EXCLUSIVE INTERVIEW

No More Napkin Plans: Q&A With Syncplicity CEO Leonard Chung

Syncplicity, a startup online data management company, announced last October the closing of its post-seed funding round for US$2.35 million. The company offers an automated, all-in-one service for online and offline file syncing, backup and sharing.

Silicon Valley-based True Ventures led a group of private investors in compiling the funding pool. Syncplicity will use the funds to accelerate enhancements and extend functionality of its on-line service to speed up the growth of its customer base.

In what Syncplicity CEO Leonard Chung describes as a more challenging investment environment, his company was one of few early-stage startups that won the endorsement of investors. He started his company in April 2007 and then recruited two cofounders.

“Syncplicity is an example of a really good entrepreneurial founder who started out attempting to raise a much larger round because of a perception that he needed to raise that much larger round to get the attention of Sand Hill Road,” Phil Black, cofounder of True Ventures, told the E-Commerce Times. “He didn’t need a $5 million round of capital at that moment, and his characteristics were a perfect fit with the True Venture model of raising a smaller round of capital to get launched and start the process of expanding its market.”

Funding Woes

Venture capitalists invested $7.1 billion in the third quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters. That reflects a 7 percent decrease compared to the second quarter. Internet-specific companies received $1.1 billion in the third quarter, a 36 percent decline in dollars over the second quarter of 2008.

“The data for Q4 will be fairly telling. We had been on a $7 billion-per-quarter investment pace as an industry, and I have to assume that those numbers will be lower. The early, early stage investments are somewhat valuation insensitive, but prices will be generally lower,” explained Black.

In this harsher investment climate, Chung steered his young company through a rough course that other startups seeking funding failed in traversing. True Ventures invests in promising entrepreneurs at the earliest stages in the highest-growth segments of the technology market. The partners at True Ventures have started more than 10 companies as founders.

“We’re very focused on the team that we invest in and felt that Leonard Chung and his cofounders have what it takes to succeed in today’s entrepreneurial market. We believe Syncplicity is best positioned to emerge as the dominant player in this space,” stated Black.

The company has the ability to integrate with Web applications and mobile devices as well as adhere to open, Web-based standards and industry standard protocols, explained Black.

Niche View

Having successfully weathered a critical storm, Chung has an unusual view of the window for fundraising that has essentially frozen shut. That freeze makes the ability to secure funding today extraordinarily difficult. This is particularly true for young tech startups like his that are looking to close their Series A round, noted Black.

The E-Commerce Times discussed with Chung his timely perspective about the state of the fundraising environment and challenges he faced.

E-Commerce Times: How does your company’s vision differ from that of others in the data management services?

Leonard Chung:

The great need for businesses is having the data you need before you know you need it. Many large companies offer this for a high price. We are the only company to offer a complete turnkey and support solution for data management through the Web. We offer an open API (application programming interface), support for many platforms and accessibility. This is our Software as a Service (SaaS) delivery model.

ECT: How does your pricing structure compare?

Chung:

Most of our competition offers traditional backup with high operational expenses. We provide a cost savings to SMB and consumers through our cost-effective online service. Most businesses pay about $30,000 for a VPN (virtual private network) solution for all of this. We are 10 times less. We are still adjusting our pricing structure for services that will be added. We are growing our customer base and are adding features.

ECT: How was your quest for funding different than you expected from previous experiences in raising capital?

Chung:

We got through the very beginning of the economic downturn. Then our venture capital source renegotiated. This is an example of the golden rule of VC financing for startups. The man who’s got the money makes the rules. The typical process used to be that to get a business appraisal and use it to come to an agreement on the term sheet. Then the startup goes to due diligence and then gets the funding. Now what is happening is the VCs are renegotiating the evaluation in the due diligence stage. The startup has nothing to fall back on, so this new process leaves the company in a lurch with Series A funding for all or get nothing.

ECT: So you had trouble raising the amount of funding you needed because of the current economic downturn?

Chung:

We computed the value of our company based on a business model plus an industry multiplier. This multiplier is based on different evaluation models depending on the industry involved. A startup with no revenue yet is forced to rely on a guesstimate of future value to get new a multiplier. The lower the multiplier, the worse the money deal. The new formula leaves less money for the start-up with more ownership of the company held by the VC funding agency.

