TIME Companies

Ad-Free Social Network Ello Gets $5.5 Million in Funding

US-IT-INTERNET-MEDIA-ELLO
The Ello website is seen on the monitor screen September 27, 2014 in Washington D.C. Paul J. Richards—AFP/Getty Images

Company promises it will never sell ads or user data

The burgeoning social network Ello has raised $5.5 million in a new round of venture funding, it was revealed Thursday. The buzzy startup gained widespread attention in September thanks to its manifesto decrying social media companies’ habit of gathering and monetizing user data.

“Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.” the manifesto reads. “We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce and manipulate — but a place to connect, create and celebrate life.”

Ello is putting some legal muscle behind its lofty rhetoric by reincorporating as a public benefit corporation in Delaware. The company will vow in its new legal charter that it will never sell user data or advertising, according to The New York Times. The company plans to make money by charging users for extra, as-yet-unspecified features.

Though Ello has been around since summer, the site exploded in popularity last month after Facebook began kicking drag queens off its site because they were not using their legal names, leading some of those users to relocate to Ello. The small social network leapt from 90 users in early August to more than 1 million today, according to the Times. Facebook has since apologized for how its real name policy affected the LGBT community and others.

The funding round was led by Foundry Group, based in Boulder, Colo.

[Re/code]

 

TIME Companies

Google Inks $542 Million Venture Deal to Fund Mysterious Startup

2013 Google Developer Conference Continues In San Francisco
An attendee tries Google Glass during the Google I/O developer conference on May 17, 2013 in San Francisco, California. Justin Sullivan—Getty Images

The four-year-old firm Magic Leap aspires to blend computer generated images into the physical world

Google and several other leading tech firms have pooled $542 million in venture capital funding for Magic Leap, a secretive, Florida-based startup that is rumored to be working on virtual reality eyewear.

The deal, one of the largest venture capital fundraisers to date, would value the company at nearly $2 billion, two sources close to the negotiations told the Wall Street Journal. Two senior Google executives will join Magic Leap’s board of directors.

Little is known about Magic Leap beyond an eye-popping video of what the company hopes to achieve with its technology: a projection of life-like imagery that seamlessly blends with the physical surroundings. This deal echoes Facebook’s acquisition of Oculus Rift, a virtual reality headset that immerses users in graphically rendered 3-D worlds.

Both technologies point to a gamble within the tech industry that interfaces will ultimately break free from the confines of 2-D screens and form more immersive user experiences.

[WSJ]

TIME Startups

5 Reasons You Want to Become a ‘Growth Hacker’

Startup
Hero Images—Getty Images/Hero Images

Short answer: dramatic impact on business growth

startupcollective

This story was originally published on StartupCollective.

I’m elbow to elbow with everyone in a room packed with around 180 people, and all I can hear is the dizzying murmur of words like “SEM” and “User Acquisition Costs.” One person I meet is an engineer at a company that is changing the mattress industry by selling directly online to the consumer. Another person is a communications professional from England who recently moved to New York City to find opportunities as a marketer for startups.

We’re all here, at a GrowHack meetup in New York City hosted by Conrad Wadowski, to hear Sean Ellis speak about growth hacking. Despite our diverse backgrounds, we all want to learn about the little things we can do that can have a dramatic impact on business growth. Sean was the first marketer at Dropbox, Lookout, Xobni, and led marketing teams at companies like LogMeIn and Uproar through IPO filings. He now runs a successful data insights startup called Qualaroo, and is credited with coining the term “growth hacker” in his post, Find a Growth Hacker for your Startup.

Sean revealed unique insights about growth strategies and reassurance to all those working hard every day to grow their business.

First, Hustle to Get Traction

There was natural curiosity about how Dropbox became what it is today. Sean revealed that in the beginning, it was all about hustling. Drew Houston first created a video with some clever tongue-in-cheek humor that caught on with the tech crowd. They also gamed Digg and Reddit to get more exposure. In fact, their efforts landed them on the front page of Digg, which in its heyday, could drive meaningful traffic to a site.

Such hustle is not uncommon among startup stories. Whitney Wolfe, co-founder of Tinder, visited sororities to get girls on Tinder. Shortly after, she went to their neighboring fraternities, which then gladly joined. The founders of Flickr commented on photos regularly in order to create an engaged community.

