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Mutiny at HQ Trivia fails to oust CEO

This week’s banishment of host Scott Rogowsky was merely a symptom of the ongoing struggle to decide who will lead HQ Trivia. According to multiple sources, over half of the startup’s staff signed an internal petition to depose CEO Rus Yusupov who they saw as mismanaging the company. But Yusupov then fired some core supporters of the mutiny, leading to a downward spiral of morale that mirrors HQ’s plummeting App Store rank.
TechCrunch spoke to multiple sources familiar with HQ Trivia’s internal troubles to piece together how the live video mobile game went from blockbuster to nearly bust. Two sources said HQ recently only had around $6 million in the bank but was burning over $1 million per month, meaning its runway could be dwindling. But its early investors are reluctant to hand Yusupov any more cash. “
Employees petitioned to remove HQ Trivia’s CEO Rus Yusupov
HQ reimagined gaming and mobile entertainment with the launch of its 12-question trivia game in August 2017 where players all competed live in twice-daily shows with anyone who got all the answers right split a cash jackpot. The games felt urgent since you could only participate at designated times, fun to play against friends or strangers, and winning carried a significance no single-player or non-stop online game could match.
When TechCrunch wrote the first coverage of HQ Trivia in October 2017, it had just 3500 concurrent players. But by January it had climbed to the #3 game and #6 overall app in the App Store, and grown to 2.38 million players by March. Quickly, copycats from China and Facebook entered the market. But they all lacked HQ’s secret weapon — its plucky host comedian Scott Rogowsky. Affectionately awarded nicknames like Quiz Daddy, Quiz Khalifa, Host Malone, and Trap Trebek from the “HQties” who played daily, he was the de facto face of the startup.
Yet HQ had some shaky foundations. Co-founder Colin Kroll, who’d also started Vine with Yusupov and sold it to Twitter, had been fired from Twitter after 18 months for being a bad manager, Recode reported. He’d also picked up a reputation of being creepy around female employees, as well as Vine stars, TechCrunch has learned. Rapid growth and an investigation by early HQ investor Jeremy Liew that found no egregious misconduct by Kroll paved the way for a $15 million investment. The round was led by Founders Fund’s Cyan Bannister, and it valued HQ at over $100 million.

Yusupov failed to translate that cash into sustained growth and product innovation. His public behavior had already raised flags. He yelled at a Daily Beast reporter after the outlet’s Taylor Lorenz interviewed Rogowsky without Yusupov’s approval, threatening to fire the host. “You’re putting Scott’s job in jeopardy. Is that what you want? . . .  Please read me your story word for word,” Yusupov said. When he learned Rogowsky had expressed his preference for salad restaurant chain Sweetgreen, Yusupov shouted “He cannot say that! We do not have a brand deal with Sweetgreen! Under no circumstances can he say that.” The next day, Yusupov falsely claimed he’d never threatened Rogowsky’s job.
With HQ’s bank account full, sources say Yusupov was extremely slow to make decisions, allowing HQ to stagnate. The novelty of playing trivia for money via phone has begun to wear off, and people increasingly ignored HQ’s push notifications to join its next game. But beyond bringing in some guest hosts and the option to buy a second chance after a wrong answer, HQ ceased to evolve. HQ fell to the #196 game on iOS and the #585 overall app as concurrent players waned.

That’s when things started to get a bit Game Of Thrones.
Pawns In A CEO War
Liew pushed for HQ to swap Kroll into the CEO spot in September 2018 while moving Yusupov to Chief Creative Officer, which was confirmed despite an HR complaint against Kroll for aggressive management. However, three sources tell TechCrunch that Yusupov pushed that HQ employee to file the complaint against Kroll. As the WSJ reported after Kroll’s death, that employee later left the startup because they felt that they’d been exploited. “There was definitely what felt like manipulation there, and that’s also why that employee resigned from the company.” one source said. Another source said that staffer “believed Rus used their unhappiness about work to use them as a pawn in his CEO war and not because Rus actually cared about resolving things.”
Cyan of Founders Fund stepped down from HQ’s board after the decision to swap out Yusupov due to her firm’s reputation of keeping founders in control, Recode’s Kurt Wagner reported. Sources say that despite Kroll’s reputation, the staff believed in him. “Colin loved HQ and was dedicated to all the employees more than Rus. Rus cares about Rus. Colin cared about the content” a source tells me. 