ECT: How is this situation impacting technology start-ups?

Chung:

Another factor is that the deal volume is not uniform. The so-called VC math has gone out of alignment over the last few years. As a result, VCs are not giving out money because SMBs are not taking the deal.

ECT: So you are saying that VCs are now presenting a new attitude toward technology start-ups?

Chung:

It used to be that SMBs would come with a plan written on a napkin to a meeting with a VC agency. Now VCs are demanding more preparation. For instance, VCs want more investors. As a result, entrepreneurs are increasingly going to different sources of funding, such as angel backers. Another change is that [because of the funding crunch] companies are starting without having full capacity in place. Instead, they use a pay-as-you-go model. For instance, we started Syncplicity by renting storage and servers as we go.

ECT: What is the impact in terms of dollars and cents?

Chung:

This change in the VC funding environment is leading to different economics. It used to cost $4 million to launch a company. Now you can do it on hundreds of thousands of dollars because you don’t have to buy everything. A lot of VCs do well with their first funding round, maybe $100 million. Each partner needs $33 million to bring to the table. But for the second round of funding, SMBs expand, and this forces up the amount each partner has to kick in.

ECT: You mentioned earlier that start-ups are not getting what they need from VC funding or are rejecting the funding offer due to its high stake. What other options do start-ups have?

Chung:

I am seeing a lot of people taking initial money from angels and friends and family. VCs take a huge chunk of a company. Angels require a smaller amount of money at lower equity. Angels are moving into that spot and doing more than VCs.

ECT: So you took Syncplicity in a different funding direction?

Chung:

We took money from True Ventures in the early stages. The company makes money from management fees. The difference is that VCs tend to push for more money.

ECT: Where do you see this economic downturn going in terms of the VC funding space?

Chung:

I’m seeing entrepreneurs being more savvy about from where they take money. VCs are now only one of several funding sources. I am also seeing VCs not providing money initially but instead waiting for series B and C funding rounds.

Clarifying Round

The E-Commerce Times asked True Ventures’s Black to comment on the VC funding market. Black agreed that the angel funding developments could play a key role.

“I think the more interesting data from our standpoint is the angel market. That market will be significantly impacted. Not only are individual angels feeling poorer, there is an added concern about whether or not the angel-funded company will get that next institutional round,” he said.

For instance, True Ventures continues to invest alongside angel investors over 75 percent of the time. His company removes the financing risk in the early stage for those angel investors, he explained.

As for new hurdles that technology startups might face, Black sees none in the actual process. But that process will be elongated, he said.

The assumptions about revenue generation and customer acquisition will be more detailed and thoroughly examined. Entrepreneurs may opt to bootstrap or raise lower capital to get started. This will bypass the large institutional rounds and requirements, he concluded.

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EXCLUSIVE INTERVIEW

Metaverse Marketing Offers New Approach To Utilizing Customer Data

In Neal Stephenson’s popular 1992 sci-fi novel “Snow Crash” the author introduced the term metaverse to portray a futuristic world where people interacted in virtual 3D worlds using avatars. While his avatar-laced society is a familiar playing field for virtual game fans, few others but forward-looking marketers envisioned much usefulness in the realities of e-commerce.

That is, until now. Facebook CEO Mark Zuckerberg turned the M-word into a vibrant new name for his now rebranded metaverse company, Meta.

Since the “Snow Crash” novel craze, the metaverse term described multi-user, persistent virtual worlds that incorporate social interaction. The game Second Life, which launched in 2003, was the first metaverse to achieve meaningful user adoption, according to Wendell Lansford, co-founder and CEO of MarTech firm Wyng. Multiplayer online games and platforms, like Minecraft, Roblox and Fortnight, may also be considered as variations of a metaverse.

“Today, the term metaverse describes shared environments that bring together aspects of social media, virtual, and augmented reality, multiplayer online games, and cryptocurrencies to create immersive, digital experiences that both reflect and bridge to the physical world,” Lansford told the E-Commerce Times.

