GigaOM » John Borthwick

What Tumblr’s sale means for New York startup ecosystem

Om Malik — Mon, 20 May 2013 04:28:31 +0000

A few weeks after Ken Lerer quit AOL-owned Huffington Post to work on his venture fund Lerer Ventures, I stopped by in his office to catch up and talk about the New York landscape. And during our conversation, he pointed out that New York is still a big media town, except different kind of media. If you stand on Broadway and look above 34th street, you can see the media of the past. Look down the Broadway, you see the future. What he meant was that it was in Soho, Nomad and East Village (and Brooklyn) that companies like Foursquare, Tumblr and Thrillist made their homes. They were the new kind of media, one that married technology, social and content.

Ken Lerer, Lerer Ventures & Huffington Post, Co-founder

I was reminded of that conversation today, when the news emerged that Yahoo board had approved the $1.1 billion cash offer for Tumblr, the social sharing platform. It would be one of the biggest exits for a New York-based startup. Sure, there have been other exits — Google paid $3.1 billion for DoubleClick, but that was a company that belonged to a different internet era. There was AOL buying Huffington Post for $315 million, eBay bought Hunch for about $80 million, Skype took out GroupMe for about $85 million, and more recently Salesforce ponying up $689 million for Buddy Media. But Yahoo snapping up Tumblr is in a whole different league.

The new New York

Why? Because Tumblr, in many ways, is a visible manifestation of this new New York, one where startups combine technology with content (one of New York’s core industries) for a new world. It is a success story that matches the fable-like qualities of the Instagram-Facebook deal. Of course, a real comparison would have been Twitter and Tumblr — both companies were started around the same time, both are essentially content sharing and amplification systems and both have enjoyed a similar growth curve. Twitter has grown bigger with an eye on an IPO, and Tumblr is now going to be part of Yahoo.

But that is a comparison for another day, for the New York community is clearly excited about this deal. A Silicon Alley insider who wished to remain anonymous put it best when he described this deal as sign that finally in New York people who build things are getting rich versus people (Wall Street) who take things. A bit hyperbolic, but the point is well made. I think this exit allows the young New York startup community to look up to David Karp in the same way folks here look up to Kevin Systrom of Instagram.

BetaWorking

John Borthwick, who is co-founder of New York-based Betaworks, believes that it is an important turn of the cycle, and the sale of a social media company like this helps solidify and legitimize the entire New York startup ecosystem. Borthwick’s incubator was a seed investor in Tumblr, and that investment will pay handsomely.

John Borthwick, co-founder, Betaworks & seed investor in Tumblr.

Borthwick points out that the knock-on effects of this sale are going to help the new tech-centric New York gain momentum. Just as PayPal helped spawn a series of other companies, many in New York are optimistic that Huffington Post and Tumblr are going to result in many more startups. HuffPo’s progeny include BuzzFeed and RebelMouse, and Tumblr’s talent is likely to do more interesting things, he argued.

Lerer, grand wizard of the New York tech scene, believes that New York is no longer an after thought. “This is just beginning,” said Lerer, who has invested in 150 companies (80 percent of which are in New York). And with content being central (something he shared in a conversation at paidContent Live), Lerer believes that New York will become a bustling startup city.

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Dots game from Betaworks hits 100 million game plays in first 2 weeks

Eliza Kern — Wed, 15 May 2013 04:00:50 +0000

Dots, the super-addictive iOS game from Betaworks that launched just two weeks ago, has already hit 100 million games played, Betaworks told us.

Betaworks CEO John Borthwick and Om Malik talk about the future of Betaworks and testing new products at paidContent Live 2013 Albert Chau / itsmebert.com

The game came out of experimentations with iOS interactions and designs, and it’s sort of like a mobile version of Connect Four. The main screen on Dots displays 36 colored dots that users have to connect to remove from the screen, and the simplicity of the game’s design emphasizes the flat aesthetic that’s become popular in mobile design recently.

Dots comes from Betaworks as the NYC technology incubator has set an agressive schedule for releasing beta products each week for six weeks in hopes of seeing what works. Betaworks CEO John Borthwick talked about this strategy and said a game was in the works at our paidContent Live conference last month.