Three sources say that in a desperate ploy to retain power and prevent Kroll’s rise, Yusupov suggested Rogowsky, a comedian with no tech or management experience, be made CEO of HQ Trivia. He even suggested the company film a reality show about Rogowsky taking over. That idea was quickly shot down as preposterous.
“It was a very personal desperation tactic not to have Colin be CEO. It was not a professionally thought-out idea” a source tells me, though another said it was always hard to tell if Yusupov’s crazy ideas were jokes. Both Yusupov and HQ Trivia declined to respond to multiple requests for comment, but we’ll update if we hear back.
HQ Trivia co-founder Colin Kroll passed away in December
Then tragedy struck in December. Kroll, then CEO, was found dead in his apartment from a drug overdose. Employees were distraught over what would happen next. “Colin’s plan was to ship fast, and get new things out there” a source says, noting that Kroll had pushed for the release of HQ’s first new game type HQ Words modeled after Wheel Of Fortune. “He wasn’t perfect but in the time he was in charge, the ship started to turn, but when Rus took over again it was like the 9 months where we did nothing.”
Coup d’éHQ
By February 2019, HQ’s staff was fed up. Two sources confirm that 20 of the roughly 35 employees signed a letter asking the board to remove Yusupov and establish a new CEO. With HQ’s download rate continuing to sink, they feared he’d run the startup into the ground. One source suggested Yusupov might rather have seen the whole startup come crashing down with the blame placed on the product than have it come to light that he played a large hand in the fall. The tone of the letter, which was never formally delivered but sources believe the board knew of, wasn’t accusatory but a plea for transparency about the company’s future and the staff’s job security.
At a hastily convened all-hands meeting in late February, HQ investor Liew told the company his fund Lightspeed would support a search for a new CEO to replace Yusupov, and provide that new CEO with funding for 18 more months of runway. Liew told the staff he would step down from the board once that CEO was found, but the search continues and so Liew remains on HQ’s board.
“Mostly everyone was on Jeremy’s side as no one wanted to work under Rus. Jeremy wasn’t trying to screw him over the way Rus would screw other people over. He just wanted to do what was right, getting behind what everyone wanted” a source said of Liew. 
Instead, HQ’s board moved forward with instituting a new executive decision-making committee composed of Yusupov, HQ’s head of production Nick Gallo, and VP of engineering Ben Sheats. Yusupov would remain interim CEO, and he continued to cling to power and there’s been little transparency about the CEO replacement process. Until a new CEO is found, HQ must subsist on its existing funds. The staff is “always worried about running out of runway” and are given vague answers when they ask leadership about how much money is left.

