Startup Battlefield Round 3: The Final Disruption

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We’re down to the final five companies at the TechCrunch Disrupt Startup Battlefield: Betterment, Movieclips, Publish2, Soluto, and UJAM. This afternoon these companies are all making their last appeals to a panel of expert judges, explaining how they disrupt their respective markets. My live notes from the session are below.

The judges:
John Borthwick
Ron Conway
Marissa Mayer
Sam Schwartz
Quincy Smith

Publish2
Read our post detailing Publish2 here.

MM: One question. What percentage of AP’s rev. is derived from Co-op?
A: It doesn’t break out. If you ask a cable TV provider, what percentage is consumer paying for this. But if you look at how AP presents itself.. without the co-op they can’t present themselves as comprehensive.
MM: I get the sense that if you look at AP they have bureaus. My question is that I’m worried it’s a small percentage of overall business. I think this is a great area that needs disruption. One thing that I’m concerned about — I want a sense of reliability. Who can you count on as a source? How do you defend brands in this network? I’m worried about overall biz model. There are people who believe real time news are being commoditized. This also couples in with distribution. What’s your plan for getting dist. in the beginning? Chicken and egg problem. With users, you think, can I monetize them directly?
A: They do a tremendous amount of reporting nobody else does. Story in Haiti.. I don’t think that’s a majority of their content.
RC: How big is AP?
A: 700M dollar business. We think globally, there’s a billion+ dollar market. By adding efficiency it will shrink to say half a billion, we think we can take 20% of that.
QS: You need to know your market a little bit better. They are being told by multimedia holding company, in your marketing pitch, if you’re going to replace it, something you have to own and feel accomplished with.

Soluto:
Read our post describing Soluto here.

Dives deep into Windows kernel. Starting with PCs, to eliminate things that are annoying/frustrating.
SS: We get about a million calls a day of customers trying to fix PC problems. They blame it on our connection 90% of the time. I think diagnosing that problem could be multifaceted, if you can do what you say, I think you have a nice exit in front of you.I think you’re tackling: boot sequence, crowdsourcing solution, database of problems. Lot of things to tackle.
A: We have been approached by Comcast already for a partnership.
RC: Is this hardware or software?
A: Doesn’t help you if your CD drive is clicking, but if it’s the driver, yes.
RC: Is it automatic? Or does consumer have to identify the problem?
A: Depends if they want to pay us. Free version, we tell them how to help themselves. Free is paid service.
JB: Talk to me about trust. I wake up one day and this behavioral targeting. How do I know that won’t happening.
SS: A lot of software when it crashes, it asks your permission.. if you’re going to crowd sourcing answer, how much is exposed.
A: We don’t want to know who our users are. There is no registration. All we gather is completely anon. technical information.
JB: I love it. I wish it worked on a Mac. It runs all the time. Normally those things cause more problems than they help.
A: … I think that being very clear and transparent, by contributing all the info we gather back, openly for free, it’s a pain so many people have they want a solution.
MM: I want to offer kudos, you have a great knack for consumer marketing. I think this is a really clever idea. When we launched Google Desktop, we had a conflict with photo software on HP PCs. took 2.5 months to track it down. One concern: we’ve seen that in markets where spyware and negative software runs rampant, people are living more in the cloud, and reimaging machines. If that’s the strat. it circumvents it. I think netbooks, hardware shifts/platform shifts can move and change faster than people thought. So in terms of shifts and ways to get around it how do you respond to that.
A: I think the cloud option is a sad outcome… We think if we are succesful we can stop that. I think it can be comparable in pricing. Regarding the shift we think most of the data is going to the web and it’s great. Still think bad programmers will create frustrations on netbooks, every other platform. This is relevant for every platform.
QS: Remember, in going after Apple.. The beauty of Apple is you go to genius bar, you’re trying to replace the touch. My rec would be to find these geeks early who are luminaries. Get some personalities out there who are advocating. Alt biz model: you have some PC recommendation ideas. You may not disrupt CNet, but maybe join something like that.
A: At present it’s very important to build trust with users of being objective, trusted. Not being affiliated with companies we may be passing judgement. We aren’t passing judgement, but it can be inferred.

Betterment
Read our post describing Betterment here.