Our first product, EasyBib, now has 40 million yearly users. We started without any in 2001. We invaded AOL chatrooms to talk about our product, spammed thousands of teachers individually, and sent emails to dozens of publications. We ended up being published on the front page of the business section of the Chicago Tribune.

Optimize Your Product for Marketing

Sean talked about how Dropbox had a strong focus on making their product do the marketing for them. In particular, they introduced the concept of a dual reward: When you invite someone to access your Dropbox, they receive 250MB of free space, and so do you. Therefore, the more people used Dropbox, the more beneficial it was.

But the Dropbox team made their product even stickier. When someone you shared a Dropbox folder with created an account, you would be pleasantly notified that you have more memory. If you’re familiar with Nir Eyal’s hook methodology, such variable rewards keep you highly engaged in a product. Seeing the success of the referral program, the Dropbox team doubled down on the idea by strategically placing prompts to share throughout the product, testing what would make it more shareable.

Do Whatever It Takes to Learn About Your Users

Sean advocated that every marketer should be surveying their audience. At his past companies, he didn’t think on his own how to position the product. Instead, he would ask users how they would describe it to a friend, and what one word they would use to describe the product. Having gained this insight, he would then test and iterate on messaging.

Surveying goes beyond the purpose of understanding messaging. Sean would look at a user funnel and identify where drop-offs existed. He would then reach out to those who dropped off at a particular point to understand why. He cited an example where LogMeIn users from a new channel were dropping off on a free offer. It turns out they they thought the offer was too good to be true. As result, Sean’s team created an option to download a trial of the premium version or download the free version, which increased conversion by the tune of 300 percent.

More importantly, Sean would survey to benchmark whether users found value in the product, and why or why not. He would utilize that information to better demonstrate the product’s value, and survey again to gauge if his changes were improving upon the initial benchmark.

In my experience, talking to the customer is invaluable. When we show someone our new GetCourse product, we ask how they would describe the product, and why they would recommend it to a friend. These questions have helped us understand how we should position the product. To learn more about surveying, ConversionXL has a great post on the best questions to ask.

Think Beyond Content

Sean created a community website to drive conversation around the plethora of great marketing content circulating the Internet. His ultimate goal was to educate readers of GrowthHackers about his Qualaroo product. What’s fascinating is that Sean realized that in order to make Qualaroo stand out, he would have to go beyond pumping out content like all his peers in the space. He could distinguish his efforts through curation and technology.

GrowthHackers exceeded expectations. Not only did it provide exposure to Qualaroo as intended, but the community that rallied around it became so strong that GrowthHackers has the potential of becoming it’s own business. Sean now hosts conferences with the Growth Hackers brand.

Indeed, the future of content marketing is thinking beyond content. Above all else, Sean constantly reminded the audience of the importance of testing your ideas, which is a core tenant of growth hacking. His lessons aren’t textbook, they’re tested.

Neal Taparia is Co-CEO of Imagine Easy Solutions. This post originally appeared on the author’s Forbes column.

TIME Startups

Reddit Gets $50 Million in Venture Funding

A big step for a major Internet hub

The popular online message board Reddit has secured $50 million in new venture capital funding, the company announced Tuesday. The website known as the “front page of the Internet” is getting a cash infusion from a long list of investors that includes Y Combinator president Sam Altman, Marc Andreessen of Andreessen Horowitz and the rapper Snoop Dogg.

Reddit is well-known for its primitive website design and laissez-faire attitude toward moderating its users. The company is a former subsidiary of Conde Nast that was later spun off into an independent company. CEO Yishan Wong said the new funding will help Reddit grow its relatively small staff of 60 and improve its app and ad products. “An investment like this doesn’t mean we’re rich or successful,” Wong said in a blog post. “Money can become worthless very quickly, value is something that is built over time through hard work.”

Reddit faced criticism earlier this month for allowing users to link to a vast number of stolen nude photos of celebrities. The startup defended the right of its users to post controversial content but ended up banning the page with the nude photos because some of the images were of minors.

With more money may come more pressure for Reddit to both generate profits and conform to the standards of traditional media companies. For now, though, Reddit is still playing by its own rules. The startup, which acknowledged it was still unprofitable earlier this year, has agreed to give 10% of its 2014 ad revenue to charity. The company promised Tuesday that investors involved in the latest funding round will give 10% of their shares back to the Reddit community (details on the practicality and legality of this are still to come, Wong said).