Our review of the game can be found here, and Zach Seward wrote a guide for Quartz dissecting the different ways a user can excel at Dots. (Hint: it’s all about the squares.) The game is free to download from Apple’s app store, with in-app purchases that gives users a few additional features. Betaworks reported that the game hit 25 million games played about a week ago.

Here’s the company’s description of how Dots got started:

About 3 months ago, Patrick Moberg started experimenting with various iOS interaction designs as part of the hacker in residence program. We didn’t set out to build a game, but quickly realized there’s a desire for well designed mobile entertainment so that’s where we focused. Patrick worked for a few weeks to build something that looked beautiful and provided you some level of stimulation. After a few days playing one of the initial concepts, we were all completely hooked. Several betaworks employees and their partners clocked hours and hours of playtime off a fairly rudimentary pilot. Over the next few months, we refined the scoring, design, and overall aesthetic to come up with what we simply call Dots – a game about connecting.

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Betaworks acquires Marco Arment’s read-it-later platform Instapaper

Laura Hazard Owen — Thu, 25 Apr 2013 22:02:14 +0000

New media incubator and venture firm Betaworks has acquired a majority stake in Marco Arment’s read-it-later platform Instapaper, the companies announced Thursday evening. Other Betaworks companies and projects include bit.ly, Chartbeat and Done Not Done. The firm acquired Digg for a reported $500,000 last year.

Unlike Digg at the time it was acquired, however, Instapaper has a business model: It’s a paid product. The iPhone and iPad apps are $3.99, and the Android app is $2.99. Users can also install a bookmarklet to save articles.

On his blog, Arment wrote of the acquisition, “We’ve structured the deal with Instapaper’s health and longevity as the top priority, with incentives to keep it going well into the future. I will continue advising the project indefinitely, while Betaworks will take over its operations, expand its staff, and develop it further.” He said he has been looking for an opportunity to “try other apps and creative projects.”

Betaworks’ acquisition of Instapaper fits with the firm’s strategy of investing in both short and long-form content. Betaworks CEO John Borthwick said at the paidContent conference last week that companies shouldn’t favor one over the other: They need to invest in both. Digg is planning to launch a Google Reader replacement, and Instapaper’s technology could possibly be put to work on that project.

Here’s a video of Borthwick talking to Om Malik at paidContent Live:

Watch this video for free on GigaOM

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How Betaworks is rolling out its new machine gun-style media play

Katie Fehrenbacher — Wed, 17 Apr 2013 19:23:47 +0000

Betaworks, the social media incubator and venture firm based in New York City, has slowly been morphing into a company that focuses on launching and operating projects — a whole lot of projects in recent months. The company has been working on five launches over the next five weeks, including one today, something in the music space next week, and Betaworks’ first game product coming shortly, Betaworks CEO John Borthwick told Om Malik during an interview at paidContent Live on Wednesday.

Betaworks has developed a model for these rapid launches and development cycles (100 to 150 days), and the company relies heavily on data to see if they stick in the marketplace. On Wednesday Betaworks launched Poncho, a super simple weather app; a couple weeks ago there was Giphy, a search engine for GIFs, which Borthwick said was so popular that 2 million users crashed the system when it first launched. Before that there was tapestry, a collection of mobile tappable stories.

But when Betaworks isn’t churning out its own content, it’s slicing, dicing, merging and mixing the content of others. One of the things that Betaworks is most famous for is its acquisition of the former social reading site Digg for a reported $500,000. Betaworks then merged it with some of the tools of its sluggish News.me creation.

Borthwick said that when the company bought Digg it had $250,000 a month worth of legacy costs, with $10,000 in monthly operating profits. Digg was jacked up and it had to pull out the needle, said Borthwick. After switching over to Amazon, building a new stack and relaunching with Betawork’s algorithms, Digg now costs closer to $20,000 a month to operate. “That’s the math of the cloud,” said Borthwick.