On March 1st, the committee emerged from a meeting and fired three employees — two who had spearheaded the petition and been vocal about Yusupov’s failings.
One who wasn’t fired was Rogowsky, despite sources saying at one point he’d tried to organize the staff to go on strike. Other employees had been cautious about standing up to Yusupov. “Everyone was terrified of retaliation. Their fears have totally been validated” a source explains. Engineers and other staffers with strong employment prospects began to drain out of the company. Those left were just trying to hold onto their jobs. Without inspiring leadership or a strategy to reverse user shrinkage, recruiting replacements would prove difficult.
Yusupov remains on the board, along with Tinder CEO Elie Seidman who Yusupov appointed to his additional common seat. Liew retains his seat until the new CEO is found and given that seat. And Kroll’s seat appears to have gone to Lightspeed partner Merci Victoria Grace. Lightspeed and Cyan of Founders Fund declined to respond to requests for comment.
[Update: Seidman tells TechCrunch that the he sees the internal struggle for the CEO role as over now that Yusupov has accepted that a new CEO will be installed. That search is moving along, and the CEO chosen will report to the board but otherwise be given full autonomy to run the company as they choose. That includes having hiring and firing power over Yusupov. He did not dispute any other claims from this article. Seidman rightly believes HQ has contributed important ideas to the mobile gaming ecosystem, and now it’s the startup’s responsibility to turn those ideas into a steady business.]
Losing Face
Tensions at HQ and a desire to diversify his prospects led Rogowsky to pick up a side gig hosting baseball talk show ChangeUp on the DAZN network, TMZ reported this week. He’d hoped to continue hosting HQ during its big weekend contests. But tensions with Yusupov and the CEO’s desire for the host to remain exclusively at HQ led negotiations to sour causing Rogowsky to leave the startup entirely. TechCrunch was first to report that he’s been replaced by former HQ guest host Matt Richards, who Yusupov bluntly told me Friday had polled higher than Rogowsky in a SurveyMonkey survey of HQ’s top players.

In tweets, Rogowsky revealed that that “Sadly, it won’t be possible for me to continue hosting HQ concurrently as I had hoped” noting, “I wasn’t given the courtesy of a farewell show.” Finding a way to preserve Rogowsky’s ties to HQ likely would have been best for the startup.  TechCrunch had raised the concern a year ago that unless Rogowsky was properly locked in with an adequate equity vesting schedule at HQ, he could leave. Or worse, he could be poached by Facebook, Snapchat, or YouTube to host an HQ competitor.
“Rus is a visionary but not a good leader. He is extremely manipulative in an unproductive way. He’s a dude who just cares a lot about his reputation” a source noted. “A lot of the negative sentiment amongst staff is the belief that he cares more about his reputation than the company itself.”

HQ’s next attempt to revive growth appears to be HQ Editor’s Picks, is described as “a new live show on your phone where our host shows funny viral videos and you decide on who gets paid.” Finally it seems willing to embrace the potential of interactive live video entertainment outside of trivia and puzzles. HQ Editor’s Picks will face an uphill battle, since HQ dropped out of the top 1500 iOS apps last month, according to App Annie. Sensor Tower estimates that HQ saw just 8 percent as many downloads in March 2019 as March 2018.
After the loss of its spirit animal Rogowsky, the employees’ chosen leader Kroll, the supervision of veteran investor Cyan, and its product momentum, tough questions are what remain for HQ Trivia. The company’s struggles have paralyzed its progress towards finding a new viral mechanic or game format that attracts users. While HQ Words is fun, it’s too similar to its trivia competition to change the startup’s trajectory. And all of the in-fighting could scare off any talent hoping to turn HQ around. Unfortunately, securing an extra life for the game will take a more than a $3.99 in-app purchase.

Mutiny at HQ Trivia fails to oust CEO

Movius raises $45M for its business communications service

Atlanta-based Movius, a company that allows companies to assign a separate business number for voice calls and texting to any phone, today announced that it has raised a $45 million Series D round led by JPMorgan Chase, with participation from existing investors PointGuard Ventures, New Enterprise Associates and Anschutz Investment company. With this, the company has now raised a total of $100 million.
In addition to the new funding, Movius also today announced that it has brought on former Adobe and Sun executive John Loiacono as its new CEO. Loiacono was also the founding CEO of network analytics startup Jolata.
“The Movius opportunity is pervasive. Almost every company on planet Earth is mobilizing their workforce but are challenged to find a way to securely interact with their customers and constituents using all the preferred communication vehicles – be that voice, SMS or any other channel they use in their daily lives,” said Loiacono. “I’m thrilled because I’m joining a team that features highly passionate and proven innovators who are maniacally focused on delivering this very solution. I look forward to leading this next chapter of growth for the company.”
Sanjay Jain, the chief strategy officer at Hyperloop Transportation Technologies, and Larry Feinsmith, the head of JPMorgan Chase’s Technology Innovation, Strategy & Partnerships office, are joining the company’s board.
Movius currently counts more than 1,400 businesses as its customers, and its carrier partners include Sprint, Telstra and Telefonica. What’s important to note is that Movius is more than a basic VoIP app on your phone. What the company promises is a carrier-grade network that allows businesses to assign a second number to their employees’ phones. That way, the employer remains in charge, even as employees bring their own devices to work.