Reddit is no longer a scrappy startup underdog. It’s a company with a valuation pegged as high as a half-a-billion dollars that has hosted a conversation with the President, among other leaders. But Wong remains confident that backers will let the newly-rich Reddit keep being weird.

“We have been entrusted with capital by patient, long-term investors who support our views on difficult issues,” he said. “We believe in free speech, self-governing communities, and the power of voting. We find that this freedom yields more good than bad, and we have chosen investors based on this belief.”

TIME Startups

San Francisco and Los Angeles Threaten Crackdown on Uber, Lyft

App Car Service Startups Continue To Irk Traditional Cab Companies And Regulators
A Lyft car drives along Powell Street in San Francisco on June 12, 2014 Justin Sullivan—Getty Images

Prosecutors in California's two biggest cities say the ride-share programs are breaking the law

Correction appended, Sept. 26

Uber, Lyft and Sidecar are under scrutiny by San Francisco and Los Angeles district attorneys, who are threatening legal action against the ride-share companies unless they make major structural changes.

The San Francisco and Los Angeles offices said that a joint investigation found the ride-share companies were in violation of California law and represent “a continuing threat to consumers and the public,” SF Gate reports. They’re threatening to levy civil penalties on the on the companies, but didn’t say what those might be.

The district attorney offices said that the three companies mislead customers by saying their background checks on drivers screen out those with criminal offenses and DUIs — but that in actuality, they don’t. They also said that the shared-ride-service fares that allow separate passengers going the same way to pay their fares separately violate state law.

“We value innovation and new modes of providing service to the public,” San Francisco district attorney George Gascón said in a statement. “However, we need to make sure the safety and well-being of consumers are adequately protected in the process.”

The attorneys also said Uber and Lyft have to be regulated by the California Department of Food and Agriculture’s weights and measures division, which would ensure riders are getting the taxi miles they pay for, and that the two companies don’t have the correct licenses to pick up and drop off passengers at airports.

[SF Gate]

Correction: The original version of this story misstated in the headline the nature of prosecutors’ threat to Uber and Lyft. They threatened civil penalties.

TIME

This Startup Thinks Pictures of Onions Can Reveal Changes in the Economy

Fruit and vegetables are common items photographed with the Premise app to help measure inflation

Correction appended, August 25

It’s probably every teenager’s dream to get paid for snapping iPhone pictures. Instead of selfies, though, David Soloff is seeking pictures of fruit carts, health clinics and remotely located schools. His startup is hoping to leverage the vast proliferation of smartphones—and our insatiable desire to take photos with them—in order to bring real-time economic data to the masses.

The new company, called Premise, tracks economic indicators by enlisting armies of local residents to record data about their communities, like the price of oranges at a local market or the physical condition of a local health clinic, via an Android app. Premise pays the photo-takers up to 15 cents for each “observation,” which can be a picture or other data point. The company aggregates all the individual observations to derive broader insights about inflation and consumption shifts in different countries, then sells the data to financial institutions.

Premise’s aim is to provide important economic metrics faster than government agencies, which often only release data in weekly or monthly intervals. The company is currently gathering data in 50 cities across four continents, including locations in Argentina, China and the United States.

“What people experience in their day-to-day lives is frequently really, really different from what the official government or news bureau or stats-gathering agencies tell them about their lives,” says Soloff, Premise’s CEO. “By the time those official numbers come out, the world’s probably changed a lot.”

Soloff points to countries like Argentina — where Premise and a variety of economists have projected inflation to be increasing much faster than the government says it is — as an example of a place where private data sources can be more reliable than official figures. In other countries, such as India, where onion prices leapt 190% in 2013, food prices are incredibly volatile and government-released figures can’t keep up with the rapid changes.

“Almost certainly, in a lot of countries, the government is lying about price changes,” says Gary Burtless, an economist at the Brookings Institution. “It would be useful to know, to ordinary people and to businesses, what the real inflation is.”

How does Premise ensure that its figures are accurate? To devise its economic models, the company has brought on advisors whom Soloff calls the “adult supervision.” Among them are Hal Varian, Google’s chief economist and Alan Krueger, the former chairman of President Obama’s Council of Economic Advisers. To guarantee that data are collected accurately on the ground, Premise vets local residents by giving them test assignments, then evaluating their performance before committing their observations to the official dataset. The company recruits new workers via social media, online job boards and college campuses.

“It’s not an open cast call,” Soloff says. “These are students or people on the way to jobs or people who are doing the weekly shopping for their families at the market.”

