Start Up No.1396: how to price app subscriptions, Facebook’s QAnon failure, TouchID for new iPhones?, Quibi maybe for sale, and more


The TikTok algorithm is watching you all the time. What does that presage about future apps? CC-licensed photo by Solen Feyissa on Flickr.

A selection of 9 links for you. Not growing exponentially. I’m @charlesarthur on Twitter. Observations and links welcome.

Seeing like an algorithm • Remains of the Day

Eugene Wei with a very smart explanation of what TikTok is doing – which presages how we will probably see many following systems work. As he points out, TikTok shows you one video at a time, and notices your responses to determine what to show next. By contrast:

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The default UI of our largest social networks today is the infinite vertically scrolling feed (I could have easily used a screenshot of Facebook [rather than Twitter, as in the post], for example). Instead of serving you one story at a time, these apps display multiple items on screen at once. As you scroll up and past many stories, the algorithm can’t “see” which story your eyes rest on. Even if it could, if the user doesn’t press any of the feedback buttons like the Like button, is their sentiment towards that story positive or negative? The signal of user sentiment isn’t clean.

If you subscribe to the idea that UIs should remove friction, the infinite scrolling feed is ideal. It offers a sense of uninhibited control of the pace of consumption. The simulated physics that result from flicking a feed with your thumb and seeing it scroll up like the drum of the Big Wheel from the Price is Right Showcase Showdown with the exact rotational velocity implied by the speed of your initial gesture, seeing that software wheel gradually slow down exactly as it would if encountering constant physical friction, is one of the most delightful user interactions of the touchscreen era. You can scroll past a half dozen tweets or Facebook feed items in no time. Wheeeeeeee!

A paginated design, in which you could only see one story at a time, where each flick of the finger would only advance the feed one item at a time, would be a literal and metaphoric drag.

On the other hand, maybe you wouldn’t mind reading one tweet at a time if they were better targeted, and maybe they would be better targeted if Twitter knew more about which types of tweets really interest you.

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In 2016 Mark Zuckerberg said “I wouldn’t be surprised if you fast-forward five years and most of the content that people see on Facebook and are sharing on a day-to-day basis is video.” He couldn’t imagine TikTok, but that’s pretty much what’s happening there.

Next question we should ask: what potential drawbacks will this have?
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Nikola founder Trevor Milton steps down after fraud allegations • Financial Times

Peter Campbell, Harry Dempsey and Claire Bushey:

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Nikola founder Trevor Milton is stepping down as executive chairman of the US electric truck maker, capping a tumultuous 10 days for the company after a short-seller alleged it was an “intricate fraud”.

Stephen Girsky, a former vice-chairman of General Motors and a Nikola board member, will take over as chairman, the company said on Monday.

Mr Milton’s exit follows a bruising period for Nikola after a report from short-seller Hindenburg Research claimed to have “extensive evidence” that the group’s proprietary technology was purchased from another company.

Shares in Nikola, already down heavily over the past week, fell almost 30% in early trading on Wall Street on Monday. Mr Milton remains Nikola’s largest shareholder, owning roughly a quarter of its stock.

…Nikola, which in June went public through a special purpose acquisition vehicle that avoids some of the scrutiny of a traditional initial public offering, has promised to “revolutionise” trucking and battery technology.

…The report from Hindenburg also raised questions about past businesses run by Mr Milton, several of which were mired by lawsuits or had collapsed.

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Has battery technology finally found its very own Theranos?
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Why you should charge more for your app subscriptions • Matt Ronge

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The reality is most people won’t sign up for your subscription even at a low price. Most people dislike subscriptions, and many won’t subscribe at any cost. The recurring nature of subscriptions provides a major mental hurdle and makes them hard to commit to.

However, you likely have a smaller set of users who get the most value out of your app and are willing to subscribe. These are your most devoted and die-hard users. When designing your subscription plan you want to focus on these users, they are the ones who will pay and stick around (see my post on churn for why this is critical). By going subscription, you are choosing to focus on fewer customers but your most dedicated customers. Given that this is a much smaller customer base, you need to charge a higher price.