Movius raises $45M for its business communications service

Tech giants offer empty apologies because users can’t quit

A true apology consists of a sincere acknowledgement of wrong-doing, a show of empathic remorse for why you wronged and the harm it caused, and a promise of restitution by improving ones actions to make things right. Without the follow-through, saying sorry isn’t an apology, it’s a hollow ploy for forgiveness.
That’s the kind of “sorry” we’re getting from tech giants — an attempt to quell bad PR and placate the afflicted, often without the systemic change necessary to prevent repeated problems. Sometimes it’s delivered in a blog post. Sometimes it’s in an executive apology tour of media interviews. But rarely is it in the form of change to the underlying structures of a business that caused the issue.
Intractable Revenue
Unfortunately, tech company business models often conflict with the way we wish they would act. We want more privacy but they thrive on targeting and personalization data. We want control of our attention but they subsist on stealing as much of it as possible with distraction while showing us ads. We want safe, ethically built devices that don’t spy on us but they make their margins by manufacturing them wherever’s cheap with questionable standards of labor and oversight. We want groundbreaking technologies to be responsibly applied, but juicy government contracts and the allure of China’s enormous population compromise their morals. And we want to stick to what we need and what’s best for us, but they monetize our craving for the latest status symbol or content through planned obsolescence and locking us into their platforms.

The result is that even if their leaders earnestly wanted to impart meaningful change to provide restitution for their wrongs, their hands are tied by entrenched business models and the short-term focus of the quarterly earnings cycle. They apologize and go right back to problematic behavior. The Washington Post recently chronicled a dozen times Facebook CEO Mark Zuckerberg has apologized, yet the social network keeps experiencing fiasco after fiasco. Tech giants won’t improve enough on their own.
Addiction To Utility
The threat of us abandoning ship should theoretically hold the captains in line. But tech giants have evolved into fundamental utilities that many have a hard time imagining living without. How would you connect with friends? Find what you needed? Get work done? Spend your time? What hardware or software would you cuddle up with in the moments you feel lonely? We live our lives through tech, have become addicted to its utility, and fear the withdrawal.
If there were principled alternatives to switch to, perhaps we could hold the giants accountable. But the scalability, network effects, and aggregation of supply by distributors has led to near monopolies in these core utilities. The second-place solution is often distant. What’s the next best social network that serves as an identity and login platform that isn’t owned by Facebook? The next best premium mobile and PC maker behind Apple? The next best mobile operating system for the developing world beyond Google’s Android? The next best ecommerce hub that’s not Amazon? The next best search engine? Photo feed? Web hosting service? Global chat app? Spreadsheet?
Facebook is still growing in the US & Canada despite the backlash, proving that tech users aren’t voting with their feet. And if not for a calculation methodology change, it would have added 1 million users in Europe this quarter too.
One of the few tech backlashes that led to real flight was #DeleteUber. Workplace discrimination, shady business protocols, exploitative pricing and more combined to spur the movement to ditch the ridehailing app. But what was different here is that US Uber users did have a principled alternative to switch to without much hassle: Lyft. The result was that “Lyft benefitted tremendously from Uber’s troubles in 2018” eMarketer’s forecasting director Shelleen Shum told the USA Today in May. Uber missed eMarketer’s projections while Lyft exceeded them, narrowing the gap between the car services. And meanwhile, Uber’s CEO stepped down as it tried to overhaul its internal policies.
This is why we need regulation that promotes competition by preventing massive mergers and giving users the right to interoperable data portability so they can easily switch away from companies that treat them poorly
But in the absence of viable alternatives to the giants, leaving these mainstays is inconvenient. After all, they’re the ones that made us practically allergic to friction. Even after massive scandals, data breaches, toxic cultures, and unfair practices, we largely stick with them to avoid the uncertainty of life without them. Even Facebook added 1 million monthly users in the US and Canada last quarter despite seemingly every possible source of unrest. Tech users are not voting with their feet. We’ve proven we can harbor ill will towards the giants while begrudgingly buying and using their products. Our leverage to improve their behavior is vastly weakened by our loyalty.
Inadequate Oversight
Regulators have failed to adequately step up either. This year’s congressional hearings about Facebook and social media often devolved into inane and uninformed questioning like how does Facebook earn money if its doesn’t charge? “Senator, we run ads” Facebook CEO Mark Zuckerberg said with a smirk. Other times, politicians were so intent on scoring partisan points by grandstanding or advancing conspiracy theories about bias that they were unable to make any real progress. A recent survey commissioned by Axios found that “In the past year, there has been a 15-point spike in the number of people who fear the federal government won’t do enough to regulate big tech companies — with 55% now sharing this concern.”