0_Task lists
The Premise app assigns users tasks to complete in order to feed the company’s massive data set.

So far, Bloomberg and Standard Charter Bank have signed on to receive Premise’s data, in addition to other financial institutions that Soloff declined to disclose. The company is currently unprofitable, but it has raised $16.5 million in venture funding from bigtime backers like Google Ventures and Andreessen Horowitz.

Soloff isn’t the most likely man to head a high-tech San Francisco data firm. He studied Near Eastern linguistics as an undergrad at Columbia University and has a master’s in history from the University of California, Berkeley. But Soloff believes his humanities background gives him an edge in Silicon Valley.

“I’ve always been interested in systems, how things work,” he says. “Language systems, social systems, financial markets have always fascinated me.”

It also helps that Soloff had a two-year stint as a quantitative analyst at a Wall Street investment bank and co-founded Metamarkets, an analytics tool used for programmatic online advertising.

Soloff’s long-term goal is to expand the scope of Premise into a real-time financial pulse that can provide immediate economic data to not only wealthy investment institutions but also regular citizens. Other platforms have similar aims — the Billion Prices Project, started by a pair of MIT professors, gathers online price listings from more than 70 countries to predict inflation trends from around the world. Such initiatives “have a real value to consumers and businesses,” the Brookings Institution’s Burtless says.

But the devil is in the data, of course. Some economists question whether locally recruited residents can reliably document data for an entire community or country.

“Surveys are of no value unless we can be assured by some means that they are representative of the underlying population,” Barry Bosworth, another economist at the Brookings Institution, said in an email. “The survey will reflect all the biases of the reporter who decides what prices to report. We may use the Internet more in the future to collect data but it will have to be used with some structure to assure that the individual quotes are representative of an even larger underlying population.”

Premise spokesperson Sara Blask said in an email that the company’s contributors capture observations at predetermined locations and intervals to assure that the sample is indeed accurate. “In this sense we are the opposite of crowdsourcing,” she said.

Premise’s dataset should grow more robust and useful as it racks up more observations.

In five years’ time, Soloff envisions millions of people around the world submitting photos and other information to Premise. He believes such a cascade of data could help keep governments more honest in the future. “Rather than relying on the official story, so to speak, [people] have an alternative read that’s generated by the citizens just like them,” he says. “We don’t need to tell them what’s happening—it’s the opposite.”

Correction: The original version of this story misstated the number of locations where Premise has launched. The company is collecting data in 50 cities.

TIME technology

Taxi Drivers Are Using Apps to Disrupt the Disruptors

Essdras M Suarez—The Boston Globe/Getty Images; Justin Sullivan—Getty Images; Gamma Nine Photography/Uber

Taxis in San Francisco are fighting back through apps, with the city's blessing

Flywheel ScreenshotStanding on the corner of California and Polk in San Francisco, I took out my phone and ordered a ride from Flywheel, an app that’s competing with rival transportation services like Uber and Lyft by leveraging the thousands of taxis already on the road. Like with those services, once I order a Flywheel ride, a map pops up with a car icon, showing me where my ride is in relation to me and allowing me to monitor the driver as he or she gets closer.

Or at least that’s how it’s supposed to work.

On this particular morning, as I watched multiple Lyfts go by (unmissable with their trademark giant pink mustaches attached to the cars’ grilles), and a couple Ubers (the black cars now identifiable by small logos that must be placed on their windows), my driver’s icon drifted away from me. After some minutes passed, I called the driver, who assured me he was on his way. When he continued to travel not towards me, I canceled the order and got a new Flywheel, which picked me up and promptly delivered me to the company’s San Francisco office, with my bill and a 20% tip paid automatically through the credit card I stored on the app.

Once at Flywheel, Chief Product Officer Sachin Kansal explained what had likely happened with my misguided driver. “He may have been ride-stacking,” Kansal explained, meaning that the driver accepted my order on the app and then took a street hail, thinking he could deliver the latter before I ever knew the difference. But the moment I canceled my ride, the driver’s plan was foiled. He would be blocked from the system until Flywheel investigated the case, and these did not appear to be circumstances that would yield quick forgiveness from administrators. Kansal made sure I knew how swiftly justice would be dealt, because this is not the kind of mistake companies can afford to treat lightly in the midst of the Great Ride App Wars.