New Frontier for E-Marketing

The metaverse is a digital universe where people as avatars live, play, interact, and work. In the virtual community of the game Second Life, many users work full-time jobs creating and selling digital goods.

That concept of bringing shared environments together gives new life to some tired old marketing strategies. It also suggests exactly where Facebook and the marketing industry plan to go. To borrow a “Star Trek” slogan, it’s a place where no advertisers have gone before.

The online shopping world will become an exciting place. Facebook’s name change as a business force may well carve a place out of the metaverse. Suddenly, metaverse has generated a huge buzz over the potential benefits that this 3D shared environment has to offer.

This new metaverse frontier of digital development may well have unparalleled advantages for enterprising technology enthusiasts. The metaverse concept may well be the driving force to take e-commerce marketing to the next level. But many people are questioning how it could be used.

Zero-Party Data

Digital relationships between brands and consumers and the risk/reward strategies of third-party data have shifted immensely in recent years. As marketers begrudgingly shift away from the practice, the rise of the metaverse presents a unique opportunity for brands to start fresh and employ new privacy-first initiatives.

Being that each user in the metaverse is an authorized user, both brands and consumers are empowered to get the value exchange they want. In exchange for certain coupons, digital goods or access to areas, brands can ensure they are collecting data that was shared with explicit consent.

This eliminates guesswork from both sides. If done correctly, it has the chance to change how we look at data forever, noted Lansford.

Lansford’s company Wyng is positioned to help companies and their customers successfully co-exist with effective online interaction strategies. Wyng uses API-powered infrastructure for zero-party data (ZPD).

Zero-party data is all the consent-based, personal context data that customers share to improve their experience with brands. It gives customers transparency and control over their profiles and builds trust. The process involves personalizing experiences in real time across channels.

Discussing Business in the Metaverse

The E-Commerce Times discussed with Lansford how metaverse technology will impact brands and their customers.

E-Commerce Times: How is the metaverse different than what is non-metaverse?

Wendell Lansford: Think of the non-metaverse as today’s internet as exemplified by Facebook, Google, Amazon, Netflix, Spotify, and any web or e-commerce site.

Metaverse environments, on the other hand, run in parallel to today’s internet. It works much like multiplayer online games. Compared to today’s internet, emerging metaverse environments will offer richer experiences where the virtual and physical worlds converge, and the experience of interacting with others approximates real life.

Is the metaverse concept strictly aligned with e-commerce — meaning doing business over the internet — or does it have connections to other industries, too?

Lansford: In addition to e-commerce, metaverse technologies will have applications in a range of industries. These include entertainment, gaming, social media, education, fitness, travel, real estate, and marketing and advertising.

For example, one popular application today is watching movies (and chatting) with remote friends in a shared virtual theater.

As another example, in November, a plot of virtual real estate in Decentraland (a popular crypto-powered metaverse environment) sold for $2.43 million. The land, purchased by Metaverse Group, will be developed to facilitate fashion shows and commerce within the exploding digital fashion industry.

Fair value exchange (FVE) is a key element of business in metaverse. How is the importance of FVE instead of not shorting consumers in data exchanges a new concept?

Lansford: In the past, brands have primarily collected data about consumers by purchasing data from data aggregators/brokers (i.e., third-party data) or by tracking consumers’ clicks, searches, and purchases on a brand-owned website or mobile app (i.e., first-party data). These ways of collecting data happen behind the scenes, typically without the consumer having any knowledge of the data being collected.

As a result of privacy regulations and privacy-aware consumers, brands are now investing in zero-party data. This is data that consumers knowingly and intentionally share with a brand in exchange for something of value, like a personalized recommendation, loyalty points, and/or a coupon. Consumers will share their data with a brand they trust when the brand makes it worth their while.

How can brands gather zero-party data in the metaverse?

Lansford: The only way to gather zero-party data is by asking for it. On the web, brands ask for zero-party data via micro experiences like guided shopping quizzes, next-best questions, surveys, polls, sign-up forms, and conversational chatbots.

These same techniques can be adapted to the metaverse, but with richer interfaces. The metaverse also opens new possibilities for asking for zero-party data.