There is such a mental barrier with subscriptions that once someone is willing to purchase, they are likely less price sensitive. If someone is willing to buy at $1.99/month, they are very likely to buy at $4.99/month or even $7.99/month. Our surveys conducted before launching Astropad Studio show this as well:

Price $50 One-time $20 Yearly $50 Yearly $100 Yearly
Conversion % 45% 38% 21% 15%
Revenue per 10k visitors $223,549 $75,524 $106,007 $147,887

This is real data from a test on potential pricing schemes for a new app. The first thing you’ll notice is that people are much more willing to make a one-time purchase.

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Much more revenue from the smaller number of people. Significant.
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Facebook tried to limit QAnon. It failed • The New York Times

Sheera Frankel and Tiffany Hsu:

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Last month, Facebook said it was cracking down on activity tied to QAnon, a vast conspiracy theory that falsely claims that a satanic cabal runs the world, as well as other potentially violent extremist movements.

Since then, a militia movement on Facebook that called for armed conflict on the streets of U.S. cities has gained thousands of new followers. A QAnon Facebook group has also added hundreds of new followers while questioning common-sense pandemic medical practices, like wearing a mask in public and staying at home while sick. And a campaign that claimed to raise awareness of human trafficking has steered hundreds of thousands of people to conspiracy theory groups and pages on the social network.

Perhaps the most jarring part? At times, Facebook’s own recommendation engine — the algorithm that surfaces content for people on the site — has pushed users toward the very groups that were discussing QAnon conspiracies, according to research conducted by The New York Times, despite assurances from the company that that would not happen.

None of this was supposed to take place under new Facebook rules targeting QAnon and other extremist movements. The Silicon Valley company’s inability to quash extremist content, despite frequent flags from concerned users, is now renewing questions about the limits of its policing and whether it will be locked in an endless fight with QAnon…

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Facebook can’t control Facebook. That’s what this is saying. The reason why: Facebook.
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Apple’s new iPad Air fingerprint sensor would be ideal for the iPhone 12 • The Verge

Tom Warren:

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Android device makers have already embedded fingerprint sensors in displays and power buttons. The in-screen variants have been hit and miss, though, with reliability issues that could have held back Apple from adopting similar technology over the past couple of years. Early in-screen sensors were slow to authenticate, but newer devices seem to have caught up. All but the newest of button sensors have had issues, too. Apple’s reputation is to only introduce new tech once it’s ready, so I’m willing to assume the iPad’s sensor is just as fast and reliable as the company claims.

Even if a new form of Touch ID doesn’t appear on the iPhone 12, there are also other parts of Apple’s new iPad Air that I’d like to see on the new iPhones. Apple’s new A14 Bionic, a 5nm chip with a six-core CPU, had a starring role at the iPad Air announcement and will undoubtedly make an appearance on the iPhone 12. Apple is promising a 40% performance improvement over the previous iPad Air, labeling the chip its most advanced yet.

Apple has also switched to USB-C on the iPad Air, which is a move I’m sure many of us would love to see happen on the iPhone 12. It seems increasingly unlikely that USB-C will appear on the iPhone 12, though.

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I think it’s at least 50-50 on Apple including Touch ID on the new iPhones. The situations where touch to unlock is more convenient than face to unlock are multiplying, and Apple will have noticed that in the past three years.

USB-C, though – not a chance. The mess of charging and data and all the other nonsense surrounding it is too awful.
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GE is getting out of the coal power business • CNN

Matt Egan:

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General Electric is one of the world’s largest makers of coal-fired power plants. But now it plans to say goodbye to coal.

Struggling GE announced Monday it won’t build new coal-fuelled power plants, making it the latest major company to dump coal in an exit that may include asset sales, site closures and layoffs.

The move marks a dramatic reversal for GE. Just five years ago, the company doubled down on coal by acquiring Alstom’s power business, which makes coal-fuelled turbines.

That $10.6bn deal – GE’s biggest-ever industrial purchase – proved to be a disaster. Coal has been crushed by the rise of natural gas and a shift toward solar, wind and renewable energy. Since then, GE has laid off thousands of power workers, slashed its dividend to a penny, fired two CEOs and sharply written down the value of its power business.