San Francisco has been transformed into a city full of smartphone-wielding guinea pigs, willing beta testers who try out new services and shovel feedback to engineers. But while many transportation startups are busy dreaming up new and unfamiliar offerings, Flywheel and similar companies like Curb and Hailo are trying to breathe high-tech life into the old taxis that have been around for decades. That business model comes with limitations as well as certain advantages—the biggest of which may be that the city of San Francisco is proving a willing ally, and that could in turn prove a model for other metros. (Lyft did not respond to an interview request for this article, and Uber declined.)

San Francisco’s Municipal Transportation Agency’s “position is that there is a public good to having a regulated taxi industry,” city spokesperson Kristen Holland said in an email. “We want to encourage the public to take San Francisco taxicabs by making them aware of the e-hail option and letting them know the benefits of taking a San Francisco taxicab.”

Earlier this summer, the city and Flywheel teamed up to get their pro-taxi message across by putting cheeky ads like this on the sides of city buses:

Screen Shot 2014-08-15 at 1.35.15 PM

And this:

Screen Shot 2014-08-15 at 1.35.05 PM

By getting its app adopted a whole fleet at a time, Flywheel now has its system in 80% of San Francisco’s approximately 1,800 cabs and is aiming for 100%. Both the city and companies like Flywheel have a financial interest in cabs doing well—Flywheel through the 10% cut it takes off the base fare and the city through its medallion system, which will yield an anticipated $10 million in fiscal year 2015. Holland says that the city also supports cabs because they’re a known quantity. The city regulates them and decides exactly how the drivers are trained. Questions about insurance and liability, which have plagued startups innovating new transportation systems, have long been answered when it comes to cabs.

Taxi drivers, many bitter that they have to deal with more onerous regulations than drivers for companies like Lyft, have taken to writing down license plate numbers of cars with pink mustaches and reporting them to insurance companies. While cabs are clearly commercial vehicles, Lyft drivers are often using their personal cars to make money, and some insurers have canceled Lyft drivers’ policies after finding out they had only forked out for non-commercial plans.

Using apps like Flywheel is a way for taxis to fight fire with fire instead of tattling, however justified it might seem. Flywheel’s Kansal says that drivers may double the amount of rides they get in a shift through the efficiency that the system provides, matching people who need rides with nearby drivers. “There are weaknesses that others have. There are regulations that they may be breaking,” he says. “But 90% of our energy is spent on making sure this experience always stays top notch. That the experience that you had this morning never happens again.”

While Flywheel can’t turn cabs into fancy black cars or Lyft Plus SUVs, customers who order a taxi never have to worry about surge pricing, premiums that other companies charge in times of high demand. And while Flywheel can’t innovate at the speed of the other companies, given the limitations of what a fleet cab can be, it did just roll out service to airports in San Francisco, Seattle and L.A—something less established fleets still can’t legally do in many cities due to long-standing airport regulations. The California commission regulating the new services like Uber and Lyft has threatened to shut them down if drivers keep showing up at arrival and departure areas without proper permits.

Kansal believes his company can outfit cabs in a way that allows them to disrupt the companies that disrupted cabs in the first place. The fleet model is “very scalable,” he says, though the app is now densely present only in San Francisco and available in just a handful of other cities, most on the West Coast. (Competitor Hailo is the leader among taxi apps on the East Coast and in Europe.)

But the equation isn’t so simple as making lists of pros and cons for new ride-providing companies and app-enabled taxis. After my interview with Kansal, I tried to hail a car through Curb, a rival app that just rebranded itself after previously operating as Taxi Magic. After failing to get a taxi assigned to me before five minutes passed by I went back to Flywheel. A taxi arrived, and I asked my driver Casey Callahan what he thought of using the platform.

“I have mixed feelings,” he says. “You get a lot of business you wouldn’t normally get, and it gives us an edge against Uber, but they take a kind of big cut.” Ten percent seemed too high to Callahan, and that’s the kind of resentment that can fester. UberX drivers protested angrily outside Uber’s HQ in San Francisco earlier this year when the company started taking a bigger cut of the fare, many drivers threatening to go work for someone else. Callahan said the Flywheel app can also have technical kinks, and it remains painful to pass up a willing street hail once he’s agreed to pick up a Flywheel customer, the temptation to which my driver succumbed.

Callahan described all the driver-luring and price-cutting companies are doing to one-up each other in the Bay Area as “cutthroat capitalism at it worst.” But he said that if cab drivers don’t use technology and whatever else they can to fight back, they’re going to go the way of the dodo and the stagecoach. “This is going to be one more thing that’s gone from the American way of life,” he says.

