Daily Tech Snippet: Monday, August 31

The CEO of the company behind Ashley Madison is resigning: The chief executive of the parent company of Ashley Madison, a dating site targeting people looking for extra-marital affairs, resigned Friday after a massive hack exposed the personal information of millions of its users. Earlier this month, personal information about millions of Ashley Madison customers, including e-mails, member profiles, credit-card transactions and other sensitive information, showed up online. A group known as Impact Team took credit for the hack, which is now under investigation by the FBI and Canadian authorities.The information was initially only accessible on the dark Web, where users must use anonymous browsing tools. But soon after the hack, databases showed up on the broader Web allowing people to search some parts of the data. Analysis of that data seemed to suggest that most of the female profiles on the site were fake. Those millions of Ashley Madison men were paying to hook up with women who appeared to have created profiles and then simply disappeared. Were they cobbled together by bots and bored admins, or just user debris? Whatever the answer, the more I examined those 5.5 million female profiles, the more obvious it became that none of them had ever talked to men on the site, or even used the site at all after creating a profile. Actually, scratch that. As I’ll explain below, there’s a good chance that about 12,000 of the profiles out of millions belonged to actual, real women who were active users of Ashley Madison. When you look at the evidence, it’s hard to deny that the overwhelming majority of men using Ashley Madison weren’t having affairs. They were paying for a fantasy.

Uber hires two security researchers who hacked a moving Jeep to improve car technology: Uber has hired two top vehicle security researchers, the company said on Friday, high-profile additions that come as the ride-hailing service ramps up its work on technology for self-driving cars. Charlie Miller, who had been working at Twitter Inc, and Chris Valasek, who worked at security firm IOActive, have resigned from their jobs and will join Uber next week. Miller and Valasek won wide attention this month after demonstrating that they could hack into a moving Jeep. Uber on Tuesday announced a partnership with the University of Arizona, offering the school grant money to fund research into the mapping and safety technology needed for autonomous vehicles, which Uber will test on the streets of Tucson, Arizona. This partnership follows the more tumultuous effort earlier this year at Carnegie Mellon University that resulted in Uber hiring away more than 40 of its top scientists and researchers, leaving one of the world's top robotics research institutions reeling.

Jet.com CEO: We May Have the Lowest Prices, but Many Shoppers Can’t Figure That Out: Jet.com may have the lowest prices on the Web, but a lot of people who visit the site still don’t realize it. That is something CEO Marc Lore acknowledged when asked about confusion among people who hear about Jet.com’s low prices but don’t see them displayed clearly when they visit a Jet.com product page. “Believe me, we have this discussion every single day,” Lore said in an interview Thursday evening. “We keep tweaking the [user experience] to make it more clear and are bringing in research groups. But you’re right, it’s still frustrating to [some].” Before we get to the confusion, a reminder about how Jet works: Jet marks down most of the products it sells below the lowest price elsewhere on the Web. How? The retailers that sell goods through Jet give Jet a fee for each sale, but Jet doesn’t pocket that fee, as competing online marketplaces do. Instead, it gives a large portion of it back to shoppers in the form of discounts on each item they buy. Lore has said the company will simply break even on the actual sale of goods, and then generate a profit through the $50 membership fee Jet shoppers have to pay each year. Many smart people in the industry are skeptical that Jet can become big enough to make this model work.The confusion among potential shoppers stems from how Jet displays these discounted prices. Lore said the reason it doesn’t show the fully discounted price is straightforward: Some of the product brands that sell on Jet have asked Jet not to display the discounted price because it is angering other retailers they sell their products to. Lore didn’t name these brands, but said the company wanted to do good by them even if it led to some short-term confusion among shoppers. For now, Jet has opted for a uniform design strategy even though it has only heard complaints from some of the brands they sell. That said, Jet is considering making a change so that the fully discounted price will be shown for brands that don’t object and leave the pricing display as is for the brands that do, Lore said.

