor — to introduce a payment service before the end of this year. A source close to the companies confirmed the plans to TechCrunch, adding that an official announcement is expected very soon.
The plan is to start out with payments before moving into financial services, such as loans and insurance. The Japan launch would then be a springboard to expand to other global markets in the future, according to the Bloomberg report. Although it isn’t clear how the service would compete with offerings from Ant Financial, the Alibaba fintech affiliate that has local operations spread across numerous countries in Asia.
Paytm was the first mobile payment service to reach meaningful scale in India. Today it claims over 100 million registered users, thanks to a surge in adoption following the Indian government’s 2016 demonetization campaign which removed 500 INR and 1,000 INR notes in a bid to crack down on illicit usage and counterfeit cash.
The company recently claimed to have hit an annual run rate of five billion transactions, and reached $50 million in gross transaction value over the past twelve months, but Paytm has plenty of competitors waiting in the wings. Google’s Tez app has now passed 50 million downloads, while rivals such as MobiKwik hope Paytm’s focus on services like shopping will present a window to out-perform it on payments.
Japan will be Paytm’s first major international expansion — it has a modest service in Canada, where it has an R&D team — but even then there’s plenty of others in the market. Those include the likes of Line, Japan’s top chat app, and e-commerce giant Rakuten.
The Inspire’s mere existence isn’t news in and of itself. The device was actually announced a couple of weeks back. But back then, it was a corporate exclusive — the latest piece in the company’s bid to get serious about health care.
Today, however, Fitbit announced that the product will be available to everyone, arriving later this month, priced at $70 for the standard version and $100 for the 24/7 heart rate tracking HR model.
The device’s arrival marks yet another line in Fitbit’s already complicated offerings, but the Inspire is effectively canceling a number of earlier models in its wake. The Inspire and Inspire HR will be replacing five Fitbit devices: the Alta, Alta HR, Zip, One and Flex 2.
“When a category is new and it’s growing, you’re always trying to figure out what works. What form factors work, what price points work,” CEO James Park said in an interview with TechCrunch. “Trackers are a pretty mature category at this stage, so I think we’ve been able to figure out what the the minimum number of SKUs is to hit all of the price points and demographics.”
The new device does double duty with a pair of easy release latches on the rear that let it double as a standard wrist-worn tracker or a clip-on with a separate accessory, a la the Zip.
The price is certainly right. Cost is a big factor that keeps users opting for trackers versus smartwatches, but Fitbit’s been experiencing increased competition on the low end, particularly from Chinese device makers like Xiaomi. This isn’t the $15 Mi Band, but it’s a step in the right direction for a one-time ubiquitous brand looking to regain footing.
When Luminar came out of stealth last year with its built-from-scratch lidar system, it seemed to beat established players like Velodyne at their own game — but at great expense and with no capability to build at scale. After the tech proved itself on the road, however, Luminar got to work making its device better, cheaper, and able to be assembled in minutes rather than hours.
“This year for us is all about scale. Last year it took a whole day to build each unit — they were being hand assembled by optics PhDs,” said Luminar’s wunderkind founder Austin Russell. “Now we’ve got a 136,000 square foot manufacturing center and we’re down to 8 minutes a unit.”
Lest you think the company has sacrificed quality for quantity, be it known that the production unit is about 30 percent lighter and more power efficient, can see a bit further (250 meters vs 200), and detect objects with lower reflectivity (think people wearing black clothes in the dark).
The secret — to just about the whole operation, really — is the sensor. Luminar’s lidar systems, like all others, fire out a beam of light and essentially time its return. That means you need a photosensitive surface that can discern just a handful of photons.
Most photosensors, like those found in digital cameras and in other lidar systems, use a silicon-based photodetector. Silicon is well-understood, cheap, and the fabrication processes are mature.
Luminar, however, decided to start from the ground up with its system, using an alloy called indium gallium arsenide, or InGaAs. An InGaAs-based photodetector works at a different frequency of light (1,550nm rather than ~900) and is far more efficient at capturing it. (Some physics here.)
The more light you’ve got, the better your sensor — that’s usually the rule. And so it is here; Luminar’s InGaAs sensor and a single laser emitter produced images tangibly superior to devices of a similar size and power draw, but with fewer moving parts.
The problem is that indium gallium arsenide is like the Dom Perignon of sensor substrates. It’s expensive as hell and designing for it is a highly specialized field. Luminar only got away with it by minimizing the amount of InGaAs used: only a tiny sliver of it is used where it’s needed, and they engineered around that rather than use the arrays of photodetectors found in many other lidar products. (This restriction goes hand in glove with the “fewer moving parts” and single laser method.)
Last year Luminar was working with a company called Black Forest Engineering to design these chips, and finding their paths inextricably linked (unless someone in the office wanted to volunteer to build InGaAs ASICs), Luminar bought them. The 30 employees at Black Forest, combined with the 200 hired since coming out of stealth, brings the company to 350 total.
By bringing the designers in house and building their own custom versions of not just the photodetector but also the various chips needed to parse and pass on the signals, they brought the cost of the receiver down from tens of thousands of dollars to… three dollars.
“We’ve been able to get rid of these expensive processing chips for timing and stuff,” said Russell. “We build our own ASIC. We only take like a speck of InGaAs and put it onto the chip. And we custom fab the chips.”
“This is something people have assumed there was no way you could ever scale it for production fleets,” he continued. “Well, it turns out it doesn’t actually have to be expensive!”
Sure — all it took was a bunch of geniuses, five years, and a seven-figure budget (and I’d be surprised if the $36M in seed funding was all they had to work with). But let’s not quibble.
Quality inspection time in the clean room.
It’s all being done with a view to the long road ahead, though. Last year the company demonstrated that its systems not only worked, but worked well, even if there were only a few dozen of them at first. And they could get away with it, since as Russell put it, “What everyone has been building out so far has been essentially an autonomous test fleet. But now everyone is looking into building an actual, solidified hardware platform that can scale to real world deployment.”
Some companies took a leap of faith, like Toyota and a couple other unnamed companies, even though it might have meant temporary setbacks.
“It’s a very high barrier to entry, but also a very high barrier to exit,” Russell pointed out. “Some of our partners, they’ve had to throw out tens of thousands of miles of data and redo a huge portion of their software stack to move over to our sensor. But they knew they had to do it eventually. It’s like ripping off the band-aid.”
We’ll soon see how the industry progresses — with steady improvement but also intense anxiety and scrutiny following the fatal crash of an Uber autonomous car, it’s difficult to speculate on the near future. But Luminar seems to be looking further down the road.