The overhaul seems to be working. The new Digg, and its users, are highly mobile-centric. Fifty percent of the traffic during the week and 55 percent on weekends comes from mobile traffic, said Borthwick. It was closer to 5 to 6 percent mobile before the relaunch. Digg now has a couple of million “active, rabid” users, said Borthwick. The Betaworks team pays particular attention to the amount of engaged users on Digg, which is high.

Attention is being fractured into a bipolar fashion, leading to condensed, fractional content on one hand and uber long-form content on the other. It’s Twitter vs House of Cards and Homeland, explained Borthwick. To build media companies and products in this era, you have to keep an eye on both, said Borthwick. To address that long form content market, Betaworks has created some tools over the past year around long-form story telling.

Not all of the innovation will come from newly launched media projects. Borthwick said he admires the work that Forbes and Bloomberg have done, as well as new media sites like The Huffington Post, Buzzfeed and Upworthy.

CHeck out the rest of our paidContent Live 2013 coverage here, and a video embed of the session follows below:

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For some companies, confusion in app-land equals money

Om Malik — Tue, 20 Nov 2012 17:30:27 +0000

When News.me, a New York-based company, acquired some assets of the earliest social news sharing service Digg and refocused on Digg, its chances to make it were seen as a long shot. And while that dark prognosis hasn’t changed, Digg has come up with a business model — making app discovery easier — that could set it on the right path and in the process show others a new way of doing business.

Back in the day, when Digg was still a dominant force on the web, the company essentially came up with the “sponsored story links as an ad-unit” concept that proved to be quite successful, since it fit in with the overall usage behavior of Digg’s community. The new Digg has taken that concept and applied it to mobile apps. They call this “Apps We Love.” Apps that meet Digg’s criterion will pay an undisclosed amount of money to be featured.

Along the grain advertising

Digg General Manager Jake Levine say that the two apps that have been featured in tests so far — Zapd and Tapestry — have seen between two percent to four percent click-through rates on about 250,000 impressions per ad across the web and mobile platforms, which higher rates on mobile devices.

The click-through rate mirrors the click throughs on services such as BuzzFeed, which have taken a similar “content as advertising” approach. This approach has been a subject of great debate for a long time and will continue to be debated in context of traditional media publications.

John Borthwick, the co-founder and CEO of Betaworks, the main backer of Digg believes that as the content and media types continue to evolve, Internet advertising has to take an along-the-grain approach; as he defines it, “along the grain” means where advertising matches the service. For example, Google AdWords offered a utility not too different than its unpaid search results, which lead to better usage of advertisements. It turned out to be a big hit and the company has benefitted deeply from it. Twitter has started pushing promoted tweets that are very much in sync with its un-paid behavior. Borthwick believes that since Digg helped discovery of news stories, taking the promote-the-app route is an obvious move for the company.

App discovery is broken

Digg is part of a growing number of services that are trying to arbitrage the near-term inefficiency in the app market. Yesterday there was news that since Apple launched its app store, it had approved over a million apps. The Android app market is growing at a breakneck speed as well. All this growth has made discovery of apps very difficult.

Today, if a developer wants to get attention for her app, she has to bank on a few things to go right: Apple (or Google) features them on their App store — which is a long shot unless the app is exceptional — or the app is written up on the many blogs that cover apps. The problem is that while press attention is good, it doesn’t necessarily translate into millions of users. Discovery is a difficult and tedious process.

In an interview with the New York Times, Brewster Kahle, founder of the Internet Archive, a nonprofit digital library, put it succinctly when he said, “If someone else controls the distribution of your work, and the pricing, then you don’t have a company, you have an affiliate.” The New York Times also pointed out that while there are Instagram and Angry Birds, there also hundreds of thousands who don’t make much money from Apple’s app platform.

Inefficiency means opportunity

The market inefficiency has allowed companies like Paris-based AppsFire to thrive in the marketplace. The company yesterday launched its app discovery engine that takes on Apple’s app store itself. It is betting that its app will provide a better experience that Apple’s App Store, which has gone through some design changes (based on its Chomp acquisition) — not necessarily for the better. If you had to draw an analogy, then AppsFire could be the LinkExchange of mobile.