He says he chose driving for a cab company over the new services partly because he doesn’t own his own car and feels that buying one through a company, as some Lyft Plus drivers do, is the equivalent of being an “indentured servant.” Myriad factors could send a driver one way or the other. Long-time cabbies know how much they can make in a shift, while newer companies continue to play with prices and what cuts they take. There’s also the ethos of the job, like Lyft’s requirement that a driver fist-bump each passenger, while a cool distance in taxis is the norm and Uber black car drivers will open your door. There are hours, incentives, pride, rules about where certain companies can go and who they can pick up. And so on.

For those championing taxis, the question is whether cab drivers who long roamed without competition, facing no penalty if they ditched one fare for another, can give their industry the kind of customer-service makeover it takes to convince a San Franciscan to order a Flywheel instead of something from the long menu of other options.

MONEY Small Business

The Best Way to Keep Your New Business from Failing

Conjoined paperclips
Find the right partner if you want your startup to succeed. Helen Sessions—Alamy

Making sure you're compatible with your business partner is a key to success. So ask yourself these questions before you pair up.

Nearly two-thirds of high-potential startups fail because of conflicts between co-founders, says Harvard Business School professor Noam Wasserman. Make sure you know these things about a prospective partner:

How does he respond to adversity?

With a startup, “the highs are high, but the lows are very low,” says Eric Del Balso, founder of Ignite Advisors. Ask the person’s friends, family, and former co-workers how he handles letdowns and curve balls.

What are her goals for the business?

Discuss key decisions you’ll make together—like, Will you raise outside money? Pay top dollar for talent or hire temps? “If you can’t resolve those, there is a high likelihood the team won’t be aligned,” says Wasserman.

How does he handle money?

An overspender may burn through funds before you find revenue. But a timid spender can hold you back. Pull a credit report on your compatriot. Then discuss “what you each think is worthwhile to spend on and what’s lower priority,” says Wasserman.

More on starting your own business:

TIME Startups

How YouTube Stars Can Actually Make a Living

Pedals Music Video—Conte

Patreon offers a new approach to crowdfunding

Being a YouTube star doesn’t actually pay all that well. Just ask Jack Conte, a singer and musician who has scored viral hits mashing up Pharrell songs and stripping down pop hits like Beyonce’s “Single Ladies” as one half of the indie rock duo Pomplamoose. Between the group and his solo work, Conte says his videos can rack up as many as four million views each month on the video sharing site. But all those eyeballs do little for Conte’s bottom line—in a good month, he collects $400 in advertising revenue from YouTube.

“There’s great ways for people to build an audience online right now,” he says. “There’s really no great way for people to make a living.”

After a particularly elaborate music video involving singing robots on a handmade replica of the Millennium Falcon earned him just a few hundred dollars, Conte realized that there had to be a better way to earn money online. He wanted what he calls a “quality driven Web,” or a space where artists could make money based on the passion of their fanbases rather than trying to lure millions of mildly interested passersby by “going viral.”

His solution was Patreon, a new crowdfunding platform that helps creators earn revenue from their most ardent fans on an ongoing basis. Unlike Kickstarter, where inventors and creative types solicit money from users in a month-long campaign frenzy, Patreon asks users to pay creators each time they produce a new work. That could be a music video, a web comic any other kind of creative project. As on Kickstarter, patrons are given varying prizes based on how much they donate.

The unusual funding model creates a new dynamic between creators and fans. It’s not as much about crafting one brilliant idea and marketing it well but rather building and sustaining an audience over the long term. The idea of individual fans supporting artists on such a granular basis might seem anachronistic in an age where YouTube has helped make media more accessible, but Conte believes people are still willing to pay for art. “Patronage is a very old phenomenon that’s occurred in people and in society for thousands of years,” he says. “It stems from an emotional response to someone’s art. It’s a feeling of responsibility and importance and a desire to be a part of what they’re making.”

Since launching in May 2013, Patreon has attracted 25,000 creators who are requesting funding for everything from science fiction short stories to Minecraft raps to video game reviews. So far patrons have paid more than $2 million for creative works on the site, with $1 million of that coming in just the last two months. The most popular creators can earn close to $10,000 per project on the site.