“With the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory,” GE Power CEO Russell Stokes said in a statement.
GE shares tumbled 6% Monday, leaving them down a whopping 42% on the year. The pandemic has dealt a damaging blow to GE’s jet engine business, which is reeling from a plunge in orders.

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The Alstom power acquisition wasn’t just coal-powered turbines – there was a lot else – but there were already signs that the whole power market was oversupplied at the time of the acquisition. (Not quite in China, but that’s a tougher market.) Now that huge buy into fossil fuels is going wrong. Terrible forecasting gets its comeuppance.

By the way, Trump’s promise to get coal jobs back hasn’t panned out. There are fewer now than in 2016.
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Quibi explores strategic options including possible sale • WSJ

Amol Sharma, Benjamin Mullin and Cara Lombardo:

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Streaming service Quibi is exploring several strategic options including a possible sale, according to people familiar with the situation, as the company founded by Hollywood mogul Jeffrey Katzenberg struggles to sign up subscribers in a competitive online-video marketplace.

Quibi, which launched its short-form, mobile-focused video service in April, is also considering raising more money or going public through a merger with a special-purpose acquisition company, or SPAC—essentially a blank-check company that helps fund deals, the people said. Quibi is working with advisers to review its options.

The review process is a sign of strain.

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Sooooo… it’s very short, and now it’s mobile? Anyone who puts money into it would be properly bonkers.
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In 2005, Helios flight 522 crashed into a Greek hillside. Was it because one man forgot to flip a switch? • The Guardian

Sally Williams:

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After the disaster, Greek air investigators determined that flight 522 had crashed because it had failed to pressurise properly. As it climbed, the air in the cabin had become too thin to breathe, causing most people to lose consciousness. The investigation quickly focused on the theory that the pressurisation selector switch had been left in “manual” rather than “auto”, and attributed this to human error – principally that of Irwin who, they said, had not returned the switch to its correct position after a safety check; and of incompetent pilots who had failed to spot the error.

This narrative was soon leaked to the press. “Alan Irwin… is at the centre of the inquiry after reports that a knob used to control cabin pressure was left in the wrong position after a safety check,” stated the Times.

Meanwhile, Boeing was also attributing the crash to human error. “Helios’s ground engineers did not follow Boeing’s correct procedure,” said Stephen Preston, a lawyer hired by the manufacturer, in a private deposition to the Greek courts seen by the Guardian. “At least 16 separate mistakes were made by the ground staff, the flight deck crew and the passenger cabin crew. If any one of these mistakes had not been made, the accident would not have happened.”

But the causes of the crash were more complicated.

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Long but fascinating piece which revolves around what constitutes good and bad user interface design. If you’re a pilot in an ascending plane and you hear a warning horn go off, what does it mean? In the Boeing 737, it could mean at least two very different things.
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Low- to mid-range smartphones dominate worldwide smartphone forecast with the fastest growth expected in $400-600 price band • IDC

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Economic uncertainties have increased the downward pressure on smartphone prices globally with 73% of shipments in 2020 expected to be priced below $400, according to a new price band forecast from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker. Worldwide smartphone value is expected to decline 7.9% in 2020 to $422.4 billion, down from $458.5 billion in 2019. The downward trend is intensified by consumers turning to devices priced in the low-to-mid range as they prioritize spending on essentials.

Overall, the low-to-mid end segment ($100 to less than $400) dominated global smartphone shipments with 60% market share in the second quarter of 2020 (2Q20) and is expected to grow in the short term to 63% by next year. The mid-to-high end segment ($400 to less than $600) grew its share of the market by almost 4 points to 11.6% in 2Q20. Devices from Samsung, Huawei, and other Chinese vendors like Xiaomi, OPPO, and vivo are the main vendors driving these segments. Apple also recently entered the mid segment with its new iPhone SE device, which has performed well, further validating the trend toward more budget-friendly devices.

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Not surprising, but given that there are a billion-plus of these gizmos sold every year, there’s still plenty of room at the top. The question is how you make a profit on the cheap ones.
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