The situation isn’t very different from the early days of the web when many web publications were started but eventually cratered because they were unable to build a big following. Discovery and attention are still vital criteria for success. And apps are essentially the mobile equivalent of the web destinations. Just as Expedia and Trulia spend dollars attracting traffic to their website, they would need a smarter way to get people to try their apps as well.

Like Digg and Appsfire we are going to see more people take a gander at the app marketplace. My colleague Ryan Kim has written about the growing number of startups that have jumped into the app discovery game. Facebook executives tout their ability to become king-makers for mobile apps, and back in the day Facebook were offering SocialCam as a poster child of success.

However, the market should be ripe for a strong push from an ad-based company that is not beholden to a major mobile platform. And that company is Yahoo, which under new CEO Marissa Meyer is looking to mobile as a big opportunity to reinvent itself. Last year they embarked on an app-discovery effort, but for now it has not yielded any major results. Maybe they should restart by snagging Appsfire and building an app-network. And as for Digg — it yet might live again.

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Betaworks’ Findings shifts to web clipping, as Amazon bans Kindle clips

Laura Hazard Owen — Tue, 18 Sep 2012 18:39:06 +0000

Findings, the year-old content-sharing site from untraditional VC firm Betaworks, was built on the ability to sync and share Kindle highlights. But Amazon told Betaworks last week that this function violates its terms of service. Findings is shifting its focus to web clipping.

The Kindle highlights feature lets reader select and “clip” favorite quotes and passages from the ebooks they are reading, then access those highlights online later. At launch, Findings’ main feature was the ability for users to easily share those Kindle highlights with others by syncing their Kindle account with the Findings’ web bookmarklet. Applications such as Evernote also let users sync and save their Kindle highlights.

Findings maintains that web clipping has become an increasingly important part of the service it provides, though Betaworks CEO John Borthwick acknowledged that the ability to share Kindle highlights was the reason many people started using Findings in the first place. He said that Amazon had known about Findings for a year and had been fine with the service until now. ”I don’t want to intuit what Amazon’s motivations are,” he said, but suggested that the decision was driven not by Amazon but by book publishers: “This is probably what publishers want.”

That sentiment is echoed in a blog post from Findings general manager Lauren Leto. “Amazon has to abide by what publishers demand, and this is sometimes at odds with what users want,” she writes. “As a small startup we had no choice but to comply with their demand that we discontinue the feature that allow users to import and sync Kindle data in Findings.”

I’ve asked Amazon for a comment, but does it makes sense that this decision would be driven by book publishers? They are already able to restrict Kindle highlighting: they have the ability to limit the amount of content clipped from an ebook (and Evernote users who wanted to save their highlights have been blocked from saving too much content). It makes sense that piracy-fearing publishers don’t want users to “clip” too much of a book and share it. Scanning the content shared on Findings, though, it’s clear that most users aren’t sharing more than a paragraph of text.

Amazon itself lets readers share their highlights and clippings through a feature called “Public Notes,” and it’s possible the company is cracking down on competing services like Findings in an effort to promote its own service. Considering that “Public Notes” is relatively under the radar, that seems somewhat unlikely. But the new Sony Reader lets users share passages through Evernote, and Amazon may be planning to make its own sharing features more robust.

Finally, Amazon simply may not want third-party apps accessing Kindle highlights. If so, we should expect to see services like Evernote cutting off that functionality soon.

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Video: Betaworks’ Borthwick says it’s time to stop thinking about “content”

Staci D. Kramer — Sun, 17 Jun 2012 14:30:53 +0000

Om Malik interviews John Borthwick, founder and CEO, Betaworks.

Betaworks CEO John Borthwick’s advicefor the media industry: think about producing “information” — not “content.”

Why? “Content is very much about the package, very much about the container”, Borthwick said during a Q&A with GigaOM founder Om Malik at our recent paidContent 2012 conference.

The moment you start thinking about it as information, I think people start thinking about it differently, they think less about the container and the structure and a little bit more about the users.

That’s especially important as the concept of “container” changes with the increase in realtime data and sharing across platforms.