Regulation could protect Facebook, not punish it

When regulators do step in, their attempts can backfire. GDPR was supposed to help tamp down on the dominance of Google and Facebook by limiting how they could collect user data and making them more transparent. But the high cost of compliance simply hindered smaller players or drove them out of the market while the giants had ample cash to spend on jumping through government hoops. Google actually gained ad tech market share and Facebook saw the littlest loss while smaller ad tech firms lost 20 or 30 percent of their business.
Europe’s GDPR privacy regulations backfired, reinforcing Google and Facebook’s dominance. Chart via Ghostery, Cliqz, and WhoTracksMe.
Even the Honest Ads act, which was designed to bring political campaign transparency to internet platforms following election interference in 2016, has yet to be passed even despite support from Facebook and Twitter. There’s hasn’t been meaningful discussion of blocking social networks from acquiring their competitors in the future, let alone actually breaking Instagram and WhatsApp off of Facebook. Governments like the U.K. that just forcibly seized documents related to Facebook’s machinations surrounding the Cambridge Analytica debacle provide some indication of willpower. But clumsy regulation could deepen the moats of the incumbents, and prevent disruptors from gaining a foothold. We can’t depend on regulators to sufficiently protect us from tech giants right now.
Our Hope On The Inside
The best bet for change will come from the rank and file of these monolithic companies. With the war for talent raging, rock star employees able to have huge impact on products, and compensation costs to keep them around rising, tech giants are vulnerable to the opinions of their own staff. It’s simply too expensive and disjointing to have to recruit new high-skilled workers to replace those that flee.
Google declined to renew a contract with the government after 4000 employees petitioned and a few resigned over Project Maven’s artificial intelligence being used to target lethal drone strikes. Change can even flow across company lines. Many tech giants including Facebook and Airbnb have removed their forced arbitration rules for harassment disputes after Google did the same in response to 20,000 of its employees walking out in protest.
Thousands of Google employees protested the company’s handling of sexual harassment and misconduct allegations on Nov. 1.
Facebook is desperately pushing an internal communications campaign to reassure staffers it’s improving in the wake of damning press reports from the New York Times and others. TechCrunch published an internal memo from Facebook’s outgoing VP of communications Elliot Schrage in which he took the blame for recent issues, encouraged employees to avoid finger-pointing, and COO Sheryl Sandberg tried to reassure employees that “I know this has been a distraction at a time when you’re all working hard to close out the year — and I am sorry.” These internal apologizes could come with much more contrition and real change than those paraded for the public.
And so after years of us relying on these tech workers to build the product we use every day, we must now rely that will save us from them. It’s a weighty responsibility to move their talents where the impact is positive, or commit to standing up against the business imperatives of their employers. We as the public and media must in turn celebrate when they do what’s right for society, even when it reduces value for shareholders. If apps abuse us or unduly rob us of our attention, we need to stay off of them.
And we must accept that shaping the future for the collective good may be inconvenient for the individual. There’s an oppprtunity here not just to complain or wish, but to build a social movement that holds tech giants accountable for delivering the change they’ve promised over and over.