For example, imagine a virtual store with a knowledgeable shopkeeper who is there to help customers by engaging them in conversation. The shopkeeping gets to know customers’ personal needs, preferences, goals, and interests (again, zero-party data). Then, with the customers’ permission, the retailer uses that data to provide a more personalized experience with the brand.

Moreover, NFTs or non-fungible tokens, open up new possibilities for value exchange in the metaverse. They can be redeemed for real goods on a brand’s site or in a physical store.

Closing Thoughts

Metaverse commerce is in its early days, with lots of innovation and improvements still to come, Lansford observed. However, the multiplayer online gaming market offers an analogy for virtual worlds and e-commerce coming together.

“[Last year] for example, nearly 20 million people visited a two-week Gucci exhibit, where they could purchase limited-edition Gucci accessories for their avatars,” he said.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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EXCLUSIVE INTERVIEW

Remote Work Transformation Calls for Prioritizing Employee Tech Choices

Image Credit: Lenovo

The global remote work revolution the pandemic caused has accelerated and reinforced the need for companies to prioritize the employee experience. This necessity includes providing tech equipment and consumer products from select retailers via a “choose your own device” (CYOD) reimbursement program.

That is the view from two top suppliers of computers and other electronic devices. Lenovo-Intel research found that a solid majority (72 percent) of employees feel that their employers need to focus more on listening to workers to get clarity on their tech needs. That response ranks in the top three things companies should do to improve the employee experience. 

The Lenovo and Intel study, “Empowering Employees Through Technology Can Supercharge Returns,” is now one year old. But companies still face the ongoing challenges of outfitting their remote workforce with the technical tools they need to work away from the physical office productively, suggested Stefan Engel, Lenovo’s vice president and general manager of Visuals Business.

TechNewsWorld discussed the implications of remote workers’ technical support needs with Engel, who sits in the catbird’s seat in seeing how employers are responding to the realities of the high-tech survey.

TechNewsWorld: How is the shift in meeting employees’ WFH priorities impacting companies?

Stefan Engel: The remote work revolution has put employees more in control of their work technology devices than ever before. We found that improving the employee experience, starting with the tech they provide to employees, is more important than previously anticipated.

Both IT departments and employees agree that satisfaction with their work technology has a direct impact on improving employee satisfaction.

This shift has certainly propelled monitor design forward to becoming the center of communication, interacting with all kinds of devices, not just PCs and laptops, but also mobile phones and gaming consoles, basically anything that can benefit from a fully-actualized visual experience.

How widespread is the remote working demand?

Engel: I saw a recent Gartner survey that noted about one in 10 companies that planned to reopen their offices in the third quarter of 2021 have now pushed back their reopening date to sometime in the fourth quarter.

According to Lenovo’s own customer surveys, 90 percent of businesses plan to keep a hybrid model in place where at least some of the workforce is remote. Workers have grown accustomed to flexibility over the last 19 months and have shown that productivity can be maintained regardless of location.

That increased productivity brings new levels of screen time both day and night. Modern modular technology has become key to keeping employees satisfied with their tech options by allowing for personalization.

Modular options include ergonomic stands that lift, tilt, pivot, and swivel to let workers customize their home setup to best suit their needs, or monitor webcams designed for hybrid work with features like a smart traffic light showing colleagues or family members when a user is “busy” in a conference call.

Is this WFH movement driving new purchases or just moving equipment to the workers’ locations?

Engel: From the same survey Lenovo conducted with Intel, 84 percent of employers are upgrading devices, software, and services as part of employee engagement initiatives to improve team engagement and satisfaction.

The pandemic placed greater emphasis on employees using an at-home monitor to expand the screen real estate of their laptop, making their set-up more productive for working with data and graphics.

This resulted in a large uptick of PC monitor shipments in 2021 according to IDC and other industry researchers. Monitor technology is evolving rapidly. Employers should think about replacement after approximately three years to keep work productivity at high levels. It is also worth it for talent retention according to several employee satisfaction studies.

What other tech concerns did the survey indicate?

Engel: Half of employees still say they are frustrated with their PC hardware and software experience. It is evident that technologies are instrumental in driving employee productivity and engagement. Part of what is making this work is the adoption of video calling and collaboration software.

remote employee working on notebook

Image Credit: Lenovo


Potential exists to bridge these two groups and improve employee experience and satisfaction by making new up-to-date purchases, refreshing cycles, and remotely integrating hardware and software.