Molly Lewis, a ukulele player with a small but devout following on YouTube, believes Patreon could eventually become her primary revenue source as an artist. She’s currently convinced more than 400 fans to pledge $2,600 total for each new song she makes, more than double her original funding goal. To attract donations, she promises exclusives like videos of live shows and personalized limericks written for hardcore fans. “It’s kind of like a fan club,” she says. “The money they spend goes directly into my buying food and making more music. They can see their dollars at work in a way that you can’t really when you go to a Katy Perry show or something.”

This desire to get an inside track on the creation of a new project has already helped Kickstarter pull in more than $1 billion in pledges from people around the world. Experts believe the Patreon model can also reach massive scale since it’s appealing to both creators and their fans. ““Here you can evaluate the quality of output over time and then decide whether you want to continue subscribing or not,” says Anindya Ghose, a professor of information, operation and management sciences at New York University who also studies crowdfunding. “It’s a very positive self-reinforcing cycle where people give small amounts of money, which incentivizes artists to do a better job, which then leads people to give more money more frequently.”

Plenty of obstacles remain for the still-nascent startup. It’s not yet clear just how long people will be willing to continually support a single artist’s work—Ghose points out that a few popular creators pumping out subpar work simply to collect a check could sour new users on the platform. More worrying could be YouTube’s entrance into the donations space. The video giant launched a virtual tip jar of its own recently as a response to ongoing gripes that it’s hard to earn money directly on the site. For now, Conte contends that Patreon’s features differentiates it from YouTube’s less robust offering, while YouTube has expressed support for crowdfunding platforms like Patreon and Kickstarter.

Silicon Valley, at least, believes in Patreon’s future. The startup closed a $15 million round of venture funding in June which included leading venture capitalist Danny Rimer and Alexis Ohanian, one of the co-founders of Reddit. The money will allow the company to launch a mobile app and open an office in San Francisco instead of working out of the two-bedroom apartment where Conte and co-founder Sam Yam live.

As Patreon grows, Conte promises that it will remain focused on creators’ interests. The currently unprofitable company charges a 5% commission on all donations, and Conte vows the fee won’t increase in the future (Kickstarter and YouTube charge the same amount). Though he’s now a CEO, he’s still a creator at heart—Conte has 1,300 patrons of his own paying more than $5,000 for each new video he makes. He envisions a future where every creative person isn’t a starving artist or a pop megastar. There’s room in the middle for artists, too, and people will pay for their work because, as Conte says, “Everybody wants to be able to enjoy beautiful things.”

MONEY Shopping

6 Startups That Solve Problems You Didn’t Know You Had

These startups want to make your life easier, even if you didn't know it was difficult in the first place.

Fixing important issues like education or healthcare is really, really difficult. It’s a lot easier for companies to develop solutions for the little annoyances in life. And when that’s too hard, businesses look to eliminate problems you never even knew existed. Here are six such startups, which have created products and services you never knew you needed or wanted—and perhaps still don’t.

1. Fitness Tracking… for Dogs

You probably thought being a good pet owner just meant being attentive, caring, and taking Fido to the vet when he looked sick. Well, Whistle is here to tell you that’s just not good enough. You also need real-time data on what your dog is doing and when he is doing it.

The product, which costs $129 and attaches to your pet’s collar, is basically a FitBit for dogs. Whistle claims that by keeping a detailed account of your pet’s life—providing “a visual summary of your dog’s daily activities”—and comparing Fido’s activity to that of other dogs of the same breed, it can help keep your pet healthy and highlight any worrisome anomalies. And because all new startups are required by law to have a social component, you can also share your dog’s activity logs on Twitter.

Does it work? Dr. Wakshlag, associate professor at Cornell’s College of Veterinary Medicine, calls Whistle “a kind of farcical thing” but says it may have utility on some pets. He says most house dogs don’t change their activity much under any circumstances, but it may actually reveal significant indicators of ill health for outdoor pets with daily routines.

That’s not to say Whistle can’t also help your inside pets. One beta tester told the Verge that Whistle helped her discover their Lab-Pitt mix wasn’t getting as much exercise on nights when both she and her husband weren’t home. This might seem obvious (and it is), but without Whistle they wouldn’t have gotten to use a swanky iPhone app.

2. Laundry Quarters Delivered (for a Fee)

Over the years, many services have been created to make the annoyance of laundry go away, or at least be less difficult. Laundromats do the washing for you. Some will also do the folding. Others offer delivery service, and even free cookies in addition to freshly laundered clothes.