For more on this topic:

Internal Facebook memo sees outgoing VP of comms Schrage take blame for hiring Definers

The real threat to Facebook is the Kool-Aid turning sour

Google walkout organizers aren’t satisfied with CEO’s response

Facebook and the endless string of worst-case scenarios

Tech giants offer empty apologies because users can’t quit

Snapchat shares hit all-time low as search acquisition Vurb’s CEO bails

Snapchat’s sagging share price is making it tough to retain talent. Bobby Lo, founder and CEO of mobile search app Vurb that Snap Inc acquired for $114.5 million two years ago is leaving day-to-day operations at the company. That means Lo cut out early on his four-year retention package vesting schedule, which was likely influenced by Snapchat falling to new share price lows. Snap is trading around $9.15 today, compared to its $17 IPO price and $24 first-day close.
That’s down over 7 percent from yesterday following BTIG analyst Rich Greenfield gave Snap a sell rating with a target price of $5 saying “We are tired of Snapchat’s excuses for missing numbers and are no longer willing to give management ‘time’ to figure out monetization.” Greenfield is known as one of the top social network analysts, so people take him seriously when he says “We have been disappointed in SNAP’s product evolution (as have users) and see no reason to believe this will change.”

Vurb is a good example of this. The app let users make plans with friends to visit local places, allowing them to bundle restaurants, movie theaters, and more into shareable decks of search cards. It took over a year after the October 2016 acquisition for the tech to be integrated into Snapchat in the form of context cards in search. But Snap never seemed to figure out how to make its content-craving teen audience care about Vurb’s utility. Snap could have built powerful offline meetup tools out of the cards but never did, and lackluster Snap Map adoption furthered clouded the company’s path forward around local businesses.

Now Lo tells TechCrunch of his departure, “Building experiences at Snap has been a wonderful culmination of my seven-year startup journey with Vurb. My transition to an advisor at Snap lets me continue supporting the amazing people there while directing my time back into startups, starting with investing and advising in founders.”
Lo was early to embrace the monolithic app style pioneered by WeChat in China that’s become increasingly influential in the states. Snap confirmed the departure while trying to downplay it. A spokesperson tells me, “Bobby transitioned to an advisory role this summer, and we appreciate his continued contributions to Snap.”
Given Snap is known to back-weight its stock vesting schedules, Lo could be leaving over half of his retention shares on the table. That decision should worry investors. As a solo founder, Lo already made off with a big chunk of the acquisition price that including $21 million in cash and $83 million in stock, so with the company’s share price so low, he might have had little incentive to stay.
 
Snapchat Context Cards built from Vurb’s acquired technology
Since last July, Snap has lost a ton of talent including SVP of Engineering Tim Sehn, early employee Chloe Drimal, VP of HR and Legal Robyn Thomas and VP of Securities and Facilities Martin Lev, CFO Drew Vollero, VP of product Tom Conrad, TimeHop co-founder Jonathan Wegener, Spectacles team lead Mark Randall, ad tech manager Sriram Krishnan, head of sales Jeff Lucas, and just last week, its COO Imran Khan.
With its user count shrinking, constant competition from Facebook and Instagram, and talent fleeing, it’s hard to see a bright future for Snap. Unless CEO Evan Spiegel, without the help of his departed lieutenants, can come up with a groundbreaking new product that’s not easy to copy, we could be looking at downward spiral for the ephemeral app. At what point must Snap consider selling itself to Google, Apple, Tencent, Disney, or whoever will take on the distressed social network?