The pair also talked about how to use that data (Betaworks has started both Bitly and Chartbeat); how Facebook isn’t making the best use of its data for advertising and the need to break the CPM ad model; why Apple’s app store and Google Play don’t work; and a lot more packed into the embedded video below:

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5 key takeaways from paidContent 2012

Robert Andrews, Laura Hazard Owen, Jeff Roberts — Thu, 24 May 2012 21:34:40 +0000

It’s all about the platform — except when it isn’t: Many speakers at paidContent 2012 spoke about the opportunities, challenges and constraints of creating digital content. Here are five key takeaways from the day.

Jim Bankoff, Chairman and CEO, Vox Media

Data helps destroy containers, and that’s a good thing. Data creates new content and information experiences and helps bring an end to the notion of content silos, Betaworks’ John Borthwick said: “The moment you start thinking about it as information, you start to think less about the package and more about the users.” Forrester’s James McQuivey pointed out that it’s not just a “tablet or iPad world,” but an “everything world” — and millions of people are consuming content not on iPads or e-readers but on gaming systems like the Xbox 360.

Digital storytelling is a native art. Stories on the Internet are not a new form of magazine or newspaper stories, but a medium in their own right — just like radio or TV. Publishers should develop their platforms accordingly rather than just repurposing other print vehicles. When Wenner Media released Us Weekly on iPad for the first time, it figured out a way to enable the “passalong” that’s so popular with the magazine’s print edition. As Vox Media CEO Jim Bankoff told us, George Lucas had to build a new story-telling platform called Lucasfilm so that he could tell the story of “Star Wars.” And don’t say blogging is dead: “That’s like saying creativity is dead, or personal expression is dead,” said WordPress founder Matt Mullenweg.

Om Malik interviews John Borthwick, founder and CEO, Betaworks.

Not all “media” are created equal. Union Square’s Fred Wilson and Betaworks’ John Borthwick gave a rude awakening to Big Media executives, urging them to give up control of their content — and even to stop calling it “content.” But declaring new digital networks victors over somewhat different traditional print and broadcast operators after simply labelling each “media” can sometimes seem counterproductive and insufficient: What’s being created now are entirely new kinds of information vehicles. The industry is truly “at the crossroads” suggested by the paidContent 2012 conference’s subtitle– but technologists and information producers may now be heading in different directions, as well as speaking different languages.

Publishers have to sell their brands directly to consumers. “Publishing companies need to understand that the thing [companies] like Amazon, Barnes & Noble and other retailers really respect is a brand,” Pottermore CEO Charlie Redmayne said in an explanation of why those companies agreed to send customers directly to the Pottermore site to buy e-books. “If we’ve demonstrated anything, it’s the power of a brand,” he said, noting that over half of Pottermore’s e-book sales result from readers coming directly to the site instead of being referred there by the retailers. Not every brand is Harry Potter — but “need to understand that their role in the future is creating these brands,” Redmayne said.

It’s time to toss CPM as a yardstick for online advertising success. How can Facebook be so inept at advertising? Because it’s handing advertisers a sledgehammer not a scalpel. Betaworks’ Borthwick and GigaOM’s Om Malik say it’s time to discard old-fashioned display ads as the basic unit of online ad success. Instead, it’s time for advertisers to adapt their ads to the evolving nature of the internet itself. That means forgetting about CPMs and focusing on data and social dynamics. On a broader level, it means re-imagining basic precepts of advertising and product discovery in a world where Web pages are being eclipsed by new types of online discovery and interaction.

If you didn’t make it to the TimesCenter yesterday, you’ll find video of all yesterday’s panels here (registration required). And let us know your takeaways from the day in the comments.

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Don’t think of it as content, think of it as information

Mathew Ingram — Wed, 23 May 2012 18:16:48 +0000

In order to benefit from digital media and the disruption created by the social web, content companies and publishers have to think differently about what they do, John Borthwick of Betaworks told attendees at paidContent 2012 in New York on Wednesday — and one way to do that is to stop thinking about what they produce as “content,” and start thinking about it as “information.” The problem with the word content is that it tends to focus attention on the package or the container for that content, Borthwick said, and the package part of the media business is the aspect that is being disrupted the most.