Is the Tech Market Hitting Middle Age?: First it was PCs. Now it’s tablets. And very soon, it will be smartphones. Each of these markets has — or will — hit its peak in both revenue and unit shipments in short order. Each has moved (or will soon move) from the soaring grandeur of youth and young adulthood to the dowdiness of mature middle age. As these inevitable market developments occur, important shifts are starting to happen. Not only will device manufacturers and their key component suppliers have to evolve their businesses — as many have started to do — but very soon, so will companies offering software and services used by those devices. While some argue that these software and services companies are taking over the world, it’s naive to think that their growth can be maintained completely independent of the devices. At a fundamental level, the two are linked, and when the device numbers peak, so too do the potential users of any software or service. Admittedly, there’s more of a growth opportunity over the short term for these software and service companies, but that won’t last forever, either. As with any major industry transformation, this means that some of the biggest industry players may not survive in their current form (or at all), while others are likely to go through some dramatic transformations. This also means that there will be tremendous opportunities for today’s smaller or even yet-to-be started companies. The tech industry’s transition to a more mature market does bring with it the opportunity for some potentially boring baggage when it comes to things like stagnant unit-growth rates. However, instead of viewing this as a midlife crisis, smart, innovative companies will figure out ways to see these developments as a midlife celebration that can open up new opportunities.

Your First 10 Customers Can Make Or Break You: Early in a startup’s life, the main focus is building the right product for the right market. For most B2B startups, this is the period when you start winning your first 10 customers. These 10 customers are unlike any others you’ll have over the course of your company. You’ll sell to them differently, charge them differently and try to get different things out of the relationship than you will from those that follow. This is the group that will teach you how to refine your product, whether or not you are targeting a large enough market and how to craft a scalable sales process that will help you land your next 100 customers. You’re The First Head Of Sales. It will be tempting to hire an experienced sales veteran when you’re busy trying to get the product right and grow the company, but there is a strong argument against that. The first 10 customers should be sold by you, the CEO or founder. Look For Young And Ambitious Customers. While it’s admirable to target big-name customers, the chances are unlikely that they’ll take a meeting or make a bet on a brand new product. Similarly, a potential customer who is far along or at the end of his career may not have a high tolerance for risk or change. Focus On Engagement, Not Revenue. As you land more customers and add them to your client roster, it is essential that each initial customer uses your product at the engagement level to be considered an active user. Engagement levels — not revenue numbers — are often a stronger indication of long-term product adoption. This should be your top priority. Your first set of customers will inevitably serve as reference accounts — and the more engaged users are, the better references they’ll provide. Know Who To “Sign” And When To Walk Away. Focus your initial sales efforts on prospects who aren’t your friends. To be scalable, your product will need validation outside of your network, and you need the type of honest feedback that friends don’t often provide.

IZettle, a Swedish Payments Start-Up, Begins a Lending Program: Jacob de Geer, who is a Swedish entrepreneur and the co-founder of iZettle, a payments service that offers merchants a device for processing credit card transactions, says banks don’t meet the needs of many small businesses. “Financial institutions focus more on their large clients than on the small ones,” he said. “Most of them were founded way before the invention of the Internet or the smartphone.” But he thinks he has a solution. On Friday, iZettle announced a program to lend money to small businesses that use its service, providing cash advances to companies for a one-time fee. IZettle, which operates in 11 countries from Britain to Brazil, raised a further $67 million from its existing backers, including Intel Capital and American Express, to take its total fund-raising to roughly $180 million. The steps by iZettle follow similar announcements from Square, the six-year-old American payments start-up, that also has expanded from its payments roots to offer additional financial products for its small-business customers. Square also offers a device to process credit card transactions. For iZettle, the new lending program will initially be available only in Europe, and the company will charge small businesses a flat fee ?equivalent to roughly 10 to 15 percent ?of each cash advance. To recoup the money it lends to businesses, the start-up will take a small percentage of each transaction that small businesses process through its payments system. To reduce defaults, the company says it will crunch data from businesses’ existing transactions to determine their credit risk.