QS: Are you an application or a company? Is there a strategy where you coopt other guys and offer your platform.
A: Yes we can sell through intermediaries (investment advisors, brokers). We’ve build flexible backend. We have ability whitelabel this. Stockmarket basket can be adjusted.
RC: If I put my dial for stocks only, who will pick that portfolio?
A: On our team we have decades of exp. in markets and banking. We’re putting together investor committee. It’s passively managed. Based on fundamentals. Professors, hedge fund managers.
SS: Why not use index fund?
A: We’re not managing it actively. We’re created a portfolio, it’s an index fund of index funds.
MM: I see two issues. You started by saying this a replaceement for savings accounts. Because it’s riskier than in classic savings accounts. Better to say turn savings account into investment portfolio. I’m worried on that same front, that the speed dial isn’t going to be sufficient to educate users.
A: Agree about understanding risk. We want to show people to show potential for loss, we disclose that before you sign up, as you make allocations.
SS: But I wonder if having to move that dial is one choice too many.
Michael Arrington: When Mint launched people were saying it was too cute, this is hard.
MM: I don’t think that’s my criticism. I think it’s about positioning.
JB: I think it’s got this toyish feel to it. I think you need to think about the brand. I thought it was about social investing. I think the UI/interface. You’ve simplified things.. that doesn’t mean reducing things to simple graphic with one bar.
A: It’s hard to reduce complexity to simplicity. There’s a lot of complex stuff behind the scenes.
SS: You’re bothering users with that dialing asset allocation decision.
A: This is the most important decision.
QS: The blippys, swipelys, clearly people are getting more used to simple interfaces. What’s your target market?
A: We’re going after young professionals. People who are lost when it comes to investing. Open etrade and say, I dont know what to do.
RC: Customers want to know who your fund managers who are picking these things.
A: We’re working on investment committee.
RC: You’re going to need Warren Buffet.

MovieClips
See our post describing MovieClips here.
Partnered with the six studios.
Biz model: All about volume.
RC: How you got all the studios is amazing. But imagine how big YouTube sales would be if you were a cofounder…
A: Hulu is knocking down the door.. YouTube did a deal with Vevo. We think we could be a great addition to add to their premium vertical with movie clips.
JB: I’m skeptical. I think a lot of people mash up videos today, it’s not a problem that people have per se. I’m always concerned about a company when I hear them say I got a deal that nobody else can get.
SS: How do they pick which movies?
A: We pick the movies, we do all the clips.
JB: Is this just the crappy movies?
A: A-Class, premiere titles.
QS: Two things I like. Cool thing about what you’re doing, if you do it right, you’re doing fantasy sports for movies. You’re additive and complementary. I like how you’ve coopted studios to see how this is good from promotion, marketing, monetization way. Nobody spends more money online than movie guys. My issues: if you get too successful. Hulu/Vevo.. other guys have skin in the game. SAG. All the guilds. Read all SAG negotiations before we went in.
SS: We own Fandango.. Does the user actually put own vid adjacent to clips.
A: Just compilation of professional video, can’t put own in.
MM: I think the deals are really amazing. I think they’re a good omen. Because next you need dist. I think it’s really fun. Next question has to do with search. What would make it successful is being able to search. But I am not a big fan of metatags.. I like full closed captioned search. The way people talk to each other about scenes.
A: We do have all the captions across 11k movies. Search is very important.
SS: Did you have to guarantee a minimum.
A: Yes. That’s part of the arena. We have to make this worth their time. There’s a rev share with the studios.
SS: What do you have to do with a clip to get ROI positive.
A: If we get 3 million uniques we cover min guarantee.
QS: Data – movies don’t do a good job obtaining, leveraging it. Other partner interesting here is Amazon.
JB: I think people are already doing mashups… movielinks… (he’s not buying it)
RC: This will be as viral as viral can get.

UJAM
See our post describing UJAM here.
JB: The technology is amazing. I think the whistle example displays tech even better. How do you make this social?
A: One way is people sharing music on social networks. Enabling collaboration. If I can sing well, my buddy is better is drumming, can collaborate in creating music. Service will have an API. Client is already built on API. Can be build to other platforms.
RC: Is the size of market a subset of karaoke, and how big is it?
A: I don’t know the exact number, it’s huge. Karaoke sites could use UJam as a core tech. I think it’s more than that.. It’s not recreating something, it’s creating something new.
SS: I think it’s incredible this is a web app. Very impressive. Strikes me as something you’d see on your Xbox. Because it’s on the web, wonder if there’s more you could be doing with it. This could turn into a whole community.
RC: You’d have to do that in order to make it succesful.
QS: When Google came around search was being used and innovated on my many companies, Google did it better. You guys do it better. There has been online collaboration jamming… but I have a theory there will be more music disruption online. It’s the easiest way for people to get behind an experience. In terms of adoption, applying killer tech, it’s badass. My question — what is the exit? What is the exit value? I’m not seeing what this look like in 5 years. But from a tech/implementation/user adoption it’s compelling. Top buyers today are different from top buyers tomorrow. Look at FB, they’re eating more or less the internet. FB would be a logical one. Yahoo to the extent they might be interested in content. MySpace.
RC: Activision. Nintendo, Xbox, Wii.
MM: I think the tech is impressive> I think the speed it puts together the tracks is great. I think the wow moment is transposition from voice to music. I’m not very compelled by biz models as they have been presented. Seems like you’re making music creation industry much larger. Why not monetize it the way music creation has been monetization?
A: We think that’s why we came up with freemium. People who want to use it occasionally, if you want more, if you want to aspire, sound better. They can customize it and upgrade. Buy more functionality.

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