Thinking of what they produce as information rather than content to be packaged, the Betaworks CEO said, puts the focus on the value of that information to users, and the package or delivery system — whether it’s a magazine or a newspaper or a mobile app — becomes secondary. Only that way can media companies figure out what and how their users want, he said.

The language drives the way you think about things, and since we’re dealing with a new media landscape, we need to redefine some of the words. For me, the moment you start thinking about it as information, you start to think less about the package and more about the users.

That need to understand what users want was the driving force behind two of the first services that Betaworks created, Borthwick said: Bit.ly started as a simple URL-shortener for social networks such as Twitter, but has become a tool that provides data about what links are shared and which ones are clicked on, and Chartbeat shows editors and writers what articles are getting the most engagement, but in real time rather than hours or days after they have been published. Chartbeat, he said, has become “like a Bloomberg terminal for editors.”

We wanted to understand the data and the “data exhaust” around publishing… to understand the tight loop between commenting, discovery and publishing, and the data helps inform that, but in real time Transforming publishing into real-time changes the nature of what you’re doing.

In order to appreciate that shift, content and media companies not only need to change the tools they are using, Borthwick said, but they have to fundamentally alter the way they think about the “content” business and what value they are ultimately adding for users.

Check out the rest of our coverage of paidContent 2012. Full archived video on livestream (registration required).

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paidContent 2012: An agenda (& networking) you don’t want to miss

Staci D. Kramer — Tue, 22 May 2012 08:55:43 +0000

I’m supposed to be grabbing a few hours of sleep before we start the last push for Wednesday’s paidContent 2012: At the Crossroads, our first paidContent event as part of GigaOM. But I’m a little too revved up now — in part from an e-mail thread I’ve been watching as the speakers in one session take their topic and run with it. I’m not going into the details here (that’s for Wednesday’s “The New Publishers” panel) but DigitalFirst’s John Paton, Vox Media’s Jim Bankoff and new USA Today publisher Larry Kramer have a lot of passion and know-how to pack into a discussion that could be twice as long and not come close to getting it all.

I’m also thinking about the range of interviews on tap, including two I’m doing. As president of Condé Nast, Bob Sauerberg is managing the translation of some of the magazine industry’s most iconic brands to a variety of devices and formats. In some cases, CN has tried to revive a brand by going pure digital, most famously with Gourmet Live. We’ll talk about what Sauerberg has learned, how committed CN is to app distribution, whether magazine consortium Next Issue Media can gain any meaningful traction and more.

Jon Miller is the chief digital officer of News Corp., the home of tablet tabloid pioneer The Daily, as revolutionary in its own way as USA Today was in 1982, and of a lot of digital experiments and acquisitions with mixed results (including MySpace, an acquisition Miller didn’t make but had to unwind after numerous rescue attempts failed). A current fixation for the former AOL CEO: video across properties, including the Wall Street Journal and IGN, not just the traditional sources of Fox networks and studios. And through it all, News Corp. has to protect its traditional billions and cope with the constant image hits in the UK. The same internet that offers so much potential revenue also makes it easy for every ripple to go tidal wave.

Other one-on-ones include:

betaworks CEO John Borthwick with GigaOM Founder Om Malik
VC Fred Wilson with Mathew Ingram, who outlined some ideas here
Pulitzer Prize-winning author Richard Russo will talk with our legal writer Jeff Roberts about the challenges facing authors from copyright to consolidation to pricing
Pottermore CEO Charlie Redmayne will talk to Laura Hazard Owen about taking a beloved brand digital
Automattic’s Matt Mullenweg in conversation with Anil Dash about platforms, power and disruption.

And that’s just part of the day. Check out the complete schedule and the full list of confirmed speakers is here.

The remaining ickets are selling fast — so if you want to take full advantage of the opportunities that come with networking from breakfast to closing cocktails, I strongly suggest you register now.

Thanks to our sponsors for their support. If you’re interested in sponsoring paidContent 2012, please contact eventsales@gigaom.com.

Thumbnail image courtesy of Shutterstock user [Joshua Haviv].

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