For example, an upgraded external monitor that supports high refresh rates and is connected to your PC can leverage the enhanced color performance of HDR 10 brought to life by the latest Windows 11 OS experience — certainly an improvement to your day in front of a screen.

What impact on data security does the remote workforce pose?

Engel: Data security and the feeling of still having control with employees working primarily outside of an office are top of mind for IT decision-makers when considering digital transformation solutions.

Malicious attacks targeting businesses moving their critical functions to the cloud are on the rise, as are attempts to exploit human vulnerabilities via phishing and ransomware, which have increased 11 percent and six percent respectively in 2021, according to Verizon.

Besides security software, one way employers can protect their remote workers is by encouraging them to use their physical shutter when not on camera as an added protection to user privacy.

A new feature I really love is the presence detection sensor that detects if a human being is in front of the monitor. If not, it goes to sleep mode to ensure privacy from prying eyes as well as potentially reducing your home’s power bill.

What other options are employers providing to remote staff?

Engel: As we near the second year of primarily remote work, employers are encouraging their staff to design their at-home workspace smarter than before; where they can easily switch between their workstation and laptop with a single keyboard and mouse combination for a more intuitive user experience.

We have seen several models used to equip/update the workplace at home around the world, all of which are better than companies just leaving their remote employees high and dry.

Here are a few examples:

  • Full free choice: The company reimburses employees fully, often with a max cap per item;
  • Flat amount reimbursement: This approach often leads to the user choosing a standard monitor that skimps on important features, like natural low blue light, in an effort to save money;
  • Preferred list offered: Companies provide a short list of approved monitors that employees may purchase to be eligible for reimbursement, which is a win-win because it caters to the employee’s needs while ensuring that the company is considering the impacts of a healthy work environment;
  • Delivering equipment: Companies make the selection and ship the monitor to the employee’s home.

What equipment baseline do remote workers need?

Engel: Day-to-day remote collaboration requires tailored technology that can improve video calls and even large online meetings, meet the unique needs of businesses, individuals or classrooms, and keep IT costs manageable.

Our user insights point to advancements in flexible modular tech, including enabled high-definition cameras and better device privacy and manageability. Our users also want monitors that feature high-performance displays, ergonomic capabilities, one-cable docking solution, easier video collaboration, smart software management applications, and built-in natural low blue light technology.

What are the priorities that ITDMs want for strategic IT integration?

Engel: IT decision-makers can better improve employee engagement and business outcomes by realigning investments, focusing on PC devices, and involving employees in technology decisions.

Create employee investment in your company’s digital transformation. Listening to employee feedback can go a long way towards establishing the hybrid security, software, and device framework with which IT decision-makers are tasked.

One thing that is different now is that the responsibility for meeting rooms or collaboration spaces in offices and conference centers moved from the care of facilities management to the IT department due to all the smarter technology and influx of high-tech devices. I predict this will soon become the standard for most offices.

How can OEMs address this remote technology divide?

Engel: OEMs must recognize the new realities employees face with remote work and provide technology that can not only help boost and maintain productivity at home, but also keep their work from home space minimal and organized. Organizations can improve employee experience by providing a choice in flexible with mobile and modular technology that adapts to employees’ working style from no matter where they choose to work.

Any final thoughts on how remote working is changing employer options?

Engel: I was struck by one of the study’s takeaways for IT decision-makers. It advises IT to also prioritize tech investments that focus on stated employee needs, such as building a strong ecosystem of PC devices, data security, and exploring easy-to-use collaboration tools.

In large organizations, it is common to have employee advocates working behind the scenes making sure that the long-term health and well-being of employees is factored into any equipment purchases. But this same level of compromise happens less often at smaller companies, or when people are left to buy equipment on their own as part of a company reimbursement program.

I think it is important for IT decision makers, employees, and managers to consider an issue that is just below the surface of all these connected devices. That is blue light emissions from digital displays.

Companies are starting to ask the right questions on behalf of their employees, but much more education is needed to make eye health part of the broader conversation when considering new equipment purchases.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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