Snapchat shares hit all-time low as search acquisition Vurb’s CEO bails

Coinbase acquires Distributed Systems to build ‘Login with Coinbase’

Coinbase wants to be Facebook Connect for crypto. The blockchain giant plans to develop “Login with Coinbase” or a similar identity platform for decentralized app developers to make it much easier for users to sign up and connect their crypto wallets. To fuel that platform, today Coinbase announced it has acquired Distributed Systems, a startup founded in 2015 that was building an identity standard for dApps called the Clear Protocol.
The five-person Distributed Systems team and its technology will join Coinbase. Three of the team members will work with Coinbase’s Toshi decentralized mobile browser team, while CEO Nikhil Srinivasan and his co-founder Alex Kern are forming the new decentralized identity team that will work on the Login with Coinbase product. They’ll be building it atop the “know your customer” anti-money laundering data Coinbase has on its 20 million customers. Srinivasan tells me the goal is to figure out “How can we allow that really rich identity data to enable a new class of applications?”

Distributed Systems had raised a $1.7 million seed round last year led by Floodgate and was considering raising a $4 million to $8 million round this summer. But Srinivasan says, “No one really understood what we’re building,” and it wanted a partner with KYC data. It began talking to Coinbase Ventures about an investment, but after they saw Distributed Systems’ progress and vision, “they quickly tried to move to find a way to acquire us.”
Distributed Systems began to hold acquisition talks with multiple major players in the blockchain space, and the CEO tells me it was deciding between going to “Facebook, or Robinhood, or Binance, or Coinbase,” having been in formal talks with at least one of the first three. Of Coinbase the CEO said, they “were able to convince us they were making big bets, weaving identity across their products.” The financial terms of the deal weren’t disclosed.

Coinbase’s plan to roll out the Login with Coinbase-style platform is an SDK that others apps could integrate, though that won’t necessarily be the feature’s name. That mimics the way Facebook colonized the web with its SDK and login buttons that splashed its brand in front of tons of new and existing users. This turned Facebook into a fundamental identity utility beyond its social network.
Developers eager to improve conversions on their signup flow could turn to Coinbase instead of requiring users to set up whole new accounts and deal with crypto-specific headaches of complicated keys and procedures for connecting their wallet to make payments. One prominent dApp developer told me yesterday that forcing users to set up the MetaMask browser extension for identity was the part of their signup flow where they’re losing the most people.
This morning Coinbase CEO Brian Armstrong confirmed these plans to work on an identity SDK. When Coinbase investor Garry Tan of Initialized Capital wrote that “The main issue preventing dApp adoption is lack of native SDK so you can just download a mobile app and a clean fiat to crypto in one clean UX. Still have to download a browser plugin and transfer Eth to Metamask for now Too much friction,” Armstrong replied “On it :)”

On it 🙂
— Brian Armstrong (@brian_armstrong) August 15, 2018

In effect, Coinbase and Distributed Systems could build a safer version of identity than we get offline. As soon as you give your Social Security number to someone or it gets stolen, it can be used anywhere without your consent, and that leads to identity theft. Coinbase wants to build a vision of identity where you can connect to decentralized apps while retaining control. “Decentralized identity will let you prove that you own an identity, or that you have a relationship with the Social Security Administration, without making a copy of that identity,” writes Coinbase’s PM for identity B. Byrne, who’ll oversee Srinivasan’s new decentralized identity team. “If you stretch your imagination a little further, you can imagine this applying to your photos, social media posts, and maybe one day your passport too.”
Considering Distributed Systems and Coinbase are following the Facebook playbook, they may soon have competition from the social network. It’s spun up its own blockchain team and an identity and single sign-on platform for dApps is one of the products I think Facebook is most likely to build. But given Coinbase’s strong reputation in the blockchain industry and its massive head start in terms of registered crypto users, today’s acquisition well position it to be how we connect our offline identity with the rising decentralized economy.

What the Facebook Crypto team could build

Coinbase acquires Distributed Systems to build ‘Login with Coinbase’