The new startup Washboard, for its part, sets out to tackle yet another laundry-related problem: getting enough quarters for the DIY laundry machines in your building or the local laundromat. The website promises to send you all the change you need every month—for a fee. In something reminiscent of a Saturday Night Live skit, $10 in quarters will cost you $14.99.

Why not just get a teller to give you change for free? “Banks close at 5, maybe they’re open Saturday, but they close at noon,” laments Washboard co-founder Caleb Brown. “I’m rarely out of bed by then.”

Unfortunately, Washboard was too far ahead of its time. After just over ten days on the market, the company’s payment processor balked and Brown announced they were shutting down.

3. A Messaging App That Only Sends One Message

There are millions of messaging apps out there, but few can match the simplicity of Yo. The service, which recently received $1 million in funding, allows users to send anyone they can cajole into also installing Yo a message that says, well, “yo.” Seriously, that’s all you can say.

Moshe Hogeg, the app’s principle investor, explains that he likes Yo because it makes his life easier. “My secretary, I love her, but I hate to tell her to come” when he needs her, says Hogeg, immediately provoking the ire of everyone who doesn’t communicate with other humans in the same way they would talk to a golden retriever.

Many have rushed to lampoon both Hogeg and Yo, including the Colbert Report’s Stephen Colbert, but MONEY’s own Pat Regnier points out that Yo is really good at one thing: spamming other Yo-using friends until they let you delete it from your phone.

4. Website That’ll ‘Hand-Select’ $200 Jeans for Guys

Online shopping makes browsing for clothes easier than ever. But with great power comes great responsibility, and maybe your fashion sense isn’t quite up to the task. Ask yourself, are you actually qualified to pick your own wardrobe?

Trunk Club is betting you’ll realize the answer is no. The service asks men a few survey questions to get an idea of their preferences. Then a personal stylist mails you a few articles of clothing in a trunk-like box. On the upside, there are no membership fees, and Trunk Club lets you send back anything you don’t like free of charge.

But beware: this product is not for bargain hunters. Casual shirts range from $100-$200, sweaters can go as high as $300, and a pair of jeans ranges from $170 to $250. Having a personal stylist sounds nice, but one wonders if you couldn’t get similar recommendations from the staff at, you know, a regular store.

5. Subscription to Tell You Your Underwear’s Old

As you’ve probably already learned by now, you can subscribe to pretty much anything on the Internet. Even butt wipes for guys. So it should come as no surprise that undergarment retailer MeUndies allows men and women to order a regular shipment of underwear. Yup, that’s a thing now too.

It’s not quite clear why scheduling one’s underwear purchases (MeUndies offers to send you a new pair at one month, two month, or three month intervals) would be useful since MeUndies sends its product out too infrequently to be a constant guard against a sudden underwear emergency.

Also, most consumers are aware of ways to buy underwear as necessary with minimal effort. Presumably, the arrival of a new pair serves as a reminder to toss your old undies. In any event, the company sweetens the deal by offering a 20% discount to its products to underwear subscribers.

6. A Less Convenient Way to Pay for Things

The white whale of the tech industry is something that we’ve been told will “disrupt” how the world will pay for anything and everything under the sun. For years, we’ve heard that smartphone-enabled mobile payments will soon take over, replacing credit and debit card swiping (and cash, of course) as the primary mode of completing purchases. Credit card companies and banks have made trillions placing themselves in the middle of your every transaction, and entrepreneurs are eager to get themselves a piece of that action with innovative new payment systems.

Unfortunately for Silicon Valley, it turns out credit cards are pretty awesome. They’re tiny, fit right in your wallet, and they’re accepted everywhere—not just tech savvy coffee shops in the Bay Area. However, this has not stopped companies like LevelUp and Square from trying to become the way you pay for everything. Square, the more creative of the two, promised to make the purchasing experience easier by allowing Square Wallet users to buy something at a Square-participating store just by giving their name. Unfortunately, not enough stores were as keen on this idea as Square was, and Wallet was discontinued earlier this year (although Square continues to chase the whale with other products).

LevelUp doesn’t even try to create a substantially different buying experience than credit cards, offering users the ability to pay for things (again, only at participating retailers) by scanning a QR code. Instead, LevelUp distinguishes itself by offering users deals at certain stores, but credit card companies have spent decades rewarding their customers with everything from frequent flyer miles to discounts on various products.

In the end, it’s hard not to feel like some of these apps are a solution searching for a problem.

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